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EXHIBIT 10.4
THIRD RESTATED STOCKHOLDER RIGHTS AGREEMENT
This Third Restated Stockholder Rights Agreement ("Agreement") is
entered into as of February 25, 1999, by and among VNUS Medical Technologies,
Inc., a Delaware corporation (the "Company"), and the Investors set forth on the
Schedule of Investors attached as Exhibit A hereto (the "Investors") and amends
and restates in its entirety the Stockholder Rights Agreement dated May 2, 1997
(the "Prior Rights Agreement") as amended by Amendment No. I dated June 25,
1998.
WHEREAS, certain of the Investors and the Company have entered into a
Series D Preferred Stock Purchase Agreement of even date herewith (the "Stock
Purchase Agreement"). In connection with the Stock Purchase Agreement, the
Company wishes to grant certain rights to the Investors. Any term not otherwise
defined in this Agreement shall have the meaning ascribed to it in the Stock
Purchase Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Registration Rights.
1.1 Certain Definitions. As used in this paragraph 1, 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.
"Conversion Stock" shall mean the shares of the Company's Common
Stock issued or issuable upon exercise of the Preferred Stock.
"Holder" shall mean the original purchaser of the Registrable
Securities or securities convertible into Registrable Securities and any person
holding Registrable Securities or securities convertible into Registrable
Securities to whom the rights under this paragraph 1 have been transferred in
accordance with paragraph 1.10 hereof.
"Initiating Holders" shall mean any Holder or Holders who in the
aggregate hold more than 50% of the outstanding Registrable Securities.
"Investor" shall mean a purchaser of Common Stock, a purchaser of
Series A-1 Preferred Stock, a purchaser of Series A-2 Preferred Stock and a
purchaser of Series A-3 Preferred Stock pursuant to the Stock Purchase Agreement
dated January 6, 1995; a purchaser of Series B Preferred Stock pursuant to the
Stock Purchase Agreement dated August 6, 1996; a purchaser of Series C Preferred
Stock pursuant to the Series C Preferred Stock Purchase Agreement dated May 2,
1997; Lighthouse Capital Partners II, L.P.; and a purchaser of Series D
Preferred Stock pursuant to the Series D Preferred Stock Purchase Agreement
dated February 25, 1999.
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"Preferred Stock" shall mean the issued and outstanding shares of
the Company's Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series A-3
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock (including
Series C Preferred Stock issued upon exercise of warrants to purchase Series C
Preferred Stock) and Series D Preferred Stock.
"Registrable Securities" means (i) the shares of Common Stock of
the Company held by Lighthouse Capital Partners II, L.P., and issued or issuable
upon conversion of the shares of Series C Preferred Stock issued or issuable
upon exercise of the Preferred Stock Purchase Warrant dated June 25, 1998 (the
"Warrant") to acquire 44,118 shares of the Company's Series C Preferred Stock or
any shares of Common Stock otherwise issuable under the Warrant, (ii) the
Conversion Stock and (iii) any Common Stock of the Company issued or issuable
with respect to, or in exchange for or in replacement of the Conversion Stock or
other securities convertible into or exercisable for Preferred Stock upon any
stock split, stock dividend, recapitalization, or similar event, provided,
however, that shares of Common Stock or other securities shall only be treated
as Registrable Securities for the purposes of paragraph 1.3 hereof (A) if and
for so long as they have not been sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction or
pursuant to Rule 144, or (B) such securities are held by a Holder holding less
than 1% of the outstanding voting securities of the Company and a public market
exists for the Company's Common Stock and prior to the date such securities have
been sold or are all available for immediate sale in the opinion of counsel to
the Company in a transaction exempt from the prospectus delivery requirements of
the Securities Act so that all transfer restrictions and legends with respect
thereto are removed upon the consummation of such sale.
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, except as
otherwise stated below, incurred by the Company in complying with paragraphs
1.2, 1.3 and 1.4 hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, reasonable fees and disbursements not
to exceed $20,000 of a single special counsel for the Holders, 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).
"Restricted Securities" shall mean the securities of the Company
required to bear a legend in the form set forth in paragraph 3.2.
"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, if any, applicable to the securities
registered by the Holders.
1.2 Requested Registration.
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(a) Request for Registration. If (i) prior to the Company's first
registered underwritten public offering of its Common Stock, the Company shall
receive from an Initiating Holder or Initiating Holders a written request that
the Company effect any registration, qualification or compliance with respect to
shares of Registrable Securities having an expected aggregate offering price of
at least $3,000,000, or (ii) subsequent to the Company's first registered
underwritten public offering of its Common Stock, the Company shall receive from
Holders of Registrable Securities a written request that the Company effect any
registration, qualification or compliance with respect to shares of Registrable
Securities having an expected aggregate offering price of at least $10,000,000,
the Company will:
(i) within ten days of the receipt by the Company of such
notice, give written notice of the proposed registration, qualification or
compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to
effect such registration, qualification or compliance (including, without
limitation, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Securities Act and any other governmental requirements or regulations)
as may be so requested 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 Holder or 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 paragraph 1.2:
(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 any period commencing on the 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, with
respect to an employee benefit plan or with respect to the Company's first
registered public offering of its stock), provided that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective;
(C) After the Company has effected (i) one such
registration pursuant to this paragraph 1.2(a) prior to the Company's first
registered underwritten public offering of its Common Stock, which registrations
have been declared or ordered effective; provided, however that in the event
that any legal restriction or prohibition shall result in the inability of the
Holders participating in a registration pursuant to this paragraph 1.2(a) to
sell at least 75% of the Registrable Securities included in any such
registration within 180 days of the effectiveness thereof, then the Holders
shall be entitled to demand an additional registration pursuant to this
paragraph 1.2(a); and (ii) one such registration pursuant to this paragraph
1.2(a) subsequent to the Company's first registered underwritten public offering
of its Common Stock;
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(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 stockholders for a registration statement to be filed in the
near future, then the Company's obligation to use its best efforts to register,
qualify or comply under this paragraph 1.2 shall be deferred for a period not to
exceed 120 days from the date of receipt of written request from the Initiating
Holders; provided, however, that the Company shall not exercise such right more
than once in any twelve-month period.
