Document:

exv10w01

 

Exhibit 10.01

First Amendment to the ARA Alliance, Purchase, and Production Agreement

     This First Amendment to the ARA Alliance, Purchase, and Production Agreement (“First
Amendment”) is made and entered into as of the 31st day of December, 2005 (“Signing Date of the
First Amendment”), but with an effect as of and though entered into on January 1, 2005 (“Effective
Date of the First Amendment”), by and between DSM Food Specialties B.V., a Besloten Vennootschap
organized under the laws of the Netherlands with its principal place of business at A. Fleminglaan
1, 2613 AX Delft, the Netherlands (“DSM”), and MARTEK BIOSCIENCES CORPORATION, a corporation
organized under the laws of the State of Delaware with its principal place of business at 6480
Dobbin Road, Columbia, Maryland 21045 (“Martek”), who, intending to be legally bound, hereby agree
as follows:

WITNESSETH:

     WHEREAS Martek and DSM have previously entered into an ARA Alliance, Purchase, and Production
Agreement dated April 19, 2004 pursuant to which Martek and DSM entered into cross-licensing,
purchase, and production arrangements (the “Agreement”) related to arachidonic acid, and have
entered into a related August, 2004 Letter agreement; and

     WHEREAS Martek and DSM now wish to amend, clarify and expand certain provisions in the
Agreement as set forth herein.

     NOW, THEREFORE, effective as of the Effective Date of the First Amendment, the parties hereto
agree to amend the Agreement as follows:

     Capitalized terms, unless otherwise defined herein, shall have the meaning given in the
Agreement.

1. Definitions and Schedules. 

A. Section 2 of the Agreement is hereby amended to add the following definitions:

     2.16A “August, 2004 Letter” shall have the meaning set forth in Section 3.3A.

     2.20A “Broth” shall mean the liquid ARA fermentation product collected after
pasteurization and prior to Down Stream Processing and which conforms to the Specifications
set forth in Schedule 2.20A.

     2.23A “Capital Related Costs” shall mean all documented capital costs associated with
the Phase II Belvidere Build-Out including design and engineering, site preparation and
demolition costs, construction costs including all costs associated with preparing equipment
for commercial fermentation use, purchase of new equipment and the allocation of certain
existing fermentation equipment.

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  1

 

 

     2.23B “Capua Expansion” shall have the meaning set forth in Section 3.3A(a).

     2.43A “DSM Capital Contribution” shall be the total Capital Related Costs less the
Martek Capital Contribution.

     2.62A “Expansion Shortfall Ratio” shall have the meaning set forth in Section
3.3A(b)(iv).

     2.66A “Fine Granulates” shall mean the dried ARA fermentation product with a fine,
granular particle size which is smaller than Biomass and which conforms to the
Specifications set forth in Schedule 2.66A.

     2.74A “Guarantee Remainder” shall have the meaning set forth in Section 3.3A(b)(ii).

     2.74B “Guaranteed Amount” shall have the meaning set forth in Section 3.3A(b)(ii).

     2.96A “Martek Capital Contribution” shall have the meaning set forth in Section
3.3A(g).

     2.98A “Martek DSP Capabilities” shall have the meaning set forth in Schedule 3.3A(a).

     2.125A "Phase II Belvidere Build-Out” shall have the meaning set forth in Section
3.3A(a).

     2.125B “Planned Expansion” shall have the meaning set forth in Section 3.3A.

     2.140A “Recoupment Period” shall have the meaning set forth in Section 3.3A(b)(i).

     2.142A “Revised Guaranteed Amount” shall have the meaning set forth in Section
3.3A(b)(iv).

     2.144A “Signing Date of the First Amendment” shall mean December 31, 2005.

B. Sections 2.14, 2.37 and 2.146 of the Agreement are hereby deleted in their entirety and replaced
with the following:

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  2

 

 

     2.14 "ARA Products” shall mean Biomass, Fine Granulates, Broth, Soaps, Crude Oil,
Finished Oil, Spent Biomass and ARA produced in any other form and/or made by any process
wherein the ARA content is greater than * of total fatty acids.

     2.37 “Down Stream Processing”, or “DSP”, shall mean the process of harvesting, recovery
and drying of Biomass.

     2.146 "Specifications” shall mean: (a) the product specifications for the respective
ARA Products, as set forth on Schedules 2.17, 2.20A, 2.28, 2.66A and 2.67, as applicable,
which shall be deemed in all cases to require compliance with cGMPs, and the requirements
for kosher certification by the Orthodox Union and for Halal certification by the Islamic
Food and Nutrition Council of America or any other organization agreed upon by the parties
for all of a party’s respective facilities and the facilities of any subcontractor that are
used to manufacture, produce and/or package any ARA Products; (b) quality control methods
and methods of analysis with respect to Biomass, Crude Oil, Fine Granulates, Broth and
Finished Oil; and (c) other requirements and specifications for ARA Products as set forth in
this Agreement, as amended from time to time by the Committee pursuant to Section 8 or
otherwise by mutual written agreement of the parties.

C. Schedules 2.20A, 2.66A, 3.3A and 3.3A(a) attached hereto are hereby added to the Agreement as
schedules thereto. In addition, Schedules 2.17, 2.28, 4.2(a), and 4.6 to the Agreement are hereby
deleted in their entirety and replaced, respectively, with Schedules 2.17, 2.28, 4.2(a), and 4.6
attached hereto.

2. [Intentionally Left Blank]

3. Modifications to Section 3.2 of the Agreement. The following sections are hereby
inserted as new Sections 3.2(e), 3.2(f) and 3.2(g) of the Agreement:

     (e) Notwithstanding anything to the contrary set forth above in Sections 3.2(a)-(d) of
this Agreement, the parties agree that, until the new drying line of the Phase II Belvidere
Build-Out portion of the Planned Expansion (as defined in Section 3.3A) is operating, Martek
shall be permitted to include Broth purchase quantities in its good faith forecast as
referred to in Section 3.5 of this Agreement. The parties agree, however, that in no event
shall any Martek Purchase Order amount to more than * fermenter tanks of Broth per week and
in no event shall DSM ship to Martek more than * fermenter tank of Broth every 36 hours,
unless otherwise agreed to by the parties in writing.

     (f) The Sections in this Agreement referring to the production and delivery of ARA
Products by DSM to Martek, such as but not limited to quality and verification and amounts
payable, shall apply mutatis mutandis to the production and delivery of
Broth.

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  3

 

 

     (g) DSM shall use its reasonable commercial efforts to complete the Planned Expansion
in the timeframe set forth in Schedule 3.3A(a) and Martek shall use its reasonable
commercial efforts to develop applicable DSP capabilities to enable it to purchase the
number of batches of Broth from DSM, pending DSM’s completion of the new drying line (DSP)
portion of the Phase II Belvidere Build-Out of the Planned Expansion, as is set out in
Schedule 3.3A(a).

4. Amendment to Section 3.8 of the Agreement. Section 3.8(a) of the Agreement is hereby
deleted in its entirety and replaced with the following:

     (a) Subject to the provisions of Sections 3.5(c) and 3.5(d), during a month, DSM shall
deliver quantities of ARA Products covered by the Martek Purchase Order for the month on the
later of (i) the last business day of the month or (ii) ten (10) days after receipt of
delivery instructions from Martek. All such shipments shall be FOB or FCA, as applicable,
DSM’s (or DSM’s Third Party Toll Manufacturer’s) facility. For purposes hereof, each order
shall be deemed to have been “delivered”, and risk of loss with respect to each such
shipment shall pass from DSM to Martek, upon delivery of the shipment by DSM to a carrier
agreed upon by the Committee for transport to the location specified in the Martek Purchase
Order, and Martek shall have the right and obligation to insure such shipment from and after
such delivery. Notwithstanding the foregoing, DSM shall retain title to all shipments of ARA
Products covered by the Martek Purchase Order until payment is received, whereupon title
shall pass to Martek.

5. Amendments to Section 4 of the Agreement.

A. Section 4.5 of the Agreement is hereby amended to add the following sentence at the end of such
Section:

In addition, Martek shall be permitted to have its technical personnel periodically
visit the site at Belvidere to assist DSM in matters pertaining to ARA production at
Martek’s discretion and to provide support, to share technical experience, and/or to
monitor ARA production activities. The visits shall be with reasonable notice to DSM,
with the exact hours of such visits to be mutually agreed upon. Martek shall assure
that, during such visits, Martek personnel shall adhere to the site’s rules and
regulations and the instructions of DSM personnel.

B. The last sentence of Section 4.6 of the Agreement is hereby deleted in its entirety and replaced
with the following sentence:

Changes other than the major changes as described in Schedule 4.6 shall not require
pre-approval by the Committee prior to implementation by either party, but each of Martek
and DSM agrees to maintain a written record of such other changes it makes, which record
will be readily accessible or provided to the other party for review upon the

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  4

 

 

request of such other party, and which will be reported at the next succeeding quarterly
meeting of the Committee.

6. Amendments to Sections 6.1 and 6.15 of the Agreement.

A. Section 6.1(c)(ii) of the Agreement is hereby amended by inserting “in writing” in the last
sentence, between “agree” and “on an amount” and by inserting “and on any other relevant terms or
conditions” at the end of such sentence immediately prior to the period. The following sentence is
hereby inserted at the end of Section 6.1(c)(ii) of the Agreement, as the last sentence thereof:

In addition, DSM shall obtain written approval from Martek, such approval to not be
unreasonably withheld or delayed, prior to locking in a fixed price or hedge for all or any
portion of its natural gas and electricity in connection with directly or indirectly
producing ARA Products for Martek, even if Martek has not requested such action.

B. Sections 6.1(e) and (f) of the Agreement are hereby deleted in their entirety and replaced with
the following:

     (e) The Fixed Budget Price per Unit of ARA produced at DSM’s Capua facility for 2004 is
*, consisting of a DSM Mark Up per Unit of ARA of * and DSM Costs per Unit of ARA of *.
This Fixed Budget Price for Capua production for 2004 is based on the production by DSM and
purchase by Martek of ARA Products in the form of Crude Oil. For 2004, the Martek Budgeted
Volume for ARA Products purchased by Martek from DSM produced at the Capua facility is *
Units of ARA. For 2004, the Technical Capacity for DSM’s Capua facility is * Units of ARA.
For 2004, the Practical Capacity for DSM’s Capua facility is * Units of ARA. The Fixed
Budget Price per Unit of ARA produced at DSM’s Capua facility for 2005 is *, consisting of a
DSM Mark Up per Unit of ARA of * and DSM Costs per Unit of ARA of *. This Fixed Budget
Price for Capua production for 2005 is based on the production by DSM and purchase by Martek
of ARA Products in the form of Crude Oil. For 2005, the Martek Budgeted Volume for ARA
Products purchased by Martek from DSM produced at the Capua facility is * Units of ARA. For
2005, the Technical Capacity for DSM’s Capua facility is * Units of ARA. For 2005, the
Practical Capacity for DSM’s Capua facility is * Units of ARA. The prices set forth in this
Section 6.1(e) are based on the yield assumptions set forth in Schedule 6.15.
Notwithstanding anything to the contrary contained herein, the Fixed Budget Price per Unit
of ARA for the first * Units of ARA produced at DSM’s Capua facility following January 1,
2004 shall be *.

