exv4w2



 





Exhibit
4.2



SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT




     This Second Amended and Restated Investors’ Rights Agreement (this “Agreement”) is
made and entered into as of December 9, 2005 by and among Asthmatx, Inc., a California corporation
(the “Company”), and the persons and entities listed on Exhibit A attached hereto
(the “Investors”).



W I T N E S S E T H:




     WHEREAS, certain of the Investors are currently holders of outstanding shares of the Company’s
Common Stock (“Qualified Common Stock”), and/or the Company’s Series AA Preferred Stock
(the “Series AA Stock”);



     WHEREAS, certain of the Investors held warrants (which have now all expired) issued by Broncus
Technologies, Inc. (“Broncus”) in connection with investments made by such Investors’ in
the Series D preferred stock financing of Broncus (the “Warrants”), each such Warrant, in
connection with a dividend of certain shares of the Company’s capital stock to Broncus
shareholders, entitled the holder thereof to receive upon exercise or conversion thereof certain
shares of the Company’s Common Stock, and certain Investors had exercised such Warrants prior to
their expiration in exchange for shares of such Common Stock (the “Warrant Common
Shares”);



     WHEREAS, certain of the Investors (the “Series BB Investors”) are currently holders of
outstanding shares of the Company’s Series BB Preferred Stock (“Series BB Stock”) pursuant
to that certain Series BB Preferred Stock Purchase Agreement by and among the Company and such
Series BB Investors dated March 5, 2004 (the “Series BB Agreement”).



     WHEREAS, the Company and certain of the Investors (the “Prior Investors”) entered into
that certain Amended and Restated Investors’ Rights Agreement dated March 5, 2004 (the “Prior
Rights Agreement”) pursuant to which the Prior Investors were granted certain information and
registration rights and rights of first refusal;



     WHEREAS, certain of the Investors (the “Series CC Investors”) have agreed to purchase
shares of the Company’s Series CC Preferred Stock (“Series CC Stock”) pursuant to that
certain Series CC Preferred Stock Purchase Agreement by and among the Company and such Series CC
Investors dated of even date herewith (the “Series CC Agreement”). The Series CC Agreement
provides that, as a condition to the Investors’ purchase of Series CC Stock thereunder, the Company
will enter into this Agreement and the Investors will be granted the rights set forth herein; and



     WHEREAS, the Company and the undersigned parties hereto desire to enter into this Agreement in
order to amend, restate and replace their rights and obligations under the Prior Rights Agreement
with the rights and obligations set forth in this Agreement. Section 4.2 of the Prior Rights
Agreement provides that the Prior Rights Agreement may be amended by the written consent of the
holders of at least two-thirds (2/3) of the “Investors’ Shares” (as defined in Section



 









 




4.2 of the Prior Rights Agreement) and the undersigned parties to this Agreement hold at least
two-thirds (2/3) of the Investors’ Shares, as defined in the Prior Rights Agreement.




     NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:



     1. COVENANTS OF THE COMPANY; INFORMATION RIGHTS.



          1.1 Financial Information. The Company will maintain true books and records of
account in which full and correct entries will be made of all its business transactions pursuant to
a system of accounting established and administered in accordance with U.S. generally accepted
accounting principles consistently applied (except as noted therein), and will set aside on its
books all such proper accruals and reserves as shall be required under U.S. generally accepted
accounting principles consistently applied. The Company covenants and agrees that, commencing on
the date of this Agreement, for so long as any Investor holds at least 150,000 shares of any
combination of shares of Series AA Stock, Series BB Stock, or Series CC Stock (the “Preferred
Stock”) or Qualified Common Stock, or any combination thereof and/or the equivalent number (on
an as-converted basis) of shares of Common Stock of the Company issued upon the conversion of such
shares of the Preferred Stock (“Conversion Stock”) and/or Warrant Common Shares, or any
combination of any of the foregoing, the Company will:




               (a) Annual Reports. Furnish to such Investor, as soon as practicable and in any event
within ninety (90) days after the end of each fiscal year of the Company, a consolidated Balance
Sheet as of the end of such fiscal year, a consolidated Statement of Income and a consolidated
Statement of Cash Flows of the Company and its subsidiaries for such year, setting forth in each
case in comparative form the figures from the Company’s previous fiscal year (if any), all prepared
in accordance with generally accepted accounting principles and practices and audited by nationally
recognized independent certified public accountants;



               (b) Quarterly Reports. Furnish to such Investor as soon as practicable, and in any
case within forty-five (45) days after the end of each fiscal quarter of the Company (except the
last quarter of the Company’s fiscal year), quarterly unaudited financial statements, including an
unaudited Balance Sheet, an unaudited Statement of Income and an unaudited Statement of Cash Flows;



               (c) Monthly Reports. Furnish to such Investor who holds more than 500,000 Registrable
Securities (a “Major Investor”) as soon as practicable, and in any case within twenty (20)
days of the end of each calendar month (except the last month of the Company’s fiscal year and the
last month of each fiscal quarter), monthly unaudited financial statements, including an unaudited
Balance Sheet, an unaudited Statement of Income and an unaudited Statement of Cash Flows, together
with a comparison to the Annual Plan (as defined below) and statements of the Chief Financial
Officer of the Company explaining any significant differences in the statements from the Annual
Plan for the month covered and stating that such statements fairly present the consolidated
financial position and consolidated financial results of the Company for the month covered; and



- 2 -









 





               (d) Annual Budget. Furnish to each Major Investor as soon as practicable and in any
event at least thirty (30) days prior to the close of each fiscal year of the Company, an annual
operating plan and budget, broken down by month and in reasonable detail, for the next immediate
fiscal year (the “Annual Plan”). The Company shall also furnish to such Investor, within a
reasonable time of its preparation, amendments to the Annual Plan, if any.



          (e) Confidentiality. Each Investor agrees to hold all information received pursuant
to this Section 1 in confidence, and not to use or disclose any of such information to any third
party, except to the extent such information may be made publicly available by the Company and
except as required by law, rule, regulation or other governmental order; provided,
however, that Investors may make such disclosures of such information (i) on a confidential
basis as are reasonably necessary to their limited partners, general partner or management company,
affiliates, agents, attorneys or accountants (each, a “Permitted Dislcosee”) to monitor and
protect their investment in the Company, (ii) that is communicated to them free of any obligation
of confidentiality; (iv) that is developed by an Investor or its agents independently of and
without reference to any confidential information communicated by the Company. Furthermore,
nothing contained herein shall prevent any Investor or Permitted Disclosee from entering into any
business, entering into any agreement with a third party, or investing in or engaging in investment
discussions with any other company, provided that such Investor or Permitted Disclosee does not,
except as permitted in accordance with this Section 1.1(e), use or disclose any proprietary or
confidential information of the Company in connection with such activities.




          1.2 Inspection Rights. The Company shall permit each Investor who has the right to
information under Section 1.1(a), at such Investor’s expense, to visit and inspect the Company’s
properties, to examine its books of account and records and to discuss the Company’s affairs,
finances and accounts with its officers, all at such reasonable times as may be requested by such
Investor for purposes solely of monitoring its investment in the Company.




          1.3 Reservation of Common Stock. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the conversion of the Preferred Stock, all Common
Stock issuable from time to time upon such conversion.




          1.4 Key Man Insurance. Subject to the approval of the Board, the Company will use
commercially reasonable 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 life of Glen French; naming the Company as
beneficiary.




          1.5 Director and Officer Insurance. The Company will use commercially reasonable
efforts to obtain and maintain in full force and effect director and officer liability insurance in
the amount of $2,000,000.




          1.6 Invention Assignment and Confidentiality Agreement. The Company shall require all
employees and consultants to execute and deliver an invention assignment and confidentiality
agreement substantially in a form approved by the Company’s counsel or Board.




- 3 -









 





          1.7 Approval. The Company shall not without the approval of a majority of the
disinterested members of the Board, authorize or enter into any transactions with any director or
management employee, or such director’s or employee’s immediate family.




          1.8 Indemnification and Advancement. The Company hereby agrees to hold harmless and
indemnify each of the Series CC Investors for any loss, damage or injury suffered by such Series CC
Investor (excluding any consequential or indirect damages) as a result of the failure of any of the
Company’s representations and warranties in Section 3 of the Series CC Agreement, provided,
however, that that the aggregate liability that the Company shall have to a Series CC Investor
hereunder shall, notwithstanding anything to the contrary herein, under no circumstances exceed the
total dollar amount paid by such Series CC Investor for its Series CC Stock under the Series CC
Agreement.




          1.9 Preservation of Qualified Small Business Stock Status. For at least as long any
Preferred Stock are held by any Investor or by a transferee of such Investor in whose hands the
Preferred Stock are eligible to qualify as Qualified Small Business Stock under Code Section
1202(c), the Company shall use diligent efforts to cause the Preferred Stock to qualify as
Qualified Small Business Stock under Code Section 1202(c); provided, however, that such
requirement shall not be applicable if the Board of Directors of the Company determines, in its
good faith business judgment, that such qualification is inconsistent with the best interests of
the Company.




          1.10 Expenses for Board and Meeting Attendance. The Company shall reimburse all
reasonable expenses (including airfare) incurred by members of its Board to attend Board and Board
Committee meetings as well as other meetings attended by them in connection with assisting the
Company to carry out its business.




          1.11 Indemnification. The Company will not alter the indemnification provisions of
its Restated Articles (as defined in the Series CC Agreement) or Bylaws in a manner that reduces
the protection afforded to directors or officers of the Company for so long as any representative
of the Investors serves on the Board.




          1.12 Issuance of Options. Options remaining available for grant under the Company’s
2003 Equity Incentive Plan (the “2003 Plan”) will only be granted under such arrangements
or contracts as are recommended by management and approved by the Board (or the Compensation
Committee thereof).




          1.13 Stock Vesting and Right of Repurchase. Unless otherwise approved by the Board
(or its Compensation Committee), all stock options and stock awards issued after the Closing under
the Company’s 2003 Plan to employees, directors, consultants and other service providers will (a)
be subject to four year vesting with a one (1) year cliff, provided that there shall be no
cliff vesting for an optionee once he/she has been with the Company for more than one (1) year (b)
shall not be entitled to any special acceleration of vesting. Unless otherwise approved by the
Board (or its Compensation Committee), if options granted under the 2003 Plan after the Closing
provide for exercise prior to vesting, or if stock awards made after the Closing under the 2003
Plan are subject to vesting, then such options and stock awards shall provide for a Company




- 4 -









 




right to repurchase unvested shares upon termination of employment (with or without cause) of
the holder of such unvested shares at the price per share at which such shares of stock were
originally purchased.