Subject to the foregoing clauses (A) through (E), 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) Underwriting. In the event that a registration pursuant to
this paragraph 1.2 is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as part of the notice
given pursuant to paragraph 1.2(a)(i). In such event, the right of any Holder to
registration pursuant to this paragraph 1.2 shall be conditioned upon such
Holder's participation in the underwriting arrangements required by this
paragraph 1.2, and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent requested shall be limited to the extent provided
herein.
The Company shall (together with all 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
by the Company and reasonably acceptable to a majority of the Holders proposing
to distribute their securities through such underwriting. Notwithstanding any
other provision of this paragraph 1.2, if the managing underwriter advises the
Initiating Holders in writing that marketing factors require a limitation of the
number of shares to be underwritten, then the Company shall so advise all
holders of Registrable Securities and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all Holders thereof 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 or in such other manner as shall be
agreed to by the Company and Holders of a majority of the Registrable Securities
proposed to be included in such registration. 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 disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to 90 days after the effective date
of such registration, or such other shorter period of time as the underwriters
may require.
1.3 Company Registration.
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(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, or (iii) a registration
pursuant to paragraph 1.2 hereof, 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.
(b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to paragraph 13(a)(i). In such event the right of any Holder to
registration pursuant to this paragraph 1.3 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of Registrable
Securities in the underwriting to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company and the other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the
Company. Notwithstanding any other provision of this paragraph 1.3, if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may limit the
Registrable Securities or other securities to be included in such registration;
provided, however, that no such reduction shall reduce the amount of securities
of the selling Holders included in the registration below 25% of the total
amount of securities included in such registration, unless such offering is the
initial public offering 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. The Company shall so advise all
Holders and other holders distributing their securities through such
underwriting and the number of shares of Registrable Securities and other
securities that may be included in the registration, and underwriting shall be
allocated among all Holders 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. To facilitate the allocation of shares in
accordance with the above provisions, the Company may round the number of shares
allocated to any Holder or holder to the nearest 100 shares. If any Holder or
holder disapproves of the terms of any such underwriting, he may elect to
withdraw therefrom by written notice to the Company and the managing
underwriter. Any securities excluded or withdrawn from such underwriting shall
be withdrawn from such registration, and shall not be transferred in a public
distribution prior to 90 days after the effective date of the registration
statement relating thereto, or such other shorter period of time as the
underwriters may require.
(c) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
paragraph 1.3 prior to the effectiveness of such registration, whether or not
any Holder has elected to include securities in
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such registration. The Registration Expenses of such withdrawn registration
shall be borne by the Company in accordance with paragraph 1.5 hereof.
1.4 Registration on Form S-3.
(a) If any Holder or Holders request that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3), or any
similar short-form registration statement, for a public offering of Registrable
Securities the reasonably anticipated aggregate price to the public of which,
net of underwriting discounts and commissions, would exceed $1,000,000, and the
Company is a registrant entitled to use Form S-3 to register the Registrable
Securities for such an offering, the Company shall use its best efforts to cause
such Registrable Securities to be registered for the offering on such form and
to cause such Registrable Securities to be qualified in such jurisdictions as
the Holder or Holders may reasonably request; provided, however, that the
Company shall not be required to effect more than two registrations pursuant to
this paragraph 1.4. The substantive provisions of paragraph 1.2(b) shall be
applicable to each registration initiated under this paragraph 1.4.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this paragraph 1.4: (i) 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; (ii) if
the Company, within ten (10) days of the receipt of the request of the
initiating Holders, gives notice of its bona fide intention to effect the filing
of a registration statement with the Commission within ninety (90) days of
receipt of such request (other than with respect to a registration statement
relating to a Rule 145 transaction, or an offering solely to employees); (iii)
during the period starting with the 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), provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective; or
(iv) if the Company shall furnish to such Holder 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 stockholders
for registration statements to be filed in the near future, then the Company's
obligation to use its best efforts to file a registration statement shall be
deferred for a period not to exceed 90 days from the receipt of the request to
file such registration by such Holder; provided, however, that the Company shall
not exercise such right more than once in any twelve-month period.
1.5 Expenses of Registration. All Registration Expenses incurred in
connection with all registrations pursuant to paragraphs 1.2, 1.3 and 1.4 shall
be borne by the Company. All Selling Expenses relating to securities registered
on behalf of the Holders shall be borne by the Holders of such securities
included in the registration pro rata with the Company and among each other on
the basis of the number of shares so registered.