     (f) The Fixed Budget Price per Unit of ARA produced at DSM’s Belvidere facility for
2004 is *, comprising a DSM Mark Up per Unit of ARA of * and * and DSM Costs per Unit of ARA
of *. The Fixed Budget Price per Unit of ARA produced at DSM’s Belvidere facility for 2005
is *, comprising a DSM Mark Up per Unit of ARA of * and * and DSM Costs per Unit of ARA of
*. This Fixed Budget Price for Belvidere

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  5

 

 

production for 2005 is based on the production by DSM and purchase by Martek of ARA Products
in the form of Biomass, Broth or Fine Granules. For all Broth shipments to Martek, DSM shall
pay for *% of the costs of trucking the Broth from Belvidere to a third party or to a Martek
plant as determined by Martek for drying until the new drying line of the Phase II Belvidere
Build-Out portion of the Planned Expansion is completed. For 2004 the Martek Budgeted Volume
for ARA Products purchased by Martek from DSM produced at the Belvidere facility is * Units
of ARA. For 2004 the Technical Capacity for DSM’s Belvidere facility is * Units of ARA. For
2004 the Practical Capacity for DSM’s Belvidere facility is * Units of ARA. For 2005, the
Martek Budgeted Volume for ARA Products purchased by Martek from DSM produced at the
Belvidere facility is * Units of ARA. For 2005, the Technical Capacity for DSM’s Belvidere
facility is * Units of ARA. For 2005, the Practical Capacity for DSM’s Belvidere facility is
* Units of ARA. The prices set forth in this Section 6.1(f) are based on the yield
assumptions set forth in Schedule 6.15.

C. The text following the heading of Section 6.15 of the Agreement is hereby deleted in its
entirety and replaced with the following:

The DSM Costs per Unit of ARA and the DSM Mark Up per Unit of ARA are based on the average
standard extraction and RBD yields set forth in Schedule 6.15. The Fixed Budget Price per
Unit of ARA shall be adjusted by agreement of the Committee to reflect changes in such
yields due to changes in the Biomass, Crude Oil or changes in Extraction or RBD processes.

7. Amendments to Section 6.6 of the Agreement. Section 6.6 of the Agreement is hereby
deleted in its entirety and replaced with the following:

6.6 Startup Costs. The parties acknowledge and agree that DSM will be likely to
incur certain costs in connection with the commencement of operations of expansions at DSM’s
Capua and Belvidere facilities as well as expansions of production of ARA Products at new
sites. These costs are likely to include costs that are directly related to certain
inefficiencies in producing ARA Products at a new production facility (including, for
example, batches of Biomass that do not meet the relevant Specifications) and other costs
(the “Production Startup Costs”).

     (a) The parties agree that DSM shall be responsible for, and not charge to Martek, up
to * of Production Startup Costs related to the Phase 1 Belvidere Build-out and such costs
shall be an Excluded Cost. Martek shall reimburse DSM, in twelve (12) equal quarterly
installments, the amount that the actual Production Startup Costs incurred by DSM for the
Phase 1 Belvidere Build-out exceed *, but in no event shall the total amount to be
reimbursed by Martek pursuant hereto exceed one million US Dollars ($1,000,000.00). DSM
shall also be responsible for, and not charge to Martek, Production Startup Costs related to
the Phase 1 Belvidere Build-out that are in excess of * and such costs shall be an Excluded
Cost.

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  6

 

 

     (b) The parties agree that all Production Start-up Costs related to the Phase II
Belvidere Build-Out are to be absorbed by DSM and shall be an Excluded Cost. In addition,
any Capital Related Costs related to the Phase II Belvidere Build-Out are to be absorbed by
DSM and, notwithstanding any other provision of this Agreement, shall be an Excluded Cost.

     (c) All Production Start-up Costs related to the Capua Expansion are to be absorbed by
DSM and shall be an Excluded Cost.

     (d) Production Startup Costs for expansions other than the expansions described above
and that are agreed to and approved by the Committee shall be billed separately to Martek in
a manner agreed upon by the Committee and any such Production Startup Costs shall be an
Excluded Cost.

8. Amendments to Section 6.18 of the Agreement. Section 6.18 of the Agreement shall be
amended as follows:

A. The last sentence of Section 6.18 (a) of the Agreement is hereby deleted in its entirety and
replaced with the following:

The parties hereby agree that the plans for the Phase 1 Belvidere Build-out constitute
Approved Expansion Plans and that the Phase 1 Belvidere Build-out subaccount of the Break Up
Fee Account shall reflect an initial balance in respect thereof of *. The parties hereby
agree that the plans for the Planned Expansion (as defined in Section 3.3A) constitute
Approved Expansion Plans and that the Planned Expansion subaccount of the Break Up Fee
Account shall reflect an initial balance in respect thereof of * of the maximum
Guaranteed Amount, as determined pursuant to Section 3.3A(b) or, if applicable, any lesser
Revised Guaranteed Amount as defined in Section 3.3A(b)(iv).

B. The following text is hereby inserted at the end of Section 6.18(c), replacing the period:

     ; provided, however, that with respect to the Planned Expansion subaccount, Martek shall
instead pay to DSM any Guarantee Remainder as specified in Section 3.3A(f) upon any such expiration
or termination.

9. Amendments to Section 9.4 of the Agreement. Section 9.4(e) of the Agreement is hereby
amended by (i) inserting after the last word of the third bullet point (i.e., “Agreement”)
the characters “; or” and deleting the period after such last word and (ii) inserting a fourth
bullet point as follows:

	 	•	 	Claims under this Agreement arising out of, in connection with or based on a breach by a
party of the provisions set forth in Section 10.7(a) or Section 10.7(b); or each party’s
obligation to indemnify and hold harmless the other party, its Affiliates and their

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  7

 

 

respective directors, officers, employees and agents from and against Losses pursuant to
Section 10.7(b) of this Agreement.

10. Amendments to Section 9.5. Section 9.5 of the Agreement is hereby deleted in its
entirety and replaced with the following:

9.5 Limitation of Liability.

     (a) EXCEPT FOR THE LOST PROFITS PAYABLE BY MARTEK PURSUANT TO SECTION 9.4(c), LOST
PROFITS PAYABLE BY DSM PURSUANT TO SECTION 9.4(d)(ii) AND ROYALTIES PAYABLE BY DSM PURSUANT
TO SECTION 9.4(d)(iii), IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR LOSS
OF PROFITS OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES INCURRED BY THE OTHER
PARTY AND ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT FOR ANY CAUSE OF ACTION OF ANY
KIND EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

     (b) Nothing contained in this Agreement shall preclude either DSM or Martek from
asserting any claim for Losses against any third party; provided, however, that neither DSM
nor Martek shall assert any claim for Losses arising out of or in connection with this
Agreement against any third party, including without limitation any subcontractor of the
other party, if and to the extent that either (i) DSM or Martek, as the case may be, shall
be entitled to assert the same claim for Losses against the other party or (ii) such other
party is required, pursuant to a legally binding obligation in effect at the time of such
Losses, to indemnify such third party against such Losses if such third party were to pay
them to DSM or Martek, as the case may be.

11. Amendments to Section 10.1 of the Agreement. Section 10.1 of the Agreement is hereby
deleted in its entirety and replaced with the following:

10.1 Non-Solicitation.

     (a) DSM agrees that, during the term of this Agreement, neither it nor any of its
Affiliates shall, directly or indirectly, (i) solicit, recruit or induce, or attempt to
solicit, recruit or induce, any person who is an employee of Martek or any of its Affiliates
to leave his or her employment or engagement with Martek or any of its Affiliates or (ii)
employ, hire or engage, or cause to employ, hire or engage, any person who is or was within
the previous six (6) months an employee of Martek or any of its Affiliates, in either case
without the prior written consent of Martek; provided that general advertisements by DSM or
its Affiliates for employment not directed at employees or former employees of Martek or its
Affiliates, and any employment resulting therefrom, shall not be a violation of this Section
10.1(a).

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  8

 

 

     (b) Martek agrees that, during the term of this Agreement, neither it nor any of its
Affiliates shall, directly or indirectly, (i) solicit, recruit or induce, or attempt to
solicit, recruit or induce, any person who is an employee of DSM or any of its Affiliates to
leave his or her employment or engagement with DSM or any of its Affiliates or (ii) employ,
hire or engage, or cause to employ, hire or engage, any person who is or was within the
previous six (6) months an employee of DSM or any of its Affiliates, in either case without
the prior written consent of DSM; provided that general advertisements by Martek or its
Affiliates for employment not directed at employees or former employees of DSM or its
Affiliates, and any employment resulting therefrom, shall not be a violation of this Section
10.1(b).

12. Amendments to Section 10.7 of the Agreement. The title of Section 10.7 of the
Agreement is hereby amended to be “Assignment, Delegation and Subrogation; Insurance Inspection”,
the characters “(a)” are hereby inserted between the title of Section 10.7 and the first word of
the paragraph following such title (i.e., “Neither”), and the following paragraphs are
hereby inserted immediately following such paragraph as subsection (b), subsection (c) and
subsection (d) of Section 10.7:

     (b) Without limiting the generality of the foregoing, neither party shall subrogate to
an insurance carrier or similar entity any right it may have to claim or recover Losses from
(i) the other party arising out of or in connection with this Agreement, or (ii) a third
party arising out of or in connection with this Agreement to the extent the other party is
required, pursuant to a legally binding obligation in effect at the time of such Losses, to
indemnify such third party against such Losses if such third party were to pay them, in each
case, without the prior written consent of such other party. Each party shall indemnify and
hold harmless the other party, its Affiliates and their respective directors, officers,
employees and agents from and against all Losses, including reasonable counsel fees, that
such other party suffers or incurs as a result of any subrogation made by it in violation of
the terms of this Agreement; provided, however, that nothing contained in this Section
10.7(b) shall be deemed to relieve such other party from any liability arising as a result
of any breach or failure to perform under this Agreement.

     (c) In the event that an insurance carrier or similar entity gives notice to a party
that it has been subrogated to the rights of the other party and that such carrier or entity
intends to exercise such rights against it, then such party receiving such notice shall give
the other party prompt written notice thereof.

     (d) Upon reasonable notice during regular working hours, representatives of each of
DSM’s and Martek’s insurance carriers may inspect the manufacturing facilities used by or
for the respective parties in the manufacture of ARA for (i) the purpose of inspections or
loss control visits relative to insurance being secured or validated or (ii) assessing the
validity of an insurance claim and/or the extent of damage under an insurance claim
submitted by DSM or Martek, respectively.

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  9

 

 

13. New Section 3.3A – First Planned Expansion. The following is added as a new Section
3.3A to the Agreement, inserted immediately following the end of Section 3.3:

3.3A First Planned Expansion. The parties acknowledge that, pursuant to Section
3.3(c) of this Agreement, Martek has requested in a letter dated August 25, 2004 (the
“August, 2004 Letter”), attached as Schedule 3.3A, that DSM expand its ARA production
capabilities and has offered to guarantee to DSM that DSM will recoup its investment in such
expansion in accordance with such Section. In connection with the guarantee that Martek is
to provide pursuant to Section 3.3(c)(iii) and any Martek Expansion to be permitted pursuant
to Section 3.3(c)(iv), the parties wish to clarify that, solely with respect to the
expansion to be made at the Capua and Belvidere facilities in response to the August, 2004
Letter (the “Planned Expansion”), the following shall apply:

     (a) The Planned Expansion shall include those efforts to be undertaken and/or equipment
to be installed at the Capua and Belvidere facilities as further described in Schedule
3.3A(a). That portion of the foregoing relevant to the Belvidere facility shall be referred
to as the “Phase II Belvidere Build-Out” and that portion of the foregoing relevant to the
Capua facility shall be referred to as the “Capua Expansion”.

     (b) The guarantee pursuant to Section 3.3(c)(iii) of this Agreement will be effectuated
as follows:

     (i) The twelve quarter period (the “Recoupment Period”) referenced in Section
3.3(c)(iii) shall commence on January 1, 2006.

     (ii) The amount of DSM’s investment in expanding its ARA production capacities
for the Phase II Belvidere Build-Out that will be guaranteed by Martek pursuant to
Section 3.3(c)(iii) (the “Guaranteed Amount”) shall be equal to the DSM Capital
Contribution. Subject to Section 3.3A(e) below, if the total aggregate DSM Mark Up
paid to DSM for such Recoupment Period and pursuant to Section 3.3A(b)(v) does not
meet or exceed the Guaranteed Amount, Martek shall pay to DSM the balance of such
Guaranteed Amount (the “Guarantee Remainder”) within thirty (30) days of the end of
the Recoupment Period; provided, however, that in no event shall the Guaranteed
Amount exceed US$40 million unless otherwise expressly agreed in writing by Martek.

