EXHIBIT 4.1
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VASCULAR SCIENCES CORPORATION
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AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
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June 25, 2003
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VASCULAR SCIENCES CORPORATION
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
This Amended and Restated Investors' Rights Agreement (the "Agreement") is
made as of the 25TH day of June, 2003, by and among Vascular Sciences
Corporation, a Delaware corporation (the "Company"), the individuals and
entities listed on Schedule A attached hereto (each an "Investor," and
collectively, the "Investors"), and certain holders of the Company's Common
Stock listed on Schedule B attached hereto (the "Prior Holders"). This Agreement
shall become effective on the execution of that certain Secured Convertible Grid
Debenture Subscription Agreement dated as of June 25, 2003 (the "Debenture
Subscription Agreement"), by and among the Company, TLC Vision Corporation, a
New Brunswick corporation ("TLC") and Diamed Medizintechnik GMBH, a corporation
incorporated under the laws of Germany ("Diamed" and, together with TLC, the
"Debentureholders") and certain of the Prior Holders.
RECITALS
WHEREAS, concurrently herewith, the Company, the Debentureholders and
certain of the Prior Holders are entering into the Debenture Subscription
Agreement pursuant to which the Debentureholders will acquire secured
convertible grid debentures (the "Convertible Debentures") of the Company;
WHEREAS, certain of the Investors hold shares of Series A Preferred Stock
(the "Series A Preferred Stock") of the Company and certain of the Investors
hold shares of Series B Preferred Stock (the "Series B Preferred Stock") of the
Company;
WHEREAS, the Investors, the Prior Holders and the Company are parties to
an Investors' Rights Agreement dated as of July 25, 2002 ( the "Original
Investors' Rights Agreement") providing for certain registration rights, rights
of first refusal, board representation rights, rights to financial information
and certain other rights;
WHEREAS, as a condition of entering into the Debenture Subscription
Agreement, the Debentureholders have requested that the Original Investors'
Rights Agreement be amended and restated on the terms set out herein to extend
certain rights and obligations to them in their capacities as Debentureholders
and Investors.
NOW, THEREFORE, in consideration of the mutual promises and covenants and
agreements set forth herein, the Company and the Investors hereby agree as
follows:
AGREEMENT
1. Interpretation.
1.1 Definitions.
"ADDITIONAL SECURITIES" has the meaning attributed to it in Section
4.1(c) or Section 4.2(c), as the case may be.
"ADDITIONAL SUBSCRIBERS" has the meaning attributed to it in Section
4.1(c) or Section 4.2(c), as the case may be.
"AGREEMENT" has the meaning attributed to it in the first paragraph
of this amended and restated investors' rights agreement.
"ASAHI NOTE" means the Secured Fixed Rate Note dated as of February
28, 2001 by and between OccuLogix Corporation and Asahi Medical Co.,
Ltd., as amended as of November 10, 2001 and November 30, 2002 and
as assigned by OccuLogix Corporation to the Company;
"BOARD DESIGNEE" has the meaning attributed to it in Section 6.3.
"CHANGE OF CONTROL" means the occurrence of a transaction or a
series of transactions as a result of which the Company becomes
controlled by a Person or Persons other than the Debentureholders;
for the purpose of the foregoing, the Company is controlled by a
Person or Persons other than the Debentureholders if the
Debentureholders, or either of them, no longer own Securities
carrying more than 50% of the voting rights, on a fully-diluted
basis, ordinarily exercisable at meetings of shareholders of the
Company, such rights being sufficient to elect a majority of the
directors of the Company.
"CERTIFICATE OF INCORPORATION" means the amended and restated
certificate of incorporation of the Company dated July 25, 2002 as
may be further amended and restated from time to time.
"COMPANY" has the meaning attributed to it in the first paragraph of
this Agreement.
"CONVERTIBLE DEBENTURES" has the meaning attributed to it in the
recitals to this Agreement.
"CONVERTIBLE SECURITIES" means securities convertible into,
exchangeable for or otherwise carrying the right or obligation to
acquire Common Stock, including the Convertible Debentures (and
including the Share Purchase Option contained therein), the Series A
Preferred Stock, the Series B Preferred Stock and any other rights,
options or warrants to acquire Common Stock.
"COMMON STOCK" means the Company's common stock as set forth in its
Certificate of Incorporation and includes any shares of stock or
securities into which Common Stock may be converted or changed or
which result from a consolidation, subdivision, reclassification or
redesignation of Common Stock.
"DEBENTUREHOLDERS" has the meaning attributed to it in the first
paragraph of this Agreement.
"DEBENTURE REGISTRABLE SECURITIES" means (i) the Common Stock
issuable or issued upon conversion of the Convertible Debentures and
(ii) the Common Stock issuable or issued upon exercise of the Share
Purchase Option, (iii) Common Stock 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
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to, or in exchange for or in replacement of the shares referenced in
(i) and (ii) above, excluding in all cases, however, any Debenture
Registrable Securities sold or transferred by a Person in a
transaction in which such Person's rights under Section 2 are not
assigned or sold pursuant to Rule 144 promulgated under the
Securities Act.
"DEBENTURE REGISTRABLE SECURITIES THEN OUTSTANDING" means the sum of
(i) the number of shares of Common Stock outstanding which are
Debenture Registrable Securities and (ii) the number of shares of
Common Stock which are issuable pursuant to then convertible or
exercisable securities (including Convertible Debentures) and which
are Debenture Registrable Securities.
"DEBENTURE SUBSCRIPTION AGREEMENT" has the meaning attributed to it
in the first paragraph of this Agreement.
"DEMAND NOTICE" has the meaning attributed to it in Section
2.1(a)(i).
"DEMAND REQUEST" has the meaning attributed to it in Section 2.1(a).
"DESIGNATOR" or "DESIGNATORS" has the meaning attributed to it in
Section 6.3.
"DIAMED" has the meaning attributed to it in the first paragraph of
this Agreement.
"DRAG-ALONG NOTICE" has the meaning attributed to it in Section
4.5(a).
"EXCHANGE ACT" has the meaning attributed to it in Section 2.8(a).
"FIRST REFUSAL SHARES" has the meaning attributed to it in Section
4.3(a).
"FORM S-3" means such form under the Securities Act as is in effect
on the date of this Agreement or any successor or similar
registration form under the Securities Act subsequently adopted by
the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company
with the SEC.
"HOLDER" or "HOLDERS" means, for purposes of Section 2 and Section 3
of this Agreement, any Investor owning of record Registrable
Securities that have not been sold to the public or pursuant to Rule
144 promulgated under the Securities Act or any assignee of record
of such Registrable Securities to whom rights under Section 2 have
been duly assigned in accordance with this Agreement; provided,
however, that for purposes of this Agreement, a record holder of
Series A Preferred Stock, Series B Preferred Stock or Convertible
Debentures convertible into or exercisable for, as the case may be,
such Registrable Securities shall be deemed to be the Holder of such
Registrable Securities.
"INITIAL ALLOTMENT" has the meaning attributed to it in Section
4.1(a) or Section 4.2(a), as the case may be.
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"INITIATING HOLDERS" has the meaning attributed to it in Section
2.1(a).
"INITIAL PUBLIC OFFERING" has the meaning attributed to it in
Section 2.9.
"INVESTOR" or "INVESTORS" has the meaning attributed to it in the
first paragraph of this Agreement.
"ISSUED SECURITIES" has the meaning attributed to it in Section
4.2(a).
"LISTED" means listed for trading on the NASDAQ National Market, the
New York Stock Exchange or such other United States or Canadian
stock exchange as is approved by the Board of Directors.
"NET INCOME" has the meaning attributed to it in Section 6.4(b).
"OFFERED SECURITIES" has the meaning attributed to it in Section
4.1(a) or Section 4.2(a), as the case may be.
"ORIGINAL INVESTORS' RIGHTS AGREEMENT" has the meaning attributed to
it in the recitals to this Agreement.
"PERSON" means any individual, corporation, partnership, limited
liability company, limited liability partnership, firm, joint
venture, association, joint-stock company, unincorporated
organization, trust, trustee, executor, administrator or other legal
personal representative, regulatory body or agency, government or
governmental agency, authority or other entity howsoever designated
or constituted.
"PRIOR HOLDERS" has the meaning attributed to it in the first
paragraph of this Agreement.
"PROPORTIONATE INTEREST" of any Investor or Prior Holder means the
percentage of the outstanding Common Stock then held by that
Investor or Prior Holder, as the case may be, in relation to all
Common Stock held by all Investors and Prior Holders, with all such
holdings being calculated on a fully-diluted basis.
"PROPOSED SELLER" has the meaning attributed to it in Section
4.3(a).
"PURCHASED SECURITIES" has the meaning attributed to it in Section
5.1.
"PURCHASE PRICE" has the meaning attributed to it in Section 5.3(a).
"PURCHASER" has the meaning attributed to it in Section 5.1.
"QUALIFIED IPO" means the first firmly committed underwritten public
offering of the Company's Common Stock yielding net proceeds to the
Company of at least $50,000,000, after deduction of underwriters
commissions and expenses and a per share price of least $11.56594
(as appropriately adjusted for stock splits, stock
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dividends and recapitalizations and similar events) and provided
that such shares of Common Stock are Listed.
"REGISTER", "REGISTERED" and "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement or similar
document in compliance with the Securities Act and the declaration
or ordering of effectiveness of such registration statement or
document.
"REGISTRABLE SECURITIES" means the Series A Registrable Securities,
the Series B Registrable Securities and the Debenture Registrable
Securities.
"REGISTRABLE SECURITIES THEN OUTSTANDING" shall mean the sum of (i)
the number of Series A Registrable Securities then outstanding; (ii)
the number of Series B Registrable Securities then outstanding; and
(iii) the number of Debenture Registrable Securities then
outstanding.
"S-3 DEMAND REQUEST" has the meaning attributed to it in Section
2.3(a).
"SALE PRICE" has the meaning attributed to it in Section 4.3(a).
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES" means Common Stock and Convertible Securities.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" has the meaning attributed to it in Section 4.4.
"SELLERS" has the meaning attributed to it in Section 4.5(a).
"SELLER'S NOTICE" has the meaning attributed to it in Section
4.3(a).
"SERIES A PREFERRED STOCK" has the meaning attributed to it in the
recitals to this Agreement.
"SERIES A REGISTRABLE SECURITIES" means (i) the Common Stock
issuable or issued upon conversion of the Series A Preferred Stock
and (ii) any Common Stock 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 the shares referenced in (i) above,
excluding in all cases, however, any Series A Registrable Securities
sold or transferred by a Person in a transaction in which such
Person's rights under Section 2 are not assigned or sold pursuant to
Rule 144 promulgated under the Securities Act.
"SERIES A REGISTRABLE SECURITIES THEN OUTSTANDING" means the sum of
(i) the number of shares of Common Stock outstanding which are
Series A Registrable Securities and (ii) the number of shares of
Common Stock which are issuable
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pursuant to then convertible or exercisable securities (including
Class A Preferred Stock) and which are Series A Registrable
Securities.
"SERIES B PREFERRED STOCK" has the meaning attributed to it in the
recitals to this Agreement.
"SERIES B PURCHASE AGREEMENT" means the Series B Preferred Stock
Purchase Agreement dated as of July 25, 2002 by and among the
Company, TLC and certain of the Prior Holders, as amended on June
23, 2003, and as may be further amended and restated from time to
time.
"SERIES B REGISTRABLE SECURITIES" means (i) the Common Stock
issuable or issued upon conversion of the Series B Preferred Stock
and (ii) any Common Stock 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 the shares referenced in (i) above,
excluding in all cases, however, any Series B Registrable Securities
sold or transferred by a Person in a transaction in which such
Person's rights under Section 2 are not assigned or sold pursuant to
Rule 144 promulgated under the Securities Act.