1.6 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this paragraph
1, the Company will keep each
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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
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
eighty (180) days or until the distribution described in the Registration
Statement has been completed;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders participating in such registration and
to the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as they may reasonably request in order to facilitate
the public offering of such securities.
(d) Use all reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Furnish, at the request of any Holder requesting registration
of Registrable Securities, on the date such Registrable Securities are delivered
to the underwriters for sale in connection with a registration pursuant to this
paragraph 1.6, (i) an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders requesting registration of
Registrable Securities and (ii) a letter dated such date, from the independent
accountants of the Company, in form and substance as is customarily given by
independent accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
1.7 Indemnification.
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(a) The Company will indemnify each Holder, each of its officers,
directors, trustees, fiduciaries, partners and legal counsel, 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 paragraph 1, 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,
each of its officers, directors, trustees, fiduciaries, partners and legal
counsel, and each person controlling such 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, 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 an instrument
duly executed by such Holder, controlling person or underwriter and stated to be
specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors, officers and legal counsel, 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, each of its officers, directors,
partners and legal counsel and each person controlling such 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 not
misleading, and will reimburse the Company, such Holders, such directors,
officers, 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 an instrument
duly executed by such Holder and stated to be specifically for use therein.
Notwithstanding the foregoing, the maximum liability of each Holder under this
subsection (b) shall be limited to an amount equal to the net proceeds to such
Holder from the sale of such Holder's Registrable Securities as contemplated
herein, unless such liability resulted from willful misconduct by such Holder. A
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Holder will not be required to enter into any agreement or undertaking in
connection with any registration under this paragraph 1 providing for any
indemnification or contribution on the part of such Holder greater than the
Holder's obligations under this paragraph 1.7(b).
(c) Each party entitled to indemnification under this paragraph
1.7 (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 paragraph 1 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 and
different defenses but shall bear the expense of such defense nevertheless. 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 with respect to such claim or litigation.
(d) If the indemnification provided for in this Section 1.7 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 omissions or violations 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 omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, that in no event shall any contribution by a
Holder hereunder exceed the net proceeds from the offering received by such
Holder.
1.8 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
reasonably request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this paragraph 1.
1.9 Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Restricted
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Securities to the public without registration, after such time as a public
market exists for the Common Stock of the Company, the Company agrees to use its
best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended.
(b) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Securities Exchange Act of 1934, as amended (at any time
after it has become subject to such reporting requirements);
(c) So long as an Investor owns any Restricted Securities, to
furnish to the Investor forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after 90 days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Securities Exchange Act of 1934 (at
any time after it has become subject to such reporting requirements), a copy of
the most recent annual or quarterly report of the Company, and such other
reports and documents of the Company and other information in the possession of
or reasonably obtainable by the Company as an Investor may reasonably request in
availing itself of any rule or regulation of the Commission allowing an Investor
to sell any such securities without registration.
1.10 Transfer of Registration Rights. The rights to cause the Company
to register securities granted to Holders under paragraphs 1.2, 1.3 and 1.4 may
be assigned to a transferee or assignee in connection with any transfer or
assignment of Registrable Securities by a Holder of not less than 70,000 shares
of Registrable Securities, or to any transferee or assignee who is a constituent
partner of a Holder or the estate of such constituent partner or to a transferee
who is a Holder's family member or trust for the benefit of an individual
Holder, provided that such transfer may otherwise be effected in accordance with
applicable securities laws.
1.11 Standoff Agreement. Each Holder agrees, so long as such Holder
holds at least one percent (1%) of the Company's outstanding voting equity
securities, in connection with the Company's initial public offering of the
Company's securities, upon request of the Company or the underwriters managing
any underwritten offering of the Company's securities, not to sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise dispose
of any Registrable Securities (other than those included in the registration)
without the prior written consent of the Company or such underwriters, as the
case may be, for such period of time (not to exceed one hundred eighty (180)
days) from the effective date of such registration as may be requested by the
underwriters; provided that the officers and directors of the Company who own
stock of the Company also agree to such restrictions.
1.12 Rule 144A Information. Whenever the Company receives a request
for the information required in Rule 144A(d)(4) from Initiating Holders on or
after January 6, 2000, then the Company shall within 60 days after the date of
such request provide such information to such Initiating Holders and any person
or persons designated by the Initiating Holders as a prospective
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buyer in a transaction pursuant to Rule 144A. The Company's obligations pursuant
to this paragraph 1.12 shall extend to any person who acquires shares of the
Company's Preferred Stock and/or Conversion Stock as a result of a transaction
pursuant to Rule 144A.
1.13 Amendment of Registration Rights. Any provision of this Section
1 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 sixty-six and
two-thirds percent (66-2/3%) of the Registrable Securities then outstanding. Any
amendment or waiver effected in accordance with this paragraph 1.13 shall be
binding upon each Holder and the Company. By acceptance of any benefits under
this Section 1, Holders of Registrable Securities hereby agree to be bound by
the provisions hereunder.
1.14 Limitation on Subsequent Registration Rights. After the date of
this Agreement, the Company shall not, without the prior written consent of the
Holders of sixty-six and two-thirds percent (66-2/3%) of the Registrable
Securities then outstanding, enter into any agreement with any holder or
prospective holder of any securities of the Company that would grant such holder
registration rights senior to those granted to the Holders hereunder.