     (iii) Martek shall be entitled to credit the full amount of any Guarantee
Remainder actually paid to DSM against any and all DSM Mark Up amounts that become
due to DSM pursuant to invoices received after the Recoupment Period for ARA
Products.

     (iv) Notwithstanding the foregoing, the Guaranteed Amount, as defined above,
shall be reduced as of January 1, 2007, if and only if (a) the maximum

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  10

 

 

average monthly production and delivery of Units of ARA Products meeting
Specifications from Phase II Belvidere Build-Out that is achieved for any month
prior to such date, based on the average monthly production and delivery of Units of
ARA Products meeting Specifications over any three-month period prior to July 1,
2007, is less than * Units of ARA and Martek has placed Martek Purchase Orders
sufficient to require production from Phase II Belvidere Build-Out equal to or
greater than * Units of ARA per month, or (b) Martek Purchase Orders have not been
sufficient to require Phase II Belvidere Build-Out to produce an average of * Units
of ARA per month and, following a request by Martek, the Committee determines the
average monthly Technical Capacity to be expected from Phase II Belvidere Build-Out,
and such amount is expected to be less than * Units of ARA, in which case the
Guaranteed Amount shall be reduced by a percentage equal to one minus the ratio of
the actual maximum average monthly production and delivery of Units of ARA from
Phase II Belvidere Build-Out that is achieved or the Technical Capacity determined
by the Committee to be achievable, as the case may be, as of the end of such
twenty-four (24) month period versus * Units of ARA (such percentage to be the
“Expansion Shortfall Ratio”, and such revised Guaranteed Amount shall be referred to
as the “Revised Guaranteed Amount” for purposes of Section 6.18 of this Agreement.

     (v) The Guaranteed Amount, whether or not adjusted as provided above, shall in
all cases be reduced by the amount of DSM Mark Up paid on Martek’s purchases of ARA
Products in calendar years during the period from and after January 1, 2005 and
continuing through and including the last day of the Recoupment Period exceeding (i)
* Units of ARA for calendar year 2005, (ii) * Units of ARA for Calendar year 2006,
and (iii) * Units of ARA for each calendar year thereafter.

     (vi) The parties acknowledge and agree that the obligation of Martek to pay DSM
such Guaranteed Amount as set forth in this Section 3.3A(b) shall be deemed
sufficient to meet Martek’s obligation to guarantee DSM’s investment in the Planned
Expansion pursuant to Section 3.3(c)(iii) of this Agreement.

     (c) In support of the Planned Expansion, DSM has provided to Martek a detailed schedule
and cost estimates of the Planned Expansion plans and shall update such information monthly
from and after the Signing Date of the First Amendment. DSM shall also permit Martek to be
reasonably involved in Belvidere Phase II Build-Out planning/production meetings if desired
by Martek and shall give Martek at least ten (10) days’ notice of relevant meetings whenever
possible.

     (d) The parties hereby acknowledge and agree that the expanded volume expected from the
Planned Expansion (* Units of ARA on an annualized basis, which is *% of the Technical
Capacity of the Planned Expansion) fully satisfies the expanded volume requested by Martek
in the August, 2004 Letter, and that any specified volume

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  11

 

 

requirements of such letter shall be deemed replaced by such * Units of expanded volume
expected from the Planned Expansion for purposes of Section 3.3(c) of this Agreement. The
parties further acknowledge and agree that, with respect to the Planned Expansion, any
Martek Expansion to be permitted pursuant to Section 3.3(c)(iv) of this Agreement shall be
limited to * Units of ARA times the Expansion Shortfall Ratio calculated as provided in
3.3A(b) above, and that no Martek Expansion shall be permitted pursuant to Section
3.3(c)(iv) with respect to the Planned Expansion if, as of any time prior to January 1,
2007, DSM is able to produce and deliver to Martek ARA Products on a monthly average basis
in an amount equal to or greater than * Units of ARA, or if, as of January 1, 2007, DSM has
been unable to produce and deliver to Martek ARA Products on a monthly average basis in an
amount equal to or greater than * Units of ARA but DSM is able to meet Martek Purchase
Orders of ARA Products for the three (3) month period beginning January 1, 2007.

     (e) Martek’s obligation to pay any Guarantee Remainder to DSM pursuant to Section
3.3A(b) above shall expire on January 1, 2010 if the Recoupment Period has not ended prior
to such date, and on such date the Guaranteed Amount, if any, shall be reduced to zero.
Such obligation to pay the Guarantee Remainder shall also expire upon any early termination
or expiration of this Agreement.

     (f) Notwithstanding the foregoing, if a payment by Martek to DSM is required pursuant
to Section 6.18(c) of this Agreement upon termination or expiration of this Agreement, such
payment shall be equal to the greater of (x) any unpaid Guarantee Remainder as of such
termination or expiration date and (y) the balance of the Planned Expansion subaccount of
the Break Up Fee Account less any portion of any Guarantee Remainder actually paid and
against which a credit has not been taken as permitted in 3.3A(b)(iii) above.

     (g) Martek Capital Contribution.  The parties agree that Martek will pay to DSM
the sum of three million US Dollars ($3,000,000) in respect of the Capital Related Costs
(the “Martek Capital Contribution”). As a means to incentivize performance of the Belvidere
facility, the amount will be payable once the total output of the Belvidere facility,
starting from January 1, 2005, has reached * Units of ARA in the aggregate. Martek shall pay
such amount in immediately available funds and within fifteen (15) days following the date
on which DSM has notified Martek in writing of such event. The amount of the Martek Capital
Contribution shall be considered an Excluded Cost and shall not be part of any Fixed Budget
Price or be billed to Martek through future depreciation expenses or in any other manner.

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  12

 

 

     (h) Martek Purchase Commitment. Martek hereby agrees to purchase the total ARA
production from the Capua and Belvidere facilities in 2005; provided that Martek will not be
required to purchase more than * Units of ARA from Belvidere production in 2005 or more than
* Units of ARA from Capua production in 2005. Notwithstanding the foregoing, to the extent
that Belvidere production for 2005 is less than * Units of ARA, Martek shall pay to DSM for
2006 Belvidere ARA production the prices set forth herein for Units of ARA produced at DSM’s
Belvidere facility for 2005 for that number of Units of ARA produced by Belvidere in 2006
equal to * Units of ARA less the number of Units of ARA produced from Belvidere and
purchased by Martek in 2005.

14. Miscellaneous.

     (a) Except as expressly modified herein, all terms and conditions set forth in the Agreement
shall remain in full force and effect and the Agreement as so modified is hereby ratified and
confirmed in all respects.

     (b) The provisions of Section 10.5 (Disputes; Arbitration) of the Agreement are hereby
incorporated by reference into this First Amendment, with the same force and effect as if set forth
in full herein.

     (c) This First Amendment shall be governed by and construed in accordance with the internal
laws of the State of New York applicable to contracts to be performed fully within the State of New
York. The parties hereby expressly exclude the applicability of the Convention on Contracts for the
International Sale of Goods and that body of law known as conflicts of laws.

     (d) Neither this First Amendment nor any terms hereof may be amended, waived, discharged or
terminated unless such amendment, waiver, discharge or termination is in writing signed by all
parties or, in the case of a waiver, by the party waiving compliance.

     (e) The parties acknowledge that this First Amendment sets forth the complete, exclusive and
integrated understanding of the parties and supersedes all proposals or prior agreements, oral or
written, and all other prior communications between the parties relating to the subject matter of
this First Amendment and, except as provided in Section 15(d), no other documents shall act to
modify, amend or add to this First Amendment.

     (f) This First Amendment may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same document.

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  13

 

 

     IN WITNESS WHEREOF, each of the parties has caused this First Amendment to be duly executed
and delivered as of the day and year first above written.

	 	 	 
	MARTEK BIOSCIENCES CORPORATION

	 	DSM FOOD SPECIALTIES B.V.
	 
	 	 
	/s/ Steve Dubin

	 	/s/ Rob van Leen
	 

	 	 
	By: Steve Dubin

	 	By: Rob van Leen
	Title: President

	 	Title: Business Group Director
	 
	 	 
	 

	 	/s/ Krijn Rietveld
	 

	 	 
	 

	 	By: Krijn Rietveld
	 

	 	Title: Business Unit Director

	 	 	 
	Schedules;
	 	 
	Schedule 2.17

	 	Biomass Specifications
	Schedule 2.20A

	 	Broth Specifications
	Schedule 2.28

	 	Crude Oil Specifications
	Schedule 2.66A

	 	Fine Granulate Specifications
	Schedule 4.2(a)

	 	DSM Certificate of Analysis (Fine Granulates, Broth, Biomass, Crude Oil)
	Schedule 4.6

	 	Manufacturing Changes
	Schedule 3.3A

	 	“August, 2004 Letter”
	Schedule 3.3A(a)

	 	Planned Expansion

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  14

 

 

SCHEDULE 2.17

BIOMASS SPECIFICATIONS

	 	 	 	 	 
	

	 	PRODUCT SPECIFICATION FORM

ARA Biomass
	 	ARA-PSF-004M

Revision 4

22 June 2005

	 	 	 	 	 	 	 
	Product no: 2984
	 	 	 	 	 	 
	Parameters

	 	Approval
	 	Discussion	 	 
	 

	 	Limit *
	 	Range *
	 	Methods
	Release specifications
	 	 	 	 	 	 
	Description

	 	*
	 	 	 	*
	Smell

	 	*
	 	 	 	*
	Colour

	 	*
	 	 	 	*
	*

	 	*
	 	*
	 	*
	*

	 	*	 	 	 	 
	*

	 	*
	 	*
	 	*
	*

	 	*
	 	*
	 	*
	*

	 	*
	 	 	 	*

	 	 	 	 	 	 	 
	Control specifications*
	 	 	 	 	 	 
	Parameters

	 	Specification limit *
	 	 
	 	Methods
	*

	 	*
	 	 
	 	*
	 
	 	 	 	 	 	 
	*

	 	*
	 	 	 	*

	 	 	 	 	 	 	 
	Controlled in batch records:
	 	 	 	 	 	 
	*

	 	*
	 	 
	 	*

	 	 	 	 	 	 	 
	In-process control parameters *:
	 	 	 	 	 	 
	Parameters

	 	Control limit *
	 	 
	 	Methods
	*

	 	*
	 	 
	 	*
	*

	 	*
	 	 
	 	*
	*

	 	*
	 	 
	 	*

In addition to parameters above, biomass must produce crude oil meeting all applicable
specifications defined in *. Retention samples of biomass will be maintained by DSM for reference
if any off-spec results are obtained in crude oil.