          1.14 Restrictions on Sales. Unless otherwise approved by the Board (or its
Compensation Committee), all shares of Common Stock (or options therefor) issued after the Closing
(other than Common Stock issued upon conversion of Preferred Stock) shall provide for a Company
right of first refusal on transfers on terms and conditions substantially the same as those set
forth in the Company’s current form of stock option agreement and provide for standard “market
stand-off” provisions.




          1.15 Certain Covenants Relating to SBA Matters.




               (a) Use of Proceeds. The Company certifies that it will use the proceeds from the
investment for its working capital, growth, modernization or expansion. The Company shall provide
each Investor that is a licensed Small Business Investment Company (an “SBIC Investor”) and
the Small Business Administration (the “SBA”) reasonable access to the Company’s books and
records for the purpose of confirming the use of proceeds (to the extent such access is reasonably
required by such SBIC Investor or the SBA to comply with applicable law).



               (b) Business Activity. For a period of one year following the closing date of the
investment, the Company shall not change the nature of its business activity if such change would
render the Company ineligible as provided in 13 C.F.R. Section 107.720.



               (c) Compliance. So long as any SBIC Investor holds any securities of the Company, the
Company will at all times comply with the non-discrimination requirements of 13 C.F.R. Parts 112,
113, and 117.



               (d) Information of SBIC Investor. Within 90 days after the end of each fiscal year
and at such other times as an SBIC Investor may reasonably request (and only to the extent
reasonably necessary to permit such SBIC Investor to comply with applicable law), the Company shall
deliver to such SBIC Investor a written assessment, in form and substance reasonably satisfactory
to such SBIC Investor, of the economic impact of such SBIC Investor’s financing specifying the
full-time equivalent jobs created or retained in connection with such investment, and the impact of
the financing on the Company’s business in terms of profit and on taxes paid by the Company and its
employees. Upon request, the Company agrees to promptly provide each SBIC Investor with sufficient
information to permit such Investor to comply with its obligations under the Small Business
Investment Act; provided however, each SBIC Investor agrees that it will protect
any information which the Company labels as confidential to the extent permitted by law. Any
submission of any financial information under this paragraph shall include a certificate of the
Company’s president, chief executive officer, treasurer or chief financial officer. The Company
shall provide each SBIC Investor and the SBA, on a confidential basis confirmed in writing by the
recipient thereof, reasonable access to the Company’s books, records and properties for the purpose
of confirming the use of the proceeds received hereunder.



- 5 -









 





          1.16 Termination of Certain Rights. The Company’s obligations under Section 1 above
will terminate upon the earlier of (a)(1) the acquisition of all or substantially all the assets of
the Company or (2) an acquisition of the Company by another corporation or entity by consolidation,
merger or other reorganization in which the holders of the Company’s outstanding voting stock
immediately prior to such transaction own, immediately after such transaction, securities
representing less than fifty percent (50%) or more of the voting power of the corporation or other
entity surviving such transaction on account of shares of the Company’s stock held by them
immediately prior to such consolidation, merger or other reorganization, and (b) the closing of the
Company’s initial public offering of Common Stock pursuant to an effective registration statement
filed under the U.S. Securities Act of 1933, as amended (the “Securities Act”);
provided, however, that in the event that such initial public offering does not
constitute a “Qualified Public Offering” (as defined in Section 3.5 below), then the obligations
under Sections 1.1 and 1.2 above shall, in the event that the Company is thereafter not required to
file annual or periodic reports with the Securities and Exchange Commission under Section 13 or
Section 15 of the Securities Exchange Act of 1934, as amended, be reinstated as to any Investor who
continues to hold shares of Preferred Stock and who holds the requisite number of shares of the
Company’s Preferred Stock and/or Conversion Stock for so long as such Investor continues to hold
any shares of Preferred Stock and such requisite number of shares of Preferred Stock and/or
Conversion Stock.




     2. REGISTRATION RIGHTS; RESTRICTIONS ON TRANSFER.



          2.1 Definitions. For purposes of this Section 2:




               (a) Registration. The terms “register,” “registered,” and
“registration” refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or ordering of effectiveness
of such registration statement.



               (b) Registrable Securities. The term “Registrable Securities” means: (1) all
the shares of Common Stock of the Company issued or issuable upon the conversion of any shares of
Preferred Stock and all Warrant Common Shares and (2) any shares of Common Stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, all such shares of Common Stock described in clause (1) of this subsection (b);
excluding in all cases, however, any Registrable Securities sold by a person in a
transaction in which rights under this Section 2 are not assigned in accordance with this Agreement
or any Registrable Securities sold to the public or sold pursuant to Rule 144 promulgated under the
Securities Act.



               (c) Registrable Securities Then Outstanding. The number of shares of “Registrable
Securities then outstanding” shall mean the number of shares of Common Stock which are
Registrable Securities and (1) are then issued and outstanding, or (2) are then issuable pursuant
to the exercise or conversion of then outstanding and then exercisable options, warrants or
convertible securities.



- 6 -









 





               (d) Holder. For purposes of this Section 2 and Sections 3 and 4 hereof, the term
“Holder” means any person owning of record Registrable Securities that have not been sold
to the public or pursuant to Rule 144 promulgated under the Securities Act or any assignee of
record of such Registrable Securities to whom rights under this Section 2 have been duly assigned
in accordance with this Agreement; provided, however, that for purposes of this
Agreement, a record holder of shares of Preferred Stock convertible into such Registrable
Securities shall be deemed to be the Holder of such Registrable Securities; and provided,
further, that the Company shall in no event be obligated to register shares of Preferred
Stock, and that Holders of Registrable Securities will not be required to convert their shares of
Preferred Stock into Common Stock in order to exercise the registration rights granted hereunder,
until immediately before the closing of the offering to which the registration relates.



               (e) Form S-3. The term “Form S-3” means such form under the Securities Act as
is in effect on the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of substantial information
by reference to other documents filed by the Company with the SEC.



               (f) SEC. The term “SEC” or “Commission” means the U.S. Securities and
Exchange Commission.



          2.2 Restrictions on Transfer.




               (a) Each Holder agrees not to make any disposition of all or any portion of the Preferred
Stock or Registrable Securities unless and until:



                    (i) there is then in effect a registration statement under the Securities Act covering such
proposed disposition and such disposition is made in accordance with such registration statement;
or



                    (ii) (A) the transferee has agreed in writing to be bound by the terms of Section 2.2 of this
Agreement, (B) such Holder shall have notified the Company of the proposed disposition and shall
have furnished the Company with a detailed statement of the circumstances surrounding the proposed
disposition, and (C) if reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition
will not require registration of such shares under the Securities Act. It is agreed that the
Company will not require opinions of counsel for transactions made pursuant to Rule 144, except in
unusual circumstances.



               (b) Notwithstanding the provisions of subsection (a) above, no such restriction shall apply to
a transfer by a Holder that is (A) a partnership transferring to its partners or former partners in
accordance with partnership interests or any of its affiliates, (B) a corporation transferring to a
wholly-owned subsidiary or a parent corporation that owns all of the capital stock of the Holder,
(C) a limited liability company transferring to its members or former members in accordance with
their interest in the limited liability company or any of its affiliates, or (D) an individual
transferring to the Holder’s family member or trust for the benefit of an individual Holder;
provided that in each case the transferee will agree in writing to be subject to



- 7 -









 




the terms of Section 2.2 of this Agreement to the same extent as if he were an original Holder
hereunder.




               (c) Legends.



                    (i) It is understood that the certificates evidencing shares of Preferred Stock and the
Registrable Securities will bear the legend set forth below:




               THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF
CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO
BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.



                    (ii) It is further understood that the certificates evidencing the Preferred Stock and
Registrable Securities will also bear any legend required by the laws of the State of California,
including any legend required by the California Department of Corporations and Sections 417 and 418
of the California Corporations Code or any other state securities laws, and that the certificates
representing the Preferred Stock may also bear a legend substantially in the form of the following:




               THE SHARES EVIDENCED BY THIS CERTIFICATE: (1) ARE CONVERTIBLE INTO SHARES
OF COMMON STOCK OF THE COMPANY AT THE OPTION OF THE HOLDER AT ANY TIME PRIOR TO
AUTOMATIC CONVERSION THEREOF; (2) AUTOMATICALLY CONVERT INTO COMMON STOCK OF THE
COMPANY IN THE EVENT OF A PUBLIC OFFERING MEETING CERTAIN REQUIREMENTS OR UPON
CERTAIN CONSENTS OF THE HOLDERS OF THE COMPANY’S PREFERRED STOCK ALL PURSUANT TO
AND UPON THE TERMS AND CONDITIONS SPECIFIED IN THE COMPANY’S ARTICLES OF
INCORPORATION. A COPY OF SUCH ARTICLES OF INCORPORATION MAY BE OBTAINED,
WITHOUT CHARGE, AT THE COMPANY’S PRINCIPAL OFFICE.



- 8 -









 





               The legend set forth in (i) above shall be removed by the Company from any certificate
evidencing Preferred Stock or Registrable Securities upon delivery to the Company of an opinion by
counsel, reasonably satisfactory to the Company, that a registration statement under the 1933 Act
is at that time in effect with respect to the legended security or that such security can be freely
transferred in a public sale without such a registration statement being in effect and that such
transfer will not jeopardize the exemption or exemptions from registration pursuant to which the
Company issued the Preferred Stock or the Registrable Securities.