1.15 Termination of Registration Rights. The rights granted under
this paragraph 1 shall terminate on the seventh anniversary of the consummation
of the initial underwritten public offering of the Company's securities pursuant
to a registration statement filed under the Securities Act.
2. Right of First Refusal.
(a) Except as set forth in paragraph 2(e), the Company hereby
grants to each Investor holding at least 70,000 shares of Registrable Securities
the right of first refusal to purchase all or any part of such Investor's pro
rata share of the New Securities (as defined in paragraph 2(b)) which the
Company may, from time to time, propose to sell and issue. The Investors may
purchase said New Securities on the same terms and at the same price at which
the Company proposes to sell the New Securities. The pro rata share of each
Investor, for purposes of this right of first refusal, is the ratio of the total
number of shares of Common Stock held by such Investor, including any shares of
Common Stock into which shares of Preferred Stock held by such Investor are
convertible, to the total number of shares of Common Stock outstanding
immediately prior to the issuance of the New Securities (including any shares of
Common Stock into which outstanding shares of Preferred Stock are convertible).
(b) "New Securities" shall mean any capital stock of the Company,
whether now authorized or not, and any rights, options or warrants to purchase
said capital stock, and securities of any type whatsoever that are, or may
become, convertible into said capital stock; provided that "New Securities" does
not include (i) the Shares issued pursuant to the Stock Purchase Agreement or
the Conversion Stock described therein, (ii) securities offered pursuant to a
registration statement filed under the Securities Act, as hereinafter defined,
(iii) securities issued pursuant to the acquisition of another corporation by
the Company by merger, purchase of substantially all of the assets or other
reorganization, and (iv) all shares of Common Stock hereafter issued or issuable
to officers, directors, employees or consultants of the Company
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pursuant to any employee or consultant stock offering, plan or arrangement
approved by the Board of Directors of the Company.
(c) In the event the Company proposes to undertake an issuance of
New Securities, it shall give to the Investors written notice (the "Notice") of
its intention, describing the type of New Securities, the price and the terms
upon which the Company proposes to issue such New Securities. Each Investor
entitled to such notification shall have fifteen (15) days from the date of
receipt of the Notice to agree to purchase any or all of such Investor's pro
rata portion of such New Securities for the price and upon the terms specified
in the Notice by giving written notice to the Company and stating therein the
quantity such New Securities to be purchased. Each such Investor that notifies
the Company of its intention to purchase New Securities shall forward payment
for such New Securities to the Company no later than the date on which the
Company issues any of such New Securities to any purchaser thereof who is not an
Investor.
(d) In the event any Investors fail to exercise in full the right
of first refusal within said fifteen (15) day period, the Company shall offer
such shares to the other Investors who have elected to exercise their rights of
first refusal. Each such participating Investor shall be entitled to purchase
that number of shares of New Securities not being purchased by the Investors as
determined by multiplying such non-purchased New Securities by a fraction, the
numerator of which is the number of shares of New Securities being purchased by
the participating Investor and the denominator of which is the number of shares
of New Securities being purchased by all Investors exercising rights of first
refusal. Each Investor electing to purchase such additional New Securities shall
have five (5) days from the date of receipt of any notice from the Company with
respect thereto to agree to purchase its respective share of such New
Securities. The Company shall have ninety (90) days thereafter to sell or enter
into an agreement (pursuant to which the sale of New Securities covered thereby
shall be closed, if at all, within thirty (30) days from date of said agreement)
to sell the New Securities respecting which the Investors' rights were not
exercised, at a price and upon general terms no more favorable to the Investors
thereof than specified in the Notice. In the event the Company has not sold the
New Securities within said ninety (90) day period (or sold and issued New
Securities in accordance with the foregoing within thirty (30) days from the
date of said agreement), the Company shall not thereafter issue or sell any New
Securities without first offering such securities to the Investors in the manner
provided above.
(e) The right of first refusal granted under this paragraph 2
shall expire upon:
(i) The date upon which a registration statement filed by
the Company under the Securities Act (other than a registration of securities in
a Rule 145 transaction or with respect to an employee benefit plan) in
connection with an underwritten public offering of its securities first becomes
effective and the securities registered thereunder shall have been sold for
gross proceeds to the Company of at least $15,000,000 at a price to the public
of at least $4.25 per share.
(ii) With respect to each Investor, the date on which such
Investor no longer holds a minimum of Seventy Thousand (70,000) shares of
Registrable Securities.
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(f) The right of first refusal granted under this paragraph 2 is
assignable by the Investors to any transferee of a minimum of Seventy Thousand
(70,000) shares of Common Stock (including any shares of Common Stock into which
shares of Preferred Stock then held by it are convertible).
3. Transferability.
3.1 Restrictions on Transferability. The Preferred Stock and the
Conversion Stock held by the Investors shall not be sold, assigned, transferred
or pledged except upon the conditions specified in this paragraph 3, which
conditions are intended to ensure compliance with the provisions of the
Securities Act; provided, however, that BA Venture Partners III may pledge its
shares to BankAmerica Investment Corporation ("BAIC") and may transfer such
shares to BAIC so long as BAIC agrees to the provisions of this Agreement.