	 	 	 	 	 	 	 
	Scope

	 	*
	 	*
	 	 
	*

	 	*
	 	*	 	 
	*

	 	*
	 	*	 	 
	*

	 	*
	 	*	 	 

Legend:

*

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  15

 

 

*

*

*

*

*

*

*

*

	 	 	 	 	 	 	 
	Storage:	 	Packaging:
	•

	 	Below -2° C +/-3°C,
	 	•
	 	Big Bags (polypropylene with polyethylene liner), anti static
	 

	 	preferably lower temperatures
	 	•
	 	Labeled with product number, batch
number, production number, production date and storage conditions on
both inner and outer bag
	•

	 	Protected from light
	 	 	 
	•

	 	Dry conditions	 	 	 	 
	Expiration period*	 	 	 	 

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  16

 

 

SCHEDULE 2.20A

BROTH SPECIFICATIONS

	 	 	 	 	 
	

	 	PRODUCT SPECIFICATION FORM

ARA Broth

	 	ARA-PSF-006M

Revision 0

22 June 2005

	 	 	 	 	 
	Product no:
	 	 	 	 
	Parameters

	 	Approval limit *
	 	Methods
	*

	 	*
	 	*
	*

	 	*
	 	*
	*

	 	*
	 	*
	 
	 	 	 	 
	Control specifications *	 	 
	*

	 	*	 	 

Legend:

*

*

*

	 	 	 
	Scope

	 	*
	*

	 	*
	*

	 	*

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  17

 

 

SCHEDULE 2.28

CRUDE OIL SPECIFICATIONS

	 	 	 	 	 
	

	 	PRODUCT SPECIFICATION FORM

ARA Crude Oil 

	 	ARA-PSF-001M

Revision 5

22 June 2005

	 	 	 	 	 	 	 
	Product no: 2983	 	 	 	 
	Parameters

	 	Approval limit *
	 	Discussion Range *
	 	Methods
	Release specifications	 	 	 	 
	Appearance

	 	*
	 	 
	 	*
	Colour

	 	*
	 	 
	 	*
	Smell

	 	*
	 	 
	 	*
	*

	 	*
	 	*
	 	*
	*

	 	*
	 	*
	 	*
	*

	 	*
	 	 	 	*
	*

	 	*
	 	*
	 	*
	*

	 	*
	 	 	 	*

	 	 	 	 	 	 	 
	Parameters

	 	Specification Limit *
	 	 	 	Methods
	Control specifications *	 	 	 	 
	*

	 	*
	 	 
	 	*
	*

	 	*
	 	 
	 	*
	*

	 	*
	 	 
	 	*
	*

	 	*
	 	 
	 	*
	Control specifications *;	 	 	 	 
	*: every tenth batch;
*: every batch; All experimental batches
	*

	 	*
	 	 
	 	*
	*

	 	*
	 	 
	 	*
	*

	 	*
	 	 
	 	*
	*

	 	*
	 	 
	 	*
	*

	 	*
	 	 
	 	*
	*

	 	*
	 	 
	 	*
	*

	 	*
	 	 
	 	*

	 	 	 	 	 	 	 
	In-process control parameters *:	 	 	 	 
	Parameters

	 	Control limit *
	 	 
	 	Methods
	*

	 	*
	 	 
	 	*

	 	 	 
	Scope

	 	*
	*

	 	*
	*

	 	*
	*

	 	*

 

*

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  18

 

 

*

*

*

*

	 	 	 	 	 	 	 
	Storage conditions:	 	Packaging:
	•

	 	below –18°C
	 	•
	 	Under Nitrogen
	•

	 	Protected from light
	 	•
	 	200 kg food grade phenolic coated
lined drums (tight head) with DSM label
	•

	 	Dry conditions
	 	 	 	 

 

			
	*	 	Expiration date:*
	 
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  19

 

 

SCHEDULE 2.66A

FINE GRANULATES SPECIFICATIONS

	 	 	 	 	 
	

	 	PRODUCT SPECIFICATION FORM

ARA Biomass Fines
	 	ARA-PSF-005M
Revision 4

22 June 2005

	 	 	 	 	 	 	 
	Product no: 8752	 	 	 	 
	Parameters

	 	Approval
	 	Discussion
	 	Methods
	 

	 	Limit *
	 	Range *	 	 
	Release specifications	 	 	 	 
	Description

	 	*
	 	 
	 	*
	Smell

	 	*
	 	 
	 	*
	Colour

	 	*
	 	 
	 	*
	*

	 	*
	 	*
	 	*
	*

	 	*	 	 	 	 
	*

	 	*
	 	*
	 	*
	*

	 	*
	 	*
	 	*
	*

	 	*
	 	 
	 	*

	 	 	 	 	 	 	 
	Control
specifications*	 	 	 	 
	Parameters

	 	Specification limit *
	 	 
	 	Methods
	*

	 	*
	 	 
	 	*
	*

	 	*
	 	 
	 	*

	 	 	 	 	 	 	 
	Controlled in batch records:	 	 	 	 
	*

	 	*
	 	 
	 	*

	 	 	 	 	 	 	 
	In-process control parameters *:	 	 	 	 
	Parameters

	 	Control limit *
	 	 	 	Methods
	*

	 	*
	 	 
	 	*
	*

	 	*
	 	 
	 	*
	*

	 	*
	 	 
	 	*

	 	 	 	 	 	 	 
	Scope

	 	*
	 	*
	 	 
	*

	 	*
	 	*
	 	 
	*

	 	*
	 	*
	 	 
	*

	 	*
	 	*
	 	 

Legend:

*

*

*

*

*

*

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  20

 

 

*

*

*

*

*

	 	 	 	 	 	 	 
	Storage:	 	Packaging:
	*

	 		 	*
	 	
	Expiration period: *	 	 	 	 

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  21

 

 

SCHEDULE 4.2(a)

DSM CERTIFICATE OF ANALYSIS

FINE GRANULATES

	 	 	 	 	 
	

	 	Certificate of Analysis
ARA Biomass Fines
	 	ARA-CoA-005M
Revision 1

22 June 2005

	 	 	 	 	 
	Product no: 8752
	 	 	 	 
	Parameters

	 	Requirements
	 	Result
	 
	Description

	 	*	 	 
	Smell

	 	*	 	 
	Colour

	 	*	 	 
	*

	 	*	 	 
	*

	 	*	 	 
	*

	 	*	 	 
	*

	 	*	 	 
	*

	 	*	 	 
	*

	 	*	 	 
	*

	 	*	 	 

	 	 	 	 	 	 	 
	Storage:	 	Packaging:
	*

	 		 	*
	 	

Expiration period *:

Remarks

	
 	 	 	 	 	 	 
	 
	 

	 	 	 	 

	 	 
	Date:

	 	 
	 	QA-Manager:
	 	 

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  22

 

 

SCHEDULE 4.2(a)

DSM CERTIFICATE OF ANALYSIS

BROTH

	 	 	 	 	 
	

	 	Certificate of Analysis

ARA Broth

	 	ARA-CoA-006M

Revision 0

22 June 2005

	 	 	 	 	 
	Product no: 8932
	 	 	 	 
	*

	 	Requirements
	 	Results
	*

	 	*	 	 
	*

	 	*	 	 
	*

	 	*	 	 
	*

	 	*	 	 

Remarks

	 	 	 	 	 	 	 
	 
	 

	 	 	 	 

	 	 
	Date:

	 	 
	 	QA-Manager:
	 	 

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  23

 

 

SCHEDULE 4.2(a)

DSM CERTIFICATE OF ANALYSIS

BIOMASS

	 	 	 	 	 
	

	 	Certificate of Analysis

ARA Biomass

	 	ARA-CoA-004M

Revision 1

22 June 2005

	 	 	 	 	 
	Product no: 2984
	 	 	 	 
	Parameters

	 	Requirements
	 	Result
	 
	Description

	 	*
	 	 
	Smell

	 	*	 	 
	Colour

	 	*	 	 
	*

	 	*	 	 
	*

	 	*	 	 
	*

	 	*	 	 
	*

	 	*	 	 
	*

	 	*	 	 
	*

	 	*	 	 
	*

	 	*	 	 

	 	 	 	 	 	 	 
	Storage:	 	Packaging:
	•

	 	Below -2°C +/-3°C, preferably
	 	•
	 	Big Bags (polypropylene with polyethylene liner), anti static
	 

	 	lower temperatures
	 	•
	 	Labeled with product number, batch number, production
	•

	 	Protected from light
	 	 	 	number, production date and storage conditions on both inner
	•

	 	Dry conditions
	 	 
	 	and outer bag

Expiration period *:

Remarks

	 	 	 	 	 	 	 
	 
	 

	 	 	 	 

	 	 
	Date:

	 	 
	 	QA-Manager:
	 	 

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  24

 

 

SCHEDULE 4.2(a)

DSM CERTIFICATE OF ANALYSIS

CRUDE OIL

	 	 	 	 	 
	

	 	Certificate of Analysis

ARA Crude Oil

	 	ARA-CoA-Crude-001

Revision 7

22 June 2005

	 	 	 	 	 
	Product no: 2983
	 	 	 	 
	Parameters

	 	Requirements
	 	Results
	 
	Appearance

	 	*
	 	 
	Colour

	 	*
	 	 
	Smell

	 	*
	 	 
	*

	 	*	 	 
	*

	 	*	 	 
	*

	 	*	 	 
	*

	 	*	 	 
	*

	 	*	 	 
	*

	 	*	 	 

	 	 	 	 	 	 	 
	Storage conditions:	 	Packaging:
	•

	 	below –18°C
	 	•
	 	Under Nitrogen
	•

	 	Protected from light
	 	•
	 	200 kg food grade phenolic coated lined drums
	•

	 	Dry conditions
	 	 	 	(tight head) with DSM label

Expiration date (24 months from date of packaging):

Remarks

	 	 	 	 	 	 	 
	 
	 

	 	 	 	 

	 	 
	Date:

	 	 
	 	QA-Manager:
	 	 

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  25

 

 

SCHEDULE 4.6

MANUFACTURING CHANGES

I. Standard Operating Procedure: Martek/DSM Procedure “Process Change Control Procedure”

A. Documentation: All process changes must be documented and approved by management level
representatives from the departments applicable to the process change, including but not limited
to, Process Development, Manufacturing, and Quality Assurance. DSM and Martek will each maintain a
log of process changes, which will be accessible to the other party. Process changes are permanent
modifications made to the manufacturing and testing processes. Temporary process deviations will
be appropriately documented by each party in the applicable production and testing records and
addressed outside of this agreement.

B. Major vs. minor changes: Changes are categorized as “minor” or “major” process changes, as
summarized in the examples below:

Minor changes: Any change that has an impact to yield or process efficiency

	 	 	 	 	 
	Fermentation

	 	Drying
	 	Extraction and RBD
	*

	 	*
	 	*
	*

	 	 
	 	*
	*

	 	 
	 	*
	 

	 	 
	 	*
	 

	 	 
	 	*

Major changes: Any change that has or may have a detectable and significant effect on final product
properties as specified in the product specification forms

	 	 	 	 	 
	Fermentation

	 	Drying
	 	Extraction and RBD
	*

	 	*
	 	*
	*

	 	*
	 	*
	*

	 	*
	 	*
	*

	 	 
	 	*
	*

	 	 
	 	*
	*

	 	 
	 	*
	*

	 	 
	 	*

     *

     *

     C. Customer notification requirements:

	 	•	 	Both parties will inform each other every quarter of all changes to production controls,
processes and test methods, both minor and major.
	 
	 	•	 	Both parties require pre-notification and the right to approve process and test method
changes classified as major.
	 
	 	•	 	Martek is responsible to determine if and when process and test method changes require
prior or post change customer notification.
	 
	 	•	 	Martek, with DSM help, will determine if a process or test methods change requires
regulatory review.

Any change categories not specified in the table above must be discussed by the Quality
Subcommittee with recommendation to the Steering Committee as appropriate.

Version 3 – Modified Dec 22, 2004

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  26

 

 

SCHEDULE 3.3A

AUGUST, 2004 LETTER

August 25,
2004

Dr. Krijn Rietveld

Business Unit Director Nutritional Ingredients

DSM Food Specialties B.V.

2613 AX Delft

The Netherlands

Dear Krijn,

Pursuant to section * of the ARA Alliance, Purchase and Production Agreement By and Between Martek
Biosciences and DSM Food Specialties B.V. dated April 19, 2004 (the “Agreement”), I am writing to
notify DSM that there is a * for the calendar quarters Q4 of 2004 and Q1 of 2005. As a result of
this * for *, the * will be * until * following * that *.

Additionally, pursuant to section 3.3 (c) of the Agreement Martek requests that DSM expand its
current production capacity to provide a quarterly output of * metric tons of crude 40% ARA oil
through Q3 of calendar year 2005, * metric tons output of crude 40% ARA oil from Q4 of calendar
year 2005 to Q2 2006, and * metric tons output of crude 40% ARA oil from Q3 2006 to Q3 of 2007.
Martek offers to guarantee that DSM will recover its investment in so expanding its ARA production
capacity through the DSM Mark Up received on purchase orders by Martek for ARA Products over a
period of twelve (12) quarters.