          2.3 Demand Registration.




               (a) Request by Holders. If the Company shall receive (i) at any time before the
initial public offering of the Company’s stock registered under the Securities Act, a written
request from the Holders of at least a majority of the Registrable Securities then outstanding, or
(ii) at any time after the initial public offering of the Company’s stock registered under the
Securities Act, a written request from the Holders of Registrable Securities that the Company file
a registration statement under the Securities Act covering the registration of Registrable
Securities pursuant to this Section 2.3, then the Company shall, within ten (10) business days of
the receipt of such written request, give written notice of such request (“Request Notice”)
to all Holders, and effect, as soon as practicable, the registration under the Securities Act of
all Registrable Securities which Holders request to be registered and included in such registration
by written notice given by such Holders to the Company within twenty (20) days after receipt of the
Request Notice, subject only to the limitations of this Section 2.3; provided,
however, that the Registrable Securities requested to be registered pursuant to (ii) above
must have an anticipated aggregate public offering price (before any underwriting discounts and
commissions) of not less than Fifteen Million Dollars ($15,000,000.00).



               (b) Underwriting. If the Holders initiating the registration request under this
Section 2.3 (“Initiating Holders”) intend to distribute the Registrable Securities covered
by their request by means of an underwriting, then they shall so advise the Company as a part of
their request made pursuant to this Section 2.3 and the Company shall include such information in
the written notice referred to in subsection 2.3(a). In such event, the right of any Holder to
include his Registrable Securities in such registration shall be conditioned upon such Holder’s
participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. All Holders proposing to distribute their
securities through such underwriting shall enter into an underwriting agreement in customary form
with the managing underwriter or underwriters selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 2.3, if the underwriter(s) advise(s) the
Company in writing that marketing factors require a limitation of the number of securities to be
underwritten then the Company shall so advise all Holders of Registrable Securities which would
otherwise be registered and underwritten pursuant hereto, and the number of Registrable Securities
that may be included in the underwriting shall be reduced as required by the underwriter(s) and
allocated among the Holders of Registrable Securities on a pro rata basis according to the number
of Registrable Securities then outstanding held by each Holder requesting registration (including
the Initiating Holders); provided, however, that the number of shares of
Registrable Securities to be included in such underwriting and registration shall not be



- 9 -









 




reduced unless all other securities of the Company are first entirely excluded from the
underwriting and registration. Any Registrable Securities excluded and withdrawn from such
underwriting shall be withdrawn from the registration.




               (c) Maximum Number of Demand Registrations. The Company is obligated to effect only
three (3) such registrations pursuant to this Section 2.3.



               (d) Deferral. Notwithstanding the foregoing, if the Company shall furnish to Holders
requesting the filing of a registration statement pursuant to this Section 2.3, a certificate
signed by the President or Chief Executive Officer of the Company stating that in the good faith
judgment of the Board, it would be seriously detrimental to the Company and its shareholders for
such registration statement to be filed and it is therefore essential to defer the filing of such
registration statement, then the Company shall have the right to defer such filing for a period of
not more than 120 days after receipt of the request of the Initiating Holders; provided,
however, that the Company may not utilize this right more than once in any twelve (12)
month period.



               (e) Expenses. All expenses incurred in connection with a registration pursuant to
this Section 2.3, including without limitation all registration and qualification fees, printers’
and accounting fees, fees and disbursements of counsel for the Company, and reasonable fees and
disbursements of one counsel for the selling Holders (but excluding underwriters’ discounts and
commissions), shall be borne by the Company. Each Holder participating in a registration pursuant
to this Section 2.3 shall bear such Holder’s proportionate share (based on the total number of
shares sold in such registration other than for the account of the Company) of all discounts,
commissions or other amounts payable to underwriters or brokers in connection with such offering.
Notwithstanding the foregoing, the Company shall not be required to pay for any expenses of any
registration proceeding begun pursuant to this Section 2.3 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to
be registered, unless the Holders of a majority of the Registrable Securities then outstanding
agree to forfeit their right to one (1) demand registration pursuant to this Section 2.3 (in which
case such right shall be forfeited by all Holders of Registrable Securities); provided,
however, that (i) if at the time of such withdrawal, the Holders have learned of a material
adverse change in the condition, business, or prospects of the Company not known to the Holders at
the time of their request for such registration and have withdrawn their request for registration
with reasonable promptness after learning of such material adverse change, or (ii) if, after the
Company has deferred the filing of a registration statement in accordance with subsection 2.3(d),
the Holders have learned of a material adverse change in general market conditions for the
Company’s Registrable Securities not known to the Holders at the time of such Company deferral and
have withdrawn their request for registration with reasonable promptness after learning of such
material adverse change, then the Holders shall not be required to pay any of such expenses and
shall retain their rights pursuant to this Section 2.3.



          2.4 Piggyback Registrations. The Company shall notify all Holders of Registrable
Securities in writing at least thirty (30) days prior to filing any registration statement under
the Securities Act for purposes of effecting a public offering of securities of the Company
(including, but not limited to, registration statements relating to secondary offerings of
securities




- 10 -









 







of the Company, but excluding registration statements relating to any registration
under Section 2.3 or Section 2.5 of this Agreement, or to any employee benefit plan or a corporate
reorganization) and will afford each such Holder an opportunity to include in such registration
statement all or any part of the Registrable Securities then held by such Holder. Each Holder
desiring to include in any such registration statement all or any part of the Registrable
Securities held by such Holder shall, within twenty (20) days after receipt of the above-described
notice from the Company, so notify the Company in writing, and in such notice shall inform the
Company of the number of Registrable Securities such Holder wishes to include in such registration
statement. If a Holder decides not to include all of its Registrable Securities in any
registration statement thereafter filed by the Company, such Holder shall nevertheless continue to
have the right to include any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings of its securities,
all upon the terms and conditions set forth herein. No shareholder of the Company shall be granted
registration rights equal to or senior to those of the holders of the Registrable Securities
without the consent of the holders of at least a majority of the Registrable Securities then
outstanding.




               (a) Underwriting. If a registration statement under which the Company gives notice
under this Section 2.4 is for an underwritten offering, then the Company shall so advise the
Holders of Registrable Securities. In such event, the right of any such Holder’s Registrable
Securities to be included in a registration pursuant to this Section 2.4 shall be conditioned upon
such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable
Securities in the underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an underwriting agreement
in customary form with the managing underwriter or underwriter(s) selected for such underwriting.
Notwithstanding any other provision of this Agreement, if the managing underwriter determine(s) in
good faith that marketing factors require a limitation of the number of shares to be underwritten,
then the managing underwriter(s) may exclude shares (including Registrable Securities) from the
registration and the underwriting, and the number of shares that may be included in the
registration and the underwriting shall be allocated, first, to the Company,
second, to each of the Holders requesting inclusion of their Registrable Securities in such
registration statement on a pro rata basis based on the total number of Registrable Securities then
held by each such Holder and third, to any other shareholders; provided
however, that the right of the underwriters to exclude shares (including Registrable
Securities) from the registration and underwriting as described above shall be restricted so that
the number of Registrable Securities included in any such registration is not reduced below twenty
percent (20%) of the shares included in the registration, except for a registration relating to the
Company’s initial public offering from which all Registrable Securities may be excluded. If any
Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw
therefrom by written notice to the Company and the underwriter, delivered at least ten (10)
business days prior to the effective date of the registration statement. Any Registrable
Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the
registration. For any Holder which is a partnership or corporation, the partners, retired partners
and shareholders of such Holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be a
single “Holder”, and any pro rata



- 11 -









 




reduction with respect to such “Holder” shall be based upon the aggregate amount of shares
carrying registration rights owned by all entities and individuals included in such “Holder”, as
defined in this sentence.




               (b) Expenses. All expenses incurred in connection with a registration pursuant to
this Section 2.4 (excluding underwriters’ and brokers’ discounts and commissions), including,
without limitation all federal and “blue sky” registration and qualification fees, printers’ and
accounting fees, fees and disbursements of counsel for the Company and reasonable fees and
disbursements of one counsel for the selling Holders shall be borne by the Company.



          2.5 Form S-3 Registration. In case the Company shall receive from any Holder or
Holders of at least twenty percent (20%) of all Registrable Securities then outstanding a written
request or requests that the Company effect a registration on Form S-3 (or any other successor Form
S-3) or any similar short form registration statement and any related qualification or compliance
with respect to all or a part of the Registrable Securities owned by such Holder or Holders, then
the Company will:




               (a) Notice. Promptly give written notice of the proposed registration and the
Holder’s or Holders’ request therefor, and any related qualification or compliance, to all other
Holders of Registrable Securities; and



               (b) Registration. As soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Holder’s or Holders’ Registrable Securities as are
specified in such request, together with all or such portion of the Registrable Securities of any
other Holder or Holders joining in such request as are specified in a written request given within
twenty (20) days after receipt of such written notice from the Company; provided,
however, that the Company shall not be obligated to effect any such registration,
qualification or compliance pursuant to this Section 2.5:



                    (1) if Form S-3 (or any successor or similar short form) is not available for such offering by
the Holders;



                    (2) if the Holders, together with the holders of any other securities of the Company entitled
to inclusion in such registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public of less than One Million Dollars ($1,000,000);



                    (3) if the Company shall furnish to the Holders a certificate signed by the President or Chief
Executive Officer of the Company stating that in the good faith judgment of the Board, it would be
seriously detrimental to the Company and its shareholders for such Form S-3 Registration to be
effected at such time, in which event the Company shall have the right to defer the filing of the
Form S-3 registration statement no more than once during any nine month period for a period of not
more than 120 days after receipt of the request of the Holder or Holders under this Section 2.5;



- 12 -









 





                    (4) if the Company has, within the twelve (12) month period preceding the date of such
request, already effected one (1) registration on Form S-3 for the Holders pursuant to this Section
2.5; or



                    (5) in any particular jurisdiction in which the Company would be required to qualify to do
business or to execute a general consent to service of process in effecting such registration,
qualification or compliance.



               (c) Expenses. Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities so requested to be
registered pursuant to this Section 2.5 as soon as practicable after receipt of the request or
requests of the Holders for such registration. The Company shall pay all expenses incurred in
connection with each registration requested pursuant to this Section 2.5 (excluding underwriters’
or brokers’ discounts and commissions), including without limitation all filing, registration and
qualification, printers’ and accounting fees and the reasonable fees and disbursements of one
counsel for the selling Holder or Holders and counsel for the Company.



               (d) Not Demand Registration. Form S-3 registrations shall not be deemed to be demand
registrations as described in Section 2.3 above.



          2.6 Obligations of the Company. Whenever required to effect the registration of any
Registrable Securities under this Agreement, the Company shall, as expeditiously as reasonably
possible:




               (a) Prepare and file with the SEC a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration statement to become effective, and,
upon the request of the Holders of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for up to ninety (90) days.