"SERIES B REGISTRABLE SECURITIES THEN OUTSTANDING" means the sum of
(i) the number of shares of Common Stock outstanding which are
Series B Registrable Securities and (ii) the number of shares of
Common Stock which are issuable pursuant to then convertible or
exercisable securities (including Series B Preferred Stock) and
which are Series B Registrable Securities.
"SHARE PURCHASE OPTION" has the meaning attributed to it in the
Convertible Debentures.
"SPECIAL MEETING" has the meaning attributed to it in Section
6.2(h).
"SUBSCRIPTION NOTICE" has the meaning attributed to it in Section
4.1(b).
"SUBSCRIPTION OFFER" has the meaning attributed to it in Section
4.1(a) or Section 4.2(a), as the case may be.
"TAG-ALONG NOTICE" has the meaning attributed to it in Section 4.4.
"TAG-ALONG SALE" has the meaning attributed to it in Section 4.4.
"THIRD PARTY" has the meaning attributed to it in Section
4.3(b)(ii).
"THIRD PARTY PURCHASER" means, in relation to any Investor or Prior
Holder, a person with whom such Investor or Prior Holder deals at
arm's length.
"TIME OF CLOSING" has the meaning attributed to it in Section 5.2.
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"TLC" has the meaning attributed to it in the first paragraph of
this Agreement.
"UNSUBSCRIBED SECURITIES" has the meaning attributed to it in
Section 4.1(c) or Section 4.2(c), as the case may be.
"VENDOR" has the meaning attributed to it in Section 5.1.
"VIOLATION" has the meaning attributed to it in Section 2.8(a).
1.2 AMENDMENT AND RESTATEMENT OF PRIOR REGISTRATION AND
STOCKHOLDERS' RIGHTS. The Company and each undersigned Prior Holder and Investor
agrees and acknowledges that this Agreement hereby amends, restates, supercedes
and replaces any prior agreements, including, without limitation, the Original
Investors' Rights Agreement, between such Prior Holder or Investor, as the case
may be, and the Company (or any predecessor corporation of the Company) relating
to registration rights, rights of first refusal, board representation rights,
rights to financial information or any other rights described in this Agreement.
1.3 CHANGE TO COMMON STOCK. The provisions of this Agreement
relating to Common Stock shall apply, mutatis mutandis, to any securities into
which such Common Stock may be converted, reclassified, redesignated,
subdivided, consolidated or otherwise changed from time to time and to any
securities of any successor or continuing corporation to the Company that may be
received in respect of any Common Stock on a reorganization, amalgamation,
consolidation or merger, statutory or otherwise.
1.4 ADDITIONAL SECURITIES. Each party hereby agrees that all
Securities hereafter acquired by such party shall be subject in all respects to
the provisions of this Agreement.
1.5 FULLY-DILUTED. For the purposes of this Agreement, wherever a
calculation is to be made on a "fully-diluted basis", the relevant calculation
shall be made on a pro forma basis after giving effect to or assuming the prior
conversion or exchange of, or the prior exercise of any right, option or
obligation to purchase or acquire any Common Stock attaching to, any Convertible
Securities, including, without limitation, the Share Purchase Option, then
outstanding by each holder of such Convertible Securities, regardless of whether
such conversion, exchange or exercise has in fact occurred.
1.6 DEBENTUREHOLDERS DEEMED TO BE STOCKHOLDERS. Notwithstanding
anything to the contrary in the Company's constating documents or otherwise,
where the consent, approval or any process requiring a vote by the stockholders
of the Company is required, whether under this Agreement, at law or otherwise,
the Debentureholders shall be entitled to and shall vote on the basis that the
Debentureholders are holders of that number of shares of Common Stock to which
such Debentureholder would be entitled upon the full conversion and exercise of
its Convertible Debenture and Share Purchase Option, respectively. For greater
certainty, in addition to any other consent, approval or vote which may be
required by stockholders of the Company, the Company shall not take any action
with respect to any matter submitted for such consent, approval or vote, unless
the required threshold of consent, approval or vote is achieved taking into
account the Debentureholders' participation in such consent, approval or vote.
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2. Registration Rights. The Company covenants and agrees as follows:
2.1 Request for Registration.
(a) If the Company shall receive a written request (the
"Demand Request") from the Debentureholders (the "Initiating Holders") that the
Company file a registration statement under the Securities Act covering the
registration of Registrable Securities with an aggregate expected offering price
of at least $10,000,000, then the Company shall:
(i) within ten (10) calendar days of the receipt of the
Demand Request, give written notice of such request (the "Demand Notice") to all
Holders;
(ii) prepare and file as soon as practicable, and in any
event within forty-five (45) calendar days after the receipt of the Demand
Request, a registration statement under the Securities Act covering all
Registrable Securities which the Holders request to be registered (subject to
the limitations of subsection 2.1(b)) by written notice to the Company given
within twenty (20) calendar days after the giving of the Demand Notice; and
(iii) use its best efforts to cause the registration
statement to become effective as soon as practicable.
(b) 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 Demand Request and the
Company shall include such information in the Demand Notice. The underwriter
will be selected by the Company and shall be reasonably acceptable to the
Initiating Holders. In such event, the right of any Holder to include its
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
the Initiating Holders and such Holder) to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 2.4(f)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 2.1, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of such Registrable Securities that may be included in
the underwriting shall be allocated in the following order:
(i) first, the Debenture Registrable Securities (pro
rata as between the Holders thereof based upon the number of Debenture
Registrable Securities owned by each such Holder, on a fully-diluted basis);
(ii) second, the Series B Registrable Shares (pro rata
as between the Holders thereof based upon the number of Series B Registrable
Shares owned by each such Holder, on a fully-diluted basis); and
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(iii) third, the Series A Registrable Shares (pro rata
as between the Holders thereof based upon the number of Series A Registrable
Shares owned by each such Holder, on a fully-diluted basis),
provided, however, that the number of shares of Registrable Securities to be
included in such underwriting shall not be reduced unless all other securities
are first entirely excluded from the underwriting.
(c) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
2.1 a certificate signed by the Chief Executive Officer 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 stockholders for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, the Company shall have the right to defer
taking action with respect to such filing for a period of not more than sixty
(60) calendar days after receipt of the Demand Request; provided, however, that
the Company may not utilize this right more than once in any 12-month period.
2.2 Piggyback Registrations.
(a) The Company shall promptly notify all Holders of
Registrable Securities in writing at least thirty (30) calendar days prior to
filing any registration statement under the Securities Act for purposes of
effecting 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 on Forms S-4
and S-8 and any similar successor forms) and will afford each such Holder an
opportunity to include in such registration statement all or any part of the
Registrable Securities then held by such Holder. Each Holder desiring to include
in any such registration statement all or any part of the Registrable Securities
held by such Holder shall, within twenty (20) calendar days after receipt of the
above-described notice from the Company, so notify the Company in writing, and
in such notice shall inform the Company of the number of Registrable Securities
such Holder wishes to include in such registration statement. 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.
(b) If a registration statement under which the Company gives
notice under this Section 2.2 is for an underwritten offering, then the Company
shall so advise the Holders of Registrable Securities. In such event, the right
of any such Holder's Registrable Securities to be included in a registration
pursuant to this Section 2.2 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 managing underwriter or underwriter(s) selected for such underwriting.
Notwithstanding any other provision of this Agreement, if the managing
underwriter(s) determine(s) in good faith that marketing factors require a
limitation of the
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number of shares to be underwritten, then the managing underwriter(s) may
exclude shares (including Registrable Securities) from the registration and the
underwriting, and the number of shares that may be included in the registration
and the underwriting shall be allocated,
(i) first, to the Company,
(ii) second, to each of the Holders of Debenture Registrable
Securities requesting inclusion of their Debenture Registrable
Securities in such registration statement on a pro rata basis
based on the total number of Debenture Registrable Securities
then held by each such Holder on a fully-diluted basis,
(iii) third, to each of the Holders of Series B Registrable
Securities requesting inclusion of their Series B Registrable
Securities in such registration statement on a pro rata basis
based on the total number of Series B Registrable Securities
then held by each such Holder on a fully-diluted basis,
(iv) fourth, to each of the Holders of Series A Registrable
Securities requesting inclusion of their Series A Registrable
Securities in such registration statement on a pro rata basis
based on the total number of Series A Registrable Securities
then held by each such Holder on a fully-diluted basis, and
(v) fifth, to any stockholder (other than a Holder) invoking
contractual rights to have their securities registered, if
any, on a pro rata basis,
but in no event shall the amount of securities of the selling Holders of
Convertible Debentures included in the offering be reduced below 30% of the
total amount of securities included in such offering, unless such offering is
the initial public offering of the Company's securities. If any Holder
disapproves of the terms of any such underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company and the underwriter. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration and those Registrable Securities
will continue to be subject to the terms of this Agreement. For any Holder which
is a partnership or corporation, the partners, retired partners and shareholders
of such Holder, or the estates and family members of any such partners and
retired partners and any trusts for the benefit of any of the foregoing persons
shall be deemed to be a single "Holder," and any pro rata reduction with respect
to such "Holder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"Holder," as defined in this sentence.
2.3 S-3 Registration.
(a) In case the Company shall receive, at any time and from
time to time after the Company is eligible to use Form S-3, from any Holder or
Holders a written request or requests (the "S-3 Demand Request") 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 shall:
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(i) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(ii) prepare and file as soon as practicable, and in any
event within thirty (30) calendar days after the receipt of the S-3 Demand
Request, a registration statement on Form S-3 and use its best efforts to, 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 twenty (20) calendar
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 2.3: (i) if Form S-3 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
and electing to be included in such registration, propose to sell Registrable
Securities and such other securities (if any) at an aggregate price to the
public (net of any underwriters' discounts or commissions) of less than
$1,000,000; or (iii) if the Company shall furnish to the Holders a certificate
signed by the Chief Executive Officer 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 stockholders for such Form S-3 registration
to be effected at such time, in which event the Company shall have the right to
defer the filing of the Form S-3 registration statement for a period of not more
than sixty (60) calendar days after receipt of the request of the Holder or
Holders under this Section 2.3 (provided, however, that the Company shall not
utilize this right more than once in any 12-month period).