Notwithstanding the foregoing, there shall be permitted without any consents or
approvals, (i) the transfer by the State Treasurer of the State of Michigan,
Custodian of the Michigan Public School Employees' Retirement System; State
Employees' Retirement System; Michigan State Police Retirement System; and
Michigan Judges Retirement System (the "Michigan Fund") of all or any part of
the Michigan Fund's shares to any successor or additional trustee or custodian
of the assets of the Michigan Fund as may be appointed, and qualified under the
applicable laws of the State of Michigan, and (ii) the transfer by GMI/DRI
Investment Trust ("GMI") of all or any part of GMI's shares to any successor
trust or trustee, and (iii) the admission of any such transferee as a
substituted stockholder with respect to such transferred shares. The Investors
will cause any proposed purchaser, assignee, transferee, or pledgee of the
Preferred Stock or the Conversion Stock held by the Investors to agree to take
and hold such securities subject to the provisions and upon the conditions
specified in this Agreement.
3.2 Restrictive Legend. Each certificate representing (i) the
Preferred Stock held by the Investors, (ii) the Conversion Stock and (iii) any
other securities issued in respect of the Preferred Stock or Conversion Stock
held by the Investors upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event, shall (unless otherwise permitted by the
provisions of paragraph 3.3 below) be stamped or otherwise imprinted with a
legend in the following form (in addition to any legend required under
applicable state securities laws):
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 UNLESS THE TRANSFER IS IN ACCORDANCE
WITH RULE 144 OR SIMILAR RULE 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.
The Investors and Holders consent to the Company making a
notation on its records and giving instructions to any transfer agent of its
Preferred Stock or Conversion Stock in order to implement the restrictions on
transfer established in this paragraph 3.
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3.3 Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this paragraph 3.3. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities (other than (i) a
transfer not involving a change in beneficial ownership, or (ii) in transactions
involving the distribution without consideration of Restricted Securities by any
Investor to any of its partners, or retired partners, or to the estate of any of
its partners or retired partners, (iii) a transfer to an affiliated fund,
partnership or company, which is not a competitor of the Company, subject to
compliance with applicable securities laws, (iv) a transfer to a holder's family
member or a trust for the benefit of an individual holder, or (v) transfers in
compliance with Rule 144, so long as the Company is furnished with satisfactory
evidence of compliance with such Rule), unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, the holder
thereof shall give written notice to the Company of such holder's intention to
effect such transfer, sale, assignment or pledge. Each such notice shall
describe the manner and circumstances of the proposed transfer, sale, assignment
or pledge in sufficient detail, and shall be accompanied, at such holder's
expense by either (i) a written opinion of legal counsel who shall, and whose
legal opinion shall be, reasonably satisfactory to the Company addressed to the
Company, to the effect that the proposed transfer of the Restricted Securities
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, whereupon the
holder of such Restricted Securities shall be entitled to transfer such
Restricted Securities in accordance with the terms of the notice delivered by
the holder to the Company. Each certificate evidencing the Restricted Securities
transferred as above provided shall bear, except if such transfer is made
pursuant to Rule 144, the appropriate restrictive legend set forth in paragraph
3.1 above, except that such certificate shall not bear such restrictive legend
if in the opinion of counsel for such holder and in the reasonable opinion of
the Company such legend is not required in order to establish compliance with
any provision of the Securities Act.
In any case in which an opinion of counsel or written advice of
counsel is required pursuant to this Section 3.3 that requirement shall be
deemed satisfied in the case of the State Treasurer of the State of Michigan, as
Custodian of various retirement systems (the "Retirement Systems") by a
certificate signed by the administrator of the Retirement Systems stating that
the administrator has determined, after consultation with its counsel, the
Attorney General of the State of Michigan, that the specified circumstances or
consequences identified in the applicable opinion requirement, and set forth in
such certificate, exist.
3.4 Removal of Restrictions on Transfer of Securities. Any legend
referred to in paragraph 3.2 hereof stamped on a certificate evidencing (i) the
Preferred Stock held by the Investors, (ii) the Conversion Stock or (iii) any
other securities issued in respect of the Preferred Stock or Conversion Stock
held by the Investors upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event and the stock transfer instructions and
record notations with respect to such security shall be removed and the Company
shall issue a certificate without such legend to the holder of such security if
such security is registered under the Securities Act, or if such holder provides
the Company with an opinion of counsel (which may be counsel for the Company)
reasonably acceptable to the Company to the effect that a public sale or
transfer of such security may be made without registration under the Securities
Act or (iii) such holder provides the Company with reasonable assurances, which
may, at the option
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of the Company, include an opinion of counsel satisfactory to the Company, that
such security can be sold pursuant to Section (k) of Rule 144 under the
Securities Act.
4. Designation of Director; Voting. Each holder of Series C Preferred Stock
agrees to vote the shares of Series C Preferred Stock now or hereafter owned by
such holder, whether beneficially or otherwise, so that the member of the
Company's Board of Directors elected pursuant to the provisions of Section 5.2
of the Company's Restated Certificate of Incorporation by the holders of the
Company's Series C Preferred Stock shall be the designee of the holder(s) of a
majority of the outstanding shares of Series C Preferred Stock
5. Certain Covenants of the Company. The Company hereby covenants and
agrees as follows:
5.1 Financial Information.
(a) As soon as practicable after the end of each fiscal year, and
in any event within 90 days thereafter, the Company will provide to each
Investor (for so long as the Investor is a holder of a minimum of 5,000 shares
of Preferred Stock, Conversion Stock or an equivalent combination thereof),
consolidated balance sheets of the Company and its subsidiaries, if any, as of
the end of such fiscal year, and consolidated statements of income,
stockholders' equity and cash flows of the Company and its subsidiaries, if any,
for such year, prepared in accordance with generally accepted accounting
principles consistently applied and setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
audited by independent public accountants of national standing selected by the
Company.