               (b) Prepare and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement.



               (c) Furnish to the Holders such number of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such other documents as
they may reasonably request in order to facilitate the disposition of the Registrable Securities
owned by them that are included in such registration.



               (d) Use its best efforts to register and qualify the securities covered by such registration
statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.



               (e) In the event of any underwritten public offering, enter into and perform its obligations
under an underwriting agreement, in usual and customary form, with the



- 13 -









 




managing underwriter(s) of such offering. Each Holder participating in such underwriting
shall also enter into and perform its obligations under such an agreement.




               (f) Notify each Holder of Registrable Securities covered by such registration statement at any
time when a prospectus relating thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included in such registration statement,
as then in effect, includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing.



               (g) Furnish, at the request of any Holder requesting registration of Registrable Securities,
on the date that such Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such securities becomes
effective, (i) an opinion, dated as of such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to underwriters in an
underwritten public offering and reasonably satisfactory to a majority in interest of the Holders
requesting registration, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a “comfort” letter dated as of such date, from the
independent certified public accountants of the Company, in form and substance as is customarily
given by independent certified public accountants to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and to the Holders requesting registration of
Registrable Securities.



          2.7 Furnish Information. It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Sections 2.3, 2.4 or 2.5 that the selling Holders shall
furnish to the Company such information regarding themselves, the Registrable Securities held by
them, and the intended method of disposition of such securities as shall be required to timely
effect the registration of their Registrable Securities.




          2.8 Delay of Registration. No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result of any controversy
that might arise with respect to the interpretation or implementation of this Section 2.




          2.9 Indemnification. In the event any Registrable Securities are included in a
registration statement under Sections 2.3, 2.4 or 2.5:




               (a) By the Company. To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, officers and directors of each Holder, any underwriter (as
defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Securities Act or the Securities Exchange Act of 1934, as
amended, (the “1934 Act”), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act, the l934 Act or other federal
or state law, insofar as such losses, claims, damages, or liabilities (or actions



- 14 -









 




in respect thereof) arise out of or are based upon any of the following statements, omissions
or violations (collectively a “Violation”):




                    (i) any untrue statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus contained therein
or any amendments or supplements thereto;



                    (ii) the omission or alleged omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not misleading, or



                    (iii) any violation or alleged violation by the Company of the Securities Act, the 1934 Act,
any federal or state securities law or any rule or regulation promulgated under the Securities Act,
the 1934 Act or any federal or state securities law in connection with the offering covered by such
registration statement; and the Company will reimburse each such Holder, partner, officer or
director, underwriter or controlling person for any legal or other expenses reasonably incurred by
them, as incurred, in connection with investigating or defending any such loss, claim, damage,
liability or action; provided however, that the indemnity agreement contained in
this subsection 2.9(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it arises out of or
is based upon a Violation which occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by such Holder, partner, member,
officer, director, underwriter or controlling person of such Holder.



               (b) By Selling Holders. To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who controls the Company within the meaning
of the Securities Act, any underwriter and any other Holder selling securities under such
registration statement or any of such other Holder’s partners, directors or officers or any person
who controls such Holder within the meaning of the Securities Act or the 1934 Act (on a several and
not joint basis), against any losses, claims, damages or liabilities (joint or several) to which
the Company or any such director, officer, controlling person, underwriter or other such Holder,
partner or director, officer or controlling person of such other Holder may become subject under
the Securities Act, the 1934 Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such Holder expressly for use
in connection with such registration; and each such Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer, controlling person,
underwriter or other Holder, partner, officer, director or controlling person of such other Holder
in connection with investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this subsection 2.9(b)
shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder, which consent shall not be
unreasonably



- 15 -









 




withheld; and provided further, that the total amounts payable in indemnity by
a Holder under this Section 2.9(b) in respect of any Violation shall not exceed the net proceeds
received by such Holder in the sale of its Registrable Securities in the registered offering out of
which such Violation arises.




               (c) Notice. Promptly after receipt by an indemnified party under this Section 2.9 of
notice of the commencement of any action (including any governmental action), such indemnified
party will, if a claim in respect thereof is to be made against any indemnifying party under this
Section 2.9, deliver to the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own counsel, with the
fees and expenses to be paid by the indemnifying party, if representation of such indemnified party
by the counsel retained by the indemnifying party would be inappropriate due to actual or potential
conflict of interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the indemnifying party within
a reasonable time of the commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to the indemnified party under
this Section 2.9, but the omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party otherwise than under this
Section 2.9.



               (d) Defect Eliminated in Final Prospectus. The foregoing indemnity agreements of the
Company and Holders are subject to the condition that, insofar as they relate to any Violation made
in a preliminary prospectus but eliminated or remedied in the amended prospectus on file with the
SEC at the time the registration statement in question becomes effective or the amended prospectus
filed with the SEC pursuant to SEC Rule 424(b) (the “Final Prospectus”), such indemnity
agreement shall not inure to the benefit of any person if a copy of the Final Prospectus was
furnished to the indemnified party and was not furnished to the person asserting the loss,
liability, claim or damage at or prior to the time such action is required by the Securities Act;
provided, however, that this condition shall only apply where the indemnified party
had an obligation to provide the Final Prospectus to such person.



               (e) Contribution. If the indemnification provided for in this Section 2.9 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with respect to any
loss, liability, claim, damage, or expense referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in
such proportion as is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the statements or omissions
that resulted in such loss, liability, claim, damage, or expense as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of the indemnified
party shall be determined by a court of law by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and the parties’
relative intent,



- 16 -









 




knowledge, access to information, and opportunity to correct or prevent such statement or
omission; provided, that in no event shall any contribution by a Holder hereunder exceed the net
proceeds from the offering of its Registrable Securities received by such Holder. Notwithstanding
the foregoing, to the extent that the provisions on indemnification and contribution contained in
the underwriting agreement entered into in connection with the underwritten public offering are in
conflict with the foregoing provisions, the provisions in the underwriting agreement shall control;
provided, however, that in no event shall the provisions of such underwriting
agreement impose potential liability on a Holder for indemnity or contribution in excess of the net
proceeds from the offering of its Registrable Securities received by such Holder; provided,
further, however, the provisions on indemnification and contribution contained in
the underwriting agreement shall not be deemed to be in conflict with the foregoing provisions
solely by virtue of the fact that the underwriting agreement is silent on them.




               (f) Survival. The obligations of the Company and Holders under this Section 2.9 shall
survive the completion of any offering of Registrable Securities in a registration statement, and
otherwise. No indemnifying party, in the defense of any such claim or litigation, shall, except
with the consent of each indemnified party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect to such claim or
litigation.



          2.10 “Market Stand-Off” Agreement. Each Holder hereby agrees that it shall not, to
the extent requested by the Company or an underwriter of securities of the Company, sell or
otherwise transfer or dispose of any Registrable Securities or other shares of stock of the Company
then owned by such Holder (other than to donees or partners of the Holder who agree to be similarly
bound and other than those included in the registration) for up to one hundred eighty (180) days
following the effective date of a registration statement of the Company filed under the Securities
Act; provided, however, that:




               (a) such agreement shall be applicable only to the first such registration statement of the
Company which covers securities to be sold on its behalf to the public in an underwritten offering
but not to Registrable Securities sold pursuant to such registration statement;



               (b) all executive officers and directors of the Company then holding Common Stock of the
Company, and shareholder(s) holding one percent (1%) or more of the Company’s capital stock enter
into similar agreements, or are similarly bound; and



               (c) such agreement prohibits the Company or the underwriters from selectively releasing
certain persons from the market stand-off provisions.



          In order to enforce the foregoing covenant, the Company shall have the right to place
restrictive legends on the certificates representing the shares subject to this Section and to
impose stop transfer instructions with respect to the Registrable Securities and such other shares
of stock of each Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.




- 17 -









 








          Each Holder agrees to execute and deliver such other agreements as may be reasonably requested
by the Company or the underwriter which are consistent with the foregoing or which are necessary to
give further effect thereto.




          2.11 Rule 144 Reporting. With a view to making available the benefits of certain
rules and regulations of the Commission which may at any time permit the sale of the Registrable
Securities to the public without registration, after such time as a public market exists for the
Common Stock of the Company, the Company agrees to:




               (a) Make and keep public information available, as those terms are understood and defined in
Rule 144 under the Securities Act, at all times after the effective date of the first registration
under the Securities Act filed by the Company for an offering of its securities to the general
public;



               (b) Use its best efforts to file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the 1934 Act (at any time after it
has become subject to such reporting requirements); and



               (c) So long as a Holder owns any Registrable Securities, to furnish to the Holder forthwith
upon request a written statement by the Company as to its compliance with the reporting
requirements of said Rule 144 (at any time after 90 days after the effective date of the first
registration statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the 1934 Act (at any time after it has become subject to the
reporting requirements of the 1934 Act), a copy of the most recent annual or quarterly report of
the Company, and such other reports and documents of the Company as a Holder may reasonably request
in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such
securities without registration (at any time after the Company has become subject to the reporting
requirements of the 1934 Act).



          2.12 Termination of the Company’s Obligations. The Company shall have no obligations
pursuant to Sections 2.3 through 2.5 with respect to: (i) any request or requests for registration
made by any Holder on a date more than seven (7) years after the closing date of the Company’s
initial public offering; or (ii) any Registrable Securities proposed to be sold by a Holder in a
registration pursuant to Section 2.3, 2.4 or 2.5 if, in the opinion of counsel to the Company, all
such Registrable Securities proposed to be sold by a Holder may be sold in a three-month period
without registration under the Securities Act pursuant to Rule 144 under the Securities Act.