2.4 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously as reasonably possible:
(a) prior to filing a registration statement with the SEC,
provide each selling Holder with a draft of the registration statement for its
review and comment;
(b) 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 keep such registration
statement effective for up to one hundred eighty (180) calendar days; provided,
however, that such 180-day period shall be extended for a period of time equal
to the period the Holder refrains from selling any securities included in such
registration at the request of an underwriter of Common Stock (or other
securities of the Company);
(c) 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;
(d) furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act,
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and such other documents as they may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by them that are included in
such registration;
(e) use its best efforts to (i) 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, (ii) prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements, and take such other actions, as may
be necessary to maintain such registration and qualification in effect at all
times for the period of distribution contemplated thereby and (iii) take such
further action as may be necessary or advisable to enable the disposition of the
Registrable Securities in such jurisdictions provided that the Company shall not
be required in connection therewith or as a condition thereto to qualify
generally to do business where it is not so qualified or to file a general
consent to service of process in any such states or jurisdictions;
(f) 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 (it being
understood and agreed that, as a condition to the Company's obligations under
this clause (f), each Holder participating in such underwriting shall also enter
into and perform its obligations under such an agreement);
(g) immediately 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 and promptly file such amendments and supplements which may be
required on account of such event and use its best efforts to cause each such
amendment and supplement to become effective;
(h) immediately notify each seller of Registrable Securities
of the issuance by the SEC of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings for that purpose and
make every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest possible
time;
(i) furnish, at the request of any Holder requesting
registration of Registrable Securities, 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, on a
fully-diluted basis, of the Holders requesting registration, addressed to the
underwriters, if any, and to the Holders requesting registration of Registrable
Securities and (ii) a "comfort" 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 reasonably
- -12-
satisfactory to a majority in interest of the Holders, on a fully-diluted basis,
requesting registration, addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities;
(j) apply for listing and list the Registrable Securities
being registered on any national securities exchange on which a class of the
Company's equity securities is listed or, if the Company does not have a class
of equity securities listed on a national securities exchange, apply for
qualification and use its best efforts to qualify the Registrable Securities
being registered for inclusion on the automated quotation system of the National
Association of Securities Dealers, Inc.;
(k) make available for inspection by each seller of
Registrable Securities, any underwriter participating in any distribution
pursuant to such registration statement, and any attorney, accountant or other
agent retained by such seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement;
(l) take all actions reasonably necessary to facilitate the
timely preparation and delivery of certificates (not bearing any legend
restricting the sale or transfer of such securities) representing the
Registrable Securities to be sold pursuant to the Registration Statement and to
enable such certificates to be in such denominations and registered in such
names as the Sellers or any underwriters may reasonably request; and
(m) take all other reasonable actions necessary to expedite
and facilitate the registration of the Registrable Securities pursuant to the
Registration Statement.
2.5 EXPENSES. All expenses incurred in connection with
registrations, filings or qualifications pursuant to Sections 2.1, 2.2 and 2.3
(excluding underwriters' and brokers' discounts and commissions), including,
without limitation all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company and the
reasonable fees and disbursements of one (1) counsel for the selling Holder or
Holders shall be borne by the Company.
2.6 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Sections 2.1, 2.2 and
2.3 of this Agreement that the selling Holders shall furnish to the Company such
information regarding themselves, the Registrable Securities held by them and
the intended method of disposition of such securities as shall be required to
timely effect the registration of their Registrable Securities.
2.7 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 Section 2.
2.8 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Sections 2.1, 2.2 and 2.3 of this
Agreement:
(a) BY THE COMPANY. To the extent permitted by law, the
Company will indemnify and hold harmless each Holder, the partners, officers,
members, employees,
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agents 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 "Exchange Act"), against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"):
(i) any untrue statement or alleged untrue statement of
a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto;
(ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading; or
(iii) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act, any federal or state securities law or
any rule or regulation promulgated under the Securities Act, the Exchange Act or
any federal or state securities law in connection with the offering covered by
such registration statement;
and the Company will reimburse each such Holder, partner, officer, member,
employee, agent or director, underwriter or controlling person for any legal or
other expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that if the Company is found not to be liable for a Violation
and such Holder (or a partner, officer, member, employee, agent or director or
controlling person of such Holder) is found to be liable for such Violation,
such Holder shall pay the Company's legal or other expenses reasonably incurred
in defending any such loss, claim, damage, liability or action; provided further
that the indemnity agreement contained in this Section 2.8(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, member, employee, agent
or director, underwriter or controlling person of such Holder.
(b) BY SELLING HOLDERS. To the extent permitted by law, each
selling Holder, severally and not jointly with any other Holder, will indemnify
and hold harmless the Company, each of its directors, each of its officers who
have signed the registration statement, 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
within the meaning of the Securities Act or the Exchange Act, 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, partner, officer, director, member, employee or agent or controlling
person of such other Holder may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities
- -14-
(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 expressly 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 partner, director, officer, member, employee, agent or
controlling person, underwriter or other Holder, partner, officer, director,
member, employee, agent or controlling person of such other Holder in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that if the Holder is found not to be liable for a
Violation, the Company shall pay the Holder's legal or other expenses reasonably
incurred in defending any such loss, claim, damage, liability or action;
provided further that the indemnity agreement contained in this Section 2.8(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, (which consent shall not be unreasonably withheld), nor shall the
selling Holder 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
the Company, and provided further, that the total amounts payable in indemnity
by a Holder under this Section 2.8(b) in respect of any Violation shall not
exceed the net proceeds (after deduction of all underwriters' discounts and
commissions paid by such Holder in connection with the registration in question)
received by such Holder in the registered offering out of which such Violation
arises.
(c) NOTICE. Promptly after receipt by an indemnified party
under this Section 2.8 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 2.8,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential conflict of interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 2.8, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 2.8.
(d) CONTRIBUTION. In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (i) any Holder exercising rights under this Agreement, or any controlling
person of any such Holder, makes a claim for indemnification pursuant to this
Section 2.8 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 2.8 provides
for indemnification in such case,
- -15-
or (ii) contribution under the Securities Act may be required on the part of any
such selling Holder or any such controlling person in circumstances for which
indemnification is provided under this Section 2.8; then, and in each such case,
the Company and such Holder will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution from
others) in such proportion so that such Holder is responsible for the portion
represented by the percentage that the public offering price of its Registrable
Securities offered by and sold under the registration statement bears to the
public offering price of all securities offered by and sold under such
registration statement, and the Company and other selling Holders are
responsible for the remaining portion; provided, however, that, in any such
case, (A) no such Holder will be required to contribute any amount in excess of
the public offering price of all such Registrable Securities offered and sold by
such Holder pursuant to such registration statement and (B) no Person or entity
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any Person or entity
who was not guilty of such fraudulent misrepresentation.
(e) SURVIVAL. The obligations of the Company and Holders under
this Section 2.8 shall survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
2.9 "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that it
shall not, to the extent requested by the Company or an underwriter of
securities of the Company, offer, sell or otherwise transfer or dispose of or
engage in any other transaction regarding any Registrable Securities or other
shares of stock of the Company then owned by such Holder (other than to donees,
affiliates or partners of the Holder who agree to be similarly bound and except
for securities sold pursuant to such Registration Statement) for up to one
hundred eighty (180) calendar days following the effective date of the first
firmly underwritten public offering of Common Stock pursuant to a Registration
Statement filed with, and declared effective by, the SEC under the Securities
Act, on the terms and conditions approved by the Board of Directors (an "Initial
Public Offering"), and for up to ninety (90) calendar days following the
effective date in the case of subsequent public offerings; provided, however,
that the holders of more than 1% of the Company's capital stock, the Prior
Holders, and executive officers and directors of the Company then holding Common
Stock of the Company enter into similar agreements.
In order to enforce the foregoing covenant, the Company shall have the
right to place restrictive legends on the certificates representing the shares
subject to this Section 2.9 and to impose stop transfer instructions with
respect to the Registrable Securities and such other shares of stock of each
Holder (and the shares or securities of every other Person subject to the
foregoing restriction) until the end of such period.
2.10 RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the SEC which may at any time
permit the sale of the Registrable Securities to the public without
registration, after such time as a public market exists for the Common Stock,
the Company agrees 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 Exchange Act;
- -16-
(b) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); and
(c) furnish to any Holder forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144 (at any time after ninety (90) calendar 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 Exchange
Act (at any time after it has become subject to such reporting requirements), a
copy of the most recent annual or quarterly report of the Company and such other
reports, documents of the Company or other information in the possession of or
reasonably obtainable by the Company as a Holder may reasonably request in
availing itself of any rule or regulation of the SEC allowing a Holder to sell
any such securities without registration.
2.11 TERMINATION OF THE COMPANY'S OBLIGATIONS. The Company shall
have no obligations pursuant to Section 2 with respect to: (i) any request or
requests for registration made by any Holder on a date more than five (5) years
after the closing date of the Company's Initial Public Offering, or (ii) any
Registrable Securities proposed to be sold by a Holder in a registration
pursuant to Section 2 if in the opinion of counsel to the Company, all such
Registrable Securities proposed to be sold by a Holder may be sold in a ninety
(90) day period without registration under the Securities Act pursuant to Rule
144 under the Securities Act. Notwithstanding the foregoing, in no event shall a
Holder's registration rights terminate prior to the end of the end of the lock
up period provided for in Section 2.9.
2.12 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of the Debentureholders, enter into any agreement with any holder or
prospective holder of any securities of the Company that provides such holder or
prospective holder with registration rights superior or equal to the
registration rights provided to the Investors pursuant to this Section 2.
3. Assignment, Amendment and Restriction on Transfer.
3.1 ASSIGNMENT. Notwithstanding anything herein to the contrary, the
registration rights of a Holder under Section 2, the pre-emptive rights, right
of first refusal, tag-along rights and drag along rights under Section 4 and the
information rights under Section 6 may be assigned only to (i) a party who
acquires at least three hundred thousand (300,000) shares of Registrable
Securities, on a fully-diluted basis, or (ii)(A) a shareholder, partner, member,
affiliate or beneficiary of such Holder; (B) a spouse, child, parent or
beneficiary of the estate of such Holder or (C) a trust for the benefit of the
persons set forth in (A) or (B); provided, however, that no party may be
assigned any of the foregoing rights unless the Company is given written notice
by the assigning party within five (5) calendar days after such assignment
stating the name, address and tax identification number, if any, of the assignee
and identifying the securities of the Company as to which the rights in question
are being assigned; and provided further that any such assignee (i) shall
receive such assigned rights subject to all the terms and conditions of this
Agreement, including without limitation the provisions of this Section 3, and
(ii) is not a competitor of the Company as determined in good faith by the
Company's Board of Directors.
3.2 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular
- -17-
instance and either retroactively or prospectively), only with the written
consent of: (i) the Company, (ii) the Debentureholders, (iii) the Holders
(and/or any of their permitted successors or assigns) of at least two-thirds of
Series B Registrable Securities then outstanding, and (iv) the Holders (and/or
any of their permitted successors or assigns) of at least a majority of the
Series A Registrable Securities then outstanding. Any amendment or waiver
effected in accordance with this Section 3.2 shall be binding upon each Investor
and each permitted successor or assignee of such Investor or Holder and the
Company; provided, however, that no waiver which adversely affects the rights of
any Investor or Holder disproportionately relative to the other Investors or
Holders shall be effective against such party unless such party has given its
consent to such waiver.
3.3 GENERAL RESTRICTION ON TRANSFER. Except as otherwise permitted
in Section 4.8 of the Series B Purchase Agreement, Section 4.8 of the Debenture
Subscription Agreement and Section 4.3 of this Agreement, no securities of the
Company or any beneficial interest therein shall be sold, transferred, assigned,
mortgaged, pledged, charged, hypothecated or otherwise encumbered or disposed of
by any Investor or Prior Holder whether by operation of law or otherwise, except
with the prior written approval of the Board of Directors, or as expressly
required or permitted pursuant to the provisions of this Agreement, and any
action in contravention of this Section 3.3 shall be void.
4. Pre-emptive Rights; Right to Maintain Proportionate Holding; Right
of First Refusal.
4.1 Pre-Emptive Rights.
(a) Except as otherwise provided in Section 4.1(f), if the
Company proposes to issue any Securities (the "Offered Securities"), the Company
shall first offer (the "Subscription Offer") the Offered Securities for
subscription and purchase by the Investors and the Prior Holders, in each case
as nearly as may be offered (disregarding fractional interests) on a pro rata
basis in proportion to their respective Proportionate Interests at that date (in
this Section 4.1, the "Initial Allotment"), at such price as the Board of
Directors of the Company may determine.
