exv4w5



 







Exhibit 4.5




REPLIDYNE, INC.




FOURTH AMENDED AND RESTATED

STOCKHOLDERS AGREEMENT




     THIS FOURTH AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this “Agreement”) is entered into as
of August 17, 2005, by and among REPLIDYNE, INC., a Delaware corporation (the “Corporation”), those
original stockholders of the Corporation listed on Schedule 1 hereto (hereinafter referred to
collectively as the “Original Stockholders”), those stockholders of the Corporation listed on
Schedule 2 hereto (hereinafter referred to collectively as the “Investors”), those certain
stockholders of the Corporation that shall from time-to-time become party to this Agreement
effective as of the date indicated on the counterpart signature page hereto (together with the
Original Stockholders and Investors, the “Holders”) and the holders of the Warrants listed on
Schedule 3 hereto (the “Warrant Holders”).



W I T N E S S E T H:




     Whereas, the Corporation has agreed to issue shares of its Series D Preferred Stock
to certain investors pursuant to the Series D Preferred Stock Purchase Agreement (the “Series D
Stock Purchase Agreement”) of even date herewith (the “Financing”);



     Whereas, the obligations in the Series D Stock Purchase Agreement are conditioned
upon the execution and delivery of this Agreement;



     Whereas, the Corporation and the certain of the Investors entered into the
Convertible Preferred Stock Purchase Agreement, dated February 20, 2002 (the “Series A Stock
Purchase Agreement”), in connection with which the Corporation agreed to sell to such Investors
shares of its Series A Preferred Stock and the Corporation desired to grant to such Investors
certain registration and other rights with respect to such shares;



     Whereas, as a condition to entering into the Series A Stock Purchase Agreement, the
Original Stockholders agreed to certain restrictions on their rights to dispose of their shares of
Common Stock of the Corporation set forth in that certain Stockholders Agreement, dated February
20, 2002 (the “Original Stockholders Agreement”);



     Whereas, in connection with an equipment lease transaction between the Corporation
and the Warrant Holders, the Original Stockholders Agreement was amended pursuant to that certain
First Amendment to Stockholders’ Agreement, dated July 31, 2002;



     Whereas, the Original Stockholders Agreement was amended and restated pursuant to the
Amended and Restated Stockholders Agreement, dated February 1, 2003 (the “Restated Stockholders
Agreement”), pursuant to which the parties thereto accepted certain rights and covenants relating
to the Offered Securities (as defined below) and the right to dispose of shares of Offered
Securities acquired prior to or after the execution of this Agreement by the parties thereto;



     Whereas, in connection with the issuance by the Corporation of shares of its Series B
Preferred Stock to GSK (as defined herein) pursuant to the Asset Sale and Purchase and



1.









 




Licensing Agreement (the “Asset Purchase Agreement”) dated June 4, 2003 and the Series B
Preferred Stock Purchase Agreement (the “Series B Stock Purchase Agreement”) dated June 4, 2003,
the Restated Stockholders Agreement was amended and restated pursuant to the Second Amended and
Restated Stockholders Agreement, dated June 4, 2003 (the “Second Restated Stockholders Agreement”);




     Whereas, in connection with the issuance by the Corporation of shares of its Series C
Preferred Stock pursuant to the Series C Preferred Stock Purchase Agreement (the “Series C Stock
Purchase Agreement”) dated April 28, 2004, the Second Restated Stockholders Agreement was amended
and restated pursuant to the Third Amended and Restated Stockholders Agreement, dated April 28,
2004 (the “Third Restated Stockholders Agreement”);



     Whereas, the parties to the Third Restated Stockholders Agreement (the “Prior
Investors”) desire to terminate the Third Restated Stockholders Agreement and accept the rights and
covenants hereof in lieu of their rights and covenants under the Third Restated Stockholders
Agreement; and



     Whereas, in connection with the consummation of the Financing, the parties desire to
enter into this Agreement in order to grant registration, information rights and other rights to
the Investors as set forth below.



     Now, Therefore, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree
hereto as follows:



ARTICLE 1




DEFINITIONS




     As used herein, the following terms shall have the following respective meanings:



          (a) Agreement shall have the meaning set forth in the preamble hereto.




          (b) Approved Plan shall mean any written agreement, plan or arrangement, including the 2001
Long-Term Incentive Plan of the Corporation, as may be amended from time to time pursuant to the
terms of this Agreement and in compliance with the terms of such plan or arrangement (the “Current
Incentive Plan”), to purchase, or rights to subscribe for, stock options, Common Stock or any other
equity securities of the Corporation, that has been approved in form and in substance by the
holders of a majority of the combined voting power of the Series A Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock then outstanding, voting together as a single class,
held by the Investors, calculated in accordance with Section A.5(a) of Article III of the
Certificate (including, in such calculation, any outstanding Restricted Shares held by such
holders), and which, as a condition precedent to the issuance of stock options, Common Stock, or
any other equity security, provides for the vesting of stock options, Common Stock or any other
equity security and/or subjects such stock options, shares or securities to restrictions on
transfers and rights of first offer in favor of the Corporation; provided, however, that the
maximum number of shares of Common Stock heretofore or hereafter issuable pursuant to the Current
Incentive Plan and all such agreements, plans and




2.









 







arrangements shall not exceed 12,910,000 shares, as such number may be increased only with the
approval of the holders of a majority of the combined voting power of the Series A Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock then outstanding, voting together as a single
class, held by the Investors, calculated in accordance with Section A.5(a) of Article III of the
Certificate (including, in such calculation, any outstanding Restricted Shares held by such
holders) and subject to adjustment as required to comply with any anti-dilution rights set forth in
the Current Incentive Plan and any such agreement, plan or arrangement.




          (c) Asset Purchase Agreement shall mean the Asset Purchase Agreement, dated June 4, 2003,
between the Corporation and GSK.




          (d) Board shall mean the Board of Directors of the Corporation.




          (e) Budget shall have the meaning set forth in Section 2.8 hereof.




          (f) Certificate shall mean the Restated Certificate of Incorporation of the Corporation, filed
with the Secretary of State of Delaware on August 17, 2005, as may be amended from time to time.




          (g) Claim shall have the meaning set forth in Section 7.1 hereof.




          (h) Commission shall mean the U.S. Securities and Exchange Commission.




          (i) Common Stock shall mean the Common Stock, par value $.01 per share, of the Corporation.




          (j) Corporation shall have the meaning set forth in the preamble hereto.




          (k) Designating Party shall have the meaning set forth in Section 5.4 hereof.




          (l) Domestic Partner shall mean an adult of the same or opposite sex with whom another adult
has an intimate relationship in which the adults (1) reside together or share the same permanent
address for a period of at least 12 consecutive months, (2) each share responsibility and
contribute, in equal or unequal amounts, to providing food, shelter, other expenses and other
non-financial aspects of the relationship, (3) each have the current intent to remain in the
relationship indefinitely, (4) are not married to any other person, (5) are not related by blood
closer than law would prohibit in legal marriage in the state of residence, and (6) each do not
have a different Domestic Partner.




          (m) Duquesne shall mean Juggernaut Fund, L.P., a Delaware limited partnership, Steeler Fund,
Ltd., a corporation organized under the laws of the Cayman Islands, and Iron City Fund, Ltd., a
corporation organized under the laws of the Cayman Islands, collectively, including any successor
thereto or any permissible assignee of the interest, in whole or in part, of any of such entities
under this Agreement.




          (n) Environmental Laws shall mean all applicable federal, state and local laws, ordinances,
rules and regulations that regulate, fix liability for, or otherwise relate to, the handling, use
(including use in industrial processes, in construction, as building materials, or




3.









 







otherwise), storage and disposal of hazardous and toxic wastes and substances, and to the
discharge, leakage, presence, migration, threatened release or release (whether by disposal, a
discharge into any water source or system or into the air, or otherwise) of any pollutant or
effluent. Without limiting the preceding sentence, the term “Environmental Laws” shall
specifically include the following federal and state laws, as amended:




FEDERAL




     Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601
et seq.;



     Resource Conservation and Recovery Act of 1976, 42 U.S.C. 6901 et seq.;



     Clean Water Act, 33 U.S.C. 1251 et seq.; and



     Clean Air Act, 42 U.S.C. 7401 et seq.



STATE

COLORADO ENVIRONMENTAL STATUTES




     Colorado Hazardous Waste Sites Act, Colo. Rev. Stat. § 25-16-101 et seq.;



     Colorado Hazardous Waste Act, Colo. Rev. Stat. § 25-15-101 et seq.;



     Colorado Water Quality Control Act, Colo. Rev. Stat. § 25-8-101 et seq.; and



     Colorado Air Pollution Prevention and Control Act, Colo. Rev. Stat. § 25-7-101 et seq.



          (o) Equity Percentage shall mean, as to any Investor, that percentage figure which expresses
the ratio that (a) the number of shares of issued and outstanding Common Stock then owned by such
Investor bears to (b) the aggregate number of shares of issued and outstanding Common Stock then
owned by all Investors. For purposes solely of the computation set forth in clauses (a) and (b)
above and the rights of oversubscription as set forth in Article 2 and Article 6, all issued and
outstanding equity securities held by the Investors that are convertible into or exercisable or
exchangeable for shares of Common Stock (including any issued and issuable shares of Preferred
Stock) or for any such convertible, exercisable or exchangeable securities, shall be treated as
having been so converted, exercised or exchanged at the rate or price at which such securities are
convertible, exercisable or exchangeable for shares of Common Stock in effect at the time in
question (which, for purposes of Section 2.3 of this Agreement, shall be at the time of delivery by
the Corporation of the notice of the Offer contemplated by Section 2.3(b)), whether or not such
securities are at such time immediately convertible, exercisable or exchangeable.




          (p) Exchange Act shall mean the Securities Exchange Act of 1934, as amended.




          (q) Exchange Act Registration Statement shall have the meaning set forth in Section 2.5
hereof.




4.









 








          (r) Excess Securities shall have the meaning set forth in Section 2.3(d) hereof.




          (s) Excess Securities Notice shall have the meaning set forth in Section 2.3(d) hereof.




          (t) Excess Securities Period shall have the meaning set forth in Section 2.3(d) hereof.




          (u) Excluded Forms shall have the meaning given such term in Section 3.5 hereof.




          (v) Excluded Securities shall mean, collectively:




               (i) the Reserved Shares;



               (ii) stock options issued or issuable to officers, directors or employees of, or consultants
or independent contractors to, the Corporation, pursuant to an Approved Plan;



               (iii) Common Stock issued as a stock dividend payable in shares of Common Stock, or capital
stock of any class issuable upon any subdivision, recombination, split-up or reverse stock split of
all the outstanding shares of such class of capital stock of the Corporation;



               (iv) Common Stock issued or issuable pursuant to the acquisition of another corporation or
other entity (or its assets) by the Corporation by any merger, stock acquisition, reorganization,
purchase of substantially all assets or otherwise in which the Corporation, or its stockholders of
record immediately prior to the effective date of such transaction, directly or indirectly, own at
least a majority of the voting power of the acquired entity or the resulting entity after such
transaction, provided that such issuance is approved by the Board and the holders of shares
representing a majority of the voting power of the Preferred Stock then outstanding (the
“Acquisition Stockholder Vote”), provided, that, the Acquisition Stockholder Vote shall not be
required if the aggregate of any such shares issued or issuable pursuant to this subsection (iv)
does not exceed three percent (3%) of the Corporation’s shares, calculated on a fully-diluted basis
after giving effect to such issuance;



               (v) Common Stock issued or issuable to banks, lenders, landlords or equipment lessors,
provided that each such issuance is approved by the Board and the aggregate of any such shares
issued or issuable pursuant to this subsection (v) does not exceed one percent (1%) of the
Corporation’s shares, calculated on a fully-diluted basis after giving effect to such issuance;



               (vi) Common Stock issued or issuable to third parties in connection with strategic
partnerships or alliances, joint ventures or other licensing transactions, provided that each such
transaction and related issuance is approved by the Board and the holders of shares representing a
majority of the voting power of the Preferred Stock then outstanding (the “Strategic Stockholder
Vote”), provided, that, the Strategic Stockholder Vote shall not be required if the aggregate of
any such shares issued or issuable pursuant to this subsection (vi)
does not exceed three percent (3%) of the Corporation’s shares, calculated on a fully-diluted
basis after giving effect to such issuance;



5.









 





               (vii) Securities issued to GSK pursuant to the Series B Stock Purchase Agreement or the Asset
Purchase Agreement;



               (viii) shares of Series D Preferred Stock (and the Common Stock issuable upon the conversion
thereof) issued pursuant to the Series D Stock Purchase Agreement.



          (w) Family of an individual shall mean only that individual’s spouse, Domestic Partner and
lineal descendants (including by adoption).




          (x) Founder shall have the meaning set forth in Section 5.1(c) hereof.




          (y) Fourth Restated Stockholders Agreement shall have the meaning set forth in the recitals
hereto.




          (z) Group shall mean: (i) as to an Investor that is a corporation: any and all of the venture
capital limited partnerships or corporations now existing or hereafter formed that are affiliated
with or controlling, controlled by or under common control with one or more of the controlling
stockholders of such Investor and any predecessor or successor thereto, (ii) as to an Investor that
is a partnership, limited liability company or other entity, any current or former partner, member
or manager, any current or former partner, member or manager of a partnership, limited liability
company or other entity that serves as a general partner or manager of such entity, or any and all
of the venture capital or private equity limited partnerships or corporations now existing or
hereafter formed that are affiliated with or controlling, controlled by or under common control
with such Investor and any predecessor or successor thereto, (iii) in the case of HCV, the HCV
Group, (iv) in the case of any MDS Entity, any other MDS Entity, and (v) as to any Investor, any
other Investor.




          (aa) GSK shall mean SmithKline Beecham plc, an English corporation whose registered office is
at 980 Great West Road, Brentford, Middlesex, TW8 9GS, England, a wholly owned subsidiary of
GlaxoSmithKline plc.