     3. RIGHT OF FIRST REFUSAL.



          3.1 General. Each Holder (as defined in subsection 2.1(d)) and any party to whom such
Holder’s rights under this Section 3 have been duly assigned in accordance with subsection 4.1(b)
(each such Holder or assignee being hereinafter referred to as a “Rights Holder”)
has the right of first refusal to purchase such Rights Holder’s Pro Rata Share (as defined below in
this Section 3.1), of all (or any part) of any “New Securities” (as defined in Section 3.2 below)
that the Company may from time to time issue after the date of this Agreement. A Rights




- 18 -









 







Holder’s “Pro Rata Share” for purposes of the right of first refusal granted under
this Section 3.1 is the ratio of (a) the number of Registrable Securities as to which such Rights
Holder is the Holder (and/or is deemed to be the Holder under subsection 2.1(d)), to (b) a number
of shares of Common Stock of the Company equal to the sum of (1) the total number of shares of
Common Stock of the Company then outstanding, plus (2) the total number of shares of Common Stock
of the Company into which all then outstanding shares of Preferred Stock of the Company are then
convertible, plus (3) the number of shares of Common Stock of the Company issuable upon exercise of
any outstanding options, warrants or other convertible securities of the Company or upon conversion
of any convertible securities that are issuable upon the exercise of any of the foregoing.




          3.2 New Securities. “New Securities” shall mean any Common Stock or Preferred
Stock of the Company, whether now authorized or not, and rights, options or warrants to purchase
such Common Stock or Preferred Stock, and securities of any type whatsoever that are, or may
become, convertible or exchangeable into such Common Stock or Preferred Stock; provided,
however, that the term “New Securities” does not include:




               (a) any shares of the Company’s Common Stock (and/or options, warrants or rights directly or
indirectly exercisable therefore and the underlying Common Stock) issued to employees, officers, or
directors of, or contractors, consultants or advisors to the Company pursuant to stock option
plans, stock bonuses or awards, warrants, contracts or other arrangements that are approved by the
Board;



               (b) any securities issuable upon conversion of or with respect to any shares of Preferred
Stock or Common Stock or other securities issuable upon conversion thereof;



               (c) any shares of Series CC Preferred issued pursuant to the Series CC Agreement;



               (d) any securities issuable upon exercise of any options, warrants or rights to purchase any
securities of the Company outstanding on the date of this Agreement (“Warrant Securities”)
and any securities issuable upon the conversion of any Warrant Securities or upon the exercise or
conversion of any securities, if such securities were first offered to the Rights Holders
hereunder;



               (e) shares of the Company’s Common Stock or Preferred Stock issued in connection with any
stock split or stock dividend;



               (f) securities offered by the Company to the public pursuant to a bona fide, firmly
underwritten public offering registered under the Securities Act in connection with which (or prior
to) all outstanding Preferred Stock is converted to Common Stock;



               (g) shares of the Company’s Common Stock or Preferred Stock (and/or options or warrants
therefor) issued or issuable to parties in connection with such parties’ providing the Company with
equipment leases, real property leases, loans, credit lines, guaranties of indebtedness, cash price
reductions or similar financing pursuant to contracts or other



- 19 -









 




arrangements approved by at least 80% of the members of the Board in resolutions acknowledging
that the right of first refusal will not apply with respect to the issuance of such shares; or




               (h) securities issued pursuant to the acquisition of another corporation or entity by the
Company by consolidation, merger, purchase of all or substantially all of the assets, or other
reorganization in which the Company acquires, in a single transaction or series of related
transactions, all or substantially all of the assets of such other corporation or entity or fifty
percent (50%) or more of the voting power of such other corporation or entity or fifty percent
(50%) or more of the equity ownership of such other corporation or entity.



          3.3 Procedures. In the event that the Company proposes to undertake an issuance of
New Securities, it shall give to each Rights Holder written notice of its intention to issue New
Securities (the “Notice”), describing the type of New Securities and the price and the
general terms upon which the Company proposes to issue such New Securities. Each Rights Holder
shall have twenty (20) days from the date of mailing of any such Notice to agree in writing to
purchase up to such Rights Holder’s Pro Rata Share of such New Securities for the price and upon
the general terms specified in the Notice by giving written notice to the Company and stating
therein the quantity of New Securities to be purchased (not to exceed such Rights Holder’s Pro Rata
Share). If any Rights Holder fails to so agree in writing within such twenty (20) day period to
purchase such Rights Holder’s full Pro Rata Share of an offering of New Securities (a
“Nonpurchasing Holder”), then such Nonpurchasing Holder shall forfeit the right hereunder
to purchase that part of his Pro Rata Share of such New Securities that he did not so agree to
purchase and the Company shall promptly give each Rights Holder who has timely agreed to purchase
his full Pro Rata Share of such offering of New Securities (a “Purchasing Holder”) written
notice of the failure of any Nonpurchasing Holder to purchase such Nonpurchasing Rights Holder’s
full Pro Rata Share of such offering of New Securities (the “Overallotment Notice”). Each
Purchasing Holder shall have a right of overallotment such that such Purchasing Holder may agree to
purchase a portion of the Nonpurchasing Holders’ unpurchased Pro Rata Shares of such offering on a
pro rata basis according to the relative Pro Rata Shares of the Purchasing Rights Holders, at any
time within five (5) days after receiving the Overallotment Notice.




          3.4 Failure to Exercise. To the extent that the Rights Holders fail to timely exercise
in full the right of first refusal provided for in Section 3.3, then the Company shall have 120
days after the expiration of the time periods provided for in Section 3.3 to sell the New
Securities with respect to which the Rights Holders’ rights of first refusal hereunder were not
exercised, at a price and upon general terms not materially more favorable to the purchasers
thereof than specified in the Company’s Notice to the Rights Holders. In the event that the
Company has not issued and sold the New Securities within such 120 day period, then the Company
shall not thereafter issue or sell any New Securities without again first offering such New
Securities to the Rights Holders pursuant to this Section 3.




          3.5 Termination. This right of first refusal shall terminate upon the earlier of (a)
the closing of the first underwritten sale of Common Stock of the Company to the public pursuant to
a registration statement filed with, and declared effective by, the SEC under the

- 20 -









 








Securities Act, covering the offer and sale of Common Stock to the public for an aggregate
gross public offering price (calculated before deduction of underwriters’ discounts and
commissions) of at least Twenty Five Million Dollars ($25,000,000) and the public offering price
per share of which equals or exceeds Four Dollars Eighty One and Eight Tenths Cents ($4.818) per
share (a “Qualified Public Offering”), or (b)(1) the acquisition of all or substantially
all the assets of the Company or (2) an acquisition of the Company by another corporation or entity
by consolidation, merger or other reorganization in which the holders of the Company’s outstanding
voting stock immediately prior to such transaction own, immediately after such transaction,
securities representing less than fifty percent (50%) or more of the voting power of the
corporation or other entity surviving such transaction on account of shares of the Company’s stock
held by them immediately prior to such consolidation, merger or other reorganization.




          3.6 Special Right of First Refusal. To the extent that the Company does not exercise
any right of first refusal it may have to repurchase shares of its Common Stock issued pursuant to
exercises of options or stock awards granted under the its 2003 Equity Incentive Plan, then in the
event that the holder of such shares of Common Stock (a “Common Stock Holder”) gives the
Company notice of an intention to transfer such shares (“Offered Shares”) to a third party
(a “Transfer Notice”), the Company shall, to the extent permitted by the applicable
contracts and law, assign to each of the Rights Holders its “Pro Rata Share” (as defined below in
this Section 3.6) of the Company’s right of first refusal and follow the procedures set forth below
in this Section 3.6. For purposes of this Section 3.6, Rights Holder’s “Pro Rata Share” is
the ratio of (a) the number of Registrable Securities as to which such Rights Holder is the Holder
(and/or is deemed to be the Holder under subsection 2.1(d)), to (b) the number of Registrable
Securities as to which all Rights Holders are the Holders (and/or are deemed to be the Holders
under subsection 2.1(d)).




               (a) Procedures. Within ten (10) days of receipt of a Transfer Notice, the Company
shall give to each Rights Holder written notice (a “Section 3.6 Notice”) of the receipt of
such Transfer Notice, which shall also set forth all of the information provided by the Common
Stock Holder to the Company regarding the proposed transferee and the offered price for the Offered
Shares, and include the name and address of the Common Stock Holder, a statement of the number of
Offered Shares being made available to the Rights Holders (after deducting those which the Company
intends to repurchase). Each Rights Holder shall have fifteen (15) days from the date of mailing
of any such Section 3.6 Notice to agree in writing to purchase up to such Rights Holder’s Pro Rata
Share of such Offered Shares for the price and upon the general terms specified in the Section 3.6
Notice by giving written notice to the Company and the Common Stock Holder and stating therein the
quantity of Offered Shares to be purchased (not to exceed such Rights Holder’s Pro Rata Share). If
any Rights Holder fails to so agree in writing within such fifteen (15) day period to purchase such
Rights Holder’s full Pro Rata Share of an offering of Offered Shares, then such Rights Holder shall
forfeit the right hereunder to purchase that part of his Pro Rata Share of such Offered Shares that
he did not so agree to purchase.



               (b) Termination. This right of first refusal shall terminate at the same time that
the right of first refusal provided for in Section 3.1 terminates pursuant to the provisions of
Section 3.5.



- 21 -









 





     4. ASSIGNMENT AND AMENDMENT.



          4.1 Assignment. Notwithstanding anything herein to the contrary:




               (a) Information Rights. The rights of an Investor under Section 1.1 or 1.2 hereof may
be assigned only to a party who acquires from an Investor (or an Investor’s permitted assigns) at
least that number of shares of Common Stock or Preferred Stock and/or an equivalent number (on an
as-converted basis) of shares of Conversion Stock described in Section 1.1 or 1.2 hereof,
respectively; provided, however that no party may be assigned any of the foregoing
rights unless the Company is given written notice by the assigning party at the time of such
assignment stating the name and address of the assignee and identifying the securities of the
Company as to which the rights in question are being assigned; and provided,
further, that any such assignee shall receive such assigned rights subject to all the terms
and conditions of this Agreement, including without limitation the provisions of this Section 4, by
agreeing in a writing satisfactory to the Company to be bound by the terms hereof.



               (b) Registration Rights and Rights of First Refusal. The registration rights of a
Holder under Section 2 hereof and/or the rights of first refusal of a Holder under Section 3 hereof
may be assigned by a Holder to a transferee or assignee of Registrable Securities which (a) is a
subsidiary, parent, general partner, limited partner, retired partner, member or retired member of
a Holder, (b) is a Holder’s family member or trust for the benefit or an individual Holder, (c) is
an affiliate of a Holder, or (d) acquires at least 10,000 shares of Preferred Stock and/or an
equivalent number (on an as-converted basis) of Registrable Securities issued upon conversion
thereof; provided, however that no party may be assigned any of the foregoing
rights unless the Company is given written notice by the assigning party at the time of such
assignment stating the name and address of the assignee and identifying the securities of the
Company as to which the rights in question are being assigned; and provided further
that any such assignee shall receive such assigned rights subject to all the terms and conditions
of this Agreement, including without limitation the provisions of this Section 4, by agreeing in a
writing satisfactory to the Company to be bound by the terms hereof.