(b) The Subscription Offer shall be made in writing by the
Company to each Investor and Prior Holder and shall (i) specify the price at
which the Offered Securities are offered, the amount of Offered Securities which
represents such Investor's or Prior Holders' Initial Allotment and the date on
which the purchase of the Offered Securities by the Investors and the Prior
Holders is to be completed, (ii) contain a summary of the principal attributes
of the Offered Securities (if other than Common Stock), (iii) state that any
Investor or Prior Holder who wishes to subscribe for Offered Securities must
give written notice (a "Subscription Notice") to that effect to the Company
within 20 calendar days after the date of the Subscription Offer, (iv) state
that any Investor or Prior Holder who wishes to subscribe for an amount of
Offered Securities different than its Initial Allotment must specify, in its
Subscription Notice, the amount of Offered Securities that it wishes to purchase
and (v) state that, unless the Investors and Prior Holders subscribe for all the
Offered Securities, the Company may elect not to sell any Offered Securities
under the Subscription Offer.
(c) If any Investors or Prior Holders do not subscribe in the
manner provided above for all of their Initial Allotments, the unsubscribed
Offered Securities (in this
- -18-
Section 4.1, the "Unsubscribed Securities") shall be applied to satisfy the
subscriptions of Investors or Prior Holders (in this Section 4.1, "Additional
Subscribers") for Offered Securities in excess of their Initial Allotments (in
this Section 4.1, "Additional Securities"). If the amount of Unsubscribed
Securities is less than the amount of Additional Securities subscribed for by
the Additional Subscribers, the Unsubscribed Securities shall be allocated among
the Additional Subscribers as nearly as may be (disregarding fractional
interests) on a pro rata basis based on the proportion that the number of shares
of Common Stock held by each Additional Subscriber at the date of the
Subscription Offer bears to the total number of shares of Common Stock held by
all Additional Subscribers at that date, with all such holdings being calculated
on a fully-diluted basis; provided, however, that the amount of Unsubscribed
Securities allocated to any Additional Subscriber shall not exceed the amount of
Additional Securities subscribed for by such Additional Subscriber as specified
in its Subscription Notice.
(d) If Offered Securities are subscribed for by the Investors
or Prior Holders in accordance with this Section 4.1, each Investor and Prior
Holder shall purchase the amount of Offered Securities subscribed for by and
allocated to it and the Company shall issue and sell such Offered Securities to
such Investor or Prior Holder on the closing date specified in the Subscription
Offer and otherwise on the terms specified in the Subscription Offer.
(e) If less than all the Offered Securities are subscribed for
by the Investors and Prior Holders in accordance with this Section 4.1, unless
the Company determines not to proceed with the issuance and sale of the Offered
Securities, the Company shall complete the issuance and sale of the Offered
Securities subscribed for by the Investors and Prior Holders as contemplated by
Section 4.1(d) and may offer and sell the unsubscribed portion of the Offered
Securities to such persons as the Board of Directors of the Company may
determine provided that (A) any such sale is completed within 90 days after the
expiry of the period of 20 calendar days for the giving of Subscription Notices,
(B) the price at which any Offered Securities are sold is not less than the
subscription price offered to the Investors and (C) each purchaser becomes a
party to this Agreement. After the expiry of such 90-day period, the foregoing
provisions of this Section 4.1 shall again apply to any proposed issuance of
Securities by the Company.
(f) The pre-emptive rights in this Section 4.1 shall not be
applicable to (i) the issuance or sale of shares of Common Stock (or options
therefor) to employees, directors and consultants for the primary purpose of
soliciting or retaining their services, pursuant to plans or agreements approved
by a majority of the Board of Directors of the Company, (ii) the issuance of
securities upon the conversion of shares of the Company's preferred stock,
conversion of the Convertible Debentures or exercise of the Share Purchase
Option, (iii) the issuance of securities to persons or entities with which the
Company has business relationships in connection with bona fide arm's length
equipment leasing arrangements, bank or institutional loans or other bona fide
arm's length transactions wherein the principal purpose of the issuance of such
securities is for non-equity financing purposes, so long as all such
arrangements and transactions are approved by a majority of the Board of
Directors of the Company (including at least one (1) Debentureholder nominee),
(iv) the issuance of securities pursuant to currently outstanding (as of the
date of this Agreement) options, warrants or notices to acquire securities of
the Company, (v) the issuance of securities in connection with a bona fide arm's
length business acquisition of or by the Company, whether by merger,
consolidation, sale of assets, sale or
- -19-
exchange of stock or otherwise, as approved by a majority of the Board of
Directors of the Company (including at least one (1) Debentureholder nominee),
or (vi) the issuance of securities pursuant to a Qualified IPO.
(g) The covenants set forth in this Section 4.1 shall
terminate and be of no further force and effect after the closing of the
Qualified IPO.
4.2 Right to Maintain Proportionate Holding.
(a) In addition to any rights an Investor or Prior Holder may
have pursuant to Section 4.1, if the Company issues any Securities (the "Issued
Securities"), the Company shall offer (in this Section 4.2, the "Subscription
Offer") each Investor and Prior Holder the right to subscribe, at a price per
Security equal to the price received by the Company per Issued Security, for
such number (in this Section 4.2, the "Initial Allotment") of Securities (in
this Section 4.2, the "Offered Securities") of the same type and class as the
Issued Securities as is necessary to ensure that such Investor's or Prior
Holder's percentage ownership of the outstanding Common Stock, on a
fully-diluted basis after giving effect to the issuance of the Issued Securities
and any additional securities subscribed for pursuant to this Section 4.2, is
equal to such Investor's or Prior Holder's percentage ownership of the
outstanding Common Stock, on a fully-diluted basis, immediately prior to the
issuance of the Issued Securities.
(b) The Subscription Offer shall be made in writing by the
Company to each Investor and Prior Holder and shall (i) specify the price at
which the Offered Securities are offered, the amount of Offered Securities which
represents such Investor's or Prior Holders' Initial Allotment and the date on
which the purchase of the Offered Securities by the Investors and the Prior
Holders is to be completed, (ii) contain a summary of the principal attributes
of the Offered Securities (if other than Common Stock), (iii) state that any
Investor or Prior Holder who wishes to subscribe for Offered Securities must
give a Subscription Notice to that effect to the Company within 20 calendar days
after the date of the Subscription Offer and (iv) state that any Investor or
Prior Holder who wishes to subscribe for an amount of Offered Securities
different than its Initial Allotment must specify, in its Subscription Notice,
the amount of Offered Securities that it wishes to purchase.
(c) If any Investors or Prior Holders do not subscribe in the
manner provided above for all of their Initial Allotments, the unsubscribed
Offered Securities (in this Section 4.2, the "Unsubscribed Securities") shall be
applied to satisfy the subscriptions of Investors or Prior Holders (in this
Section 4.2 "Additional Subscribers") for Offered Securities in excess of their
Initial Allotments (in this Section 4.2, "Additional Securities"). If the amount
of Unsubscribed Securities is less than the amount of Additional Securities
subscribed for by the Additional Subscribers, the Unsubscribed Securities shall
be allocated among the Additional Subscribers as nearly as may be (disregarding
fractional interests) on a pro rata basis based on the proportion that the
number of shares of Common Stock held by each Additional Subscriber at the date
of the Subscription Offer bears to the total number of shares of Common Stock
held by all Additional Subscribers at that date, with all such holdings being
calculated on a fully-diluted basis; provided, however, that the amount of
Unsubscribed Securities allocated to any Additional Subscriber shall not exceed
the amount of Additional Securities subscribed for by such Additional Subscriber
as specified in its Subscription Notice.
- -20-
(d) If Offered Securities are subscribed for by the Investors
or Prior Holders in accordance with this Section 4.2, each Investor and Prior
Holder shall purchase the amount of Offered Securities subscribed for by and
allocated to it and the Company shall issue and sell such Offered Securities to
such Investor or Prior Holder on the closing date specified in the Subscription
Offer and otherwise on the terms specified in the Subscription Offer.
(e) The rights in this Section 4.2 shall not be applicable to
(i) the issuance or sale of shares of Common Stock (or options therefor) to
employees, directors and consultants for the primary purpose of soliciting or
retaining their services, pursuant to plans or agreements approved by a majority
of the Board of Directors of the Company, (ii) the issuance of securities upon
the conversion of shares of the Company's preferred stock, conversion of the
Convertible Debentures or exercise of the Share Purchase Option, (iii) the
issuance of securities to persons or entities with which the Company has
business relationships in connection with bona fide arm's length equipment
leasing arrangements, bank or institutional loans or other bona fide arm's
length transactions wherein the principal purpose of the issuance of such
securities is for non-equity financing purposes, so long as all such
arrangements and transactions are approved by a majority of the Board of
Directors of the Company (including at least one (1) Debentureholder nominee),
(iv) the issuance of securities pursuant to currently outstanding (as of the
date of this Agreement) options, warrants or notices to acquire securities of
the Company, (v) the issuance of securities in connection with a bona fide arm's
length business acquisition of or by the Company, whether by merger,
consolidation, sale of assets, sale or exchange of stock or otherwise, as
approved by a majority of the Board of Directors of the Company (including at
least one (1) Debentureholder nominee), or (vi) the issuance of securities
pursuant to a Qualified IPO. For greater certainty, the rights in this Section
4.2 shall be applicable to any issuance of Securities relating to the Asahi
Note.
(f) The covenants set forth in this Section 4.2 shall
terminate and be of no further force and effect after the closing of the
Qualified IPO.
4.3 Right of First Refusal of Sales by Investors.
(a) If an Investor (the "Proposed Seller") intends to sell any
of such Investor's Series B Preferred Stock or Series B Registrable Securities
(other than the sale or transfer of such securities as otherwise permitted in
Section 4.8 of the Series B Purchase Agreement), the Proposed Seller shall give
written notice (the "Seller's Notice") to the Company stating that the Proposed
Seller intends to make such a sale or transfer, specifying the number of shares
of Series B Preferred Stock or Series B Registrable Securities (the "First
Refusal Shares"), and specifying the per share purchase price (payable in cash)
which the Proposed Seller is willing to accept for the First Refusal Shares (the
"Sale Price").
(b) Upon receipt of the Seller's Notice, the Company shall
have the irrevocable and exclusive right, exercisable by notice given to the
Proposed Seller within twenty (20) calendar days of its receipt of the Seller's
Notice:
(i) to agree that it will purchase all the First Refusal
Shares at the Sale Price and on the terms of payment set out in the Seller's
Notice; or
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(ii) to agree that the Proposed Seller may sell all the
First Refusal Shares held by it to a Person acting bona fide and at arm's length
with the Proposed Seller (a "Third Party") on terms and conditions no more
favorable to the Third Party than those contained in the Seller's Notice,
provided that, prior to completion of such sale, such Third Party become subject
to all of the obligations of the Proposed Seller under this Agreement and agree
to be bound by all of the provisions hereof in which case such Third Party shall
become entitled to exercise all the rights of the Proposed Seller under this
Agreement.
If no notice is given by the Company under Section 4.3(b)(i), the Company
shall be deemed to have given the notice referred to in Section 4.3(b)(ii).
(c) If the Company gives the notice referred to in Section
4.3(b)(i), the purchase and sale of the First Refusal Shares shall be completed
on the 5th business day after the Company has agreed that it will purchase all
the First Refusal Shares held by the Proposed Seller.
If (i) the Company agrees that the Proposed Seller may sell
the First Refusal Shares held by it to a Third Party, or (ii) the Company does
not purchase all the First Refusal Shares in accordance with Section 4.3(c),
then, for a period of ninety (90) business days from the date of the Seller's
Notice, the Proposed Seller shall be entitled to sell the First Refusal Shares
held by it to a Third Party. Any transfer of the First Refusal Shares by the
Proposed Seller after the end of such ninety (90) business day period or any
change in the terms of the sale as set forth in the Seller's Notice which is
more favorable to such Third Party shall require a new notice of intent to
transfer to be delivered to the Company and shall give rise anew to the rights
provided in the preceding paragraphs.