Capitalized terms used herein shall have the meanings attributed to them in the Agreement unless
defined herein or the context indicates otherwise.

Please acknowledge receipt of this notice by signing below and returning an enclosed copy to me at
your earliest convenience.

Sincerely,

Chris Lindsay

Sr. Dir. Project Management

	 	 	 	 	 	 	 	 	 
	Receipt acknowledged;
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Date:
	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Krijn Rietveld, DSM Food Specialties
	 	 	 	 	 	 	 	 

	 	 	 	 	 
	CC:

	 	David Abramson, Martek Biosciences
	 	Johan van Doesum, DSM Food Specialties B.V.
	 

	 	Steve Dubin, Martek Biosciences
	 	Attn: Legal Counsel, DSM Food Specialties B.V.
	 

	 	Flint Harding, Martek Biosciences	 	 

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  27

 

 

     Tom Feeley, Martek Biosciences

SCHEDULE 3.3A(a)

PLANNED EXPANSION

The Planned Expansion shall consist of the Phase II Belvidere Build-Out and the Capua Expansion.

The “Phase II Belvidere Build-Out” shall mean the production capacity put in place by DSM at its
Belvidere facility, consisting of * and the related DSP and support capacity and is expected to be
completed by December 31, 2005. The total Technical Capacity of the Belvidere facility after the
Phase II Belvidere Build-Out shall be approximately * Units of ARA.

The “Capua Expansion” shall mean the debottlenecking of the DSP and the construction of one (1) *
and peripheral equipment which will add an estimated * Units of ARA to the annual capacity of the
Capua facility and was completed in May 2005. The total Technical Capacity of the Capua facility
after the Capua Expansion shall be approximately * Units of ARA.

Martek DSP Capabilities to be established at its Kingstree, South Carolina facility will consist of
a broth recover filter press and fluid bed dryer capable of recovering an estimated * Units of ARA
per year. The Martek DSP Capabilities were completed in March 2005.

 

			
	*	 	The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

  28exv4w2

 

Exhibit 4.2

RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

January 28, 2004

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	1. REGISTRATION RIGHTS
	 	 	1	 
	1.1 Definitions
	 	 	1	 
	1.2 Request for Registration
	 	 	2	 
	1.3 Company Registration
	 	 	4	 
	1.4 Form S-3 Registration
	 	 	6	 
	1.5 Obligations of the Company
	 	 	7	 
	1.6 Information from Holder
	 	 	8	 
	1.7 Expenses of Registration
	 	 	8	 
	1.8 Delay of Registration
	 	 	9	 
	1.9 Indemnification
	 	 	9	 
	1.10 Reports Under the 1934 Act
	 	 	12	 
	1.11 Assignment of Registration Rights
	 	 	12	 
	1.12 Limitations on Subsequent Registration Rights
	 	 	13	 
	1.13 “Market Stand-Off’ Agreement
	 	 	13	 
	1.14 Termination of Registration Rights
	 	 	14	 
	1.15 Black-Out Period
	 	 	14	 
	 
	 	 	 	 
	2. COVENANTS OF THE COMPANY
	 	 	15	 
	2.1 Delivery of Financial Statements
	 	 	15	 
	2.2 Inspection
	 	 	15	 
	2.3 Termination of Information and Inspection Covenants
	 	 	16	 
	2.4 Right of First Offer
	 	 	16	 
	2.5 Proprietary Information and Inventions Agreements
	 	 	17	 
	2.6 Compensation and Audit Committees
	 	 	18	 
	2.7 Director and Officer Liability Insurance
	 	 	18	 
	2.8 Qualified Small Business Stock
	 	 	18	 
	 
	 	 	 	 
	3. BOARD OF DIRECTORS
	 	 	18	 
	3.1 Articles of Incorporation
	 	 	18	 
	3.2 Agreement to Vote
	 	 	19	 
	3.3 Board Size
	 	 	19	 
	3.4 Election of Directors
	 	 	19	 
	3.5 Removal; Vacancies
	 	 	21	 
	3.6 Legend
	 	 	21	 
	3.7 No Liability for Election of Recommended Directors
	 	 	21	 
	3.8 Termination of Voting Provisions
	 	 	21	 
	3.9 Board Observation Rights
	 	 	21	 
	 
	 	 	 	 
	4. DRAG-ALONG RIGHTS
	 	 	22	 
	 
	 	 	 	 
	5. LIMITED POWER OF ATTORNEY
	 	 	23	 
	 
	 	 	 	 
	6. PAY-TO-PLAY FINANCING
	 	 	24	 

i

 

	 	 	 	 	 
	 	 	Page	 
	7. REORGANIZATION OF THE COMPANY
	 	 	24	 
	 
	 	 	 	 
	8. ADDITIONAL COVENANTS
	 	 	24	 
	8.1 Required Financing
	 	 	24	 
	8.2 Consent to Pay-to-Play
	 	 	25	 
	8.3 Investors’ Rights Agreement
	 	 	25	 
	 
	 	 	 	 
	9. MISCELLANEOUS
	 	 	25	 
	9.1 Successors and Assigns
	 	 	25	 
	9.2 Governing Law
	 	 	25	 
	9.3 Counterparts
	 	 	25	 
	9.4 Titles and Subtitles
	 	 	26	 
	9.5 Notices
	 	 	26	 
	9.6 Expenses
	 	 	26	 
	9.7 Entire Agreement; Amendments and Waivers
	 	 	26	 
	9.8 Severability
	 	 	27	 
	9.9 Aggregation of Stock
	 	 	27	 
	9.10 Restrictions of Transfer
	 	 	27	 
	9.11 Massachusetts Business Trusts
	 	 	28	 

ii

 

INVESTORS’ RIGHTS AGREEMENT

     THIS INVESTORS’ RIGHTS AGREEMENT (the “Agreement”) is made as of the 28`h day of January,
2004, by and among Restore Medical, Inc., a Minnesota corporation (the “Company”), the investors
and certain other shareholders of the Company listed on Schedule A hereto, each of which is
herein referred to as an “Investor,” and the holders of the Company’s capital stock listed on
Schedule B hereto, each of whom is herein referred to as a “Founder”

RECITALS

     WHEREAS, the Company and certain Investors are parties to the Series C and Series C-1
Preferred Stock and Warrant Purchase Agreement of even date herewith (the “Series C/C-1
Agreement”); and

     WHEREAS, in order to induce such Investors to purchase Series C Preferred Stock and Series C-1
Preferred Stock (collectively, the “Series C Preferred”) and invest funds in the Company pursuant
to the Series C/C-1 Agreement, the Investors, the Founders and the Company hereby desire to enter
into this Agreement.

     NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

     1. Registration Rights. The Company covenants and agrees as follows:

          1.1 Definitions. For purposes of this Section 1:

     (a) The term “Act” means the Securities Act of 1933, as amended.

     (b) The term “Common Stock” means the Company’s Common Stock, par value $.01
per share.

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

     (d) The term “Holder” means any person owning or having the right to acquire
Registrable Securities or any assignee thereof in accordance with Section 1.11
hereof.

     (e) The term “Initial Offering” means the Company’s first firm commitment
underwritten public offering of its Common Stock under the Act.

     (f) The term “1934 Act” means the Securities Exchange Act of 1934, as amended.

 

 

     (g) The term “Preferred Stock” means the Company’s Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock, each with a par value of $.01
per share.

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

     (i) The term “Registrable Securities” means (i) the Common Stock issuable or
issued upon conversion of the Preferred Stock and (ii) any Common Stock of the
Company issued as (or issuable upon the conversion or exercise of any warrant, right
or other security that is issued as) a dividend or other distribution with respect
to, or in exchange for, or in replacement of, the shares referenced in (i) above,
excluding in all cases, however, any Registrable Securities sold by a person in a
transaction in which his rights under this Section 1 are not assigned.

     (j) The number of shares of “Registrable Securities” outstanding shall be
determined by the number of shares of Common Stock outstanding that are, and the
number of shares of Common Stock issuable pursuant to then exercisable or
convertible securities that are, Registrable Securities.

     (k) The term “Rule 144” shall mean Rule 144 under the Act.

     (l) The term “Rule 144(k)” shall mean subsection (k) of Rule 144 under the Act.

     (m) The term “SEC” shall mean the Securities and Exchange Commission.

          1.2 Request for Registration.

     (a) Subject to the conditions of this Section 1.2, if the Company shall receive
at any time after six (6) months after the effective date of the Initial Offering, a
written request from the Holders of fifty-one percent (51%) or more of the
Registrable Securities then outstanding (for purposes of this Section 1.2, the
“Initiating Holders”) that the Company file a registration statement under the Act
covering the registration of Registrable Securities with an anticipated aggregate
offering price of at least $10,000,000, then the Company shall, within twenty (20)
days of the receipt thereof, give written notice of such request to all Holders, and
subject to the limitations of this Section 1.2, use all commercially reasonable
efforts to effect, as soon as practicable, the registration under the Act of all
Registrable Securities that the Holders request to be registered in a written
request received by the Company within twenty (20) days of the mailing of the
Company’s notice pursuant to this Section 1.2(a); provided, however, that only one
such request may be made by Holders during any twelve (12) month period.

2

 

     (b) If the Initiating Holders intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise the
Company as a part of their request made pursuant to this Section 1.2 and the Company
shall include such information in the written notice referred to in Section 1.2(a).
In such event the right of any Holder to include its Registrable Securities in such
registration shall be conditioned upon such Holder’s participation in such
underwriting and the inclusion of such Holder’s Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall enter into
an underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by a majority in interest of the Initiating Holders
(which underwriter or underwriters shall be reasonably acceptable to the Company).
Notwithstanding any other provision of this Section 1.2, if the underwriter advises
the Company that marketing factors require a limitation on the number of securities
underwritten (including Registrable Securities), then the Company shall so advise
all Holders of Registrable Securities that would otherwise be underwritten pursuant
hereto, and the number of shares that may be included in the underwriting shall be
allocated to the Holders of such Registrable Securities pro rata based on the number
of Registrable Securities held by all such Holders (including the Initiating
Holders). In no event shall any Registrable Securities be excluded from such
underwriting unless all other securities are first excluded. Any Registrable
Securities excluded or withdrawn from such underwriting shall be withdrawn from the
registration.

     (c) Notwithstanding the foregoing, the Company shall not be required to effect
a registration pursuant to this Section 1.2:

     (i) in any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting
such registration, unless the Company is already subject to service in such
jurisdiction and except as may be required under the Act; or

     (ii) after the Company has effected two (2) registrations pursuant to
this Section 1.2, and such registrations have been declared or ordered
effective; or

     (iii) during the period starting with the date sixty (60) days prior to
the Company’s good faith estimate of the date of the filing of and ending on
a date one hundred eighty (180) days following the effective date of a
Company-initiated registration subject to Section 1.3 below, provided that
the Company is actively employing in good faith all commercially reasonable
efforts to cause such registration statement to become effective; or

3

 

     (iv) if the Initiating Holders propose to dispose of Registrable
Securities that may be registered on Form S-3 pursuant to Section 1.4
hereof; or

     (v) if the Company shall furnish to Holders requesting a registration
statement pursuant to this Section 1.2 a certificate signed by the Company’s
Chief Executive Officer or Chairman of the Board stating that in the good
faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such
registration statement to be effected at such time, in which event the
Company shall have the right to defer such filing for a period of not more
than one hundred twenty (120) days after receipt of the request of the
Initiating Holders, provided that such right shall be exercised by the
Company not more than once in any twelve (12) month period and provided
further that the Company shall not register any securities for the account
of itself or any other stockholder during such one hundred twenty (120) day
period (other than a registration relating solely to the sale of securities
of participants in a Company stock plan, a registration relating to a
corporate reorganization or transaction under Rule 145 of the Act, a
registration on any form that does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities, or a registration in which
the only Common Stock being registered is Common Stock issuable upon
conversion of debt securities that are also being registered).