          4.2 Amendment of Rights.




               (a) Any provision of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and Investors (and/or any of their permitted successors or
assigns) holding shares of Common Stock and Preferred Stock and/or Conversion Stock representing
and/or convertible into at least a majority of all the Investors’ Shares (as defined below). As
used herein, the term “Investors’ Shares” shall mean the shares of Common Stock and Common
Stock then issuable upon conversion of all then outstanding shares of Preferred Stock plus all then
outstanding shares of Conversion Stock that were issued upon the conversion of any shares of
Preferred Stock. Any amendment or waiver effected in accordance with this Section 4.2 shall be
binding upon each Investor, each permitted successor or assignee of such Investor, and the Company.
Notwithstanding the foregoing, if any amendment or waiver materially and adversely changes the
express rights hereunder of one or more Investors who do not consent in writing thereto (a
“Nonconsenting Investors”) in a manner



- 22 -









 




that is materially and adversely different from the corresponding change, if any, to the
express rights hereunder of other Investors, then such amendment or waiver shall not be effective
as against the Nonconsenting Investors without the written consent of the holders of a majority of
Registrable Securities held by all Investors whose express rights hereunder were changed by such
amendment or waiver in substantially the same manner as the Nonconsenting Investors.




               (b) Notwithstanding anything herein to the contrary, if pursuant to Section 2.3 of the Series
CC Agreement, additional parties purchase shares of Series CC Stock pursuant to the Series CC
Agreement, as amended from time to time, as “New Investors” thereunder, then each such New Investor
shall become a party to this Agreement as an “Investor” hereunder, without the need for any
consent, approval or signature of any Investor hereunder when such New Investor has both: (i)
purchased shares of Series CC Stock under the Series CC Agreement, as amended from time to time,
and paid the Company all consideration payable for such shares, and (ii) executed one or more
counterpart signature pages to this Agreement as an “Investor”, with the Company’s consent.



     5. GENERAL PROVISIONS.



          5.1 Notices. Any notice, request or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been duly given upon the earlier of (i)
actual receipt, (ii) deposit in the United States mail, by registered or certified mail, return
receipt requested, postage prepaid, or (iii) delivery to an express courier service, fees prepaid,
as follows:




               (a) if to an Investor, at such Investor’s respective address as set forth on Exhibit A
hereto.



               (b) if to the Company, at Asthmatx, Inc., 1340 Space Park Way, Mountain View, CA 94043, Attn.
Glendon French, President.


Any party hereto (and such party’s permitted assigns) may by notice so given change its address for
future notices hereunder. Notice shall conclusively be deemed to have been given when personally
delivered or when deposited in the mail in the manner set forth above.




          5.2 Entire Agreement. This Agreement, together with all the Exhibits hereto,
constitutes and contains the entire agreement and understanding of the parties with respect to the
subject matter hereof and supersedes any and all prior negotiations, correspondence, agreements,
understandings, duties or obligations between the parties respecting the subject matter hereof,
including under the Prior Rights Agreement.




          5.3 Governing Law. This Agreement shall be governed by and construed exclusively in
accordance with the internal laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within California, excluding that
body of law relating to conflict of laws and choice of law.




          5.4 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, then such provision(s) shall be excluded from this Agreement




- 23 -









 







and the balance of this Agreement shall be interpreted as if such provision(s) were so
excluded and shall be enforceable in accordance with its terms.




          5.5 Third Parties. Nothing in this Agreement, express or implied, is intended to
confer upon any person, other than the parties hereto and their successors and assigns, any rights
or remedies under or by reason of this Agreement.




          5.6 Successors And Assigns. Subject to the provisions of Section 4, the provisions of
this Agreement shall inure to the benefit of, and shall be binding upon, the successors and
permitted assigns of the parties hereto.




          5.7 Captions. The captions to sections of this Agreement have been inserted for
identification and reference purposes only and shall not be used to construe or interpret this
Agreement.




          5.8 Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the same instrument.




          5.9 Costs And Attorneys’ Fees. In the event that any action, suit or other proceeding
is instituted concerning or arising out of this Agreement or any transaction contemplated
hereunder, the prevailing party shall recover all of such party’s costs and attorneys’ fees
incurred in each such action, suit or other proceeding, including any and all appeals or petitions
therefrom.




          5.10 Adjustments for Stock Splits, Etc. Wherever in this Agreement there is a
reference to a specific number of shares of Common Stock or Preferred Stock of the Company of any
class or series, then, upon the occurrence of any subdivision, recapitalization, combination or
stock dividend of such class or series of stock following the date of this Agreement, the specific
number of shares so referenced in this Agreement shall automatically be proportionally adjusted to
reflect the affect on the outstanding shares of such class or series of stock by such subdivision,
recapitalization, combination or stock dividend.




          5.11 Aggregation of Stock. All shares held or acquired by affiliated entities or
persons shall be aggregated together for the purpose of determining the availability of any rights
under this Agreement.




          5.12 Prior Rights Agreement Superseded/Waiver. Pursuant to Section 4.2 of the Prior
Rights Agreement, the undersigned parties who are parties to such Prior Rights Agreement hereby (i)
amend and restate the Prior Rights Agreement to read in its entirety as set forth in this
Agreement, all with the intent and effect that the Prior Rights Agreement shall be hereby be
terminated and entirely replaced and superseded by this Agreement and (ii) waive, on behalf of each
“Holder” (as defined in the Prior Rights Agreement), the application of the right of first refusal
set forth in Section 3 of the Prior Rights Agreement to the issuance of shares of Series CC Stock
pursuant to the Series CC Agreement.




- 24 -









 





[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]




- 25 -









 





     IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated
Investors’ Rights Agreement as of the date first above written.



THE COMPANY:




ASTHMATX, INC.

A California corporation




	 	 	 	 	 
	 

	 	 	 	 
	By:

	 	/s/ Glendon French
 

Glendon French, President
	 	 






 









 





     
     
IN WITNESS WHEREOF, the parties hereto have executed this
SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS
AGREEMENT as of the date first above written.



Vanguard VII, L.P.



Vanguard VII-A, L.P.



Vanguard VII Accredited Affiliates Fund, L.P.



Vanguard VII Qualified Affiliates Fund, L.P.



By: their General Partner, Vanguard VII



Venture Partners, L.L.C.





		
	                         By: 
	/s/ Thomas C. McConnell

	 	/s/ Thomas C.
McConnell, Managing Member

	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 





[SIGNATURE PAGE TO ASTHMATX, INC. SECOND AMENDED AND
RESTATED



INVESTORS’ RIGHTS AGREEMENT]



2








 



     
IN WITNESS WHEREOF, the parties hereto
have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above
written.





INVESTORS:




HBM BioCapital (USD) L.P.





By: HBM BioCapital Ltd,





Its: General Partner







			
	            By: 	
    /s/ JOHN ARNOLD
    




 






	  	
Name: JOHN ARNOLD





	 	

Title: Chairman & Managing Director




























HBM BioCapital (EUR) L.P.





By: HBM BioCapital Ltd.





Its: General Partner







			
	            By: 	
    /s/ JOHN ARNOLD
    




 






	  	
Name: JOHN ARNOLD





	 	

Title: Chairman & Managing Director








[SIGNATURE PAGE TO ASTHMATX,
INC.




SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT]







 



     IN WITNESS WHEREOF,
the parties hereto have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above
written.



INVESTORS:

Private Life BioMed AG



	    By:	 	ILLEGIBLE	 
	 	 	   Name:  Gerlinger, Warburg	 
	 	 	   Title:    Managing Directors	 




Alstertor Private Life GMBH
& CO.KG


	    By:	 	 	 
	 	 	   Name:  Walter, Reinhardt	 
	 	 	   Title:    Managing Directors	 




[SIGNATURE PAGE TO ASTHMATIX, INC. SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]









 



     IN WITNESS WHEREOF,
the parties hereto have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above written.


INVESTORS:

Private Life BioMed,
AG



	    By:	 	 	 
	 	 	   Name:   Gerlinger, Warburg	 
	 	 	   Title:     Managing Directors	 




Alstertor Private Life
GMBH & CO.KG



	    By:	 	ILLEGIBLE	 
	 	 	   Name:   Walter, Reinhardt	 
	 	 	   Title:     Managing Directors	 





[SIGNATURE PAGE TO ASTHMATIC, INC. SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]








 




     IN WITNESS WHEREOF,
the parties hereto have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above
written.


INVESTORS:

Polaris Venture Partners
IV, L.P.

By: Polaris Venture Management Co. IV,

L.L.C, its General Partner




	    By	 	/s/ William E. Bilodeau	 
	 	 	   William E. Bilodeau	 
	 	 	   Attorney-in-fact	 





Polaris Venture Partners
Entrepreneurs' Fund IV, L.P.

By: Polaris Venture Management Co. IV, L.L.C., its

General Partner





	    By	 	/s/
William E. Bilodeau	 
	 	 	   William E. Bilodeau	 
	 	 	   Attorney-in-fact	 





[SIGNATURE PAGE TO ASTHMATX, INC. SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]








 




     IN WITNESS WHEREOF,
the parties hereto have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above
written.


INVESTORS:

MedVenture Associates IV,
L.P.

By: MedVenture Associates Management IV

Co., LLC, General Partner of MedVenture

Associates IV, L.P.



	    By:	 	/s/ Annette Campbell-White	 
	 	 	   Annette Campbell-White	 
	 	 	   Managing Member	 







MedVenture Affiliates IV,
L.P.

By: MedVenture Associates Management IV Co., LLC,

General Partner of MedVenture Affiliates IV, L.P.



	    By:	 	/s/ Annette Campbell-White	 
	 	 	   Annette Campbell-White	 
	 	 	   Managing Member	 






[SIGNATURE PAGE TO ASTHMATX, INC. SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]








 




     IN WITNESS WHEREOF,
the parties hereto have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above
written.