(d) The covenants set forth in this Section 4.3 shall
terminate and be of no further force and effect after the closing of the
Qualified IPO.
4.4 TAG-ALONG RIGHTS. If an Investor or Prior Holder (the "Seller")
proposes to sell, whether in a single transaction or a series of transactions,
(a "Tag-Along Sale") Securities to a Third Party Purchaser(s) (subject to prior
satisfaction of Section 4.3, if applicable) and the sale of such Securities
constitutes a Change of Control and no Drag-Along Notice is given to the other
Investors and Prior Holders pursuant to Section 4.5 in respect of such proposed
sale, each other Investor and Prior Holder shall have the right, exercisable by
giving written notice (the "Tag-Along Notice") to the Seller within 10 days
after the expiry of the 20 calendar day period referred to in Section 4.3, to
sell to the Third Party Purchaser up to that number of Securities which equals
(disregarding fractions) the total number of Securities which the Third Party
Purchaser is prepared to purchase as specified in its Third Party Offer
multiplied by a fraction, the numerator of which is the number of shares of
Common Stock owned by such Investor or Prior Holder and the denominator of which
is the total number of shares of Common Stock owned by the Seller and all other
Investors and Prior Holders giving a Tag-Along Notice to the Seller pursuant to
this Section 4.4, each calculated on a fully-diluted basis. Each such other
Investor or Prior Holder that elects to participate in the Tag-Along Sale shall
sell the Securities indicated in its Tag-Along Notice for the same consideration
per Security and otherwise on the same terms and conditions, mutatis mutandis,
as those specified in the Third Party Offer. The number of Securities to be sold
by the Seller to the Third Party Purchaser shall be equal to the difference
between the number of Securities that the other Investors and Prior Holders are
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entitled to sell to the Third Party Purchaser pursuant to this Section 4.4 and
the total number of Securities which the Third Party Purchaser is prepared to
purchase as specified in its Third Party Offer. The Seller shall not be
responsible for any failure by the Third Party Purchaser to complete the
Tag-Along Sale but shall not sell any Securities to the Third Party Purchaser
unless the Securities to be sold by those other Investors and Prior Holders (if
any) that elect to participate in the Tag-Along Sale are purchased by the Third
Party Purchaser at the same time in accordance with the provisions of this
Section 4.4. Unless the Board of Directors of the Company otherwise determines,
the sale of any Securities pursuant to this Section 4.4 shall be conditional on
any Third Party Purchaser becoming a party to this Agreement.
4.5 Drag-Along Rights.
(a) If any of the Investors or Prior Holders (in this Section
4.5, the "Sellers") propose to sell all (but not less than all) of their
Securities to a Third Party Purchaser as permitted under Section 4.3 and such
Securities represent at least 66-2/3% of the outstanding Common Stock,
calculated on a fully-diluted basis, the Sellers may, by giving written notice
(a "Drag-Along Notice") to the other Investors and Prior Holders, require each
of the other Investors and Prior Holders to sell all (but not less than all) of
their Securities to the Third Party Purchaser for the same consideration per
Security and otherwise on the same terms and conditions, mutatis mutandis, as
those specified in the Third Party Offer;
(b) The Sellers shall not be responsible for any failure by
the Third Party Purchaser to complete the transactions contemplated by its Third
Party Offer but shall not sell any Securities to the Third Party Purchaser
unless the Securities to be sold by the other Investors and Prior Holders are
purchased by the Third Party Purchaser at the same time in accordance with the
provisions of this Section 4.
5. Closing Arrangements.
5.1 DEFINITIONS. In this Section 5, the term "Purchased Securities"
means any Securities of the Company to be purchased from any Investor or Prior
Holder by any other party (including the Company) pursuant to this Agreement,
and the terms "Vendor" and "Purchaser" mean, respectively, the vendor and the
purchaser of Purchased Securities.
5.2 PLACE AND TIME OF CLOSING. Unless otherwise provided in this
Agreement, the closing of the purchase and sale of the Purchased Shares shall
occur at the registered office of the Company at 1:00 p.m. (New York time) on
the tenth Business Day after the day on which the Vendor and the Purchaser first
became obliged to carry out such transaction or at such other place and time as
the Vendor and the Purchaser may mutually determine, the actual time of closing
on the closing date being hereinafter referred to as the "Time of Closing".
5.3 CLOSING DELIVERIES. At the Time of Closing, subject to the other
provisions of this Agreement:
(a) the Purchaser shall pay the purchase price for the
Purchased Securities (the "Purchase Price") as determined in accordance with the
relevant provisions of this Agreement by bank draft or certified cheque; and
(b) the Vendor shall deliver to the Purchaser:
(i) a receipt for payment of the Purchase Price;
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(ii) the certificates or instruments representing the
Purchased Securities, duly endorsed for transfer; and
(iii) a warranty from the Vendor, in form satisfactory
to the Purchaser, acting reasonably, that the Vendor is the registered and
beneficial owner of the Purchased Securities, free and clear of any lien,
charge, pledge, security interest, adverse claim or other encumbrance.
5.4 TENDER PROCESS. If the Vendor is not present at the Time of
Closing or is present but fails for any reason to deliver to the Purchaser any
document referred to in Section 5.3, the Purchaser may deposit the Purchase
Price into a special account at any branch of the Company's bank in the joint
names of the Vendor and the Purchaser. Forthwith after the making of such
deposit, the Purchaser shall give the Vendor written notice thereof, which
notice shall specify the date of deposit, the name and address of the bank at
which the deposit was made and the account number. Such deposit shall constitute
valid payment and satisfaction of the Purchase Price even though the Vendor may
have encumbered or disposed of any of the Purchased Securities and even though
the certificates or instruments representing the Purchased Securities may have
been delivered to any pledgee, transferee or other person. Upon presentation by
the Vendor to the Purchaser of the documents referred to in Section 5.3, the
Vendor shall be entitled to be paid the monies so deposited, without interest.
All interest in respect of any such bank account shall belong to the Purchaser.
5.5 TRANSFER OF TITLE. If, pursuant to Section 5.4, the Purchase
Price is deposited with the Company's bank in the joint names of the Vendor and
the Purchaser, from and after the date of such deposit, and even though the
certificates or instruments representing the Purchased Securities may not have
been delivered to the Purchaser, the purchase and sale of the Purchased
Securities shall be deemed to have been completed and all right, title, benefit
and interest, both at law and in equity, in and to the Purchased Securities
shall be conclusively deemed to have been transferred and assigned to and become
vested in the Purchaser and all right, title, benefit and interest, legal or
equitable, therein or thereto of the Vendor, or of any pledgee, transferee or
other person claiming through the Vendor, shall cease.
5.6 Payment in Satisfaction of Indebtedness.
(a) Without in any way limiting the restriction in Section
3.3, where the Vendor is unable to deliver the certificates or instruments
representing the Purchased Securities because any Purchased Securities have been
pledged as security for any indebtedness of the Vendor, the Purchaser may,
instead of depositing the Purchase Price into a special bank account as provided
in Section 5.4, pay all or a portion of the Purchase Price to discharge the
indebtedness secured thereby and to obtain a release of the relevant security
interest. Any such payment by the Purchaser shall constitute a complete
discharge of the Purchaser's obligation to pay to the Vendor a corresponding
amount of the Purchase Price.
(b) If the Purchaser pays only part of the Purchase Price to a
secured party pursuant to Section 5.6(a), the Purchaser may deposit an amount
equal to the balance of the Purchase Price into a special bank account in
accordance with the provisions of Section 5.4 and the provisions of Section 5.5
shall apply, mutatis mutandis, to the portion of the Purchase Price so
deposited.
- -24-
(c) If, following any payment by the Purchaser to a secured
party pursuant to Section 5.6(a), the balance, if any, of the Purchase Price is
either paid to the Vendor or deposited in a special bank account as provided in
Section 5.4, from and after the date of the last to occur of such payment and
such deposit, and even though the certificates or instruments representing the
Purchased Securities may not have been delivered to the Purchaser, the purchase
and sale of the Purchased Securities shall be deemed to have been completed and
all right, title, benefit and interest, both at law and in equity, in and to the
Purchased Securities shall be conclusively deemed to have been transferred and
assigned to and become vested in the Purchaser and all right, title, benefit and
interest, legal or equitable, therein or thereto of the Vendor, or of any
pledgee, transferee or other person claiming through the Vendor, shall cease.
(d) If the Vendor is indebted to the Company at the Time of
Closing, the Vendor hereby irrevocably directs the Purchaser to pay all or the
relevant portion of the Purchase Price to the Company to discharge such
indebtedness. Any such payment to the Company by the Purchaser shall constitute
a complete discharge of the Purchaser's obligation to pay to the Vendor all or
the relevant portion, as the case may be, of the Purchase Price.
5.7 POWER OF ATTORNEY. The Vendor hereby irrevocably makes,
constitutes and appoints the Company or any officer of the Company as the
Vendor's true and lawful attorney with power to, in the name and on behalf of
the Vendor, execute and deliver all such assignments, transfers, instruments and
other documents as may be necessary effectively to transfer and assign the
Purchased Securities, or any part thereof, to the Purchaser on the books of the
Company. The appointment of the Company as the Vendor's attorney, and each and
every one of its rights and powers, being coupled with an interest, is
irrevocable.
6. Information, Board Rights and Business and Finance of the Company.
6.1 Financial Statements and Reports.
(a) The Company will maintain true books and records of
account in which full and correct entries will be made of all its business
transactions pursuant to a system of accounting established and administered in
accordance with generally accepted accounting principles consistently applied,
and will set aside on its books all such proper accruals and reserves as shall
be required under generally accepted accounting principles consistently applied.
(b) The Company shall deliver to the Debentureholders and each
Investor that continues to hold not less than three hundred thousand (300,000)
shares of Registrable Securities, on a fully-diluted basis:
(i) As soon as practicable after the end of each fiscal
year of the Company, and in any event within ninety (90) calendar days
thereafter an audited consolidated balance sheet of the Company and its
subsidiaries, if any, at the end of such fiscal year and audited consolidated
statements of income, stockholders' equity and cash flows for such fiscal year,
which year-end financial reports shall be in reasonable detail prepared in
accordance with generally accepted accounting principles setting forth in each
case in comparative form the figures for the previous year and such financial
statements shall be accompanied by a report and opinion thereon by independent
chartered accountants of national standing selected by the Company's Board of
Directors (including at least one (1) Debentureholder nominee);
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(ii) As soon as practicable after the end of each month,
and in any event within thirty (30) calendar days after the end of each month
and as soon as practicable after the end of each fiscal quarter of the Company,
and in any event within forty-five (45) calendar days thereafter, an unaudited
consolidated balance sheet of the Company and its subsidiaries, as at the end of
such period, and a consolidated statement of income, stockholders' equity and
cash flows for such period and for the current fiscal year to date, each
certified by the Company's Chief Financial Officer, and all such statements
shall be in reasonable detail and prepared in accordance with generally accepted
accounting principles, except that they may not contain full footnote
disclosures and may be subject to normal year-end adjustments for recurring
accruals;
(iii) Prior to thirty (30) calendar days before the end
of each fiscal year, an operating budget for the next fiscal year; and
(iv) Any other business or financial information
regarding the Company that is reasonably requested by a Debentureholder.