          1.3 Company Registration.

     (a) If (but without any obligation to do so) the Company proposes to register
(including for this purpose a registration effected by the Company for stockholders
other than the Holders) any of its stock or other securities under the Act in
connection with the public offering of such securities (other than a registration
relating solely to the initial public offering of the Company’s securities, the sale
of securities of participants in a Company stock plan, a registration relating to a
corporate reorganization or transaction under Rule 145 of the Act, a registration on
any form that does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities, or a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities that are also
being registered), the Company shall, at such time, promptly give each Holder
written notice of such registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by the Company in accordance
with Section 9.5, the Company shall, subject to the provisions of Section 1.3(c),
use all commercially reasonable efforts to cause to be registered under the Act all
of the Registrable Securities that each such Holder requests to be registered.

4

 

     (b) Right to Terminate Registration. The Company shall have the right
to terminate or withdraw any registration initiated by it under this Section 1.3
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration. The expenses of such withdrawn
registration shall be borne by the Company in accordance with Section 1.7 hereof.

     (c) Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company’s capital stock, the Company
shall not be required under this Section 1.3 to include any of the Holders’
securities in such underwriting unless they accept the terms of the underwriting as
agreed upon between the Company and the underwriters selected by the Company (or by
other persons entitled to select the underwriters) and enter into an underwriting
agreement in customary form with such underwriters, and then only in such quantity
as the underwriters determine in their sole discretion will not jeopardize the
success of the offering by the Company. If the total amount of securities,
including Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company that the
underwriters determine in their sole discretion is compatible with the success of
the offering, then the Company shall be required to include in the offering only
that number of such securities, including Registrable Securities, that the
underwriters determine in their sole discretion will not jeopardize the success of
the offering. In no event shall any Registrable Securities held by holders that
purchased shares of Series C Preferred Stock pursuant to the Series C/C-1 Agreement
be excluded from such offering unless all other stockholders’ securities (including,
without limitation, the holders of Series C-1 Preferred Stock) have been first
excluded. In the event that the underwriters determine that less than all of the
Registrable Securities requested to be registered can be included in such offering,
then the Registrable Securities that are included in such offering shall be
apportioned pro rata among the selling Holders based on the number of Registrable
Securities held by all selling Holders or in such other proportions as shall
mutually be agreed to by all such selling Holders. Notwithstanding the foregoing,
in no event shall (i) the amount of securities of the selling Holders included in
the offering be reduced below thirty percent (30%) of the total amount of securities
included in such offering, unless such offering is the initial public offering of
the Company’s securities, in which case the selling Holders may be excluded if the
underwriters make the determination described above and no other stockholder’s
securities are included in such offering. For purposes of the preceding sentence
concerning apportionment, for any selling stockholder that is a Holder of
Registrable Securities and that is a venture capital fund, mutual fund, business
trust, partnership or corporation, the affiliated venture capital funds, mutual
funds, business trusts, partners, retired partners and stockholders 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 “selling Holder,” and any pro rata reduction with respect to such “selling
Holder” shall be based upon the aggregate

5

 

amount of Registrable Securities owned by all such related entities and
individuals.

          1.4 Form S-3 Registration. In case the Company shall receive from Holders of
Registrable Securities (for purposes of this Section 1.4, the “Initiating Holders”) a
written request or requests that the Company effect a registration on Form S-3 and any
related qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Holder or Holders, the Company shall:

     (a) promptly give written notice of the proposed registration, and any related
qualification or compliance, to all other Holders; and

     (b) use all commercially reasonable efforts to effect, as soon as practicable,
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 Holders’ Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holders joining
in such request as are specified in a written request given within fifteen (15) days
after receipt of such written notice from the Company, provided, however, that the
Company shall not be obligated to effect any such registration, qualification or
compliance, pursuant to this section 1.4:

     (i) if Form S-3 is not available for such offering by the Holders;

     (ii) if the Holders, together with the holders of any other securities
of the Company entitled to inclusion in such registration, propose to sell
less than 100,000 Registrable Securities (as adjusted for stock splits,
stock dividends, combinations or the like);

     (iii) if the Company has, within the twelve (12) month period preceding
the date of such request, already effected two registrations on Form S-3 for
the Holders pursuant to this Section 1.4;

     (iv) 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;

     (v) during the period starting with the date sixty (60) days prior to
the Company’s good faith estimate of the date of the filing of and ending on
a date one hundred eighty (180) days following the effective date of, any
registration statement pertaining to securities of the Company, provided
that the Company is actively employing in good faith all commercially
reasonable efforts to cause such registration statement to become effective;
or

6

 

     (vi) if the Company shall furnish to the Initiating Holders a
certificate signed by the Company’s Chief Executive Officer or Chairman of
the Board stating that in the good faith judgment of the Board of Directors
of the Company, it would be seriously detrimental to the Company and its
stockholders for such registration statement to be effected at such time, in
which event the Company shall have the right to defer such filing for a
period of not more than ninety (90) days after receipt of the request of the
Initiating Holders, provided that such right shall be exercised by the
Company not more than once in any twelve (12) month period and provided
further that the Company shall not register any securities for the account
of itself or any other stockholder during such ninety (90) day period (other
than a registration relating solely to the sale of securities of
participants in a Company stock plan, a registration relating to a corporate
reorganization or transaction under Rule 145 of the Act, a registration on
any form that does not include substantially the same information as would
be required to be included in a registration statement covering the sale of
the Registrable Securities, or a registration in which the only Common Stock
being registered is Common Stock issuable upon conversion of debt securities
that are also being registered).

     (c) If the Initiating Holders intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise the
Company as a part of their request made pursuant to this Section 1.4 and the Company
shall include such information in the written notice referred to in Section 1.4(a).
The provisions of Section 1.2(b) shall be applicable to such request (with the
substitution of Section 1.4 for references to Section 1.2).

     (d) Subject to the foregoing, the Company shall file a registration statement
covering the Registrable Securities and other securities so requested to be
registered as soon as practicable after receipt of the request or requests of the
Initiating Holders. Registrations effected pursuant to this Section 1.4 shall not
be counted as requests for registration effected pursuant to Sections 1.2.

          1.5 Obligations of the Company. Whenever required under this Section 1 to
effect the registration of any Registrable Securities, 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 all commercially reasonable 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 a period of up to one hundred twenty (120) days
or, if earlier, until the distribution contemplated in the Registration Statement
has been completed;

     (b) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such

7

 

registration statement as may be necessary to comply with the provisions of the
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 Act, and such
other documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them;

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

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

     (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 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) cause all such Registrable Securities registered pursuant to this Section 1
to be listed on a national exchange or trading system and on each securities
exchange and trading system on which similar securities issued by the Company are
then listed; and

     (h) provide a transfer agent and registrar for all Registrable Securities
registered pursuant hereunder and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration.

          1.6 Information from Holder. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish to the Company
such information regarding itself, the Registrable Securities held by it, and the intended
method of disposition of such securities as shall be reasonably required to effect the
registration of such Holder’s Registrable Securities.

          1.7 Expenses of Registration. All expenses other than underwriting discounts
and commissions incurred in connection with registrations, filings or qualifications
pursuant to Sections 1.2, 1.3 and 1.4, including (without limitation) all registration,
filing and qualification fees, printers’ and accounting fees, fees and disbursements of
counsel

8

 

for the Company and the reasonable fees and disbursements of one counsel for the
selling Holders shall be borne by the Company. Notwithstanding the foregoing, the Company
shall not be required to pay for any expenses of any registration proceeding begun pursuant
to Section 1.2 or Section 1.4 if the registration request is subsequently withdrawn at the
request of the Holders of a majority of the Registrable Securities to be registered (in
which case all participating Holders shall bear such expenses pro rata based upon the number
of Registrable Securities that were to be included in the withdrawn registration), unless,
in the case of a registration requested under Section 1.2, the Holders of a majority of the
Registrable Securities requested to be included in such registration agree to forfeit their
right to one demand registration pursuant to Section 1.2 and provided, however, that 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 from that known to the Holders at the time
of their request and have withdrawn the request with reasonable promptness following
disclosure by the Company 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 Section 1.2
and 1.4.

          1.8 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 1.

          1.9 Indemnification. In the event any Registrable Securities are included in a
registration statement under this Section 1:

     (a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, the partners, officers, directors, trustees and stockholders
of each Holder, legal counsel and accountants for each Holder, any underwriter (as
defined in the Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Act or the 1934 Act, against any
losses, claims, damages or liabilities (joint or several) to which they may become
subject under the Act, the 1934 Act, any state securities laws or any rule or
regulation promulgated under the Act, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any of
the following statements, omissions or violations (collectively a “Violation”): (i)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state in such registration statement 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 Act,
the 1934 Act, any state securities laws or any rule or regulation promulgated under
the Act, the 1934 Act or any state securities laws, and the Company will reimburse
each such Holder, underwriter, controlling person or other aforementioned person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action as such
expenses are incurred;

9

 

provided, however, that the indemnity agreement contained in this subsection
1.9(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 that occurs
in reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by any such Holder, underwriter,
controlling person or other aforementioned person; provided further, however, that
the foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Holder or underwriter or other aforementioned
person, or any person controlling such Holder or underwriter, from whom the person
asserting any such losses, claims, damages or liabilities purchased shares in the
offering, if a copy of the most current prospectus was not sent or given by or on
behalf of such Holder or underwriter or other aforementioned person to such person,
if required by law to have been so delivered, at or prior to the written
confirmation of the sale of the shares to such person, and if the prospectus (as so
amended or supplemented) would have cured the defect giving rise to such loss,
claim, damage or liability.

     (b) To the extent permitted by law, each selling Holder will indemnify and hold
harmless, severally and not jointly, the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, legal counsel and accountants
for the Company, any underwriter, any other Holder selling securities in such
registration statement and any controlling person of any such underwriter or other
Holder, against any losses, claims, damages or liabilities (joint or several) to
which any of the foregoing persons may become subject, under the Act, the 1934 Act,
any state securities laws or any rule or regulation promulgated under the Act, the
1934 Act or any state securities laws, 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 — person intended to be indemnified pursuant to this subsection
1.9(b) for any legal or other expenses reasonably incurred by such person in
connection with investigating or defending any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the indemnity
agreement contained in this subsection 1.9(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 withheld), and provided that in no event shall any indemnity under this
subsection 1.9(b) exceed the net proceeds from the offering received by such Holder.

     (c) Promptly after receipt by an indemnified party under this Section 1.9 of
notice of the commencement of any action (including any

10

 

governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 1.9, 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 (together with all other
indemnified parties that may be represented without conflict by one counsel) shall
have the right to retain one separate 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 differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of any
such action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of liability to the indemnified party under this Section 1.9 to
the extent of such prejudice, but the omission to so 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 1.9.

     (d) If the indemnification provided for in this Section 1:9 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 herein, 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 the
indemnified party on the other hand 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; provided, however, that no contribution by
any Holder, when combined with any amounts paid by such Holder pursuant to Section
1.9(b), shall exceed the net proceeds from the offering received by such Holder.
The relative fault of the indemnifying party and the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a material
fact relates to information supplied by the indemnifying party or by the indemnified
party and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

     (e) 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.

11

 

     (f) The obligations of the Company and Holders under this Section 1.9 shall
survive the completion of any offering of Registrable Securities in a registration
statement under this Section 1 and otherwise.

          1.10 Reports Under the 1934 Act. With a view to making available to the
Holders the benefits of Rule 144 and any other rule or regulation of the SEC that may at any
time permit a Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to use commercially reasonable
efforts to:

     (a) make and keep public information available, as those terms are understood
and defined in Rule 144, at all times after the effective date of the Initial
Offering;

     (b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Act and the 1934 Act; and

     (c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that it
has complied with the reporting requirements of Rule 144 (at any time after the
effective date of the first registration statement filed by the Company), the Act
and the 1934 Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be resold
pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested to avail any Holder of any rule or regulation of the SEC that
permits the selling of any such securities without registration or pursuant to such
form.