          (bb) Hazardous Materials shall include, without limitation, any flammable explosives,
petroleum products, petroleum byproducts, radioactive materials, hazardous wastes, hazardous
substances, toxic substances or other similar materials regulated by Environmental Laws.




          (cc) HCV Group shall mean (i) HCV VI; (ii) HCV VIII, (iii) any venture capital limited
partnership now existing or hereafter formed which is affiliated with or under common control with
one or more general partners of any general partner of HCV VI or HCV VIII (an “HCV Fund”); (iii)
any limited partners or affiliates of HCV VI or HCV VIII or any other HCV Fund; and (iv) any
successors or permissible assigns of any of the foregoing.




          (dd) HCV VI shall mean HealthCare Ventures VI, L.P., a Delaware limited partnership, including
any successor thereto or any permissible assignee of the interest, in whole or in part, of HCV VI
under this Agreement.




6.









 








               HCV VIII shall mean HealthCare Ventures VIII, L.P., a Delaware limited partnership, including
any successor thereto or any permissible assignee of the interest, in whole or in part, of HCV VIII
under this Agreement.



               HCV shall mean HCV VI and HCV VIII collectively.



          (ee) HealthCare Investment Partners shall mean HealthCare Investment Partners, including any
successor thereto or any permissible assignee of the interest, in who or in part, of HealthCare
Investment Partners under this Agreement.




          (ff) Holders shall have the meaning set forth in the preamble hereto and, in the interest of
clarity, shall not include the use of the term without capitalization.




          (gg) Indemnitees shall have the meaning set forth in Section 7.1 hereof.




          (hh) Investors shall have the meaning set forth in the preamble hereto, severally, but not
jointly and severally.




          (ii) Major Investors shall have the meaning set forth in Section 2.6.




          (jj) MDS Entity shall mean any corporation, trust, partnership, limited liability corporation
or partnership or other form of business entity which is an investment fund to which MDS Capital
Corp., a corporation existing under the laws of the province of Ontario, or any of its affiliates
provides services and also means MDS Capital Corp. and its affiliates and “MDS Entities” means all
of them.




          (kk) Morgenthaler shall mean Morgenthaler Partners, VII, L.P., a Delaware limited partnership,
including any successor thereto or any permissible assignee of the interest, in whole or in part,
of Morgenthaler under this Agreement.




          (ll) Notice of Acceptance shall have the meaning set forth in Section 2.3(c) hereof.




          (mm) Och-Ziff shall mean Och-Ziff Capital Management, including any successor thereto or any
permissible assignee of the interest, in whole or in part, of Och-Ziff under this Agreement.




          (nn) Offer shall have the meaning set forth in Section 2.3(b) hereof.




          (oo) Offered Securities shall mean, except for Excluded Securities, (i) any shares of Common
Stock, Preferred Stock or any other equity security of the Corporation, in the interest of clarity,
specifically including Option Shares or other securities issued upon the exercise or conversion of
stock options or other derivative or convertible securities of the Corporation, (ii) any debt
security or capitalized lease with any equity feature with respect to the Corporation, or (iii) any
option, warrant or other right to subscribe for, purchase or otherwise acquire any such equity
security, debt security or capitalized lease.




7.









 








          (pp) Option Shares shall mean 12,910,000 shares of Common Stock which have been duly reserved
for issuance upon the exercise of the options granted under an Approved Plan.




          (qq) Original Stockholders shall have the meaning set forth in the preamble hereto.




          (rr) Original Stockholders Agreement shall have the meaning set forth in the recitals hereto.




          (ss) Other Shares shall have the meaning set forth in Section 3.5(e) hereof.




          (tt) Outstanding Equity Securities shall mean the outstanding Common Stock, the Common Stock
issued or issuable upon the conversion of the outstanding Preferred Stock, and any other
outstanding securities of the Corporation which are convertible into or exercisable for shares of
Common Stock (including, without limitation, warrants, options or other rights to purchase Common
Stock or convertible debentures or other convertible debt securities).




          (uu) Preferred Stock shall mean all series of the Preferred Stock, par value $.01 per share,
of the Corporation.




          (vv) Prior Stockholders Agreement shall have the meaning set forth in the preamble hereto.




          (ww) Prior Agreements shall have the meaning set forth in Article 11 hereof.




          (xx) Property shall include, without limitation, land, buildings and laboratory facilities
owned or leased by the Corporation or as to which the Corporation now has any duties,
responsibilities (for clean-up, remedy or otherwise) or liabilities under any Environmental Laws,
or as to which the Corporation or any subsidiary of the Corporation may have such duties,
responsibilities or liabilities because of past acts or omissions of the Corporation or any such
subsidiary or their predecessors, or because the Corporation or any such subsidiary or their
predecessors in the past was such an owner or operator of, or bore some other relationship with,
such land, buildings and/or laboratory facilities.




          (yy) Proposed Sale shall have the meaning set forth in Section 6.3(a) hereof.




          (zz) Refused Securities shall have the meaning set forth in Section 2.3(f) hereof.




          (aaa) Reserved Shares shall mean the shares of Common Stock reserved by the Corporation for
issuance upon the conversion of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock.




          (bbb) Restated Stockholders Agreement shall have the meaning set forth in the recitals hereto.




8.









 








          (ccc) Restricted Securities shall mean (i) any of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and the Common Stock issued or
issuable upon the conversion of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock, (ii) all shares of Common Stock issued or issuable in
respect thereof by way of stock splits, stock dividends, stock combinations, recapitalizations or
like occurrences, and (iii) any other shares of Common Stock or other securities of the Corporation
which may be issued hereafter to any of the Investors or any member of their Group which are
convertible into or exercisable for shares of Common Stock (including, without limitation, other
classes or series of Convertible Preferred Stock, warrants, options or other rights to purchase
Common Stock or convertible debentures or other convertible debt securities) and the Common Stock
issued or issuable upon such conversion or exercise of such other securities, which have not been
sold (a) in connection with an effective registration statement filed pursuant to the Securities
Act, or (b) pursuant to Rule 144 or Rule 144A promulgated by the Commission under the Securities
Act.




          (ddd) Restricted Shares shall mean the shares of Common Stock issued or issuable upon the
conversion or exchange of the Restricted Securities or otherwise constituting a portion of the
Restricted Securities.




          (eee) Second Restated Stockholders Agreement shall have the meaning set forth in the recitals
hereto.




          (fff) Securities Act shall mean the Securities Act of 1933, as amended.




          (ggg) Seller shall have the meaning set forth in Section 6.3(a) hereof.




          (hhh) Sequel shall mean Sequel Limited Partnership III, a Delaware limited partnership, and
Sequel Entrepreneurs’ Fund III, L.P., a Delaware limited partnership, including any successor
thereto or any permissible assignee of the interest, in whole or in part, of Sequel under this
Agreement.




          (iii) Series A Investors shall mean the Investors who hold shares of Series A Preferred Stock.




          (jjj) Series A Preferred Shares shall mean shares of Series A Preferred Stock held by the
Investors; provided, however, that for purposes of Sections 3.4 through 3.11, inclusive, only,
Series A Preferred Shares shall include, in addition to shares of Series A Preferred Stock held by
the Investors, shares of Series A Preferred Stock issued or issuable upon exercise of the Warrants.




          (kkk) Series A Preferred Stock shall mean Series A Convertible Preferred Stock, par value $.01
per share, of the Corporation.




          (lll) Series A Stock Purchase Agreement shall have the meaning set forth in the recitals
hereto.




          (mmm) Series B Investors shall mean the Investor(s) who hold(s) shares of Series B Preferred
Stock.




9.









 








          (nnn) Series B Preferred Stock shall mean Series B Convertible Preferred Stock, par value $.01
per share, of the Corporation.




          (ooo) Series B Stock Purchase Agreement shall have the meaning set forth in the recitals
hereto.




          (ppp) Series C Investors shall mean the Investors who hold shares of Series C Preferred Stock.




          (qqq) Series C Preferred Stock shall mean Series C Convertible Preferred Stock, par value $.01
per share, of the Corporation.




          (rrr) Series C Stock Purchase Agreement shall have the meaning set forth in the recitals
hereto.




          (sss) Series D Investors shall mean the Investors who hold shares of Series D Preferred Stock.




          (ttt) Series D Preferred Stock shall mean Series D Convertible Preferred Stock, par value $.01
per share, of the Corporation.




          (uuu) Series D Stock Purchase Agreement shall have the meaning set forth in the recitals
hereto.




          (vvv) Stock Restriction Agreement shall have the meaning set forth in Article 20 hereof.




          (www) Stockholders shall mean all holders of capital stock of the Corporation.




          (xxx) Target Month shall have the meaning set forth in Section 2.7(a) hereof.




          (yyy) Third Restated Stockholders Agreement shall have the meaning set forth in the recitals
hereto.




          (zzz) 30-Day Period shall have the meaning set forth in Section 2.3(b) hereof.




          (aaaa) TPGV shall mean TPG Ventures, L.P., a Delaware limited partnership, and TPG
Biotechnology Partners, L.P., a Delaware limited partnership, including any successor thereto or
any permissible assignee of the interest, in whole or in part, of TPGV under this Agreement, acting
jointly where applicable.




          (bbbb) Transfer shall mean any actual or proposed disposition of all or a portion of an
interest (legal, equitable, record or beneficial) by any means, direct or indirect, absolute or
conditional, voluntary or involuntary, including, but not limited to, by sale, assignment, put,
transfer, conveyance, pledge, hypothecation, mortgage or other encumbrance, court order, operation
of law (including, without limitation, the laws of bankruptcy, insolvency, marital dissolution,
intestacy, descent and distribution and succession), distribution, settlement, exchange, waiver,
abandonment, gift, alienation, bequest or disposal.




10.









 








          (cccc) Transfer Notice shall have the meaning set forth in Section 6.3(a) hereof.




          (dddd) Transfer Stock shall have the meaning set forth in Section 6.3(a) hereof.




          (eeee) Warrant Holders shall have the meaning set forth in the preamble hereto.




          (ffff) Warrants shall mean those certain warrants to purchase Series A Preferred Stock held by
GATX Ventures, Inc. and TBCC Funding Trust II, dated July 31, 2002, and their permitted successors
and assigns.




ARTICLE 2




CERTAIN COVENANTS OF THE CORPORATION




     The following covenants of the Corporation are made by the Corporation to, and for the sole
benefit of, the Investors.



     2.1 Meetings of the Board of Directors.



          (a) The Corporation shall call, and use commercially reasonable efforts to have, regular
meetings of the Board not less often than quarterly. The Corporation shall pay all reasonable and
appropriately documented travel expenses and other out-of-pocket expenses incurred by directors who
are not employed by the Corporation in connection with attendance at meetings to transact the
business of the Corporation or attendance at meetings of the Board or any committee thereof.




          (b) The TPGV Director and the HCV Director, in each case as defined in Section 5.1 hereof,
shall be members of the Compensation Committee of the Board, and the Compensation Committee shall
consist of not more than three (3) members.




          (c) The Corporation shall form a Pharmaceutical Development Committee and the TPGV Director
and the HCV Director shall be members of the Pharmaceutical Development Committee.




          (d) The Company shall allow one representative designated by (i) TPGV (in addition to any
designee of such party to the Board), (ii) MDS Entities who are holders of Preferred Stock, (iii)
Och-Ziff, (iv) Duquesne, (v) HealthCare Investment Partners, and (vi) each of HCV, Sequel and
Morgenthaler at such time as HCV, Sequel or Morgenthaler, respectively, ceases to have a designee
on the Board, to attend all meetings of the Board in a nonvoting capacity, and in connection
therewith, the Company shall give such representatives copies of all notices, minutes, consents and
other materials, financial or otherwise, which the Company provides to its Board; provided,
however, that the Company reserves the right to exclude any such representative from access to any
material or meeting or portion thereof if the Company believes upon advice of counsel that such
exclusion is reasonably necessary to preserve the attorney-client privilege, to protect highly
confidential proprietary information or for other similar reasons.




11.









 








     2.2 Reservation of Shares of Common Stock and Preferred Stock, Etc. The Corporation shall at
all times have authorized and reserved out of its authorized but unissued shares of Common Stock, a
sufficient number of shares of Common Stock to provide for the conversion of the Preferred Stock.
The issuance of the Common Stock issuable upon the conversion of the Preferred Stock shall not be
subject to a preemptive right of any other Stockholder.



     2.3 Pre-emptive Rights.



          (a) Except pursuant to an Approved Plan, the Corporation shall not issue, sell or exchange,
agree to issue, sell or exchange, or reserve or set aside for issuance, sale or exchange, any
Offered Securities unless in each case the Corporation shall have first offered to sell to the
Major Investors (as defined in Section 2.6) all of such Offered Securities on the terms set forth
herein. Each Major Investor shall be entitled to purchase up to its Equity Percentage of the
Offered Securities. Each Major Investor may delegate its rights and obligations with respect to
such Offer to one or more members of its Group, which members shall thereafter be deemed to be
“Investors” for the purpose of applying this Section 2.3 to such Offer.




          (b) The Corporation shall deliver to each Major Investor written notice of the offer to sell
the Offered Securities, specifying the price and terms and conditions of the offer (the “Offer”).
The Offer by its terms shall remain open and irrevocable for a period of 15 days from the date of
its delivery to such Investor (the “15-Day Period”), subject to extension to include the Excess
Securities Period (as such term is hereinafter defined).




          (c) Each Major Investor shall evidence its intention to accept the Offer by delivering a
written notice signed by the Major Investor setting forth the number of shares that the Investor
elects to purchase (the “Notice of Acceptance”). The Notice of Acceptance must be delivered to the
Corporation prior to the end of the 15-Day Period. The failure by a Major Investor to exercise its
rights hereunder shall not constitute a waiver of any other rights or of the right to receive
notice of and participate in any subsequent Offer.