(b) As soon as practicable after the end of each month and in any
event within 20 days thereafter, the Company will provide to each Investor (for
so long as the Investor is a holder of a minimum of 500,000 shares of Preferred
Stock, Conversion Stock or an equivalent combination thereof, including for
purposes of this Section 5 any shares of Preferred Stock which have been
transferred to a constituent partner of an Investor), a consolidated balance
sheet of the Company and its subsidiaries, if any, as of the end of each such
month, consolidated statements of income, consolidated statements of changes in
financial condition, and a consolidated statement of cash flow of the Company
and its subsidiaries for such period and for the current fiscal year to date,
and setting forth in each case in comparative form the figures for corresponding
periods in the previous fiscal year, and setting forth in comparative form the
budgeted figures for such period and for the current fiscal year then reported,
prepared in accordance with generally accepted accounting principles (other than
for accompanying notes), subject to changes resulting from year-end audit
adjustments, all in reasonable detail and signed by the principal financial or
accounting officer of the Company.
(c) The Company will provide each Investor (for so long as the
Investor is a holder of a minimum of 500,000 shares of Preferred Stock,
Conversion Stock or an equivalent combination thereof, including for purposes of
this Section 5 any shares of Preferred Stock which have been transferred to a
constituent partner of an Investor), an annual financial plan for the next
fiscal year of the Company containing profit and loss projections, cash flow
projections, and capital expenditures, all on a monthly basis, as soon as it is
available but in any event within thirty (30) days prior to the end of the
current fiscal year.
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(d) Any submission of financial information pursuant to this
Section 5.1 shall be under cover of a certificate executed by the Company's
president, chief financial officer or treasurer certifying that such information
(i) relates to the Company, (ii) to the best of the Company's knowledge is
accurate, and (iii) if applicable, has been audited by the Company's independent
auditors.
5.2 Assignment of Rights to Financial Information. Subject to the
limitations set forth in Section 5.1, the rights granted pursuant to Section
5.1(a), (b) and (c) may be assigned or otherwise conveyed by the Investors or by
any subsequent transferee to an investor who acquires a minimum of 5,000 or
500,000 (as the case may be) shares of Preferred Stock, Conversion Stock, or a
combination thereof, respectively, other than a competitor of the Company, as
reasonably determined by the Board of Directors of the Company excluding any
director with an interest in such transferee, provided that written notice of
such assignment or conveyance is given to the Company.
5.3 Termination of Covenants. The covenants set forth this Section
5, shall terminate and be of no further force or effect upon the closing of the
Company's initial underwritten public offering pursuant to an effective
registration statement filed by the Company under the Securities Act (other than
a registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan).
5.4 Indemnification of Officers and Directors. For at least as long
as any representative or representatives of the Investors serve on the Board of
Directors of the Company, the Company shall indemnify its officers and directors
to the full extent permitted by law.
5.5 Qualified Small Business. For so long as any Preferred Stock is
held by an Investor or by a transferee of any Investor in whose hands the
Preferred Stock is eligible to qualify as Qualified Small Business Stock as
defined in Section 1202(c)of the Code, the Company shall use its best efforts,
consistent with sound business practices, to cause the Preferred Stock to
qualify as Qualified Small Business Stock.
5.6 Right to Conduct Activities. The Company and each Investor
hereby acknowledge that some or all of the Investors are professional investment
funds, and as such invest in numerous portfolio companies, some of which may be
competitive with the Company's business. No Investor shall be liable to the
Company or to any other Investor for any claim arising out of, or based upon,
the investment activities of such Investor, including without limitation, any
claim arising out of, or based upon, (i) the investment by Investor in any
entity competitive to the Company, or (ii) actions taken by any partner, officer
or other representative of any Investor to assist any such competitive company,
whether or not such action was taken as a board member of such competitive
company, or otherwise, and whether or not such action has a detrimental effect
on the Company.
5.7 Confidentiality of Records. Except as required by law, each
Investor agrees to use, and to use its best efforts to insure that its
authorized representatives use, the same degree of care as such Investor uses to
protect its own confidential information to keep confidential any information
furnished to it which the Company identifies as being confidential or
proprietary (so
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long as such information is not in the public domain), except that such Investor
may disclose such proprietary or confidential information to any partner,
subsidiary or parent of such Investor 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 5.7.
5.8 Inspection Rights. So long as an Investor is the holder of a
minimum of 500,000 shares of Preferred Stock, Conversion Stock or an equivalent
combination thereof, such Investor shall have the right to visit and inspect any
of the properties of the Company, and to discuss the affairs, finances and
accounts of the Company with its officers, and to review such information as is
reasonably requested 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 5.7 with respect to a competitor of the Company or with
respect to information which the Board of Directors determines in good faith is
confidential and should not, therefore, be disclosed.
5.9 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.
5.10 Proprietary Information and Inventions Agreement. The Company
shall require all employees and consultants to execute and deliver a Proprietary
Information and Inventions Agreement in the form delivered to Investors or their
counsel.