          1.11 Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Section 1 may be assigned (but only with
all related obligations) by a Holder to a transferee or assignee of such securities that (i)
is a subsidiary, parent, partner, limited partner, retired partner, affiliated venture
capital fund, affiliated mutual fund, affiliated business trust or stockholder of a Holder,
(ii) is a Holder’s family member or trust for the benefit of an individual Holder, or (iii)
after such assignment or transfer, holds at least 25,000 shares of Registrable Securities
(subject to appropriate adjustment for stock splits, stock dividends, combinations or the
like), provided: (a) the Company is, within ten (10) days after such transfer, furnished
with written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being assigned; (b) such
transferee or assignee agrees in writing to be bound by and subject to the terms and
conditions of this Agreement, including, without limitation, the provisions of Section 1.13
below; (c) such assignment shall be effective only if immediately following such transfer
the further disposition of such securities by the transferee or assignee is restricted under
the Act; and (d) such transferee is not a direct competitor of the Company, as determined in
the good faith judgment of the Board of Directors, at the time of such transfer.

12

 

          1.12 Limitations on Subsequent Registration Rights. From and after the date of
this Agreement, the Company shall not, without the prior written consent of the holders of a
majority of the Registrable Securities held by holders of the Company’s Series C Preferred
Stock, enter into any agreement with any holder or prospective holder of any securities of
the Company that would allow such holder or prospective holder (a) to include any of such
securities in any registration filed under Section 1.2, Section 1.3 or Section 1.4 hereof,
unless under the terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of such securities
will not reduce the amount of the Registrable Securities of the Holders that are included or
(b) to demand registration of their securities.

          1.13 “Market Stand-Off’ Agreement.

     (a) Each Holder hereby agrees that it will not, without the prior written
consent of the managing underwriter, during the period commencing on the date of the
final prospectus relating to the Company’s Initial Offering and ending on the date
specified by the Company and the managing underwriter (such period not to exceed one
hundred eighty (180) days) (i) lend, offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, or otherwise transfer or dispose of, directly
or indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock held immediately prior to the
effectiveness of the Registration Statement for such offering, or (ii) enter into
any swap or other arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery of
Common Stock or other securities, in cash or otherwise. The foregoing provisions of
this Section 1.13 shall apply only to the Company’s initial offering of equity
securities, shall not apply to the sale of any shares to an underwriter pursuant to
an underwriting agreement, and shall only be applicable to the Holders if all
officers, directors and greater than two percent (2%) stockholders of the Company
enter into similar agreements and such restrictions are not waived as to them. The
underwriters in connection with the Company’s Initial Offering are intended
third-party beneficiaries of this Section 1.13 and shall have the right, power and
authority to enforce the provisions hereof as though they were a party hereto. Each
Holder further agrees to execute such agreements as may be reasonably requested by
the underwriters in the Company’s Initial Offering that are consistent with this
Section 1.13 or that are necessary to give further effect thereto. Any
discretionary waiver or termination of the restrictions of any or all of such
agreements by the Company or the underwriters shall apply to all Holders subject to
such agreements pro rata based on the number of shares subject to such agreements.

     In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each Holder
(and the shares or securities of every other person subject to the foregoing
restriction) until the end of such period.

13

 

     (b) Each Holder agrees that a legend reading substantially as follows shall be
placed on all certificates representing all Registrable Securities of each Holder
(and the shares or securities of every other person subject to the restriction
contained in this Section 1.13):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
LOCK-UP PERIOD OF UP TO 180 DAYS AFTER THE EFFECTIVE DATE OF THE
ISSUER’S REGISTRATION STATEMENT FILED UNDER THE ACT, AS AMENDED, AS
SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL
HOLDER OF THESE SECURITIES, A COPY OF WHICH MAY BE OBTAINED AT THE
ISSUER’S PRINCIPAL OFFICE. SUCH LOCK-UP PERIOD IS BINDING ON
TRANSFEREES OF THESE SHARES.

          1.14 Termination of Registration Rights. No Holder shall be entitled to
exercise any right provided for in this Section 1 (i) after five (5) years following the
consummation of the Initial Offering, (ii) as to any Holder, such earlier time after the
Initial Offering at which such Holder (A) can sell all shares held by it in compliance with
Rule 144(k) or (B) all Registrable Securities held by such Holder (together with any
affiliate of the Holder with whom such Holder must aggregate its sales under Rule 144) can
be sold in any three (3)-month period without registration in compliance with Rule 144 or
(iii) after the consummation of a Liquidation Event, as that term is defined in the
Company’s Amended and Restated Articles of Incorporation (as amended from time to time) (the
“Restated Articles”).

          1.15 Black-Out Period.

     (a) Following the effectiveness of any registration statement and the filings
with any state securities commissions, the Company shall be entitled to postpone or
suspend, for a reasonable period of time, sales of Registrable Securities under such
registration statement or any such filings upon written notice to the Holders that
the Company has determined that such sales would in the good faith judgment of the
Board of Directors of the Company (a) materially adversely impair the consummation
of any pending or proposed material offering or sale of any class of securities by
the Company or (b) require disclosure of material nonpublic information that, if
disclosed at such time, would be materially harmful to the interest of the Company
and its shareholders; provided, however, that during any such period all executive
officers and directors of the Company are also prohibited from selling securities of
the Company (or any security of any of the Company’s subsidiaries or affiliates).
The Holder may recommence effecting sales of the Registrable Securities pursuant to
the registration statement or such filings following further notice to such effect
from the Company, such notice to be given by the Company not later than five (5)
business days after the conclusion of the reason for the postponement or suspension.
The Company shall use its best efforts to limit the length of any such period of
suspended sales and

14

 

shall use its best efforts to correct, amend or update any incomplete or
misleading registration statement.

     (b) In the event of the suspension of effectiveness of any registration
statement or other filings pursuant to this Section 1.15, the applicable time period
during which such registration statement or other filing is to remain effective
shall be extended by that number of days equal to the number of days the
effectiveness of such registration statement or filing was suspended.

     2. Covenants of the Company.

     2.1 Delivery of Financial Statements. So long as any shares of Preferred Stock
(as adjusted for stock splits, stock dividends, combinations or the like) remain
outstanding, the Company shall deliver to each Investor (or transferee of an Investor) that
holds at least 350,000 shares of Registrable Securities (as adjusted for stock splits, stock
dividends, combinations or the like) (a “Major Investor”):

     (a) as soon as practicable, but in any event within ninety (90) days after the
end of each fiscal year of the Company, an income statement for such fiscal year, a
balance sheet of the Company and statement of stockholders’ equity as of the end of
such year, and a statement of cash flows for such year, such year-end financial
reports to be in reasonable detail, prepared in accordance with generally accepted
accounting principles (“GAAP”), and audited and certified by independent public
accountants of nationally recognized standing selected by the Company;

     (b) as soon as practicable, but in any event within forty-five (45) days after
the end of each of the first three (3) quarters of each fiscal year of the Company,
an unaudited income statement, statement of cash flows for such fiscal quarter and
an unaudited balance sheet as of the end of such fiscal quarter.

     (c) within forty-five (45) days of the end of each month, an unaudited income
statement and statement of cash flows and balance sheet for and as of the end of
such month, in reasonable detail; and

     (d) as soon as practicable, but in any event at least thirty (30) days prior to
the end of each fiscal year, a capital and operating budget and business plan for
the next fiscal year, prepared on a monthly basis, including balance sheets, income
statements and statements of cash flows for such months and, as soon as prepared,
any other budgets or revised budgets prepared by the Company.

     2.2 Inspection. The Company shall permit each Major Investor, at such Major
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 the Major Investor; provided,
however, that the Company shall not be obligated pursuant to this Section 2..2 to provide
access to any information that it reasonably considers to be a trade secret or similar
confidential information.

15

 

     2.3 Termination of Information and Inspection Covenants. The covenants set
forth in Sections 2.1 and 2.2 shall terminate and be of no further force or effect upon the
earlier to occur of (i) the consummation of the sale of securities pursuant to a
registration statement filed by the Company under the Act in connection with the firm
commitment underwritten offering of its securities to the general public, (ii) when the
Company first becomes subject to the periodic reporting requirements of Sections 13 or 15(d)
of the 1934 Act, whichever event shall first occur or (iii) the consummation of a
Liquidation Event, as that term is defined in the Restated Articles.

     2.4 Right of First Offer. Subject to the terms and conditions specified in
this Section 2.4, the Company hereby grants to each Investor a right of first offer with
respect to future sales by the Company of its Shares (as hereinafter defined). For purposes
of this Section 2.4, the term “Investor” includes any general partners and affiliates of an
Investor. An Investor shall be entitled to apportion the right of first offer hereby
granted it among itself and its partners and affiliates in such proportions as it deems
appropriate.

     Subject to Section 8.1 hereof, each time the Company proposes to offer any shares of,
or securities convertible into or exchangeable or exercisable for any shares of, its capital
stock (“Shares”), the Company shall first make an offering of such Shares to each Investor
in accordance with the following provisions:

     (a) The Company shall deliver a notice in accordance with Section 3.5
(“Notice”) to the Investors stating (i) its bona fide intention to offer such
Shares, (ii) the number of such Shares to be offered and (iii) the price and terms
upon which it proposes to offer such Shares.

     (b) By written notification received by the Company within twenty (20) calendar
days after the giving of Notice, each Investor may elect to purchase, at the price
and on the terms specified in the Notice, up to that portion of such Shares that
equals the product of the number of Shares times the fraction obtained by dividing
(i) the sum of the total number of shares of (A) Common Stock issuable or issued
upon conversion of the Preferred Stock then held by such Investor and (B) Common
Stock issuable upon exercise of any options or warrants then held by such Investor
by (ii) the sum of the total number of shares of (A) Common Stock, (B) Common Stock
issuable upon the conversion of the Preferred Stock and (C) Common Stock issuable
upon any exercise of any options or warrants then outstanding.

     (c) If all Shares that Investors are entitled to obtain pursuant to subsection
2.4(b) are not elected to be obtained as provided in subsection 2.4(b) hereof, the
Company may, during the ninety (90) day period following the expiration of the
period provided in subsection 2.4(b) hereof, offer the remaining unsubscribed
portion of such Shares to any person or persons at a price not less than that, and
upon terms no more favorable to the offeree than those, specified in the Notice. If
the Company does not enter into an agreement for the sale of the Shares within such
period, or if such is not consummated within sixty (60) days of the execution
thereof, the right provided hereunder shall be deemed to be revived

16

 

and such Shares shall not be offered unless first reoffered to the Investors in
accordance herewith.

     (d) The right of first offer in this Section 2.4 shall not be applicable to (i)
the issuance or sale of 1,740,575 shares of Common Stock (or options therefor) to
employees, directors, consultants and other service providers for the primary
purpose of soliciting or retaining their services pursuant to plans or agreements
approved by the Company’s Board of Directors; (ii) the issuance of securities
pursuant to a bona fide, firmly underwritten public offering of shares of Common
Stock registered under the Act, (iii) the issuance of securities pursuant to the
conversion or exercise of convertible or exercisable securities, (iv) the issuance
of securities in connection with a bona fide business acquisition of or by the
Company, whether by merger, consolidation, sale of assets, sale or exchange of stock
or otherwise, (v) the issuance and sale of Series C Preferred Stock pursuant to the
Series C/C-1 Agreement, or (vi) the issuance of warrants to purchase up to an
aggregate of 200,000 shares of Common Stock with a per share exercise price equal to
at least the fair market value as of the date of issue, as determined in good faith
by the corporation’s Board of Directors (and the Common Stock issuable upon
conversion thereof) in connection with the incurrence of indebtedness for money
borrowed up to an aggregate of $5,000,000 from recognized commercial lending
institutions. In addition to the foregoing, the right of first offer in this
Section 2.4 shall not be applicable with respect to any Investor in any subsequent
offering of Shares if (i) at the time of such offering, the Investor is not an
“accredited investor,” as that term is then defined in Rule 501(a) of the Act and
(ii) such offering of Shares is otherwise being offered only to accredited
investors.