          (d) If any Major Investor fails to exercise its right hereunder to purchase its Equity
Percentage of the Offered Securities, the Corporation shall so notify the other Investors in a
written notice (the “Excess Securities Notice”). The Excess Securities Notice shall be given by
the Corporation promptly after it learns of any Major Investor’s intention not to purchase all of
its Equity Percentage of the Offered Securities, but in no event later than ten (10) days after the
expiration of the 15-Day Period. The Major Investors who or which have agreed to purchase their
Equity Percentage of the Offered Securities shall have the right to purchase the portion not
purchased by such Investor (the “Excess Securities”), on a pro rata basis, by giving notice within
ten (10) days after receipt of the Excess Securities Notice from the Corporation. The twenty (20)
day period during which (i) the Corporation must give the Excess Securities Notice to the other
Investors, and (ii) each of the other Major Investors must give the Corporation notice of its
intention to purchase all or any portion of its pro rata share of the its Excess Securities, is
hereinafter referred to as the “Excess Securities Period.”





12.









 








          (e) If the Major Investors tender their Notice of Acceptance prior to the end of the 15-Day
Period indicating their intention to purchase all of the Offered Securities or, if prior
to the termination of the Excess Securities Period, the Major Investors tender Excess
Securities Notices to purchase all of the Excess Securities, the Corporation shall schedule a
closing of the sale of all such Offered Securities. Upon the closing of the sale of the Offered
Securities to be purchased by the Major Investors, each Major Investor shall (i) purchase from the
Corporation that portion of the Offered Securities (including the Excess Securities) for which it
tendered a Notice of Acceptance and an Excess Securities Notice, if applicable, upon the terms
specified in the Offer, and (ii) execute and deliver an agreement further restricting transfer of
such Offered Securities substantially as set forth in Sections 3.1, 3.2 and 3.3 of this Agreement.
In addition, with respect to the Offered Securities being purchased by the Major Investors, the
Corporation shall provide each such Major Investor with the rights and benefits set forth in this
Agreement. The obligation of the Major Investors to purchase such Offered Securities is further
conditioned upon the preparation of a purchase agreement embodying the terms of the Offer, which
shall be reasonably satisfactory in form and substance to such Major Investor and the Major
Investor’s counsel.




          (f) The Corporation shall have ninety (90) days from the expiration of the 15-Day Period, or
the Excess Securities Period, if applicable, to sell the Offered Securities (including the Excess
Securities) refused by the Investors (the “Refused Securities”) to any other person or persons, but
only upon terms and conditions which are in all material respects (including, without limitation,
price and interest rate) no more favorable to such other person or persons, and no less favorable
to the Corporation, than those set forth in the Offer. Upon and subject to the closing of the sale
of all of the Refused Securities (which shall include full payment to the Corporation), each Major
Investor shall (i) purchase from the Corporation those Offered Securities (including the Excess
Securities) for which it tendered a Notice of Acceptance and an Excess Securities Notice, if
applicable, upon the terms specified in the Offer, and (ii) execute and deliver an agreement
restricting transfer of such Offered Securities (including the Excess Securities) substantially as
set forth in Sections 3.1, 3.2 and 3.3 of this Agreement. In addition, with respect to the Offered
Securities being purchased by the Major Investors, the Corporation shall provide each such Major
Investor with the rights and benefits set forth in this Agreement. The Corporation agrees, as a
condition precedent to accepting payment for and making delivery of any Refused Securities to any
executive officer, employee, consultant or independent contractor of or to the Corporation, or to
any other person, to the extent such purchaser has not already executed this Agreement (or such
agreement which amends and restates this Agreement in connection with the offer and sale of the
Offered Securities), to have each and every such person execute and deliver a counterpart signature
page to this Agreement (or such agreement which amends and restates this Agreement in connection
with the offer and sale of the Offered Securities) whereby such purchaser shall become a Holder
hereunder. The obligation of the Major Investor to purchase such Offered Securities (including the
Excess Securities) is further conditioned upon the preparation of a purchase agreement embodying
the terms of the Offer, which shall be reasonably satisfactory in form and substance to such Major
Investor and the Major Investor’s counsel.




          (g) In each case, any Offered Securities not purchased either by the Major Investors or by any
other person in accordance with this Section 2.3 may not be sold or otherwise disposed of until
they are again offered to the Major Investors under the procedures specified in Paragraphs (a),
(b), (c), (d), (e) and (f) hereof.




13.









 








          (h) Each Major Investor may, by prior written consent, waive its rights under this Section
2.3. Such a waiver shall be deemed a limited waiver and shall only apply to the extent
specifically set forth in the written consent of such Major Investor.




          (i) Each Major Investor may assign its rights under this Section 2.3 to any of the persons or
entities within its Group.




     2.4 Negative Covenants.



          (a) Required Approvals of Preferred Stockholders or Board. The Corporation shall not,
directly or indirectly, take any of the actions specified in Article III, Section A.5(c) of the
Certificate without the prior written consent or vote of the holders of shares representing a
majority of the Preferred Stock then outstanding voting together as a single class, each determined
in accordance with Section A.5(a) of the Certificate. In addition, the Corporation shall not,
directly or indirectly, take any of the actions specified in Article 5, Section A.2 of the
Certificate without the written approval of the Board.




          (b) Stock and Option Agreements. Without the prior written consent or vote of the holders of
shares representing a majority of the Series A Preferred Stock, Series C Preferred Stock and Series
D Preferred Stock then outstanding voting together as a single class, each determined in accordance
with Section A.5(a) of Article III of the Certificate, the Corporation shall not issue any shares
of Common Stock or options, warrants or other rights to acquire Common Stock or other securities of
the Corporation to any employee, officer, director, consultant, independent contractor or other
person or entity except for (i) Excluded Securities or (ii) pursuant to an Approved Plan.




          (c) Registration Rights. The Corporation shall not hereafter grant to any persons any rights
to register or qualify stock of the Corporation under federal or state securities laws, unless it
shall have first obtained the written consent of (i) the holders of shares representing a majority
of the Series D Preferred Stock, if such registration or qualification rights would adversely
affect the registration or qualification rights of the holders of Series D Preferred Stock as set
forth in this Agreement and (ii) the holders of shares representing a majority of the Series A
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock then outstanding voting
together as a single class, each determined in accordance with Section A.5(a) of Article III of the
Certificate.




          (d) Stock Vesting. Unless otherwise approved by the Board or the Compensation Committee of
the Board, all stock options and other stock equivalents issued after the date of this Agreement to
employees, directors, consultants and other service providers shall be subject to the Company’s
standard vesting schedule, as may be approved by the Compensation Committee from time to time.




     2.5 Filing of Reports Under the Exchange Act.



          (a) The Corporation shall give prompt notice to the holders of Preferred Stock of (i) the
filing of any registration statement (an “Exchange Act Registration Statement”) pursuant to the
Exchange Act, relating to any class of equity securities of the Corporation, (ii) the effectiveness
of such Exchange Act Registration Statement, and (iii) the number of shares of




14.









 







such class of equity securities outstanding, as reported in such Exchange Act Registration
Statement, in order to enable the Investors to comply with any reporting requirements under the
Exchange Act or the Securities Act. Upon the written request of a majority in interest of the
holders of Preferred Stock of the Corporation, the Corporation shall, at any time after the
Corporation has registered any shares of Common Stock under the Securities Act, file an Exchange
Act Registration Statement relating to any class of equity securities of the Corporation then held
by the holders of Series A Preferred Shares, Series B Preferred Stock, Series C Preferred Stock or
Series D Preferred Stock or issuable upon conversion or exercise of any class of debt or equity
securities or warrants or options of the Corporation then held by the Investors, whether or not the
class of equity securities with respect to which such request is made shall be held by the number
of persons which would require the filing of a registration statement under Section 12(g)(1) of the
Exchange Act.




          (b) If the Corporation shall have filed an Exchange Act Registration Statement or a
registration statement (including an offering circular under Regulation A promulgated under the
Securities Act) pursuant to the requirements of the Securities Act, which shall have become
effective (and in any event, at all times following the initial public offering of any of the
securities of the Corporation), then the Corporation shall comply with all of the reporting
requirements of the Exchange Act (whether or not it shall be required to do so) and shall comply
with all other public information reporting requirements of the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any of the Restricted
Securities by any holder of Restricted Securities (including any such exemption pursuant to Rule
144 or Rule 144A thereof, as amended from time to time, or any successor rule thereto or
otherwise). The Corporation shall cooperate with each holder of Restricted Securities in supplying
such information as may be necessary for such holder of Restricted Securities to complete and file
any information reporting forms presently or hereafter required by the Commission as a condition to
the availability of an exemption from the Securities Act (under Rule 144 or Rule 144A thereunder or
otherwise) for the sale of any of the Restricted Securities by any holder of Restricted Securities.




     2.6 Access to Records. So long as a holder of Preferred Stock continues to hold at least ten
percent (10%) of the shares of Preferred Stock that such holder originally acquired or Common Stock
issued upon conversion of Preferred Stock, and this amount is greater than 500,000 shares ( as
adjusted) (a “Major Investor” or, collectively, the “Major Investors”), the Corporation shall
afford to each Major Investor and such Investor’s employees, counsel and other authorized
representatives, free and full access, at all reasonable times and for reasonable periods of time,
to all of the books, records and properties of the Corporation and to all officers and employees of
the Corporation. All shares of capital stock held or acquired by affiliated entities or persons or
persons or entities under common management or control shall be aggregated together for the purpose
of determining the availability of any rights under this Agreement.



     2.7 Financial Reports. Until such time that the Corporation has a class of its equity
securities registered under the Exchange Act and is required to file reports thereunder pursuant to
Sections 13 or 15(d) of the Exchange Act, except with respect to the obligation set forth in
Section 2.7(e)(i) hereunder which shall survive such time, the Corporation shall furnish each of
the Major Investors with the financial information described below:



15.









 





          (a) Within 30 days after the last day of each month (the “Target Month”) (or such other
calendar period as is approved by the Board), financial statements, including a balance sheet as of
the last date of such Target Month, a statement of income (or monthly operating expenses) for such
month, together with a cumulative statement of income from the first day of the current year to the
last day of such month, which statements shall be prepared from the books and records of the
Corporation, a cash flow analysis, together with cumulative cash flow analyses from the first day
of the current year to the last day of such month, and a comparison between the actual monthly
operating expenses and the projected figures for such month and the comparable figures for the
prior year, subject to the provisions of Section 2.9 hereof.




          (b) Upon receipt of a request from any of the Major Investors prior to the end of a quarterly
accounting period, the Corporation shall deliver to each of the Major Investors, within 45 days
after the end of such quarterly accounting period, unaudited financial statements for such
quarterly accounting period, certified by the Chief Financial Officer or the Treasurer of the
Corporation, as presenting fairly the financial condition and results of operations of the
Corporation and as having been prepared on a basis consistent with the accounting principles
reflected in the Corporation’s annual audited financial statements, accompanied by a report, signed
by the Chief Financial Officer or the Treasurer of the Corporation, summarizing the operating and
financial highlights of the Corporation for such quarterly accounting period, which report shall
include (a) a comparison between the actual quarterly operating and financial results, the Budget
(as defined in Section 2.8 hereof) and the results of the similar quarterly accounting period for
the prior fiscal year of the Corporation, together with an explanation of material variances from
the Budget and such similar quarterly accounting period, as the case may be, and (b) a narrative
analysis of operations and trends in the business of the Corporation during such quarterly
accounting period.




          (c) Within 90 days after the end of each fiscal year of the Corporation, audited financial
statements of the Corporation, which shall include an income statement and a statement of cash flow
for such fiscal year and a balance sheet as of the last day thereof, each prepared in accordance
with generally accepted accounting principles consistently applied, and accompanied by the report
of such independent certified public accountants as shall have been approved by the Board.




          (d) If for any period the Corporation shall have any subsidiary or subsidiaries whose accounts
are consolidated with those of the Corporation, then the financial statements delivered for such
period pursuant to paragraphs (a), (b) and (c) of this Section 2.7 shall be the consolidated and
consolidating financial statements of the Corporation for all such consolidated subsidiaries.




          (e) Promptly upon becoming available:




               (i) copies of all financial statements, reports, press releases, notices, proxy statements and
other documents sent by the Corporation to its Stockholders or released to the public and copies of
all regular and periodic reports, if any, filed by the Corporation with the Commission or any
securities exchange or self-regulatory organization; and



16.









 





               (ii) any other financial or other information available to management of the Corporation that
any of the Major Investors shall have reasonably requested on a timely basis.



     2.8 Budget and Operating Forecast. The Corporation shall prepare and submit to the Board and
each of the Major Investors an operating plan with monthly and quarterly breakdowns (the “Budget”)
for each fiscal year at least 45 days prior to the beginning of each fiscal year of the
Corporation. The Budget shall be deemed accepted as the Budget for such fiscal year only when it
has been approved by the Board. The Budget shall be reviewed by the Corporation periodically and
all changes therein, and all material deviations therefrom, shall be reviewed by the Board on at
least a quarterly basis.



     2.9 System of Accounting. The Corporation shall maintain, and cause each of its subsidiaries,
when and if any shall exist, to maintain, its books of accounts, related records and system of
accounting in accordance with good business practices and generally accepted accounting principles,
and shall cause the matters contained therein to be appropriately and accurately reflected in the
financial reports (which shall be prepared in accordance with generally accepted accounting
principles) furnished pursuant to this Agreement.



     2.10 Restriction on Transfer Rights; Confidentiality. The rights granted to each of the Major
Investors pursuant to Sections 2.6 through 2.8 hereof shall not be transferred or assigned by any
Major Investor to, and shall not inure to the benefit of, any successor, transferee or assignee of
any Major Investor, which is engaged in any business directly competitive with the Corporation. In
addition to the foregoing obligations, the Corporation and GSK have entered into a separate letter
agreement which imposes additional confidentiality obligations on the parties.