(c) Each Investor agrees that any information obtained by the
Investor pursuant to this Section 6.1 which is reasonably perceived to be
proprietary to the Company or otherwise confidential will not, unless such
Investor shall otherwise be required by a court, governmental agency, any law or
the rules of any national securities exchange or association, be disclosed
without the prior written consent of the Company (so long as such information is
not in the public domain), provided that the Debentureholders may disclose such
proprietary or confidential information to their directors, officers, employees
and agents on a need to know basis, including for purposes of evaluating their
investment in the Company.
(d) For so long as an Investor is eligible to receive reports
under this Section 6.1, such Investor, or any authorized representative thereof,
shall have the right to visit and inspect the Company's properties, to examine
its books of account and records and to discuss its business and finances with
officers of the Company, all at such reasonable times and as often as may be
reasonably requested; provided, however, that each Investor agrees to use, and
to use its reasonable efforts to ensure that its authorized representatives use,
the same degree of care as such Investor uses to protect its own confidential
information and to keep confidential any information furnished to it which the
Company reasonably considers as confidential or proprietary and which has been
identified by the Company to the Investor as such (so long as such information
is not in the public domain), provided that the Debentureholders may disclose
such proprietary or confidential information to their directors, officers,
employees and agents on a need to know basis, solely for the purpose of
evaluating and monitoring their investment in the Company. Each Investor shall
pay any expenses incurred by it in connection with its discussions of the
affairs, finances and accounts of the Company.
(e) The covenants set forth in this Section 6.1 shall
terminate and be of no further force and effect after the closing of the
Qualified IPO.
- -26-
6.2 Board of Directors and Voting Agreement.
(a) The Investors and Prior Holders covenant and agree to at
all times vote or cause to be voted all shares of outstanding voting capital
stock of the Company, which they may own, control or be entitled to vote,
determined on a fully diluted basis, and to take all necessary action within
their power to cause its nominees acting as officers or directors of the Company
to at all times act, in order that the provisions of this Agreement shall govern
the business and affairs of the Company to the maximum extent permitted by law.
(b) The Company, the Investors and the Prior Holders confirm
his, her or its knowledge of this Agreement and will carry out and be bound by
the provisions of this Agreement to the full extent that he, she or it has the
capacity and power at law to do so.
(c) Subject to the other provisions of this Agreement AND
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE BYLAWS OF THE COMPANY,
the Investors and the Prior Holders shall take all necessary action within their
power to ensure that the Company's Board of Directors shall consist of seven (7)
directors. The Investors and Prior Holders shall cause such meetings of the
Company to be held, votes cast, resolutions passed, bylaws enacted, documents
executed and things and acts done to ensure the election to the Company's Board
of Directors of the nominees as set out in Section 6.2(d) and Section 6.2(e).
(d) Subject to the prior nomination right of the
Debentureholders, the Investors and the Prior Holders shall take all necessary
action within their power to ensure that the Prior Holders shall have the right
to nominate the remaining directors, at their discretion, for such time that the
ownership of shares of Common Stock by the Prior Holders is at least 18% of the
outstanding shares of Common Stock on a fully-diluted basis. Without taking away
from the prior nomination right of the Debentureholders, if the ownership of
shares of Common Stock by the Prior Holders falls below 18% of the outstanding
shares of Common Stock on a fully-diluted basis, then the Prior Holders shall be
entitled to elect such number of directors as is determined by the following
formula: a percentage of the number of board members, rounded up to the nearest
whole number equal to the percentage of shares of Common Stock issued and held
by the Prior Holders bears to the total number of shares of Common Stock of the
Company then outstanding on a fully diluted basis. Any vacancy on the Board of
Directors of the Company after giving effect to the provisions of Sections
6.2(d) and 6.2(e) will be filled by individuals nominated by a majority of the
remaining directors then in office.
(e) The Investors and Prior Holders shall take all necessary
action within their power to ensure that the Debentureholders shall be entitled
to nominate the greater of (i) four (4) directors or (ii) such number of
directors as is determined by the following formula: a percentage of the number
of board members, rounded up to the nearest whole number equal to the percentage
of shares of Common Stock issued and held on a fully diluted basis, bears to the
total number of shares of Common Stock of the Company then outstanding on a
fully diluted basis. Notwithstanding the foregoing, in the event that all
outstanding indebtedness under the Convertible Debentures has been repaid by the
Company following a demand made by the Debentureholders pursuant to Section
2.7.1 of the Convertible Debentures, the Debentureholders shall lose their
rights pursuant to this Section 6.2(e) and all directors nominated by the
Debentureholders shall be required to immediately resign from the Company's
- -27-
Board of Directors. The vacancies caused by the resignation of the
Debentureholders' directors shall be filled by a majority of the Company's Board
of Directors and shall thereafter be elected by the holders of Common Stock and
Preferred Stock, voting together as a single class.
(f) The Investors and Prior Holders shall take all necessary
action within their power to ensure that the Debentureholders shall have the
right to have two (2) nominee directors appointed as members of both an Audit
Committee (comprised of three (3) members) and a Compensation Committee
(comprised of three (3) members). The remaining members of the Audit Committee
and the Compensation Committee will be determined by the Company's Board of
Directors.
(g) The Investors and Prior Holders shall take all such
necessary action within their power to ensure that the Debentureholders shall be
entitled to nominate one (1) representative who shall be permitted to attend at
and observe (but not vote at) any meeting of the Company's Board of Directors at
which at least one (1) director nominated by the Debentureholders cannot attend.
The Investors and Prior Holders shall take all such necessary action within
their power to ensure that such observer shall have the right to receive the
materials distributed to directors for meetings of the Company's Board of
Directors and to be heard at such meetings. The Investors and Prior Holders
shall take all such necessary action within their power to ensure that such
observer will be reimbursed for reasonable out-of-pocket expenses related to
attending meetings of the Company's Board of Directors. All information
furnished by the Company to the observer shall be treated as confidential
information, excluding only such information as is otherwise generally available
on a non-confidential basis. The observer shall use the standard of care to
maintain the confidentiality of all of the confidential information furnished by
the Company that is set out in Section 6.1(e) of this Agreement.
(h) Notwithstanding anything to the contrary contained in the
bylaws of the Company and subject to the limitations described Section 6.2(n),
the Company shall hold meetings of the Board of Directors after providing all
directors with at least five (5) calendar days' prior written notice; provided
that, upon the Debentureholders' request, if at least one (1) Debentureholder
nominee is unable or unwilling to attend any properly noticed meeting either in
person or telephonically, then the Company shall reschedule such meeting and
shall again provide at least five (5) calendar days' prior written notice.
(i) Meetings of the Board of Directors shall be held five (5)
times per year. Prior to the end of each fiscal year, the meetings of the Board
of Directors for the following fiscal year shall be scheduled. The timing of
four of the meetings shall coincide with the completion of each quarter for such
fiscal year, allowing sufficient time for the financial statements for such
quarter to be completed and circulated to the directors in advance of such
meeting. The fifth meeting shall be scheduled as a strategy/budget meeting for
the coming fiscal year. Materials for meetings of the Board of Directors shall
be provided to the directors at least 5 days prior to a meeting of the Board of
Directors.
(j) Meetings of the Audit Committee and the Compensation
Committee shall be scheduled prior to but on the same day as meetings of the
Board of Directors.
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(k) Each member of the Board of Directors shall be paid fees
of $12,500 per annum plus $4,000 per annum for each seat on the Audit Committee
or the Compensation Committee. Travel and accommodation expenses of the
directors and Committee members shall be for the account of the Company.
(l) The Company shall maintain directors and officers
insurance in scope and amount consistent with industry standards.
(m) The Company, the Investors and the Prior Holders agree
that, in addition to any fees paid by the Company pursuant to paragraph (k)
above, any services rendered by representatives of the Debentureholders in
favour of the Company or Occulogix, L.P. shall be compensated by the Company or
Occulogix, L.P., as the case may be, at fair market value and that all travel
and accommodation expenses associated with such services shall be paid by the
Company or Occulogix, L.P., as the case may be.
(n) Each notice of a meeting of the Board of Directors shall
set out in reasonable detail the business to be considered at such meeting and
no other business shall be transacted at such meeting without the consent of all
of the directors. Notwithstanding the notice periods described in Section 6.2(h)
above, in the event that the Chief Executive Officer and one other director or
any three directors of the Company determine that the Board of Directors needs
to act at a special meeting (a "Special Meeting") in order to respond to a
matter (other than the matters set forth in Section 6.2(o) of this Agreement)
with respect to which they determine in good faith that the failure of the Board
of Directors to immediately act would be potentially detrimental to the best
interests of the Company's stockholders, then such Special Meeting may be called
on forty-eight (48) hours prior notice. In the event that at least one (1)
Debentureholder nominee is unable to attend a Special Meeting either in person
or telephonically, the Company covenants that (i) it will take no action at such
Special Meeting that relates to that certain Limited Partnership Agreement of
OccuLogix, L.P., Sales Agreement, TLC Software License Agreement, VSC Software
License Agreement and License Agreement or adversely affects a Debentureholder,
in its capacity as a securityholder or joint venture partner with the Company
(or its affiliates) or otherwise or that affects a Debentureholder, in a
discriminatory manner inconsistent with its adverse effects of the rights of the
Company's other stockholders, and (ii) it will provide the Debentureholders with
prompt notice of any and all actions taken at such Special Meeting, including
providing the Debentureholders with any materials distributed to directors at
the Special Meeting.
(o) In addition to any other rights provided by law, the
Company shall not, without first obtaining the prior approval of the Board of
Directors (by vote at a properly noticed meeting in accordance with Section
6.2(h) of this Agreement or by unanimous written consent):
(i) authorize any stock option plans or other similar
contracts with stockholders, directors, officers, consultants and employees of
the Company for the purchase of securities of the Company or purchase any
key-person life insurance by the Company;
- -29-
(ii) take, hold, subscribe for or agree to purchase or
acquire shares of any corporation or take or have any interest in a joint
venture or partnership or similar undertaking;
(iii) approve the annual operating budget of the Company
and any material changes or alterations to such budget (including additional
expenditures not provided for therein);
(iv) incur indebtedness (other than payables in the
ordinary course of business) in excess of $100,000 in the aggregate;
(v) make any single capital expenditure in excess of
$10,000 per calendar month or aggregate capital expenditures in excess of
$25,000 per calendar month, unless included in a budget approved by the majority
of the Board of Directors;
(vi) acquire, or permit any subsidiary to acquire, any
interest in any business with a value in excess of $25,000 (whether by purchase
of assets, purchase of stock, merger or otherwise);
(vii) change the location of the Company's current head
office, executive office, principal place of business or jurisdiction of
incorporation;
(viii) change the fiscal year of the Company;
(ix) the appointment or change of the accountants or
auditors of the Company or change in accounting policies applied by the Company;
(x) the establishment of, or any change in the business
plan for the Company or senior management of the Company or entering into a
material strategic alliance, joint venture, material acquisition or disposition
or the carrying on by the Company of any other business or operation; or
(xi) enter into or modify any agreement, transaction or
arrangement with any of its officers, directors or employees, except for
customary compensation or benefit arrangements as approved by the majority of
Board of Directors.
(p) The Investors and Prior Holders covenant and agree to at
all times vote or cause to be voted all shares of outstanding voting capital
stock of the Company, which they may own, control or be entitled to vote,
determined on a fully diluted basis, and to take all necessary action within
their power to enable the Company to fulfill its obligations described in
Section 7.10 of the Series B Purchase Agreement, including, but not limited to,
voting in favor of any amendment to the Company's Certificate or Incorporation
necessary to effect such obligations.