6. Termination of Prior Rights Agreement. Effective upon execution of this
Agreement by the Company and the holders of a majority of the Registrable
Securities under the Prior Rights Agreement, the Prior Rights Agreement is null
and void and superseded in its entirety by this Agreement.
7. Miscellaneous.
7.1 Waivers and Amendments. Except as otherwise provided, this
Agreement may be amended or modified only upon the written consent of the
Company and the holders of at least two-thirds (66-2/3%) of the Registrable
Securities. With the written consent of the Holders of more than 66-2/3% of the
Registrable Securities, the obligations of the Company and the rights of the
Holders under this Agreement may be waived (either generally or in a particular
instance, either retroactively or prospectively and either for a specified
period of time or indefinitely), and with the same consent the Company, when
authorized by resolution of its Board of Directors, may enter into a
supplementary agreement for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement; provided,
however, that no such waiver or supplemental agreement shall reduce the
aforesaid percentage of Registrable Securities, the Holders of which are
required to consent to any waiver or supplemental agreement without the consent
of the Holders of all of the Registrable Securities. With the written consent of
the Company, the obligations of the Holders and the rights of the Company under
this Agreement may be waived (either generally or in a particular instance,
either retroactively or prospectively and either for a specified period of time
or indefinitely). Neither this Agreement nor any provisions hereof may be
changed, waived, discharged or terminated orally, but only by a signed statement
in writing. Any amendment, waiver or supplementary agreement effected in
accordance with this paragraph shall be binding upon each
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Holder of any Registrable Securities then outstanding, each future Holder of all
such Registrable Securities and the Company.
7.2 Governing Law. This Agreement shall be governed in all respects
by the laws of the State of California as such laws are applied to agreements
between California residents entered into and to be performed entirely within
California.
7.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
7.4 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.
7.5 Notices. All notices and other communications required or
permitted hereunder shall be in writing and may be delivered in person, by
telecopy with written confirmation, overnight delivery service or U.S. mail, in
which event it may be mailed by first-class, certified or registered, postage
prepaid, addressed (a) if to a Holder, at such address as such Holder shall have
furnished the Company in writing, or; until any such Holder so furnishes an
address to the Company, then to and at the address of the last holder of such
securities who has so furnished an address to the Company, or (b) if to the
Company, at such address as the Company shall have furnished to the Holders in
writing.
Each such notice or other communication shall for all purposes
this Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid, or one
(1) day after deposit with a nationally recognized overnight courier, or if sent
by telecopier with written confirmation, at the earlier of (i) 24 hours after
confirmation of transmission by the sending telecopier machine or (ii) delivery
of written confirmation.
7.6 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
7.7 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.
7.8 Nominees. Securities registered in the name of a nominee for a
Holder shall, for purposes of this Agreement, be treated as being owned by such
Holder.
7.9 Severability. 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.
7.10 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
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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 this 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 writing. All remedies,
either under this Agreement, by law, or otherwise afforded to Holders, shall be
cumulative and not alternative.
7.11 Attorneys' Fees. In the event that any dispute among the parties
to this Agreement should result in litigation, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs and
expenses of enforcing any right of such prevailing party under or with respect
to this Agreement, including without limitation, such reasonable fees and
expenses of attorneys and accountants, which shall include, without limitation,
all fees, costs and expenses of appeals. Notwithstanding the foregoing, this
Section 7.1 1 shall not apply to State Treasurer of the State of Michigan,
Custodian of the Michigan Public School Employees' Retirement System, State
Employees' Retirement System, Michigan State Police Retirement System, and
Michigan Judges Retirement System.
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The foregoing Third Restated Stockholders Rights Agreement is hereby
executed as of the date first first above written.
COMPANY:
VNUS MEDICAL TECHNOLOGIES, INC.
By: /s/
-------------------------------------------
Xxxxx X. Xxxxxx, President
00
XXXXX XXXXXXXXX XX XXX XXXXX XX
XXXXXXXX, CUSTODIAN OF THE MICHIGAN
PUBLIC SCHOOL EMPLOYEES' RETIREMENT
SYSTEM, STATE EMPLOYEES' RETIREMENT
SYSTEM, MICHIGAN STATE POLICE
RETIREMENT SYSTEM, AND MICHIGAN JUDGES
RETIREMENT SYSTEM
By: /s/
------------------------------
Name: Xxxxx X. Xxxxxx
Title: Administrator
22
INVESTORS:
MENLO VENTURES VI, L.P.
BY: MV MANAGEMENT VI, L.P.
ITS GENERAL PARTNER
BY: /s/
------------------------------
GENERAL PARTNER
MENLO ENTREPRENEURS FUND VI, L.P.
BY: MV MANAGEMENT VI, L.P.
ITS GENERAL PARTNER
BY: /s/
------------------------------
GENERAL PARTNER
23
DLJ CAPITAL CORP.
/s/
-----------------------------
By: Xxxxxxxx X. Xx Xxxxx
Its: Attorney in Fact
DLJ ESC II, L.P.
By: DLJ LBO Plans Management Corporation
Its: Manager
/s/
-----------------------------
By: Xxxxxxxx X. Xx Xxxxx
Its: Attorney in Fact
SPROUT CAPITAL VIII, L.P.
By: DLJ Capital Corp.