     2.11 Confidentiality Agreements for Key Employees. The Corporation shall cause each person
who is presently an employee of or a consultant or independent contractor to the Corporation or who
becomes an employee of or a consultant to the Corporation subsequent to the date hereof to execute
a confidentiality agreement in a form approved by the Board prior to the commencement of such
person’s employment by the Corporation in such capacity.



     2.12 Stockholders Agreement for Directors, Officers, Employees, Consultants and Others Who Are
or Shall Become Stockholders. The Corporation shall cause each of its directors, officers,
employees, consultants and independent contractors who are Stockholders, and any other
Stockholders, to execute a counterpart signature page to this Agreement pursuant to which such
holder shall become a Holder hereunder and the subject securities shall become subject to the terms
and conditions of this Agreement, prior and as a condition precedent to the acquisition of any
Offered Securities.



     2.13 Marketing and Promotional Material. Each of the Investors will have the right to review
and approve, in advance of publication, distribution or dissemination, any reference to such
Investor or any entity affiliated with such Investor (other than the Corporation), contained in any
document, instrument, report or filing or in any advertising, marketing, promotional and similar
materials. If not approved or rejected by each of the Investors so identified within ten
(10) business days after delivery of such document, instrument, report or filing to such
Investor, such document, instrument, report or filing shall be deemed approved.



17.









 





     2.14 Environmental Matters. The Corporation shall promptly advise the Investors in writing of
any pending or threatened claim, demand or action by any governmental authority or third party
relating to any Hazardous Materials affecting the Property of which it has knowledge. The
Corporation shall not discharge, place, release, spill or dispose of any Hazardous Materials or any
other pollutants or effluents upon the Property or elsewhere (including, but not limited to,
underground injection of such substances), and the Corporation shall not discharge into the air any
emission which would require a permit under the Clean Air Act or its state counterparts or any
other Environmental Laws, except in compliance with the Environmental Laws. The Stockholders of
the Corporation shall have no control over, or authority with respect to, the waste disposal
operations of the Corporation. The Corporation hereby indemnifies, defends and holds harmless the
Investors from and against any and all manner of actions, causes of action, suits, debts, accounts,
controversies, judgments, claims, demands, losses or liabilities of any nature (including
reasonable attorneys’ fees) directly or indirectly arising out of or attributable to (a) any
misrepresentation or breach of the representations and covenants set forth in Section 5.18 of the
Series A Stock Purchase Agreement, Section 3.17 of the Series B Stock Purchase Agreement or Section
3.17 of the Series C Stock Purchase Agreement, or (b) the use, generation, storage, release,
threatened release, discharge, disposal or presence of Hazardous Materials on, under or about the
Property by any person during the period that the Corporation was the legal or equitable owner of
the Property or which occurred prior to such time and was otherwise actually known by, or should
have been known by, the Corporation. The obligation of the Corporation to indemnify the Investors
shall specifically cover and include, without limitation, all fines and penalties imposed by
federal, state or local authorities, costs of removing or neutralizing the Hazardous Materials,
injury to the property adjoining the Property, injury to persons living or working on or about the
Property or adjoining or otherwise affecting property, and all other indirect or consequential
damages incurred by the Investors.



     2.15 Key Man Insurance. The Corporation will use its best efforts to obtain and maintain in
full force and effect term life insurance in the amount of one million ($1,000,000) dollars on the
lives of such employees as deemed necessary by the Board, naming the Corporation as beneficiary.



     2.16 Director and Officer Insurance. The Corporation will use its best efforts to obtain and
maintain in full force and effect director and officer liability insurance in the amount of at
least $5,000,000 and otherwise acceptable to the Investors for each of its directors and officers.



     2.17 Termination. The rights described in Sections 2.1, 2.3, 2.4, 2.8, 2.12, 2.14, and 2.15
shall expire and terminate upon the earlier to occur of (i) the effective date of the registration
statement pertaining to an Initial Public Offering or (ii) the completion of an Event of Sale (as
defined in the Certificate).



18.









 






ARTICLE 3




TRANSFER AND REGISTRATION OF RESTRICTED SECURITIES




     3.1 Restriction on Transfer. The Restricted Securities shall not be transferable, except upon
the conditions specified in this Article 3, which conditions are intended solely to ensure
compliance with the provisions of the Securities Act in respect of the Transfer thereof.



     3.2 Restrictive Legend. Each certificate evidencing any Restricted Securities and each
certificate evidencing any such securities issued to subsequent transferees of any Restricted
Securities shall (unless otherwise permitted by the provisions of Section 3.3 or 3.11 hereof) be
stamped or otherwise imprinted with a legend in substantially the following form:




     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAW. THE SECURITIES MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE
STATE SECURITIES LAW OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR LAW. ADDITIONALLY,
THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE
STOCKHOLDERS’ AGREEMENT, AS THE SAME MAY BE AMENDED OR RESTATED FROM TIME TO TIME,
AMONG REPLIDYNE, INC. AND CERTAIN OTHER SIGNATORIES THERETO, AND NO TRANSFER OF SUCH
SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED.
COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF REPLIDYNE, INC.



     3.3 Notice of Transfer. By acceptance of any Restricted Securities, the holder thereof agrees
to give prior written notice to the Corporation of such holder’s intention to effect any Transfer
and to comply in all other respects with the provisions of this Section 3.3. Each such notice
shall describe the manner and circumstances of the proposed Transfer and shall be accompanied by:
(a) the written opinion of counsel for the holder of such Restricted Securities, or, at such
holder’s option, a representation letter of such holder, addressed to the Corporation (which
opinion and counsel, or representation letter, as the case may be, shall be reasonably acceptable
to the Corporation), as to whether, in the case of a written opinion, in the opinion of such
counsel, such proposed Transfer involves a transaction requiring registration of such Restricted
Securities under the Securities Act and applicable state securities laws or an exemption thereunder
is available, or, in the case of a representation letter, such letter sets forth a factual basis
for concluding that such proposed transfer involves a transaction requiring registration of such
Restricted Securities under the Securities Act and applicable State securities laws or that an
exemption thereunder is available, or (b) if such registration is required and if the provisions of
Section 3.4 hereof are applicable, a written request addressed to the Corporation by



19.









 




the holder of such Restricted Securities, describing in detail the proposed method of
disposition and requesting the Corporation to effect the registration of such Restricted Shares
pursuant to the terms and provisions of Section 3.4 hereof; provided, however, that (y) in the case
of a Transfer by a holder to a member of such holder’s Group, no such opinion of counsel or
representation letter of the holder shall be necessary, provided that the transferee agrees in
writing to be subject to Sections 3.1, 3.2, 3.3 and 3.11 hereof to the same extent as if such
transferee were originally a signatory to this Agreement, and (z) in the case of any holder of
Restricted Securities that is a partnership, no such opinion of counsel or representation letter of
the holder shall be necessary for a Transfer by such holder to a partner of such holder, or a
retired partner of such holder who retires after the date hereof, or the estate of any such partner
or retired partner if, with respect to such Transfer by a partnership, (i) such Transfer is made in
accordance with the partnership agreement of such partnership, and (ii) the transferee agrees in
writing to be subject to Sections 3.1, 3.2, 3.3 and 3.11 hereof to the same extent as if such
transferee were originally a signatory to this Agreement. If in such opinion of counsel or as
reasonably concluded from the facts set forth in the representation letter of the holder (which
opinion and counsel, or representation letter, as the case may be, shall be reasonably acceptable
to the Corporation), the proposed Transfer may be effected without registration under the
Securities Act and any applicable state securities laws or “blue sky” laws, then the holder of
Restricted Securities shall thereupon be entitled to effect such Transfer in accordance with the
terms of the notice delivered by it to the Corporation. Each certificate or other instrument
evidencing the securities issued upon such Transfer (and each certificate or other instrument
evidencing any such securities not Transferred) shall bear the legend set forth in Section 3.2
hereof unless: (a) in such opinion of such counsel or as can be concluded from the representation
letter of such holder (which opinion and counsel or representation letter shall be reasonably
acceptable to the Corporation) the registration of future Transfers is not required by the
applicable provisions of the Securities Act and state securities laws, or (b) the Corporation shall
have waived the requirement of such legend; provided, however, that such legend shall not be
required on any certificate or other instrument evidencing the securities issued upon such Transfer
in the event such Transfer shall be made in compliance with the requirements of Rule 144 (as
amended from time to time or any similar or successor rule) promulgated under the Securities Act.
The holder of Restricted Securities shall not effect any Transfer until such opinion of counsel or
representation letter of such holder has been given to and accepted by the Corporation (unless
waived by the Corporation) or until registration of the Restricted Shares involved in the
above-mentioned request has become effective under the Securities Act. In the event that an
opinion of counsel is required by the registrar or transfer agent of the Corporation to effect a
transfer of Restricted Securities in the future, the Corporation shall seek and obtain such opinion
from its counsel, and the holder of such Restricted Securities shall provide such reasonable
assistance as is requested by the Corporation (other than the furnishing of an opinion of counsel)
to satisfy the requirements of the registrar or transfer agent to effectuate such transfer.




     3.4 Required Registration.



          (a) At any time following the date that is the earlier of (i) August 17, 2007 and (ii) twelve
months following the closing of a Qualified Public Offering (as defined under the Certificate), if
the Corporation shall be requested (i) by holders of at least 50% of the outstanding Restricted
Securities (based on the underlying Common Stock for which the Restricted Securities are
convertible or exercisable) to effect the registration under the Securities Act of Restricted




20.









 







Shares, or (ii) after the first registration pursuant to this Section 3.4, by one or more of
the holders of Restricted Securities, to effect the registration under the Securities Act of
Restricted Shares, then the Corporation shall promptly give written notice of such proposed
registration to all holders of Restricted Securities, and thereupon the Corporation shall promptly
use its best efforts to effect the registration under the Securities Act of the Restricted Shares
that the Corporation has been requested to register for disposition as described in the request of
such holders of Restricted Securities and in any response received from any of the holders of
Restricted Securities within 30 days after the giving of the written notice by the Corporation;
provided, however, that the Corporation shall not be obligated to effect any registration under the
Securities Act except in accordance with the following provisions:




               (i) The Corporation shall not be obligated to file and cause to become effective more than two
(2) registration statements in which Restricted Shares are registered under the Securities Act
pursuant to this Section 3.4(a), if all of the Restricted Shares offered pursuant to such
registration statements are sold thereunder upon the price and terms offered.



               (ii) Notwithstanding the foregoing, the Corporation may include in each such registration
requested pursuant to this Section 3.4(a) any authorized but unissued shares of Common Stock (or
authorized treasury shares) for sale by the Corporation or any issued and outstanding shares of
Common Stock for sale by others; provided, however, that, if the number of shares of Common Stock
so included pursuant to this clause (b) exceeds the number of Restricted Shares requested by the
holders of Restricted Shares requesting such registration, then such registration shall be deemed
to be a registration in accordance with and pursuant to Section 3.5; and provided further, however,
that the inclusion of such previously authorized but unissued shares by the Corporation or issued
and outstanding shares of Common Stock by others in such registration does not adversely affect, in
the sole opinion of the holders of Restricted Securities requesting such registration, the ability
of the holders of Restricted Securities requesting such registration to market the entire number of
Restricted Shares requested by them.



          (b) At any time following the date that is the earlier of (i) August 17, 2007 and (ii) twelve
months following the closing of a Qualified Public Offering (as defined under the Certificate), if
the Corporation shall be requested by holders of at least 50% of the shares of Common Stock issued
or issuable upon conversion of the Series D Preferred Stock (“Series D Restricted Shares”) to
effect the registration under the Securities Act of Restricted Shares, then the Corporation shall
promptly give written notice of such proposed registration to all holders of Restricted Securities,
and thereupon the Corporation shall promptly use its best efforts to effect the registration under
the Securities Act of the Restricted Shares that the Corporation has been requested to register for
disposition as described in the request of such holders of Restricted Securities (a “Series D
Demand Registration”); provided, however, that the Corporation shall not be obligated to effect any
registration under the Securities Act except in accordance with the following provisions:




               (i) The Corporation shall not be obligated to file and cause to become effective more than two
(2) registration statements pursuant to this Section 3.4(b), if all of the Series D Restricted
Shares offered pursuant to such registration statements are sold thereunder upon the price and
terms offered.



21.









 





               (ii) Notwithstanding any other provision of this Section 3.4 or Section 3.6, if the
underwriter advises the Corporation that marketing factors require a limitation of the number of
securities to be underwritten (including Restricted Securities) then the Corporation shall so
advise all holders of Restricted Securities that would otherwise be underwritten pursuant hereto,
and the number of shares that may be included in the underwriting shall be allocated first to
holders of the Series D Preferred Stock, then to the other holders of such Restricted Securities on
a pro rata basis based on the number of Restricted Securities held by all such Holders, and
thereafter to any other stockholders of the Corporation.



     3.5 Piggyback Registration.



          (a) Each time that the Corporation proposes for any reason to register any of its securities
under the Securities Act, other than pursuant to a registration statement on Form S-4 or Form S-8
or similar or successor forms (collectively, “Excluded Forms”), the Corporation shall promptly give
written notice of such proposed registration to all holders of Restricted Securities, which shall
offer such holders the right to request inclusion of any Restricted Shares in the proposed
registration.




          (b) Each holder of Restricted Securities shall have 30 days from the receipt of such notice to
deliver to the Corporation a written request specifying the number of Restricted Shares such holder
intends to sell and the holder’s intended method of disposition.




          (c) In the event that the proposed registration by the Corporation is, in whole or in part, an
underwritten public offering of securities of the Corporation, any request under Section 3.5(b) may
specify that the Restricted Shares be included in the underwriting (i) on the same terms and
conditions as the shares of Common Stock, if any, otherwise being sold through underwriters under
such registration, or (ii) on terms and conditions comparable to those normally applicable to
offerings of common stock in reasonably similar circumstances in the event that no shares of Common
Stock other than Restricted Shares are being sold through underwriters under such registration.