(q) In addition to any other rights provided by law, the
Company shall not, without first obtaining the prior approval of the majority of
the Board of Directors of the Company, including at least one (1) nominee of the
Prior Holders, enter into any transaction with a party which does not deal at
arm's length with either of the Debentureholders where such
- -30-
transaction involves the transfer or sale of all or substantially all of the
assets of the Company or any merger, amalgamation or other business combination
with the Company.
(r) The Company and each of the Investors and Prior Holders
covenant and agree that they will take all necessary action to amend the bylaws
of the Company, as necessary, to implement and give effect to the provisions of
this Agreement.
6.3 Board Designations.
For purposes of this Agreement: (i) any individual who is designated
for election to the Company's Board of Directors pursuant to the foregoing
provisions of Section 6.2 is hereinafter referred to as a "Board Designee"; and
(ii) any individual, entity, or group of individuals and/or entities who has the
right to designate one or more Board Designees for election the Company's Board
of Directors pursuant to the foregoing provisions of Section 6.2 is hereinafter
referred to as a "Designator" or as "Designators," as applicable.
(a) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THE
BYLAWS OF THE COMPANY, FROM time to time during the term of this Agreement, a
Designator or Designators shall, in their sole discretion, have the sole and
absolute right to:
(i) elect to or remove from the Company's Board of
Directors any incumbent Board Designee who occupies a Board seat for which such
Designator or Designators are entitled to designate the Board Designee under
Section 6.2; and/or
(ii) designate a new Board Designee for election to a
Board seat for which such Designator or Designators are entitled to designate
the Board Designee under Section 6.2 (whether to replace a prior Board Designee
or to fill a vacancy in such Board seat); provided, that, such removal and/or
designation of a Board Designee is approved in a writing signed by the
appropriate Designator or Designators who are entitled to designate such Board
Designee under Section 6.2, in which case such election to remove a Board
Designee and/or elect a new Board Designee will be binding on all such
Designators. In the event of such a removal and/or designation of a Board
Designee under this Section 6.3(a)(ii), the Investors and the Prior Holders
shall vote their shares of the Company's capital stock as provided in Section
6.2 to cause: (A) the removal from the Company's Board of Directors of the Board
Designee or Designees so designated for removal by the appropriate Designator or
Designators; and (B) the election to the Company's Board of Directors of any new
Board Designee or Designees so designated for election to the Company's Board of
Directors by the appropriate Designator or Designators.
(iii) Notwithstanding anything to the contrary in this
Section 6, if a Board Designee designated by the Prior Holders pursuant to
Section 6.2 who is an employee of the Company subsequently ceases to be an
employee of the Company, such Designee may be removed from the Company's Board
of Directors by the holders of a majority of the Common Stock held by the Prior
Holders determined on a fully diluted basis,. The vacancy on the Board of
Directors resulting from such removal shall be filled in the manner provided in
Section 6.2.
- -31-
(b) The Company shall promptly give each of the Investors and
the Prior Holders written notice of any change in composition of the Company's
Board of Directors and of any proposal by a Designator or Designators to remove
or elect a new Board Designee.
(c) Each of the Investors, the Prior Holders and the Company
agree not to vote any shares of Company capital stock, or to take any other
actions, that would in any manner defeat, impair, be inconsistent with or
adversely affect the stated intentions of the parties under this Section 6 of
this Agreement.
6.4 Liquidity Covenant of Company.
If the Company:
(a) has not completed an Initial Public Offering and had its
common stock Listed prior to the date that is two years after the date that the
Company has received an "approvable ruling" for the Company's rheopheresis
technology from the U.S. Food and Drug Administration; or
(b) has recorded net income, calculated in accordance with
generally accepted accounting principles ("Net Income"), in excess of $1,000,000
in each of four consecutive fiscal quarters,
then the Board of Directors of the Company shall declare and shall cause the
Company to pay, on an annual basis, a dividend to holders of Common Stock, on a
fully-diluted basis, in an aggregate amount equal to 50% of Net Income. Such a
dividend shall be payable on an annual basis for such time as either condition
above continues to be satisfied.
6.5 Except as set forth in this Section 6, the covenants set forth
in Section 6.3 shall terminate and be of no further force and effect after the
closing of the Qualified IPO.
7. Representations and Warranties.
7.1 Each Prior Holder and Investor represents and warrants:
(a) that, subject to any transfers permitted hereunder, such
Prior Holder and Investor owns beneficially and of record the number of shares
of Common Stock (or any securities convertible or exchangeable or exercisable
into shares of Common Stock) which are expressed to be owned by him, her or it
in Schedule 7.1 to this Agreement, that such shares or securities are not
subject to any mortgage, lien, charge, pledge, encumbrance, security interest or
adverse claim and that no Person has any rights to become a holder or possessor
of any of such shares or of the certificates representing the same;
(b) that if such Prior Holder or Investor is an individual
that he or she has the capacity to enter into and give full effect to this
Agreement;
(c) that if such Prior Holder or Investor is a corporation,
that it is duly incorporated and validly existing under the laws of its
jurisdiction of incorporation and that it has the corporate power and capacity
to own its assets and to enter into and perform its obligations under this
Agreement;
- -32-
(d) if such Prior Holder or Investor is a trust, partnership
or joint venture, that it is duly constituted under the laws which govern it and
that it has the power to own its assets and to enter into and perform its
obligations under this Agreement;
(e) that this Agreement has been duly authorized by it, and
duly executed and delivered by him, her or it, as the case may be, and
constitutes a valid and binding obligation enforceable in accordance with its
terms, subject to the usual exceptions as to bankruptcy and the availability of
equitable remedies;
(f) that the execution, deliver and performance of this
Agreement does not and will not contravene the provisions of its articles,
bylaws, constating documents or other organizational documents or the documents
by which it was created or established or the provisions of any indenture,
agreement or other instrument to which he or it is a party or by which he or it
may be bound; and
(g) that all of the foregoing representations and warranties
will continue to be true and correct during the continuance of the Agreement.
7.2 The Company, to the best of its knowledge, information and
belief confirms the representations and warranties set out in Section 7.1 and
further represents and warrants that the securities set forth in Schedule 7.1
are the only outstanding securities of the Company.
8. Miscellaneous.
8.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided in this
Agreement, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties
(including transferees of any Registrable Securities). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties to this Agreement or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
8.2 GOVERNING LAW. This Agreement shall be governed by and construed
exclusively in accordance with the internal laws of the State of Delaware,
without giving effect to any choice of law or conflict of law provisions.
8.3 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
taken together shall be deemed to constitute one and the same instrument.
Counterparts may be executed either in original or faxed form and the parties
adopt any signatures received by a receiving fax machine as original signatures
of the parties.
8.4 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
8.5 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given (i) upon personal delivery to the party to be notified; (ii)
upon transmission, when sent by facsimile if sent during normal business hours
of the recipient, if not, then on the next business day; (iii) five calendar
days after having been sent by registered or certified mail, return receipt
requested,
- -33-
postage prepaid; (iv) one day after a deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification of
receipt. All communications shall be sent to the address indicated for such
party on the signature page hereof, or at such other address as such party may
designate by ten (10) calendar days advance written notice to the other parties.
8.6 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, then such provision(s) shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
8.7 THIRD PARTIES. Nothing in this Agreement, express or implied, is
intended to confer upon any Person, other than the parties hereto and their
successors and assigns, any rights or remedies under or by reason of this
Agreement.
8.8 ENTIRE AGREEMENT. This Agreement, together with all the exhibits
hereto, constitutes and contains the entire agreement and understanding of the
parties with respect to the subject matter of this Agreement and supersedes any
and all prior negotiations, correspondence, agreements, understandings, duties
or obligations between the parties respecting the subject matter of this
Agreement.
8.9 COSTS AND ATTORNEYS' FEES. In the event that any action, suit or
other proceeding is instituted concerning or arising out of this Agreement or
any transaction contemplated hereunder, the prevailing party shall recover all
of such party's costs and attorneys' fees incurred in each such action, suit or
other proceeding, including any and all appeals or petitions therefrom.
8.10 ADJUSTMENTS FOR STOCK SPLITS AND CERTAIN OTHER CHANGES.
Wherever in this Agreement there is a reference to a specific number of shares
of Common Stock or Preferred Stock of the Company of any class or series, then,
upon the occurrence of any subdivision, combination or stock dividend of such
class or series of stock, the specific number of shares so referenced in this
Agreement shall automatically be proportionally adjusted to reflect the effect
on the outstanding shares of such class or series of stock by such subdivision,
combination or stock dividend.
8.11 AGGREGATION OF STOCK. All shares held or acquired by affiliated
entities or persons shall be aggregated together for the purpose of determining
the availability of any rights under this Agreement.
8.12 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. Wherever in this
Agreement, or any Exhibit hereto, reference is made to a calculation to be made
or an action to be taken in accordance with generally accepted accounting
principles, such reference will be deemed to be to the generally accepted
accounting principles from time to time by the American Institute of Certified
Public Accountants or any successor institute, applicable as at the date on
which such calculation or action is made or taken or required to be made or
taken in accordance with generally accepted accounting principles.
8.13 COOPERATION. The parties shall cooperate fully in good faith
with each other and their respective legal advisers, accountants and other
representatives in connection with any steps required to be taken as part of
their respective obligations under this Agreement.
8.14 REMEDIES CUMULATIVE. The rights and remedies of the parties
under this Agreement are cumulative and in addition to and not in substitution
for any of the rights or remedies provided by law. Any single or partial
exercise by any party hereto of any right or remedy for default or breach of any
term, covenant or condition of this Agreement does not
- -34-
waive, alter, affect or prejudice any other right or remedy to which such party
may be lawfully entitled for the same default or breach.
8.15 TIME OF ESSENCE. Time shall be of the essence of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Investors' Rights
Agreement as of the date first set forth above.
"THE COMPANY":
VASCULAR SCIENCES CORPORATION
By:______________________________
Richard Davis, Jr., M.D,
President and Chief Executive Officer
Address: 612 Florida Avenue
Palm Harbor, FL 34683
Attention: President
Fax: (727) 784-0898
- -35-
COUNTERPART SIGNATURE PAGE TO
VASCULAR SCIENCES CORPORATION
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
"INVESTORS"
Diamed Medizintechnik GMBH
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
TLC Vision Corporation
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
______________________________________
Howard Howell
Address:______________________________
______________________________________
______________________________________
Rehab Associates of West Florida, P.A.
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
______________________________________
Charles Edgar Hart
Address:______________________________
______________________________________
______________________________________
- -ii-
______________________________________
Charles Edgar Hart Jr.
Address:______________________________
______________________________________
______________________________________
______________________________________
Nancy E. Hart
Address:______________________________
______________________________________
______________________________________
______________________________________
Patrick J. Sheppard
Address:______________________________
______________________________________
______________________________________
______________________________________
Stephen M. Weinstock
Address:______________________________
______________________________________
______________________________________
- -iii-
______________________________________
David Hooks
Address:______________________________
______________________________________
______________________________________
Barkley Family Partnership, Ltd.
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
Roger and S. Lorraine C. Golomb
______________________________________
Address:______________________________
______________________________________
______________________________________
- -iv-
Gene DMD and Brenda Whitehead
______________________________________
Address:______________________________
______________________________________
______________________________________
Jeffrey S. Schwartz and S. Maribeth
Turner
______________________________________
Address:______________________________
______________________________________
______________________________________
- -v-
William J. Jr. MD and Kris Richards
______________________________________
Address:______________________________
______________________________________
______________________________________
______________________________________
Richard J. Hairston
Address:______________________________
______________________________________
______________________________________
______________________________________
Gary M. Najar
Address:______________________________
______________________________________
______________________________________
- -vi-
Northlea Partners
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
Michael O. and Rebecca L. Abdoney
______________________________________
Address:______________________________
______________________________________
______________________________________
______________________________________
Alan B. Aker
Address:______________________________
______________________________________
______________________________________
- -vii-
The Thomas D. Arthur Revocable Trust
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
______________________________________
Richard Beard, III
Address:______________________________
______________________________________
______________________________________
- -viii-
______________________________________
Daniel A. Bertoch, D.D.S.