INVESTORS:

Montreux Equity Partners
II SBIC, LP

By: Montreux Equity Managment II SBIC,

LLC, its General Partner




	    By:	 	/s/ Howard
D. Palefsky	 
	 	 	   Howard
D. Palefsky	 
	 	 	   Managing Member	 







Montreux Equity Partners
III SBIC, LP

By: Montreux Equity Management III SBIC, LLC, its

General Partner



	    By:	 	/s/ Howard
D. Palefsky	 
	 	 	   Howard
D. Palefsky	 
	 	 	   Managing Member	 






[SIGNATURE PAGE TO ASTHMATX, INC. SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]








 




     IN WITNESS WHEREOF,
the parties hereto have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above
written.


INVESTORS:

Menlo Venture VII, L.P.

By: MV Management VII, LLC, its General

Partner




	    By:	 	/s/ H.
DuBose Montgomery	 
	 	 	   H. DuBose Montgomery, Managing Member	 
	 	 	   (Please Print Name)	 







Menlo Entrepreneurs Fund
VII, L.P.,

By: MV Management VII, LLC, its General

Partner



	    By:	 	/s/ H.
DuBose Montgomery	 
	 	 	   H. DuBose Montgomery, Managing Member	 
	 	 	   (Please Print Name)	 






[SIGNATURE PAGE TO ASTHMATX, INC. SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]








 




     IN WITNESS WHEREOF,
the parties hereto have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above written.


INVESTORS:

Kevin McQuillan and Deirdre
Roake McQuillan,
Trustees of the Keven McQuillan and

Deirdre Roake McQuillan 1995 Trust U/A/D 12/9/95



/s/ Kevin McQuillan
 

Kevin McQuillan, Trustee


 

Deidre Roake McQuillan, Trustee




[SIGNATURE PAGE TO ASTHMATX, INC. SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]








 




     IN WITNESS WHEREOF,
the parties hereto have executed this SECOND AMENDED AND RESTATED
INVESTOR’S RIGHTS AGREEMENT as of the date first above
written.


INVESTORS:

GC&H Investments
LLC



	    By:	 	/s/ John L. Cardoza	 
	 	 	(Signature)	 
	 
	 	 	John L. Cardoza


	 	 	(Print Name)	 

	 
	 	 	Managing Member



 
	 		(Print Title)	 













GC&H Investments




	    By:	 	/s/ John L. Cardoza	 
	 	 	(Signature)	 
	 
	 	 	John L. Cardoza






	 	 	(Print Name)	 

	 
	 	 	Executive Partner



 
	 		(Print Title)	 











[SIGNATURE PAGE TO ASTHMATX, INC.

SECOND AMENDED AND RESTATED INVESTOR’S RIGHTS AGREEMENT]









 



     IN WITNESS WHEREOF, the parties hereto have executed this
SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS
AGREEMENT as of the date first above written.




INVESTORS:




	 	 	 	 	 	 	 
	
    F&W Investments LLC — Series 2003	 	
    F&W Investments LLC — Series 2006
	 
	
    
    By:

    	 	
    /s/ Laird H. Simons III

     
Laird
    H. Simons III	 	
    By:	 	
    /s/ Laird H. Simons III

     
Laird
    H. Simons III
	 
	 	 	
    Managing Member

     
(Print
    Title)	 	 	 	
    Managing Member

     
(Print
    Title)
	 
	
    F&W Investments LLC — Series 2001	 	 	 	 
	 
	
    
    By:

    	 	
    /s/ Laird H. Simons III

     
Laird
    H. Simons III	 	 	 	 
	 
	 	 	
    Managing Member

     
(Print
    Title)	 	 	 	 
     
	 
	
    F&W Investments 2000	 	 	 	 
	 
	
    
    By:

    	 	
    /s/ Laird H. Simons III

     
Laird
    H. Simons III	 	 	 	 
	 
	 	 	
    Managing Member

     
(Print
    Title)	 	 	 	 
     





[SIGNATURE PAGE TO ASTHMATX, INC.




SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS
AGREEMENT]







 



     
IN WITNESS WHEREOF, the parties hereto
have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above
written.





INVESTORS:




	 	 	 	 	 	 	 
	 	 	
    By:	 	
    /s/ David Auth	 	 
	 	 	 	 	 	 	 
	 	 	 	 	
    David Auth	 	 





[SIGNATURE PAGE TO ASTHMATX, INC.
SECOND AMENDED AND RESTATED




INVESTORS’ RIGHTS
AGREEMENT]







 



     
IN WITNESS WHEREOF, the parties hereto
have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above
written.





INVESTORS:




	 	 	 	 	 	 	 
	 	 	
    By:	 	
    /s/ Kevin Knight	 	 
	 	 	 	 	 	 	 
	 	 	 	 	
    Kevin Knight	 	 





[SIGNATURE PAGE TO ASTHMATX, INC.
SECOND AMENDED AND RESTATED




INVESTORS’ RIGHTS
AGREEMENT]







 



     
IN WITNESS WHEREOF, the parties hereto
have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above
written.





INVESTORS:




General Mills Group Trust







		
	By: 	
    /s/ Daralyn Peifer 


 




    (Signature)
	 	

Daralyn B. Peifer



 



    (Print Name)
	 	

Executive Secretary of the General

Mills, Inc. Benefit Finance Committee



 



     (Print Title)









[SIGNATURE PAGE TO ASTHMATX,
INC.




SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT]







 



     
IN WITNESS WHEREOF, the parties hereto
have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above
written.





INVESTORS:




	 	 	 	 	 	 	 
	 	 	
    By:	 	
    /s/ Sanjay Bagade	 	 
	 	 	 	 	 	 	 
	 	 	 	 	
    Sanjay Bagade	 	 





[SIGNATURE PAGE TO ASTHMATX, INC.
SECOND AMENDED AND RESTATED




INVESTORS’ RIGHTS
AGREEMENT]







 



     
IN WITNESS WHEREOF, the parties hereto
have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above
written.





INVESTORS:




Saratoga Ventures IV, LP







		
	By: 	
    /s/ Foster D. Hendrix 


 




    (Signature)
	 	
Foster D. Hendrix



 



    (Print Name)
	 	
General Partner



 



     (Print Title)







INVESTORS:




Saratoga Ventures V, LP







		
	By: 	
    /s/ Foster D. Hendrix 


 




    (Signature)
	 	

Foster D. Hendrix



 



    (Print Name)
	 	
General Partner



 



     (Print Title)






[SIGNATURE PAGE TO ASTHMATX,
INC.




SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT]







 


     
IN WITNESS WHEREOF, the parties hereto
have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above
written.





INVESTORS:




The Board of Trustees of the Leland
Stanford




Junior University (DAPER I)







		
	By: 	
    /s/ ILLEGIBLE 


 




    (Signature)
	 	

for Tyler Edelstein



 



    (Print Name)
	 	
Managing
Director-Separate

Investments



 



     (Print Title)







[SIGNATURE PAGE TO ASTHMATX,
INC.




SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT]








 


     
IN WITNESS WHEREOF, the parties hereto
have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above
written.





INVESTORS:




Boston Scientific Corporation







		
	By: 	
    /s/ Timothy O’Shea 


 




    (Signature)
	 	
Timothy O’Shea



 



    (Print Name)
	 	

V.P. Business Development



 



     (Print Title)







[SIGNATURE PAGE TO ASTHMATX,
INC.




SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT]








 



     
IN WITNESS WHEREOF, the parties hereto
have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above
written.





INVESTORS:




Upper Lake Growth Capital, LLC







		
	By: 	
    /s/ David W. Stassen 


 




    (Signature)
	 	
David W. Stassen



 



    (Print Name)



	 	
 



 



     (Print Title)









Crane Island Ventures, LLC







		
	By: 	
    /s/ David W. Stassen 


 




    (Signature)
	 	
David W. Stassen



 



    (Print Name)
	 	
 



 



     (Print Title)







[SIGNATURE PAGE TO ASTHMATX,
INC.




SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT]








 


     
IN WITNESS WHEREOF, the parties hereto
have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above
written.





INVESTORS:




CLS I-IV, LLC







		
	By: 	
    /s/ A. Barr Dolan 


 




    (Signature)
	 	
A. Barr Dolan



 



    (Print Name)
	 	
Manager



 



     (Print Title)






Charter Entrepreneurs Fund III LLC







		
	By: 	
    /s/ A. Barr Dolan 


 




    (Signature)
	 	

A. Barr Dolan



 



    (Print Name)
	 	
Managing Member



 



     (Print Title)






[SIGNATURE PAGE TO ASTHMATX,
INC.




SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT]








 


     
IN WITNESS WHEREOF, the parties hereto
have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above
written.





INVESTORS:




SightLine Healthcare Fund III, L.P.





(formerly Piper Jaffray Healthcare
Fund III, L.P.)







		
	By: 	
    SightLine Healthcare Management III, LP 


 




    Its General Partner
	 	
/s/ ILLEGIBLE



 



    (Signature)
	 	
ILLEGIBLE



 



    (Print Name)
	 	
Managing Director



 



     (Print Title)







[SIGNATURE PAGE TO ASTHMATX, INC.
SECOND AMENDED AND RESTATED




INVESTORS’ RIGHTS
AGREEMENT]








 



     
IN WITNESS WHEREOF, the parties hereto
have executed this SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT as of the date first above
written.





INVESTORS:




Mitsui & Co. (U.S.A.), Inc.







		
	By: 	
    /s/ Koichi Ando 


 




    (Signature)
	 	
Koichi Ando



 



    (Print Name)
	 	
General Manager



 



     (Print Title)









[SIGNATURE PAGE TO ASTHMATX,
INC.