          (d) Upon receipt of a written request pursuant to Section 3.5(b), the Corporation shall
promptly use its best efforts to cause all such Restricted Shares to be registered under the
Securities Act, to the extent required to permit sale or disposition as set forth in the written
request.




          (e) Notwithstanding the foregoing, if the managing underwriter of any such proposed
registration determines and advises in writing that the inclusion of all Restricted Shares proposed
to be included in the underwritten public offering, together with any other issued and outstanding
shares of Common Stock proposed to be included therein by holders other than the holders of
Restricted Securities (such other shares hereinafter collectively referred to as the “Other
Shares”), would interfere with the successful marketing of the Corporation’s securities, then the
total number of such securities proposed to be included in such underwritten public offering shall
be reduced, (i) first by the shares requested to be included in such registration by the holders of
Other Shares, and (ii) second, if necessary, (A) one-half (1/2) by the securities proposed to be
issued by the Corporation, and (B) one-half (1/2) by the Restricted Securities proposed to be
included in such registration by the holders thereof, on a pro rata basis, based




22.









 







upon the number of Restricted Shares sought to be registered by each such holder. In the case
of an initial public offering, the Corporation may limit, to the extent so advised by the
representative of the underwriters, the amount of securities (including Restricted Securities) to
be included in the registration by the Corporation’s stockholders (including the Holders), or may
exclude, to the extent so advised by the representative of the underwriters, such underwritten
securities entirely from such registration (provided that in such event no other holder of
registration rights is entitled to registration of securities in such offering in preference to the
Holders). If such registration is the second or any subsequent Corporation-initiated registered
offering of the Corporation’s securities to the general public, the Corporation may limit, to the
extent so advised by the underwriters, the amount of securities to be included in the registration
by the Corporation’s Stockholders (including the Holders); provided, however, that the aggregate
value of the Restricted Securities to be included in such registration by the Corporation’s
Stockholders (including the Holders) may not be so reduced to less than thirty percent (30%) of the
total value of all securities included in such registration (provided that in such event no other
holder of registration rights is entitled to registration of securities in such offering in
preference to the Holders). The shares of Common Stock that are excluded from the underwritten
public offering pursuant to the preceding sentence shall be withheld from the market by the holders
thereof for a period, not to exceed 180 days from the closing of such underwritten public offering,
that the managing underwriter reasonably determines as necessary in order to effect such
underwritten public offering; provided that all officers and directors of the Corporation and
holders of at least one percent (1%) of the Corporation’s voting securities enter into similar
agreements.




     3.6 Registrations on Form S-2 and S-3. At such time as the Corporation shall have qualified
for the use of Form S-2 or Form S-3 (or any successor form promulgated under the Securities Act),
each holder of Restricted Securities shall have the right to request in writing three (3)
registrations (but not more than two (2) annually) on Form S-2 or Form S-3. Each such request by a
holder shall: (a) specify the number of Restricted Shares which the holder intends to sell or
dispose of, (b) state the intended method by which the holder intends to sell or dispose of such
Restricted Shares, and (c) request registration of Restricted Shares having a proposed aggregate
offering price of at least $1,000,000. Upon receipt of a request pursuant to this Section 3.6, the
Corporation shall use its best efforts to effect such registration or registrations on Form S-2 or
Form S-3.



     3.7 Preparation and Filing. If and whenever the Corporation is under an obligation pursuant
to the provision of this Article 3 to use its best efforts to effect the registration of any
Restricted Shares, the Corporation shall, as expeditiously as practicable:



          (a) prepare and file with the Commission a registration statement with respect to such
securities and use its best efforts to cause such registration statement to become and remain
effective in accordance with Section 3.7(b) hereof; provided, however, that, with respect to the
registration rights set forth in Section 3.4, the Corporation shall have the right to delay such
registration for two periods not in excess of ninety (90) days each in any twelve (12) month
period.





23.









 








          (b) prepare and file with the Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective until the earlier of (i) the sale of
all Restricted Shares covered thereby or (ii) nine months, and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all Restricted Shares covered by
such registration statement;




          (c) furnish to each holder whose Restricted Shares are being registered pursuant to this
Article 3 such number of copies of any summary prospectus or other prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities Act, and such other
documents as such holder may reasonably request in order to facilitate the public sale or other
disposition of such Restricted Shares;




          (d) use its best efforts to register or qualify the Restricted Shares covered by such
registration statement under the securities or blue sky laws of such jurisdictions as each holder
whose Restricted Shares are being registered pursuant to this Article 3 shall reasonably request
and do any and all other acts or things which may be necessary or advisable to enable such holder
to consummate the public sale or other disposition in such jurisdictions of such Restricted Shares;
provided, however, that the Corporation shall not be required to consent to general service of
process for all purposes in any jurisdiction where it is not then subject to process, qualify to do
business as a foreign corporation where it would not be otherwise required to qualify or submit to
liability for state or local taxes where it is not otherwise liable for such taxes;




          (e) at any time when a prospectus covered by such registration statement and relating thereto
is required to be delivered under the Securities Act within the appropriate period mentioned in
Section 3.7(b) hereof, notify each holder whose Restricted Shares are being registered pursuant to
this Article 3 of the happening of any event as a result of which the prospectus included in such
registration, 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, at the request of such holder,
prepare, file and furnish to such holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers
of such shares, such prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;




          (f) if the Corporation has delivered preliminary or final prospectuses to the holders of
Restricted Shares that are being registered pursuant to this Article 3 and after having done so the
prospectus is amended to comply with the requirements of the Securities Act, the Corporation shall
promptly notify such holders and, if requested, such holders shall immediately cease making offers
of Restricted Shares and return all prospectuses to the Corporation. The Corporation shall
promptly provide such holders with revised prospectuses and, following receipt of the revised
prospectuses, such holders shall be free to resume making offers of the Restricted Shares; and





24.









 








          (g) furnish, at the request of any holder whose Restricted Shares are being registered
pursuant to this Article 3, on the date that such Restricted Shares are delivered to the
underwriters for sale in connection with a registration pursuant to this Article 3, if such
securities
are being sold through underwriters, or, on the date that the registration statement with
respect to such securities becomes effective, if such securities are not being sold through
underwriters, (i) an opinion, dated such date, of the counsel representing the Corporation for the
purposes of such registration, in form and substance as is customarily given to underwriters in an
underwritten public offering, addressed to the underwriters, if any, and to the holder or holders
making such request, and (ii) a letter dated such date, from the independent certified public
accountants of the Corporation, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the holder or holders making such request.




     3.8 Expenses. The Corporation shall pay all expenses incurred by the Corporation in complying
with this Article 3, including, without limitation, all registration and filing fees (including all
expenses incident to filing with the National Association of Securities Dealers, Inc.), fees and
expenses of complying with the securities and blue sky laws of all such jurisdictions in which the
Restricted Shares are proposed to be offered and sold, printing expenses and fees and disbursements
of one counsel (including with respect to each registration effected pursuant to Sections 3.4, 3.5
and 3.6, the reasonable fees and disbursements of counsel for the holders of Restricted Shares that
are being registered pursuant to this Article 3, which counsel has been appointed by the holders of
a majority of such Restricted Shares); provided, however, that all underwriting discounts and
selling commissions applicable to the Restricted Shares covered by registrations effected pursuant
to Section 3.4, 3.5 or 3.6 hereof shall be borne by the seller or sellers thereof, in proportion to
the number of Restricted Shares sold by each such seller or sellers.



     3.9 Indemnification.



          (a) In the event of any registration of any Restricted Shares under the Securities Act
pursuant to this Article 3 or registration or qualification of any Restricted Shares pursuant to
Section 3.7(d) hereof, the Corporation shall indemnify and hold harmless the seller of such shares,
each underwriter of such shares, if any, each broker or any other person acting on behalf of such
seller and each other person, if any, who controls any of the foregoing persons, within the meaning
of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to
which any of the foregoing persons may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon an untrue statement or alleged untrue statement of a material fact contained in
any registration statement under which such Restricted Shares were registered under the Securities
Act, any preliminary prospectus or final prospectus contained therein, or any amendment or
supplement thereto, or any document incident to registration or qualification of any Restricted
Shares pursuant to Section 3.7(d) hereof, or arise out of or are based upon 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, with respect to any prospectus, necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading, or
any violation by the Corporation of the Securities Act or any state securities or blue sky laws
applicable to the Corporation and relating to action or inaction required of the Corporation in
connection with such registration or qualification under the Securities Act or such state
securities or blue sky laws. The Corporation shall reimburse on demand such seller, underwriter,
broker or other person acting on behalf of such seller and each




25.









 







such controlling person for any legal or any other expenses reasonably incurred by any of them
in connection with investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Corporation shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in said registration statement, preliminary
or final prospectus or amendment or supplement thereto or any document incident to registration or
qualification of any Restricted Shares pursuant to Section 3.7(d) hereof, in reliance upon and in
conformity with written information furnished to the Corporation by such seller, underwriter,
broker, other person or controlling person specifically for use in the preparation thereof.




          (b) Before Restricted Shares held by any prospective seller shall be included in any
registration pursuant to this Article 3, such prospective seller and any underwriter acting on its
behalf shall have agreed to indemnify and hold harmless (in the same manner and to the same extent
as set forth in paragraph (a)) the Corporation, each director of the Corporation, each officer of
the Corporation who signs such registration statement and any person who controls the Corporation
within the meaning of the Securities Act, with respect to any untrue statement or omission from
such registration statement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, if such untrue statement or omission was made in reliance upon
and in conformity with written information furnished to the Corporation through an instrument duly
executed by such seller or such underwriter specifically for use in the preparation of such
registration statement, preliminary prospectus, final prospectus or amendment or supplement;
provided, however, that the maximum amount of liability in respect of such indemnification shall be
limited, in the case of each prospective seller, to an amount equal to the net proceeds actually
received by such prospective seller from the sale of Restricted Shares effected pursuant to such
registration.




          (c) Promptly after receipt by an indemnified party of notice of the commencement of any action
involving a claim referred to in Section 3.9(a) or (b) hereof, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this Section 3.9, give
written notice to the latter of the commencement of such action. In case any such action is
brought against an indemnified party, the indemnifying party will be entitled to participate in and
to assume the defense thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and, after
notice to such indemnified party from the indemnifying party of its election to assume the defense
thereof, the indemnifying party shall be responsible for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof; provided, however, that, if any
indemnified party shall have reasonably concluded that there may be one or more legal defenses
available to such indemnified party which are different from or additional to those available to
the indemnifying party, or that such claim or litigation involves or could have an effect upon
matters beyond the scope of the indemnity agreement provided in this Section 3.9, the indemnifying
party shall not have the right to assume the defense of such action on behalf of such indemnified
party, and such indemnifying party shall reimburse such indemnified party and any person
controlling such indemnified party for the fees and expenses of counsel retained by the indemnified
party which are reasonably related to the matters covered by the indemnity agreement provided in
this Section 3.9. The indemnifying party shall not make any settlement of any claims indemnified
against hereunder without the
written consent of the indemnified party or parties, which consent shall not be unreasonably
withheld.





26.









 








          (d) 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 of Restricted Shares exercising rights
under this Agreement, or any controlling person of any such holder, makes a claim for
indemnification pursuant to this Section 3.9, 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 3.9 provides for indemnification in such case, or
(ii) contribution under the Securities Act may be required on the part of any such holder or any
such controlling person in circumstances for which indemnification is provided under this Section
3.9; then, in each such case, the Corporation and such holder will contribute to the aggregate
losses, claims, damages or liabilities to which they may be subject as is appropriate to reflect
the relative fault of the Corporation and such holder in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, it being understood that
the parties acknowledge that the overriding equitable consideration to be given effect in
connection with this provision is the ability of one party or the other to correct the statement or
omission which resulted in such losses, claims, damages or liabilities, and that it would not be
just and equitable if contribution pursuant hereto were to be determined by pro rata allocation or
by any other method of allocation which does not take into consideration the foregoing equitable
considerations. Notwithstanding the foregoing, (i) no such holder will be required to contribute
any amount in excess of the proceeds to it of all Restricted Shares sold by it pursuant to such
registration statement, and (ii) no person or entity guilty of fraudulent misrepresentation, within
the meaning of Section 11(f) of the Securities Act, shall be entitled to contribution from any
person or entity who is not guilty of such fraudulent misrepresentation.




          (e) Notwithstanding any of the foregoing, if, in connection with an underwritten public
offering of any Restricted Shares, the Corporation, the holders of such Restricted Shares and the
underwriters enter into an underwriting or purchase agreement relating to such offering which
contains provisions covering indemnification among the parties, then the indemnification provision
of this Section 3.9 shall be deemed inoperative for purposes of such offering.




     3.10 Assignment of Registration Rights. The rights to cause the Corporation to register
Restricted Securities pursuant to this Section 3 may be assigned by an Investor to a transferee or
assignee of Restricted Securities (for so long as such shares remain Restricted Securities) that is
a member of such transferring Investor’s Group; provided, however, that (i) the transferor shall,
within ten (10) days after such transfer, furnish to the Corporation written notice of the name and
address of such transferee or assignee and the securities with respect to which such registration
rights are being assigned and (ii) such transferee shall agree to be subject to all restrictions
set forth in this Agreement.



     3.11 Removal of Legends, Etc. Notwithstanding the foregoing provisions of this Article 3, the
restrictions imposed by this Article 3 upon the transferability of any Restricted Securities shall
cease and terminate when (a) any such Restricted Securities are sold or otherwise disposed of in
accordance with the intended method of disposition by the seller or sellers thereof



27.