Address:______________________________
______________________________________
______________________________________
______________________________________
Brandt, Tom E.
Address:______________________________
______________________________________
______________________________________
______________________________________
David C. Brown
Address:______________________________
______________________________________
______________________________________
- -ix-
Capital Paradigms, Inc.
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
______________________________________
Margaret A. Cornish
Address:______________________________
______________________________________
______________________________________
- -x-
DD Irrevocable Trust, Nancie Reichle,
Trustee
By:___________________________________
Nancy Reichle, Trustee
Address:______________________________
______________________________________
______________________________________
______________________________________
David W. Dieters
Address:______________________________
______________________________________
______________________________________
______________________________________
Raphael Andre Drehsen
Address:______________________________
______________________________________
______________________________________
- -xi-
Dan and Lockye Drone
______________________________________
Address:______________________________
______________________________________
______________________________________
______________________________________
Dubin, Richard J.
Address:______________________________
______________________________________
______________________________________
______________________________________
Burt W. Dubow
Address:______________________________
______________________________________
______________________________________
- -xii-
Richard and Brigitte Fielder, JT TEN
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
First Trust Corporation TTEE FBO
David H. Shapiro Acct # 031038028709
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
- -xiii-
Gills, James P. Gills Flint Trust
Dated 12/20/99
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
______________________________________
David E. Geller
Address:______________________________
______________________________________
______________________________________
______________________________________
Willi E. Gunti
Address:______________________________
______________________________________
______________________________________
- -xiv-
______________________________________
Cecil S. Harrell
Address:______________________________
______________________________________
______________________________________
JTB VisionQuest Corporation
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
______________________________________
William S. Jacobson
Address:______________________________
______________________________________
______________________________________
- -xv-
Charles S. and Edeltrout Jenkins
______________________________________
Address:______________________________
______________________________________
______________________________________
Dan R. Johnson, Revocable Trust
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
______________________________________
Ralph Katz
Address:______________________________
______________________________________
______________________________________
- -xvi-
______________________________________
Greta Meeks
Address:______________________________
______________________________________
______________________________________
______________________________________
Lorraine K. Mikolon
Address:______________________________
______________________________________
______________________________________
______________________________________
Gregory Mincey
Address:______________________________
______________________________________
______________________________________
- -xvii-
Anthony P. Pizzo Family Trust
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
______________________________________
Richard Powell
Address:______________________________
______________________________________
______________________________________
______________________________________
Dr. John A. Retzlaff
Address:______________________________
______________________________________
______________________________________
- -xviii-
______________________________________
A.H. Rodriguez
Address:______________________________
______________________________________
______________________________________
A.H. Rodriguez Family Trust
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
______________________________________
A.H. or Christopher Rodriguez
Address:______________________________
______________________________________
______________________________________
Donna Rodriguez Family Trust
- -xix-
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
Jennifer or Donna Rodriguez
______________________________________
Address:______________________________
______________________________________
______________________________________
______________________________________
Eric F. Rubin
Address:______________________________
______________________________________
______________________________________
- -xx-
______________________________________
Leslie A. Rubin
Address:______________________________
______________________________________
______________________________________
______________________________________
Tracie B. Rubin
Address:______________________________
______________________________________
______________________________________
Safe Harbor Fund I, L.P.
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
- -xxi-
Safe Harbor Managed Account 101-A,
Ltd.
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
Donald Sanders, Custodian for Kendra
Sanders
By:___________________________________
Donald Sanders, Custodian
Address:______________________________
______________________________________
______________________________________
Date:___________________________, 2003
- -xxii-
Donald Sanders, Custodian for Monica
Sanders
By:___________________________________
Donald Sanders, Custodian
Address:______________________________
______________________________________
______________________________________
Date:___________________________, 2003
Donald Sanders, IRA CIBC
Oppenheimer as Custodian
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
______________________________________
Santaromita, Joseph
Address:______________________________
______________________________________
______________________________________
The Schoenbaum Revocable Trust dtd
10/29/99
- -xxiii-
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
______________________________________
Chris Spieldenner
Address:______________________________
______________________________________
______________________________________
Mark Stern and Ellen Kaplan Stern,
ATBE
______________________________________
Address:______________________________
______________________________________
______________________________________
Mark Stern and Ellen Kaplan Stern,
Irrevocable Trust for Elliott Benjamin
Stern
By:___________________________________
- -xxiv-
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
Mark Stern and Ellen Kaplan Stern,
Irrevocable Trust for Lennie Beth
Stern
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
- -xxv-
Mark Stern and Ellen Kaplan Stern,
Irrevocable Trust for Zachary Adam
Stern
By:___________________________________
Address:______________________________
______________________________________
______________________________________
Name:_________________________________
Title:________________________________
Date:___________________________, 2003
______________________________________
Elizabeth Strapp
Address:______________________________
______________________________________
______________________________________
______________________________________
Alan Szucs
Address:______________________________
______________________________________
______________________________________
- -xxvi-
______________________________________
David E. Wise
Address:______________________________
______________________________________
______________________________________
______________________________________
Ellis Wolben
Address:______________________________
______________________________________
______________________________________
______________________________________
Thomas G. Wolf
Address:______________________________
______________________________________
______________________________________
- -xxvii-
______________________________________
Richard C. Davis, Jr.
Address:______________________________
______________________________________
______________________________________
______________________________________
Hans K. Stock
Address:______________________________
______________________________________
______________________________________
- -xxviii-
COUNTERPART SIGNATURE PAGE TO
VASCULAR SCIENCES CORPORATION
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
"PRIOR HOLDERS":
Richard C. Davis, Jr.
Address:______________________________
______________________________________
______________________________________
Hans K. Stock
Address:______________________________
______________________________________
______________________________________
Jane Cornish Smith
Address:______________________________
______________________________________
______________________________________
Ramia H. Cornish
Address:______________________________
______________________________________
______________________________________
______________________________________
John Cornish
Address:______________________________
______________________________________
______________________________________
Margaret A. Cornish QDOT Trust,
dated 8/2/90, Margaret A. Cornish and
Jane Cornish Smith, Trustees
By:___________________________________
Margaret A. Cornish, Trustee
By:___________________________________
Jane Cornish Smith , Trustee
Address:______________________________
______________________________________
______________________________________
- -ii-
Schedule A
SCHEDULE OF INVESTORS AND THEIR HOLDINGS
SHARES OF
COMMON STOCK
SHARES OF SHARES OF ISSUABLE
SHARES OF SERIES A SERIES B PURSUANT TO
COMMON PREFERRED PREFERRED CONVERTIBLE
INVESTOR STOCK STOCK STOCK DEBENTURES
Diamed Medizintechnik GMBH 125,000 191,493 3,553,226
TLC Vision Corporation 524,070 3,553,226
Howell, Howard 22,964
Rehab Associates of West Florida, P.A. 4,875
Hart, Charles Edgar 975
Hart, Edgar Hart Jr. 975
Hart, Nancy E. 975
Sheppard, Patrick J. 9,751
Weinstock, Stephen M. 5,850
Hooks, David 7,801
Barkley Family Partnership, Ltd. 7,313
Golomb, Roger, S. Lorraine C. 4,875
Whitehead, Gene DMD, Brenda 4,875
Schwartz, Jeffrey S. Maribeth Turner- 2,925
Richards, William J. Jr. MD, Kris 3,900
Hairston, Richard J. 3,900
Najar, Gary M. 4,875
Northlea Partners 3,821 3,900
Abdoney, Michael O. and Rebecca L. 3,125 3,648
Aker, Alan B. 205,499
The Thomas D. Arthur Revocable Trust 6,250 7,295
Beard, Richard, III 3,648
Bertoch, Daniel A., D.D.S. 3,648
Brandt, Tom E. 14,591
Brown, David C. 65,760
Capital Paradigms, Inc. 486
Cornish, Margaret A. 3,648
Davis, Richard C., Jr. 79,751
Dieters, David W. 2,918
Drehsen, Raphael Andre 912
Drone, Dan and Lockye 6,250
Dubin, Richard J. 1,824
Dubow, Burt W. 5,218
Fielder, Richard and Brigitte, JT TEN 75,700 7,295
First Trust Corporation TTEE FBO 4,875
David H. Shapiro Acct # 031038028709
Gills, James P. Gills Flint Trust Dated 12/20/99 187,500 42,223
Geller, David E. 3,750 3,648
Gunti, Willy E. 25,000
Harrell, Cecil S. 6,250 7,295
JTB VisionQuest Corporation 989
Jacobson, William S. 3,288
Jenkins, Charles S. and Edeltrout 1,562 1,824
Johnson, Dan R. Revocable Trust 6,250 3,648
Kahn, Harvey 3,288
Katz, Ralph 3,288
Meeks, Greta 1,824
Mikolon, Lorraine K. 822
Mincey, Gregory 8,220
Pizzo, Anthony P. Family Trust 3,648
Powell, Richard 7,295
RD Irrevocable Trust, Reichle, Nancie, Trustee 12,527
Retzlaff, Dr. John A. 32,880
- - ii -
Rodriguez, A.H. 4,008 438
Rodriguez, A.H. Family Trust 40,125
Rodriguez, A.H. or Christopher 3,648
Rodriguez, Donna Family Trust 40,125
Rodriguez, Jennifer or Donna 3,648
Rubin, Eric F. 1,824
Rubin, Leslie A. 3,648
Rubin, Tracie B. 1,824
Safe Harbor Fund I, L.P. 13,883
Safe Harbor Managed Account 101-A, Ltd. 21,082
Sanders, Donald, Custodian for Kendra Sanders 9,098
Sanders, Donald, Custodian for Monica Sanders 9,098
Sanders, Donald, IRA CIBC 250,000 246,599
Oppenheimer as Custodian
Santaromita, Joseph 2,466
The Schoenbaum Revocable Trust dtd 10/29/99 7,295
Spieldenner, Chris 7,295
Stern, Mark and Ellen Kaplan Stern, ATBE 80,548 14,591
Stern, Mark and Ellen Kaplan Stern, 730
Irrevocable Trust for Elliott Benjamin Stern
Stern, Mark and Ellen Kaplan Stern, 730
Irrevocable Trust for Lennie Beth Stern
Stern, Mark and Ellen Kaplan Stern, 730
Irrevocable Trust for Zachary Adam Stern
Stock, Hans 72,954
Strapp, Elizabeth 912
Szucs, Alan 3,125 3,648
Wise, David E. 20,550
Wolbe Ellis 3,648
Wolf, Thomas G. 3,125 3,648
TOTALS 783,435 1,275,932 620,112 7,106,452
- - iii -
Schedule B
PRIOR HOLDERS
NAME OF PRIOR HOLDERS NUMBER OF SHARES OF COMMON STOCK HELD
- ---------------------------------------------------- -------------------------------------
Richard C. Davis, Jr. 1,184,603
Hans K Stock 250,000
John Cornish 228,589
Jane Cornish Smith 230,586
Ramia H. Cornish 206,250
Margaret A. Cornish QDOT Trust, dated 8/2/90, 676,676
Margaret A. Cornish and Jane Cornish Smith, Trustees
TOTAL: 2,776,704
- - iv -
Schedule 7.1
OUTSTANDING SECURITIES
- -v-