Its: Managing General Partner
/s/
-----------------------------
By: Xxxxxxxx X. Xx Xxxxx
Its: Attorney in Fact
SPROUT VENTURE CAPITAL, L.P.
By: DLJ Capital Corp.
Its: Managing General Partner
/s/
-----------------------------
By: Xxxxxxxx X. Xx Xxxxx
Its: Attorney in Fact
24
BANKAMERICA VENTURES
By: /s/
-------------------------
Name: Xxxx X. Xxxxxxxx
Title: Principal
BA VENTURE PARTNERS III
By: /s/
-------------------------
Name: Xxxxxx X. Xxxxx
Title: General Partner
00
XXXXXXXXX & XXXXX XXXXXXXXXX
By: /s/
-------------------------
Name: Xxxxxx X. Xxxxxx
Title: Tax Director, Attorney-in-Fact
XXXXXXXXX & XXXXX EMPLOYEE
VENTURE FUND, X.X. XX
By: H & Q Venture Management, L.L.C.
Its: General Partner
By: /s/
-------------------------
Name: Xxxxxx X. Xxxxxx
Title: Tax Director, Attorney-in-Fact
26
LIGHTHOUSE CAPITAL PARTNERS II, L.P.
By: Lighthouse Management Partners II, L.P.,
its general partner
By: Lighthouse Capital Partners, Inc.,
its general partner
By: /s/
------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxxx
Title: Managing Director
27
GMI/DRI INVESTMENT TRUST
By: /s/
--------------------------------
Name: Xxxxx XxxXxxxxxxxxx
Title: Executive Secretary
Benefit Finance Committee
28
/s/
---------------------------------
Xxx Xxxxxxxx
/s/
---------------------------------
Xxxx Xxxxxx
/s/
---------------------------------
Xxxxxx Xxxxxxx
/s/
---------------------------------
Xxxx Xxxxxx
29
/s/
---------------------------------
Xxxx X. Xxxxxxxx
30
BAY CITY CAPITAL
By: /s/
------------------------------
Name: Xxxx Craves
Title: Managing Director
31
/s/
---------------------------------
Vincenzo Iuri
32
EXHIBIT A
SCHEDULE OF INVESTORS
INVESTOR SECURITIES
-------- ----------
State Treasurer of the State of Michigan, 2,500,000 Series D Preferred Stock
Custodian of the Michigan Public School
Employees' Retirement System, State Employees'
Retirement System, Michigan State Police
Retirement System, and Michigan Judges
Retirement System
Menlo Ventures VI, L.P. 2,500,000 Series A-1 Preferred Stock
2,000,000 Series A-2 Preferred Stock
1,000,000 Series A-3 Preferred Stock
1,666,667 Series B Preferred Stock
586,854 Series C Preferred Stock
234,742 Series C Warrants
492,611 Series D Preferred Stock
Menlo Entrepreneurs Fund VI, L.P. 37,500 Series A-1 Preferred Stock
30,000 Series A-2 Preferred Stock
15,000 Series A-3 Preferred Stock
25,000 Series B Preferred Stock
8,803 Series C Preferred Stock
3,521 Series C Warrants
7,389 Series D Preferred Stock
Sprout Capital VII, L.P. 2,501,459 Series C Preferred Stock
1,000,584 Series C Warrants
Sprout Capital VIII, L.P. 1,297,565 Series D Preferred Stock
DLJ First ESC L.L.C. 287,559 Series C Preferred Stock
115,023 Series C Warrants
DLJ ESC II, L.P. 113,331 Series D Preferred Stock
DLJ Capital Corp. 57,512 Series C Preferred Stock
23,005 Series C Warrants
11,250 Series D Preferred Stock
The Sprout CEO Fund, L.P. 29,057 Series C Preferred Stock
11,623 Series C Warrants
4,517 Series D Preferred Stock
1,000,587 Series C Preferred Stock
BankAmerica Ventures 400,234 Series C Warrants
450,000 Series D Preferred Stock
33
INVESTOR SECURITIES
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BA Venture Partners III 111,502 Series C Preferred Stock
44,601 Series C Warrants
50,000 Series D Preferred Stock
Xxxxxxxxx & Xxxxx California 70,423 Series C Preferred Stock
28,169 Series C Warrants
20,000 Series D Preferred Stock
Xxxxxxxxx & Xxxxx Employee Venture Fund, X.X. XX 20,000 Series D Preferred Stock
Lighthouse Capital Partners II, L.P. 44,118 Series C Warrants
GMI/DRI Investment Trust 500,000 Series D Preferred Stock
Xxx Xxxxxxxx 7,629 Series C Preferred Stock
3,052 Series C Warrants
4,250 Series D Preferred Stock
Xxxx Xxxxxx 14,671 Series C Preferred Stock
5,869 Series C Warrants
Xxxxxx Xxxxxxx 8,216 Series C Preferred Stock
3,286 Series C Warrants
4,250 Series D Preferred Stock
Xxxx Xxxxxx 7,629 Series C Preferred Stock
3,052 Series C Warrants
4,500 Series D Preferred Stock
Xxxx X. Xxxxxxxx 2,934 Series C Preferred Stock
1,174 Series C Warrants
1,250 Series D Preferred Stock
Bay City Capital 2,500,000 Series D Preferred Stock
Vincenzo Iuri 20,000 Series D Preferred Stock