 




set forth in a registration statement or such other method contemplated by Section 3.3 hereof
that does not require that the securities transferred bear the legend set forth in Section 3.2
hereof, including a Transfer pursuant to Rule 144 or a successor rule thereof (as amended from time
to time), or (b) the holder of Restricted Securities has met the requirements for transfer of such
Restricted Securities pursuant to subparagraph (k) of Rule 144 or a successor rule thereof (as
amended from time to time) promulgated by the Commission under the Securities Act. Whenever the
restrictions imposed by this Article 3 have terminated, a holder of a certificate for Restricted
Securities as to which such restrictions have terminated shall be entitled, upon request by such
holder, to receive from the Corporation, without expense, a new certificate not bearing the
restrictive legend set forth in Section 3.2 hereof and not containing any other reference to the
restrictions imposed by this Article 3.




     3.12 Standoff Provisions. No holder will sell any securities within 180 days (or the shortest
period of time agreed to; provided that the Corporation uses its best efforts to obtain a similar
standoff agreement from each officer, director and/or 1% holder) following the effective date of
the Company’s initial public offering.



     3.13 Termination of Rights. The registration rights shall terminate as to any holder upon the
earlier of (i) the date on which such holder holds less than 1% of the outstanding capital stock
and all shares held by such holder can be resold pursuant to Rule 144 or (ii) five (5) years
following the closing of the Corporation’s initial public offering.



ARTICLE 4




SECURITIES ACT REGISTRATION STATEMENTS




     Except for securities of the Corporation registered on Excluded Forms, the Corporation shall
not file any registration statement under the Securities Act covering any securities unless it
shall first have given each holder of Restricted Securities written notice thereof. The
Corporation further covenants that each holder of Restricted Securities shall have the right, at
any time when it may be deemed to be a controlling person of the Corporation, within the meaning of
the Securities Act, to participate in the preparation of such registration statement and to request
the insertion therein of material furnished to the Corporation in writing which in such holder’s
judgment should be included. In connection with any registration statement referred to in this
Article 4, the Corporation shall indemnify, to the extent permitted by law, each holder of
Restricted Securities, its officers, partners and directors and each person, if any, who controls
any such holder within the meaning of the Securities Act in the same manner and to the same extent
as the Corporation is required to indemnify a seller of Restricted Securities in Section 3.9
hereof. If, in connection with any such registration statement, any holder of Restricted
Securities shall furnish written information to the Corporation expressly for use in the
registration statement, then such holder shall indemnify the Corporation, each director of the
Corporation, each officer of the Corporation who signs such registration statement and each person,
if any, who controls the Corporation within the meaning of the Securities Act to the same extent as
a seller of Restricted Securities is required to indemnify such persons in Section 3.9 hereof.



28.









 





ARTICLE 5




VOTING AND ELECTION OF DIRECTORS




     5.1 Voting for Directors. At each annual meeting of the stockholders of the Corporation and
at each special meeting of the stockholders of the Corporation called for the purposes of electing
directors of the Corporation, and at any time at which stockholders of the Corporation shall have
the right to, or shall, vote for or consent to the election of directors, then, in each such event,
each Original Stockholder and each Investor shall vote all shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and any other shares
of voting stock of the Corporation then owned (or controlled as to voting rights) by such Original
Stockholder or Investor, whether by purchase, exercise of rights, warrants or options, stock
dividends or otherwise:



          (a) to fix and maintain the number of directors on the Board of the Corporation at seven (7);




          (b) pursuant to Paragraph A.5(b)(i) of Article III of the Certificate, to elect to the Board
one (1) director designated by HCV VI and HCV VIII (the “HCV Director”), who shall initially be Gus
Lawlor;




          (c) pursuant to Paragraph A.5(b)(i) of Article III of the Certificate, to elect to the Board
one (1) director designated by Sequel, who shall initially be Daniel Mitchell;




          (d) pursuant to Paragraph A.5(b)(i) of Article III of the Certificate, to elect to the Board
one (1) director designated by TPGV (the “TPGV Director”), who shall initially be Geoff Duyk;




          (e) pursuant to Paragraph A.5(b)(i) of Article III of the Certificate, to elect to the Board
one (1) director designated by Morgenthaler, who shall initially be Ralph Christoffersen;




          (f) pursuant to Paragraph A.5(b)(i) of Article III of the Certificate, to elect to the Board
one (1) director designated by the holders of the Series D Preferred as an independent member to be
nominated by the governance committee of the Board and approved by MDS Entities who hold Preferred
Stock of the Company, Och-Ziff, HealthCare Investment Partners and Duquesne, which director shall
initially be Henry Wendt; and




          (g) to elect to the Board one representative designated by a majority of the holders of the
Corporation’s Common Stock, which representative shall be the then serving Chief Executive Officer
of the Corporation, who shall initially be Kenneth Collins.




     5.2 Cooperation of the Corporation. The Corporation shall use its best efforts to effectuate
the purposes of this Article 5, including promoting the adoption of any necessary amendment of the
Bylaws of the Corporation and the Certificate.



     5.3 Notices. The Corporation shall provide the Investors with at least twenty (20) days’
prior notice in writing of any intended mailing of notice to the Investors of the Corporation



29.









 




for a meeting at which directors are to be elected, and such notice shall include the names of
the persons designated by the Corporation pursuant to Section 5.1 above. Each of HCV VI, HCV VIII,
Sequel, TPGV and Morgenthaler shall notify the Corporation in writing at least three (3) days prior
to such mailing of the persons designated by it pursuant to Paragraph A.5(b)(i) of Article III of
the Certificate and Section 5.1 above as nominees for election to the Board. In the absence of any
notice from any of HCV VI, HCV VIII, Sequel, TPGV or Morgenthaler, the director(s) then serving and
previously designated by HCV VI, HCV VIII, Sequel, TPGV or Morgenthaler, as applicable, shall be
renominated.




     5.4 Removal. Except as otherwise provided in this Article 5, no Investor or Original
Stockholder shall vote to remove any member of the Board designated in accordance with the
foregoing provisions of this Article 5 unless the party who designated such director (the
“Designating Party”) shall so vote or otherwise consent, and, if the Designating Party shall so
vote or otherwise consent, then the non-designating Investors shall likewise so vote. Any vacancy
on the Board created by the resignation, removal, incapacity or death of any person designated
under the foregoing provisions of this Article 5 shall be filled by another person designated by
the original Designating Party. Each Investor and Original Stockholder shall vote all voting
shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock, as applicable, of the Corporation and all other shares of voting stock of the
Corporation owned or controlled by such Investor or Original Stockholder, respectively, in
accordance with each such new designation, and no such vacancy shall be filled in the absence of a
new designation by the original Designating Party.



     5.5 Duration of Article. This Article 5 and the rights and obligations of the parties
hereunder shall automatically terminate on the consummation of a firm commitment underwritten
public offering of Common Stock registered under the Securities Act pursuant to which (X) Common
Stock is offered to the public at a price of at least $5.00 per share of Common Stock (subject to
adjustment for stock splits, stock dividends, stock combinations, recapitalizations and like
occurrences) and (Y) the net proceeds to the Corporation are at least $25 million. Prior to such
termination, the rights and obligations of any Investor to designate any member of the Board
pursuant to this Article 5 shall terminate upon the date on which such Investor or the members of
its Group, in the aggregate, no longer own 25% of the number of shares of the Series A Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock, together (as relevant to the
particular Investor), such Investor originally purchased (as adjusted), whereupon the obligations
of the remaining Investors to vote in favor of the designee of such Investor shall also terminate.



ARTICLE 6




RESTRICTIONS ON TRANSFER OF OFFERED SECURITIES BY HOLDERS




     6.1 Restrictions on Transfer.



          (a) Each Holder agrees that he will not make any Transfer of all or any portion of the Offered
Securities held by such Holder unless and until:




30.









 








               (i) There is then in effect a registration statement under the Securities Act covering such
proposed disposition and such disposition is made pursuant to such registration statement; or



               (ii) (A) The transferee has agreed in writing to be bound by the terms of this Agreement, (B)
such Holder shall have notified the Corporation of the proposed disposition and shall have
furnished the Corporation with a detailed statement of the circumstances surrounding the proposed
disposition, and (C) if reasonably requested by the Corporation, such Holder shall have furnished
the Corporation with an opinion of counsel, reasonably satisfactory to the Corporation, that such
disposition will not require registration of such Offered Securities under the Securities Act. It
is agreed that the Corporation will not require opinions of counsel for transactions made pursuant
to Rule 144 under the Securities Act except in unusual circumstances.



          (b) Each Holder agrees that he will not engage in any Transfer or other transaction that will
result in a change in the beneficial or record ownership of any Offered Securities held by the
Holder, except in accordance with the rights of first refusal and of first offer of this Article 6,
and any such Transfer of Offered Securities or attempted Transfer of Offered Securities in
contravention of such rights shall be void and ineffective for any purpose and shall not confer on
any transferee or purported transferee any rights whatsoever.




     6.2 Termination. The terms of this Article 6 shall terminate upon (and such termination shall
be effective immediately prior to) the consummation of a firm commitment underwritten public
offering of Common Stock registered under the Securities Act pursuant to which (X) Common Stock is
offered to the public at a price of at least $5.00 per share of Common Stock (subject to adjustment
for stock splits, stock dividends, stock combinations, recapitalizations and like occurrences) and
(Y) the net proceeds to the Corporation are at least $25 million.



     6.3 Right of First Refusal.



          (a) If any Holder proposes to Transfer to any person any Offered Securities in one or more
related transactions (the “Proposed Sale”), such Holder (the “Seller”) shall promptly give written
notice (the “Transfer Notice”) to the Corporation and to each of the holders of Series A Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock at least 30 days prior to the
execution of such Transfer. The Transfer Notice shall describe in reasonable detail the Proposed
Sale, including, without limitation, the number and type of shares of Offered Securities to be
transferred (the “Transfer Stock”), the nature of such Transfer, the consideration to be paid, and
the name and address of each prospective purchaser or transferee.




          (b) The Corporation shall have the right, exercisable upon written notice to the Seller within
10 days after receipt of the Transfer Notice, to purchase any or all of the Transfer Stock on the
same terms and conditions as the Proposed Sale.




          (c) If the Corporation does not exercise its right of first refusal as to all of the Transfer
Stock, the Seller shall give written notice thereof to each of the holders of Series A Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock, and each of the holders




31.









 







of Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock shall
thereupon have the right, exercisable within 15 days after receipt of such notice, to purchase its
pro rata share of all Transfer Stock on the same terms as the Proposed Sale.




          (d) If any holder of Series A Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock (an “Exercising Investor”), but not all holders of Series A Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock, exercises its right of first refusal as to its pro
rata share of Transfer Stock, the Seller shall give written notice to the Exercising Investor and
the Exercising Investor shall thereupon have a right of first refusal to purchase its pro rata
share of Transfer Stock not purchased pursuant to paragraph (c) of this Section 6.3, exercisable
within two days after receipt of such notice, on the same terms as the Proposed Sale.




          (e) If the holders of Series A Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock do not exercise their right of first refusal as to all of the Transfer Stock not
purchased by the Corporation, the Seller may consummate the Proposed Sale for the remainder of the
Transfer Stock upon the terms set forth in the Transfer Notice (or on terms more favorable to
Seller) within 30 days after the date of the last notice provided by Seller pursuant to this
Section 6.3 or Seller may cancel the Proposed Sale. Any desired Transfer of Offered Securities
after the termination of 30 days must first be offered to the Corporation pursuant to this Section
6.3.




     6.4 Exempt Transfers.



          (a) The requirements of Section 6.1 and the first refusal rights of the Corporation set forth
in Section 6.3 shall not apply to (i) any pledge of Offered Securities made pursuant to a bona fide
loan transaction with a financial institution that creates a mere security interest; (ii) any
Transfer to the members of the Holder’s Family, or to trusts for the benefit of the Holder or
members of the Holder’s Family, or to a partnership, limited liability company, or other entity all
of the equity interests of which are held by one or more of the foregoing; (iii) a Transfer by a
partnership to its partners or retired partners in accordance with their partnership interests;
(iv) a Transfer by a Holder to an affiliate of such Holder (including an entity that is a member of
such Holder’s Group); or (v) a Transfer by a limited liability company to its members or former
members in accordance with their interests in the limited liability company; provided that in the
event of any Transfer made pursuant to this Section 6.4(a), the pledgee, transferee, or donee shall
furnish the Corporation with a written agreement to be bound by and comply with all of the
obligations of this Agreement and the Holder shall give written notice to the Corporation prior to
such transfer, which notice shall state the nature of the exemption relied upon for the transfer.




          (b) Notwithstanding the foregoing, the provisions of this Article 6 shall not apply to the
sale of any Offered Securities (i) to the public pursuant to a registration statement filed with,
and declared effective by, the SEC under the Securities Act or (ii) to the Corporation.





32.









 









     6.5 Legends.



          (a) Each certificate representing Offered Securities shall (unless otherwise permitted by the
provisions of this Agreement) be stamped or otherwise imprinted with a legend
substantially similar to the following (in addition to any legend required under applicable
state securities laws or as provided elsewhere in this Agreement):





THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR QUALIFIED
UNDER FEDERAL OR STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE,
SOLD, PLEDGED OR OTHERWISE DISPOSED OF UNLESS SO REGISTERED OR QUALIFIED OR UNLESS
AN EXEMPTION EXISTS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED BY AN OPINION OF
COUNSEL (WHICH OPINION AND COUNSEL SHALL BOTH BE REASONABLY SATISFACTORY TO THE
CORPORATION).



          (b) The Corporation shall be obligated to reissue unlegended certificates promptly upon the
request of any holder thereof who proposes to dispose of such securities, if the holder shall have
obtained an opinion of counsel (which counsel may be counsel to the Corporation) reasonably
acceptable to the Corporation to the effect that the securities proposed to be disposed of may
lawfully be so disposed of without registration, qualification, or legend.