SECOND AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT]







 








Exhibit A

Schedule of Investors




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Common	 	 	Series AA	 	 	Series BB	 	 	Series CC	 
	Shareholder	 	Stock	 	 	Preferred	 	 	Preferred	 	 	Preferred	 
	Alstertor Private Life GMBH & CO.KG

c/o Katja Nehrbab

M.M. Warburg & CO Schiffahrtstreuhand

Gesellschaft mit beschränkter Haftung

Ferdinandstrb 65-67

D-20095 Hamburg, Germany
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	46,657	 
	Boston Scientific Corporation

1 Boston Scientific Place

Natick, MA 01760
	 	 	103,828	 	 	 	2,013,887	 	 	 	622,665	 	 	 	—	 
	Charter Entrepreneurs Fund III LLC

525 University Ave., Ste. 1500

Palo Alto, CA 94301

Attn: A. Barr Dolan
	 	 	—	 	 	 	31,813	 	 	 	—	 	 	 	—	 
	CLS I-IV, LLC

525 University Ave., Ste. 1500

Palo Alto, CA 94301

Attn: A. Barr Dolan
	 	 	—	 	 	 	779,697	 	 	 	—	 	 	 	—	 
	Crane Island Ventures, LLC

10400 Viking Drive, Suite 530

Eden Prairie, MN 55344

Attn: David Stassen
	 	 	—	 	 	 	15,843	 	 	 	—	 	 	 	—	 
	David Auth

537 5th Ave., West

Kirkland, WA 98033

or 490 S. Beach Rd., Hobe Sound,

FL 33455
	 	 	—	 	 	 	—	 	 	 	171,232	 	 	 	93,315	 
	F&W Investments 2000

801 California Street

Mountain View, CA 94041-2008

Attn: Laird H. Simons III
	 	 	—	 	 	 	9,902	 	 	 	—	 	 	 	—	 
	F&W Investments LLC-Series 2001

801 California Street

Mountain View, CA 94041-2008

Attn: Laird H. Simons III
	 	 	445	 	 	 	8,630	 	 	 	—	 	 	 	—	 
	F&W Investments LLC-Series 2003

801 California Street

Mountain View, CA 94041-2008

Attn: Laird H. Simons III
	 	 	—	 	 	 	—	 	 	 	31,133	 	 	 	—	 
	F&W Investments LLC-Series 2006

801 California Street

Mountain View, CA 94041-2008

Attn: Laird H. Simons III
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	23,328	 
	GC&H Investments LLC

101 California Street — 5th Floor

San Francisco, CA 94111

Attn: John Cardoza
	 	 	—	 	 	 	17,094	 	 	 	31,133	 	 	 	11,664	 







1









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Common	 	 	Series AA	 	 	Series BB	 	 	Series CC	 
	Shareholder	 	Stock	 	 	Preferred	 	 	Preferred	 	 	Preferred	 
	General Mills Group Trust

One General Mills Blvd.

Minneapolis, MN 55426

Attn: David Van Benschoten

Treasurer
	 	 	445	 	 	 	58,142	 	 	 	31,133	 	 	 	69,986	 
	HBM BioCapital (EUR) L.P.

Attn: John Arnold

PO Box 30852 SMB

Eucalyptus Bldg., Crewe Road

Grand Cayman, Cayman Islands
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	2,196,051	 
	HBM BioCapital (EUR) L.P.

Attn: John Arnold

PO Box 30852 SMB

Eucalyptus Bldg., Crewe Road

Grand Cayman, Cayman Islands
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	743,383	 
	Kevin Knight

c/o Knight Marketing Communications, Ltd.

6726 Churchill Way

Dallas, TX 75230
	 	 	—	 	 	 	—	 	 	 	31,133	 	 	 	23,328	 
	Kevin McQuillan and Deirdre Roake McQuillan,

Trustees of the Kevin McQuillan and Deirdre

Roake McQuillan

1995 Trust U/A/D 12/9/95

345 Cervantes Road

Portola Valley, CA 94028
	 	 	74	 	 	 	5,469	 	 	 	15,566	 	 	 	16,330	 
	Mac & Co. (as nominee for Pacific Life &
Annuity Co.)

c/o Pacific Life Insurance Company

700 Newport Center Drive

Newport Beach, CA 92660-6397

Attn: Securities Department
	 	 	—	 	 	 	138,137	 	 	 	—	 	 	 	—	 
	Mac & Co. (as nominee for Pacific Life
Insurance Company)

c/o Pacific Life Insurance Company

700 Newport Center Drive

Newport Beach, CA 92660-6397

Attn: Securities Department
	 	 	—	 	 	 	168,834	 	 	 	—	 	 	 	—	 
	MedVenture Associates IV, L.P.

Attn: Annette Campbell-White

5980 Horton Street, Suite 390

Emeryville, CA 94608
	 	 	—	 	 	 	—	 	 	 	2,424,657	 	 	 	1,362,638	 
	MedVenture Affiliates IV, L.P.

Attn: Annette Campbell-White

5980 Horton Street, Suite 390

Emeryville, CA 94608
	 	 	—	 	 	 	—	 	 	 	66,003	 	 	 	37,093	 







2









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Common	 	 	Series AA	 	 	Series BB	 	 	Series CC	 
	Shareholder	 	Stock	 	 	Preferred	 	 	Preferred	 	 	Preferred	 
	Menlo Entrepreneurs Fund VII, L.P.

3000 Sand Hill Road

Building 4, Suite 100

Menlo Park, CA 94025

Attn: DuBose Montgomery, Managing Director
	 	 	22,965	 	 	 	89,104	 	 	 	47,896	 	 	 	8,973	 
	Menlo Ventures VII, L.P.

3000 Sand Hill Road

Building 4, Suite 100

Menlo Park, CA 94025

Attn: DuBose Montgomery, Managing Director
	 	 	511,623	 	 	 	2,052,779	 	 	 	1,197,433	 	 	 	224,316	 
	Mitsui & Co. (U.S.A.), Inc.

200 Park Avenue, 36th Floor

New York, NY 10166

Attn: Yoichiro Endo,General Manager,

Private Equity
	 	 	—	 	 	 	413,420	 	 	 	—	 	 	 	—	 
	Montreux Equity Partners II SBIC, LP

Attn: Howard Palefsky

3000 Sand Hill Road

Bldg 1, Ste. 260

Menlo Park, CA 94025
	 	 	—	 	 	 	—	 	 	 	622,665	 	 	 	466,577	 
	Montreux Equity Partners III SBIC, LP

Attn: Howard Palefsky

3000 Sand Hill Road

Bldg 1, Ste. 260

Menlo Park, CA 94025
	 	 	—	 	 	 	—	 	 	 	622,665	 	 	 	900,494	 
	Pequot Private Equity Fund II, L.P.

500 Nyala Farm Road

Westport, CT 06880

Attn: Juliet Bakker
	 	 	7,416	 	 	 	638,966	 	 	 	—	 	 	 	—	 
	PGP/Hunter Partners I, LLC

11111 Santa Monica Blvd., Ste. 1775

Los Angeles, CA 90025

Attn: Mimi Kim, Partner
	 	 	9,615	 	 	 	198,046	 	 	 	—	 	 	 	—	 
	SightLine Healthcare Fund III, L.P.

(formerly Piper Jaffray Healthcare Fund III,
L.P.)

50 South 6th Street, Ste. 1390

Minneapolis, MN 55402

Attn: Buzz Benson
	 	 	—	 	 	 	674,928	 	 	 	—	 	 	 	—	 
	Polaris Venture Partners IV, L.P.

Attn: Brian Chee

1000 Winter Street, Ste. 3350

Waltham, MA 02451-1215
	 	 	—	 	 	 	—	 	 	 	3,671,201	 	 	 	3,205,921	 
	Polaris Venture Partners Entrepreneurs’ Fund
IV, L.P.

Attn: Brian Chee

1000 Winter Street, Ste. 3350

Waltham, MA 02451-1215
	 	 	—	 	 	 	—	 	 	 	64,790	 	 	 	60,118	 







3









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Common	 	 	Series AA	 	 	Series BB	 	 	Series CC	 
	Shareholder	 	Stock	 	 	Preferred	 	 	Preferred	 	 	Preferred	 
	Private Life BioMed AG

c/o Katja Nehrbab

M.M. Warburg & CO Schiffahrtstreuhand

Gesellschaft mit beschränkter Haftung

Ferdinandstrb 65-67

D-20095 Hamburg, Germany
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	279,946	 
	Thomas A. Raffin and P. Michelle Raffin,

Trustees of the Raffin Revocable Trust

6/10/93

13468 Three Forks Lane

Los Altos Hills, CA 94022
	 	 	6,160	 	 	 	9,444	 	 	 	—	 	 	 	—	 
	Sanjay Bagade

c/o Levine Bagade LLP

2483 East Bayshore Road, Ste. 100

Palo Alto, CA 94303
	 	 	27,303	 	 	 	—	 	 	 	—	 	 	 	4,665	 
	Saratoga Ventures IV, LP

Attn: Foster Hendrix

19361 San Marcos Road

Saratoga, CA 95070
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	233,288	 
	Saratoga Ventures V, LP

Attn: Foster Hendrix

19361 San Marcos Road

Saratoga, CA 95070
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	233,288	 
	The Board of Trustees of the Leland

Stanford Junior Varsity (DAPER I)

c/o Ashby McElveen/Saloni

Kapadia/Martina Poquet

Stanford Management Company

2770 Sand Hill Road

Menlo Park, CA 94025
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	23,328	 
	Upper Lake Growth Capital, LLC

10400 Viking Drive, Suite 530

Eden Prairie, MN 55344

Attn: David Stassen
	 	 	—	 	 	 	208,096	 	 	 	—	 	 	 	—	 
	Vanguard VII, L.P.

Attn: Thomas C. McConnell

525 University Avenue, Ste. 1200

Palo Alto, CA 94301
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	2,042,081	 
	Vanguard VII-A, L.P.

Attn: Thomas C. McConnell

525 University Avenue, Ste. 1200

Palo Alto, CA 94301
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	193,951	 
	Vanguard VII Accredited Affiliates Fund, L.P.

Attn: Thomas C. McConnell

525 University Avenue, Ste. 1200

Palo Alto, CA 94301
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	66,525	 







4









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Common	 	 	Series AA	 	 	Series BB	 	 	Series CC	 
	Shareholder	 	Stock	 	 	Preferred	 	 	Preferred	 	 	Preferred	 
	Vanguard VII Qualified Affiliates Fund, L.P.

Attn: Thomas C. McConnell

525 University Avenue, Ste. 1200

Palo Alto, CA 94301
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	30,328	 
	Column Totals:
	 	 	689,874	 	 	 	7,532,231	 	 	 	9,651,305	 	 	 	12,597,572	 








5