          (c) Any legend endorsed on an instrument pursuant to applicable state securities laws and the
stop-transfer instructions with respect to such securities shall be removed upon receipt by the
Corporation of an order of the appropriate “Blue Sky” authority authorizing such removal.




ARTICLE 7




INDEMNIFICATION




     7.1 Indemnification of Investors. In the event that any Investor or any director, officer,
employee, affiliate or agent thereof (the “Indemnitees”) become involved in any capacity in any
action, proceeding, investigation or inquiry in connection with or arising out of any matter
related to the Corporation or any Indemnitee’s role or position with the Corporation, the
Corporation shall reimburse each Indemnitee for its legal and other expenses (including the cost of
any investigation and preparation) as they are incurred by such Indemnitee in connection therewith.
The Corporation also agrees to indemnify each Indemnitee, pay on demand and protect, defend, save
and hold harmless from and against any and all liabilities, damages, losses, settlements, claims,
actions, suits, penalties, fines, costs or expenses (including, without limitation, attorneys’
fees) (any of the foregoing, a “Claim”) incurred by or asserted against any Indemnitee of whatever
kind or nature, arising from, in connection with or occurring as a result of this Agreement or the
matters contemplated by this Agreement. The foregoing agreement shall be in addition to any rights
that any Indemnitee may have at common law or otherwise.



     7.2 Advancement of Expenses. The Corporation shall advance all expenses reasonably incurred
by or on behalf of the Indemnitees in connection with any Claim or potential Claim within twenty
(20) days after the receipt by the Corporation of a statement or statements from the Indemnitee
requesting such advance payment or payments from time to time. If a court or arbitrator makes a
judicial determination at a later date that the Indemnitee was not entitled to
such indemnification, then such Indemnitee will refund to the Corporation an amount equal to
the amount of the advances made to such Indemnitee.



33.









 





ARTICLE 8




REMEDIES




     In case any one or more of the covenants and/or agreements set forth in this Agreement shall
have been breached by any party hereto, the party or parties entitled to the benefit of such
covenants or agreements may proceed to protect and enforce its or their rights, either by suit in
equity and/or action at law, including, but not limited to, an action for damages as a result of
any such breach and/or an action for specific performance of any such covenant or agreement
contained in this Agreement. Notwithstanding the generality of the foregoing, in the event that
the Corporation breaches any of its covenants and/or agreements set forth herein, the Investors
shall have the additional remedy, in their sole discretion, provided that such breach has not been
cured by the later to occur of 15 days after receipt of notice of such breach by the Corporation or
30 days after the occurrence of such breach, of electing to immediately exercise their right of
redemption set forth in Article III, Section A.4 of the Certificate, as provided therein,
irrespective of whether such right of redemption otherwise is mature. The rights, powers and
remedies of the parties under this Agreement are cumulative and not exclusive of any other right,
power or remedy which such parties may have under any other agreement or law. No single or partial
assertion or exercise of any right, power or remedy of a party hereunder shall preclude any other
or further assertion or exercise thereof.



ARTICLE 9




SUCCESSORS AND ASSIGNS




     Except as otherwise expressly provided herein, this Agreement shall bind and inure to the
benefit of the Corporation and each of the Investors and the respective successors and permitted
assigns of the Corporation and each of the Investors. Subject to the requirements of Article 3 and
Article 6 hereof, this Agreement and the rights and duties of the Investors set forth herein may be
freely assigned, in whole or in part, by each Investor to any member of such Investor’s Group and
to any other person or entity acquiring at least $50,000 of Restricted Securities, such value to be
determined pursuant to the provisions set forth in Section A.6 of the Certificate. Any transferee
(other than an Investor) to whom rights under Article 3 are transferred shall, as a condition to
such transfer, deliver to the Corporation a written instrument by which such transferee identifies
itself, gives the Corporation notice of the transfer of such rights, identifies the securities of
the Corporation owned or acquired by it and agrees to be bound by the obligations imposed hereunder
to the same extent as if such transferee were an Investor hereunder. A transferee to whom rights
are transferred pursuant to this Article 9 will be thereafter deemed to be an Investor for the
purpose of the execution of such transferred rights and may not again transfer such rights to any
other person or entity, other than as provided in this Article 9. Neither this Agreement nor any
of the rights or duties of the Corporation set forth herein shall be assigned by the Corporation,
in whole or in part, without having first received the approval of a majority of the Series A
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock then outstanding voting
together as a single class.



34.









 





ARTICLE 10




DURATION OF AGREEMENT




     The rights and obligations of the Corporation and each Investor set forth herein shall survive
indefinitely, unless and until, by their respective terms, they are no longer applicable.



ARTICLE 11




ENTIRE AGREEMENT




     Except as set forth in Article 20, this Agreement supersedes any agreement, written or oral,
relating to the subject matter hereof, including, without limitation, the Stockholders Agreement,
dated December 6, 2000, by and among the Corporation, Charles McHenry, Nebojsa Janjic, the Regents
of the University of Colorado and other stockholders of the Corporation who became party to such
agreement subsequent to December 6, 2000, the Original Stockholders Agreement, the Restated
Stockholders Agreement, the Second Restated Stockholders Agreement and the Third Restated
Stockholders Agreement (collectively, the “Prior Agreements”). Upon the execution of this
Agreement, all provisions of, rights granted and covenants made in the Prior Agreements are hereby
waived, released and superseded in their entirety and shall have no further force or effect,
including, without limitation, all preemptive rights and rights of first refusal and any notice
periods associated therewith otherwise applicable to the transactions contemplated by the Series D
Stock Purchase Agreement; provided, however, that any claims and remedies for breach of the Prior
Agreements shall survive until the applicable statutes of limitations of such claims and remedies
expire, with the exception of any applicable claims or remedies with respect to any preemptive
rights and rights of first refusal and any notice periods associated therewith applicable to the
transactions contemplated by the Series D Stock Purchase Agreement. Other than as specifically set
forth herein, there are no surviving rights, obligations, payments or commitments between the
Corporation and any of the parties thereto pursuant to the Prior Agreements. This Agreement,
together with the other writings referred to herein or delivered pursuant hereto which form a part
hereof, contains the entire agreement among the parties with respect to the subject matter hereof
and amends, restates and supersedes all prior and contemporaneous arrangements or understandings
with respect thereto.



ARTICLE 12




NOTICES




     All notices, requests, consents and other communications hereunder to any party shall be
deemed to be sufficient if contained in a written instrument delivered in person or duly sent by
first class registered, certified or overnight mail, postage prepaid, or telecopied with a
confirmation copy by regular mail, addressed or telecopied, as the case may be, to such party at
the address or telecopier number, as the case may be, set forth below or such other address or
telecopier number, as the case may be, as may hereafter be designated in writing by the addressee
to the addresser listing all parties:



            (i) If to the Corporation, to:



35.









 




Replidyne, Inc.

1450 Infinite Drive

Louisville, CO 80027

Attention: Kenneth J. Collins

President and Chief Executive Officer

Telecopier: (303) 665-3455



with a copy to:



Cooley Godward LLP

380 Interlocken Crescent

Suite 900

Broomfield, CO 80021-8023

Attention: Jim Linfield, Esq.

Telecopier: (720) 566-4099




            (ii) If to the Investors, as set forth on Schedule 2.


with a copy to each of:



McCarter & English, LLP

100 Mulberry Street

Newark, NJ 07102

Attention: Jeffrey A. Baumel, Esq.

Telecopier: (973) 624-7070



Latham & Watkins LLP

135 Commonwealth Drive

Menlo Park, CA 94025

Attention: Alan Mendelson, Esq.

Telecopier: (650) 463-2600



Kirkland & Ellis LLP

Citigroup Center

153 East 53rd Street

New York, NY 10022

Attention: Josh Korff, Esq.

Telecopier: (212) 446-4900



Willkie Farr & Gallagher

787 Seventh Avenue

New York, NY 10019

Attention: Laurence Weltman, Esq.

Telecopier: (212) 728-9278



Heller Ehrman LLP

275 Middlefield Road




36.









 







Menlo Park, CA 94025

Attention: Bruce Jenett, Esq.

Telecopier: (650) 324-6007




            (iii) If to a Holder, to


the address and facsimile then set forth on the stock

records of the Corporation.



All such notices, requests, consents and communications shall be deemed to have been received (a)
in the case of personal delivery, on the date of such delivery; (b) in the case of mailing, on the
third business day following the date of such mailing; (c) in the case of overnight mail, on the
first business day following the date of such mailing; and (d) in the case of facsimile
transmission, when confirmed by facsimile machine report.




ARTICLE 13




CHANGES




     Subject to compliance with applicable law, the terms and provisions of this Agreement may be
modified or amended, and any of the provisions hereof waived, temporarily or permanently, only
pursuant to the written consent of (i) the Corporation and (ii) the holders of a majority of the
combined voting power of the Series A Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock then outstanding, voting together as a single class, held by the Investors,
calculated in accordance with Section A.5(a) of Article III of the Certificate; provided, that, to
the extent any modification or amendment will affect one series of Preferred Stock in a manner that
is adverse to another series of Preferred Stock, the written consent of the holders of a majority
of the adversely affected series of Preferred Stock shall be required.



ARTICLE 14




COUNTERPARTS




     This Agreement may be executed in any number of counterparts, and each such counterpart shall
be deemed to be an original instrument, but all such counterparts together shall constitute but one
agreement.



ARTICLE 15




HEADINGS




     The headings of the various sections of this Agreement have been inserted for convenience of
reference only and shall not be deemed to be a part of this Agreement.



37.









 





ARTICLE 16




NOUNS AND PRONOUNS




     Whenever the context may require, any pronouns used herein shall include the corresponding
masculine, feminine or neuter forms, and the singular form of names and pronouns shall include the
plural and vice versa.



ARTICLE 17




SEVERABILITY




     Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision in any other
jurisdiction.



ARTICLE 18




GOVERNING LAW




     This Agreement shall be governed by and construed in accordance with the laws of the State of
Delaware, excluding choice of law rules thereof.



ARTICLE 19




EFFECTIVENESS




     Notwithstanding any other provision of this Agreement, this Agreement shall not be effective
until the Closing (as such term is defined in the Series D Stock Purchase Agreement).



ARTICLE 20




STOCK RESTRICTION AGREEMENT




     To the extent rights and obligations of any party pursuant to this Agreement are redundant or
inconsistent with rights and obligations of such party pursuant to the Stock Restriction Agreement
entered into by and among the Corporation, certain of the Investors, and certain of the Original
Stockholders, dated February 20, 2002 (the “Stock Restriction Agreement”), the Stock Restriction
Agreement shall control and supersede this Agreement as to that subject matter that is the source
of the redundancy or inconsistency.



38.









 





ARTICLE 21




AMENDMENT AND RESTATEMENT OF PRIOR AGREEMENT




     The Third Restated Stockholders Agreement is hereby amended in its entirety and restated
herein. Such amendment and restatement is effective upon the execution of this Agreement by the
Corporation and the holders of a majority of the combined voting power of the Series A Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock then outstanding, voting together as a
single class, held by the Investors. Upon such execution, all provisions of, rights granted and
covenants made in the Third Restated Stockholders Agreement are hereby waived, released and
superseded in their entirety and shall have no further force and effect, including, without
limitation, all preemptive rights and any notice period associated therewith otherwise applicable
to the transactions contemplated by the Series D Stock Purchase Agreement.



[Remainder of page intentionally left blank]




39.









 








     IN WITNESS WHEREOF, the parties hereto have executed this Fourth Amended and Restated
Stockholders Agreement effective as of the date first written herein.



	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	CORPORATION:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	REPLIDYNE, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	/s/ Kenneth J. Collins
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Kenneth J. Collins
	 	 	 	 	 	 	 	 	President and Chief Executive Officer
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	INVESTORS:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	HEALTHCARE VENTURES VI, L.P	 	JOHNSON & JOHNSON	 	 
	 	 	 	 	 	 	DEVELOPMENT CORP.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	HealthCare Partners VI, L.P., as	 	 	 	 	 	 	 	 
	General Partner	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Ting Pau Oei
	By:	 	/s/ Jeffrey B. Steinberg	 	 	 	Title:
	 	 	 
	 	 	 	 	 	 	 	 
	 	 	Jeffrey B. Steinberg	 	 	 	 	 	 	 	 
	 	 	Administrative Partner	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	SEQUEL LIMITED PARTNERSHIP III	 	SEQUEL ENTREPRENEURS’	 	 
	 	 	 	 	 	 	FUND III, L.P.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	Sequel Venture Partners III, L.L.C., its	 	By:	 	Sequel Venture Partners III, L.L.C.,
	 	 	General Partner	 	 	 	its General Partner
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Daniel Mitchell
	 	 	 	     By:
	/s/ Daniel Mitchell	 
	 

	 	 	 	
 
	 	 	 	 	 	 	 
	 

	 	 	 	Name: Daniel Mitchell

Manager
	 	 	 	 	Name: Daniel Mitchell

Manager	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	MORGENTHALER PARTNERS, VII, L.P.	 	SMITHKLINE BEECHAM PLC	 	 
	 
	By:	 	Morgenthaler Management Partners,	 	 	 	 	 	 	 	 
	 	 	VII, L.L.C., its Managing Partner	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert C. Bellas, Jr.
	 	 	 	     By:  
	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 	 	 
	 	 	Robert C. Bellas, Jr.	 	 	 	     Title: 	 	 	 	 
	 	 	Managing Member	 	 	 	     Its:  	 	 	 	 






Fourth Amended and Restated Stockholders Agreement






 









 








	 	 	 	 	 	 	 	 	 	 	 
	TPG VENTURES, L.P.	 	TPG BIOTECHNOLOGY PARTNERS, L.P.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: TPG Ventures Genpar, L.P.	By: TPG Biotechnology Genpar, L.P.	 
	By: TPG Ventures Advisors, LLC	By: TPG Biotech Advisors, LLC	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	/s/ Jeffrey D. Ekberg
	 	 	 	By:
	/s/ Jeffrey D. Ekberg	 	 
	 

	
 
	 	 	 	 	 	 	 
	 

	Jeffrey D. Ekberg
	 	 	 	 	Jeffrey D. Ekberg	 	 
	 

	Title: Vice President
	 	 	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	MDS LIFE SCIENCES TECHNOLOGY FUND

II NC LIMITED PARTNERSHIP	 	MDS LIFE SCIENCES TECHNOLOGY FUND II

QUEBEC LIMITED PARTNERSHIP	 	 
	 
	By:	MDS Life Sciences Technology
Fund II NC Limited Partnership, by
its General Partner, MDS LSTF II
(NCGP) Inc.	 	By:	MDS Life Sciences Technology
Fund II NC Limited Partnership, by
its General Partner, MDS LSTF II
(QGP) Inc.
	 
	 	 	 	 	 	 	 	 	 	 
	By:	/s/ R. Lockie 	 	By:	/s/ G. Bedell	 	 
	 	 
	 	 	 	 	 
	Name: R. Lockie	 	Name: 	 G. Bedell
	 
	 	 	 	 	 	 	 	 	 	 
	By:	/s/ G. Bedell	 	By:	/s/ R. Lockie
	 	 
	 	 	 	 	 
	Name: 	G. Bedell


Manager	 	Name:	 R. Lockie


Manager
	 
	 	 	 	 	 	 	 	 	 	 
	MLII CO-INVESTMENT FUND NC LIMITED	 	 	 	OZ MASTER FUND, LTD.
	PARTNERSHIP	 	 	 	 	 	 	 	 
	 
	By:

	ML II Co-Investment Fund NC
Limited Partnership, by its General
Partner, MLII (NCGP) Inc.	 	 	 	BY:	OZ Management, L.L.C.
its Investment Adviser	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	/s/ R. Lockie
	 	 	 	By:
	/s/ Joel M. Frank	 	 
	 

	 

	 	 	 	 	 	 	 
	 

	R. Lockie	 	 	 	 	 	 	 	 
	its General Partner	 	 	 	Name: 	Joel M. Frank	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	/s/ G. Bedell
	 	 	 	Title:
	 Chief Financial Officer	 	 
	 

	 
	 	 	 	 	 	 	 	 
	 

	G. Bedell	 	 	 	 	 	 	 	 
	 

	Manager	 	 	 	 	 	 	 	 






Fourth
Amended and Restated Stockholders Agreement





 









 








	 	 	 	 	 	 	 	 	 
	STEELER FUND, LTD.	 	HEALTHCARE INVESTMENT PARTNERS HOLDINGS II LLC	 	 
	By: 

	Duquesne Capital Management, L.L.C.	 	 	 	 	 	 
	 

	its investment manager	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By: 
	/s/ Reid S. Perper	 	 
	 

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By: 

	/s/ Darren Martian
	 	Name:
	Reid S. Perper	 	 
	 

	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Authorized Member	 	 
	Name:

	Darren Martian	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Assistant Vice President	 	 	 	 	 	 
	 	 	PERSEUS-SOROS	 	 
	HEALTHCARE VENTURES VIII, L.P.	 	BIOPHARMACEUTICAL FUND, LP	 	 
	 
	By:	HealthCare Partners VIII, L.P.	 	 	 	 
	 

	its General Partner
	 	By:
	/s/ Jay A. Schoenfarber	 	 
	 

	 	 	 	 	 	 	 
	By:

	HealthCare Partners VIII, LLC
	 	Name:
	Jay A. Schoenfarber	 	 
	 

	its General Partner
	 	Name:
	Attorney-in-Fact	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	/s/ Jeffrey B. Steinberg	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 
	 

	Jeffrey B. Steinberg	 	 	 	 	 	 
	 

	Administrative Officer	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	QFINANCE, INC.	 	V-SCIENCES INVESTMENTS PTE LTD	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	/s/ R. David Andrews
	 	By:
	/s/ S. Iswaran	 	 
	 

	 
	 	 	 	 	 
	 

	 	 	 	 	S. Iswaran, Director	 	 
	Name:

	R. David Andrews	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	Vice President	 	 	 	 	 	 






Fourth
Amended and Restated Stockholders Agreement




 









 








	 	 	 	 	 	 	 	 	 
	JUGGERNAUT FUND, L.P.	 	IRON CITY FUND, LTD.	 	 
	 
	By:

	Duquesne Capital Management, L.L.C.
	 	By:
	Duquesne Capital Management, L.L.C.	 	 
	 

	its investment manager
	 	 	its investment manager	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	/s/ Darren Martian
	 	By:
	/s/ Darren Martian	 	 
	 

	 

	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name: 

	Darren Martian
	 	Name: 
	 Darren Martian	 	 
	 

	Assistant Vice President
	 	 	Assistant Vice President	 	 






Fourth Amended and Restated Stockholders Agreement






 









 








	 	 	 	 	 	 	 	 	 
	WARRANT HOLDERS:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	GATX Ventures, Inc.	 	Transamerica Technology Financing Corporation
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 	 	 
	 

	 

	 	 	 	 	 
	Title:

	 	 	 	Title:	 	 	 	 
	Its:

	 	 	 	Its:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ORIGINAL STOCKHOLDERS:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	/s/ Nebojsa Janjic	 	 
	 
	 	 	 	 
	Charles McHenry, Ph.D.	 	Nebojsa Janjic, Ph.D.	 	 
	 
	 	 	 	 	 	 	 	 
	REGENTS OF UNIVERSITY OF COLORADO	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 
	 	Name:	 	Lawrence S. Melvin, Jr., Ph.D.	 	 
	 

	Title:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 
	Wendy K. Acker	 	Jennifer C. Williams	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	/s/ Kenneth J. Collins	 	 
	 
	 	 	 	 
	James M. Bullard	 	Kenneth J. Collins	 	 






Fourth Amended and Restated Stockholders Agreement






 









 








Schedule 1




Charles McHenry, Ph.D.

Nebojsa Janjic, Ph.D.

Regents of University of Colorado

Lawrence S. Melvin, Jr., Ph.D.

Wendy K. Acker

Jennifer C. Williams

James M. Bullard

Kenneth J. Collins




Fourth Amended and Restated Stockholders Agreement






 









 








Schedule 2




HealthCare Ventures VI, L.P.

44 Nassau Street

Princeton, NJ 08542

Attn: Jeffrey B. Steinberg




HealthCare Investment Partners

Holdings II LLC

4900 West Dry Creek Road

Healdsburg, CA 95448

Attn: Henry Wendt




HealthCare Ventures VIII, L.P.

44 Nassau Street

Princeton, NJ 08542

Attn: Jeffrey B. Steinberg




Iron City Fund, Ltd.

c/o Duquesne Capital Management

40 West 57th Street

25th Floor

New York, NY 10019

Attn: Kenan Turnacioglu




Johnson & Johnson Development Corporation

1 Johnson & Johnson Plaza

New Brunswick, NJ 08933

Attn: Ting Pau Oei




Juggernaut Fund, L.P.

c/o Duquesne Capital Management

40 West 57th Street

25th Floor

New York, NY 10019

Attn: Kenan Turnacioglu




MDS Life Sciences Technology Fund II NC

Limited Partnership

435 Tasso Street

Suite 315

Palo Alto, CA 94301

Attn: Mike Callaghan




MDS Life Sciences Technology Fund II Quebec

Limited Partnership

435 Tasso Street

Suite 315

Palo Alto, CA 94301

Attn: Mike Callaghan




MLII Co-Investment Fund NC Limited

Partnership

435 Tasso Street

Suite 315

Palo Alto, CA 94301

Attn: Mike Callaghan




Morgenthaler Partners, VII, L.P.

4430 Arapahoe Ave., Suite 220

Boulder, CO 80303

Attn: Chris Christoffersen




OZ Master Fund, Ltd.

9 West 57th Street

39th Floor

New York, NY 10019

Attn: James Mackey




Perseus-Soros Biopharmaceutical Fund, LP

888 Seventh Avenue, 29th Floor

New York, NY 10106

Attn: Adele Murray




QFinance, Inc.

P.O. Box 13979

Research Triangle Park, NC 27709

Attn: Jonathan Tunnicliffe




Sequel Entrepreneurs’ Fund III, L.P.

4430 Arapahoe Ave., Suite 220

Boulder, CO 80303

Attn: John Greff




Sequel Limited Partnership III

4430 Arapahoe Ave., Suite 220

Boulder, CO 80303

Attn: John Greff




Fourth Amended and Restated Stockholders Agreement





 









 








SmithKline Beecham plc

980 Great West Road

Brentford, Middlesex

England TW8 9GS

Attn: Corporate Secretariat




Steeler Fund, Ltd.

c/o Duquesne Capital Management

40 West 57th Street

25th Floor

New York, NY 10019

Attn: Kenan Turnacioglu




TPG Biotechnology Partners, L.P.

301 Commerce Street

Suite 3300

Fort Worth, TX 76102

Attn: Geoff Duyk




TPG Ventures, L.P.

301 Commerce Street

Suite 3300

Fort Worth, TX 76102

Attn: Geoff Duyk




V-Sciences Investments Pte Ltd.

60B Orchard Rd.

#06-18 Tower Two

Singapore 238891

Attn: S. Iswaran




Fourth Amended and Restated Stockholders Agreement




 









 








Schedule 3




GATX Ventures, Inc.



3687 Mt. Diablo Blvd., Suite 200

Lafayette, CA 94549

Attn: Director of Finance




Transamerica Technology Financing Corporation



76 Batterson Park Road

Farmington, CT 06032

Attn: Legal Department




Fourth Amended and Restated Stockholders Agreement




 









 








REPLIDYNE, INC.




FIRST AMENDMENT TO

FOURTH AMENDED AND RESTATED STOCKHOLDERS AGREEMENT




     This First Amendment to the Fourth Amended and Restated Stockholders Agreement dated
as of August 17, 2005 (the “Stockholders Agreement”), is entered into as of the 7th day
of March, 2006, by and among Replidyne, Inc. (the “Company”) and the parties named on the signature
pages hereto.



Recitals




     Whereas, the Company proposes to increase the size of the board of directors of the
Company to eight (8) members;



     Whereas, pursuant to Article 13 of the Stockholders Agreement, the Stockholders
Agreement may be amended with the written consent of the Company and the holders of a majority of
the combined voting power of the Series A Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock then outstanding, voting together as a single class, held by the Investors (as
defined in the Stockholders Agreement) (the “Required Holders”); and



     Whereas, the undersigned constitute the Required Holders.



     Now, Therefore, in consideration of the mutual agreements, covenants and
considerations contained herein, the parties hereto agree as follows:




	1.	 	Capitalized Terms. Capitalized terms used herein but not otherwise defined shall
have the meaning ascribed to them in the Stockholders Agreement.
	 
	2.	 	Amendment.






     2.1 Section 5.1(a) of the Stockholders Agreement shall be amended in its entirety to
read as follows:




	 	 	 	“(a) to fix and maintain the number of directors on the
Board of the Corporation at eight (8).”






     2.2 Section 5.1(h) shall be added to the Stockholders Agreement which shall read as
follows:




	 	 	 	“(h) to elect to the Board one independent director approved
by a majority of the other directors then serving.”




 









 












	3.	 	Miscellaneous






	 	(a)	 	This Amendment may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
	 
	 	(b)	 	All other terms and conditions of the Stockholders Agreement shall remain in
full force and effect.





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     In Witness Whereof, the parties hereto have executed this First Amendment to the
Fourth Amended and Restated Stockholders Agreement as of the date set forth in the first paragraph
hereof.



	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Replidyne, Inc.	 	 	 	HealthCare Ventures VI, L.P.
	 	 	1450 Infinite Drive	 	 	 	 	 	 	 	 
	 	 	Louisville, CO 80027	 	By:	 	HealthCare Partners VI, L.P.
	 

	 	 	 	 	 	 	 	Its:  General Partner
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Kenneth J. Collins	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Kenneth J. Collins
	 	 	 	By:
	 	/s/ Augustine Lawlor	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Chief Executive Officer
	 	 	 	Name:
	 	Augustine Lawlor	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Title:
	 	General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	HealthCare Investment 
	 	 	 	 	 	 	 	 	Partners Holdings II LLC
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:
	 	/s/ Henry Wendt III	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:
	 	Henry Wendt III	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Title:
	 	Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Sequel Limited Partnership III
	 	 	 	 	 	 	 	 	Sequel Entrepreneurs’ Fund 
	 	 	 	 	 	 	 	 	III, L.P.
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:
	 	Sequel Venture Partners III, L.L.C.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	     Its:
	 	General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:
	 	/s/ Daniel Mitchell	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:
	 	Daniel Mitchell	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 





3









 






	 	 	 	 	 	 	 
	 	 	Morgenthaler Partners, VII, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	Morgenthaler Management Partners VII, L.L.C.	 	 
	 

	 	Its:
	Managing Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	/s/ Robert C. Bellas, Jr.	 	 
	 

	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name: 
	Robert C. Bellas, Jr.	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:
	General Partner	 	 
	 
	 	 	 	 	 	 
	 	 	TPG Ventures, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	TPG Ventures Genpar, L.P.	 	 
	 

	 	By:
	TPG Ventures Advisors, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	/s/ Jeffrey D. Ekberg	 	 
	 

	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name: 
	Jeffrey D. Ekberg	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:
	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	TPG Biotechnology Partners, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	TPG Biotechnology Genpar, L.P.	 	 
	 

	 	By:
	TPG Biotech Advisors, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	/s/ Jeffrey D. Ekberg	 	 
	 

	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name: 
	Jeffrey D. Ekberg	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:
	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	Perseus-Soros 	 	 
	 	 	Biopharmaceutical Fund, LP	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	/s/ Jay A. Schoenfarber	 	 
	 

	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name: 
	Jay A. Schoenfarber	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:
	Attorney-in-Fact	 	 







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