     (e) The rights provided in this Section 2.4 may not be assigned or transferred
by any Investor except in connection with a transfer of Series C Preferred Stock or
Series C-1 Preferred Stock permitted under, and made in full compliance with,
Section 3.7 of the Series C/C-1 Agreement; provided, however, that, notwithstanding
the foregoing, in no event shall an Investor assign or transfer such rights to a
competitor of the Company (as determined in good faith by the Board of Directors of
the Company).

     (f) The covenants set forth in this Section 2.4 shall terminate and be of no
further force or effect upon the consummation of (i) the Company’s sale of its
Common Stock or other securities pursuant to a Qualified Public Offering, as that
term is defined in the Restated Articles or (ii) a Liquidation Event, as that term
is defined in the Restated Articles.

     2.5 Proprietary Information and Inventions Agreements. The Company shall
require all employees and consultants with access to confidential information to execute and
deliver a proprietary information and inventions agreement or a consulting agreement, as
applicable, in substantially the form approved by the Company’s Board of Directors.

17

 

     2.6 Compensation and Audit Committees. The Board of Directors shall create and
maintain a Compensation Committee and an Audit Committee, both of which shall include the
Series B Director and, if so desired by the holders of at least a majority of the
outstanding shares of Series C Preferred Stock, the Series C Director (as defined below)
designated by Bessemer (as defined below).

     2.7 Director and Officer Liability Insurance. To the extent that such coverage
is available on commercially reasonable terms (as determined in the good faith judgment of
the Board of Directors), the Company shall purchase and at all times maintain director and
officer liability insurance with coverage limits customary for similarly situated companies.

     2.8 Qualified Small Business Stock.

     (a) The Company shall not make any purchases of its stock or take other actions
which would jeopardize the status of the Series C Preferred as “qualified small
business stock” under Section 1202 of the Internal Revenue Code.

     (b) The Company will use commercially reasonable efforts to comply with any
applicable filing and reporting requirements of Section 1202 of the internal Revenue
Code, as amended or as may be amended from time to time, and any regulations
promulgated thereunder; provided, however, that “reasonable efforts” as used in this
Section 2.8(b) shall not be construed to require the Company to operate its business
in a manner which would adversely affect its business, limit its future prospects or
alter the timing or resource allocation related to its planned operations or
financing activities.

     3. Board of Directors.

     3.1 Articles of Incorporation. (a) The Restated Articles provide that (a)
holders of shares of Common Stock, voting together as a class, shall elect one (1) member of
the Board of Directors (the “Common Director”), (b) holders of shares of the Company’s
Series A Preferred Stock, voting together as a class, shall elect one (1) member of the
Board of Directors (the “Series A Director”), (c) holders of shares of Series B Preferred
Stock, voting together as a class, shall elect one (1) member of the Board of Directors (the
“Series B Director”), (d) holders of shares of Series C Preferred Stock and Series C-1
Preferred Stock, voting together as a single class, shall elect two (2) members of the Board
of Directors (the “Initial Series C Directors”), (e) the holders of shares of Common Stock
and Series A Preferred Stock, voting together as a single class and not as separate series
and on an as-converted to Common Stock basis, shall be entitled to elect one (1) member of
the Board of Directors (the “Mutual Director”), and (f) holders of shares of Preferred
Stock, voting together as a single class and not as separate series and on an as-converted
to Common Stock basis, shall be entitled to elect one (1) member of the Board of Directors
(the “Independent Director”).

18

 

     (b) The Restated Articles also provide that upon the vote of a majority of the
then outstanding shares of Series C Preferred Stock and Series C-1 Preferred Stock
(voting together as a single class and not as separate series), the holders of such shares of Series C Preferred Stock and Series C-1 Preferred Stock shall be entitled
to elect an additional two (2) directors of this corporation at any election of
directors (the “Additional Series C Directors”).

     3.2 Agreement to Vote. Each Investor, as a holder of Preferred Stock and/or
Common Stock, hereby agrees on behalf of itself and any transferee or assignee of any such
shares of Preferred Stock or Common Stock, to hold all of the shares of Preferred Stock or
Common Stock registered in its name (and any securities of the Company issued with respect
to, upon conversion of, or in exchange or substitution of such Preferred Stock or Common
Stock, and any other voting securities of the Company subsequently acquired by such
Investor) (hereinafter collectively referred to as the “Investor Shares”) subject to, and to
vote the Investor Shares at a regular or special meeting of stockholders (or by written
consent) in accordance with, the provisions of this Agreement. Each Founder, as a holder of
Common Stock (or options therefor) and/or Preferred Stock of the Company, hereby agrees on
behalf of himself or herself and any transferee or assignee of any such shares of Common
Stock or Preferred Stock, to hold all of such shares of Common Stock and Preferred Stock and
any other securities of the Company acquired by such Founder in the future (and any
securities of the Company issued with respect to, upon conversion of, or in exchange or
substitution for such securities) (the “Founder Shares”) subject to, and to vote the Founder
Shares at a regular or special meeting of stockholders (or by written consent) in accordance
with, the provisions of this Agreement.

     3.3 Board Size. The holders of Investor Shares and Founder Shares shall vote
at a regular or special meeting of stockholders (or by written consent) such shares that
they own (or as to which they have voting power) to ensure that the size of the Board of
Directors shall be set and remain at nine (9) directors; provided, however, that such Board
of Directors, size may be subsequently increased or decreased pursuant to an amendment of
this Agreement in accordance with Section 9.7 hereof.

     3.4 Election of Directors.

     (a) In any election of directors of the Company to elect the Common Director,
the parties holding shares of Common Stock shall each vote at any regular or special
meeting of stockholders (or by written consent) such number of shares of Common
Stock then owned by them (or as to which they then have voting power) as may be
necessary to elect the Company’s then-serving chief executive officer as a member of
the Company’s Board of Directors.

     (b) In any election of directors of the Company to elect the Series A Director,
the parties holding shares of Series A Preferred Stock shall each vote at any
regular or special meeting of stockholders (or by written consent) such number of
shares of Series A Preferred Stock then owned by them (or as to which

19

 

they then have voting power) as may be necessary to elect one (1) director
nominated by Venturi I, LLC.

     (c) In any election of directors of the Company to elect the Series B Director,
the parties holding shares of Series B Preferred Stock shall each vote at any
regular or special meeting of stockholders (or by written consent) such number of
shares of Series B Preferred Stock then owned by them (or as to which they then have
voting power) as may be necessary to elect one (1) director nominated by MPM Capital
or its affiliated funds (“MPM” ).

     (d) In any election of directors of the Company to elect the Initial Series C
Directors, the parties holding shares of Series C Preferred Stock and/or Series C1
Preferred Stock shall each vote at any regular or special meeting of stockholders
(or by written consent) such number of shares of Series C Preferred Stock and Series
C-1 Preferred Stock then owned by them (or as to which they then have voting power)
as may be necessary to (i) elect one (1) director nominated by Bessemer Venture
Partners or its affiliated funds (“Bessemer”), which director shall not be
affiliated with MPM, and (ii) elect one (1) director nominated by MPM.

     (e) In any election of directors of the Company to elect the Mutual Director,
the parties holding shares of Common Stock and/or Series A Preferred Stock shall
each vote at any regular or special meeting of stockholders (or by written consent)
such number of shares of Common Stock and Series A Preferred Stock then owned by
them (or as to which they then have voting power) as may be necessary to elect one
(1) director, which director shall not be affiliated with the Company, the Investors
or the Founders.

     (f) In any election of directors of the Company to elect the Independent
Director, the Investors and the Founders shall each vote at any regular or special
meeting of stockholders (or by written consent) such number of shares of Preferred
Stock of the Company then owned by them (or as to which they then have voting power)
as may be necessary to elect the Independent Director, which director shall be not
be affiliated with the Company, the Investors or the Founders.

     (g) In any election of directors of the Company to elect the Additional Series
C Directors, the parties holding shares of Series C Preferred Stock and/or Series
C-1 Preferred Stock shall each vote at any regular or special meeting of
stockholders (or by written consent) such number of shares of Series C Preferred
Stock and Series C-1 Preferred Stock then owned by them (or as to which they then
have voting power) as may be necessary to (i) elect one (1) director nominated by
the holders of a majority of the then outstanding shares of Series C Preferred Stock
(voting together as a single class), and (ii) one (1) director nominated by the
holders of a majority of the then outstanding shares of Series C Preferred Stock and
Series C-1 Preferred Stock (voting together as a single class and not as separate
series).

20

 

     3.5 Removal; Vacancies. Any director of the Company may be removed from the
Board of Directors in the manner allowed by law and the Restated Articles and Bylaws, but
with respect to a director designated pursuant to Sections 3.4(a), 3.4(b), 3.4(c),
3.4(d)(i), 3.4(d)(ii), 3.4(e), 3.4(g)(i) and 3.4(g)(ii) above, only upon the vote or written
consent of the stockholders entitled to designate such director. Vacancies on the Company’s
Board of Directors shall be filled in accordance with the provisions set forth in the
immediately preceding sentence.

     3.6 Legend. Each certificate representing any Investor Shares or Founder
Shares shall be endorsed by the Company with a legend reading substantially as follows:

“THE SHARES EVIDENCED HEREBY ARE SUBJECT TO AN INVESTORS’ RIGHTS
AGREEMENT (A COPY OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST FROM
THE ISSUER), AND BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON
ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME
BOUND BY ALL THE PROVISIONS OF SAID INVESTORS’ RIGHTS AGREEMENT.”

     3.7 No Liability for Election of Recommended Directors. Neither the Company,
the Founders, the Investors, nor any officer, director, stockholder, partner, employee or
agent of any such party, makes any representation or warranty as to the fitness or
competence of the nominee of any party hereunder to serve on the Company’s Board of
Directors by virtue of such party’s execution of this Agreement or by the act of such party
in voting for such nominee pursuant to this Agreement.

     3.8 Termination of Voting Provisions. The provisions of this Section 3 (other
than Section 3.1) shall terminate and be of no further force or effect upon (a) the
consummation of the Company’s sale of its Common Stock or other securities pursuant to a
registration statement under the Act (other than a registration statement relating either to
sale of securities to employees of the Company pursuant to its stock option, stock purchase
or similar plan or a SEC Rule 145 transaction), or (b) the consummation of a Liquidation
Event, as that term is defined in the Restated Articles.

     3.9 Board Observation Rights. For so long as Bessemer Venture Partners, NGEN
and General Electric Pension Trust hold any shares of Series C Preferred Stock, each such
Investor shall be entitled to have one observer at each board meeting and such observer
shall be entitled to receive notice of and information regarding each meeting of the
Company’s Board of Directors. Any such observer will be entitled to attend any meeting of
the Company’s Board of Directors or, if a meeting is held by telephone conference, to
participate therein by telephone. Any such observer shall have all rights of a director
other than voting rights, including, without limitation, the right to reimbursement of the
Investor’s reasonable out-of-pocket expenses incurred in the exercise of such Investor’s
board observation rights.

21

 

     4. Drag-Along Rights.

     4.1 Notwithstanding anything to the contrary in this Agreement or otherwise (including,
without limitation, any special voting rights of the holders of shares of Series A, Series B
or Series C-1 Preferred Stock set forth in the Restated Articles, beginning eighteen (18)
months after the first closing under the Series C/C-1 Agreement (the “Initial Series C
Closing”), if Investors and their affiliates (other than MPM and its affiliates and their
transferees) holding a majority of the outstanding shares of Series C Preferred Stock
(excluding shares of Series C-1 Preferred Stock), voting as a separate class (the “Dragging
Stockholders”), approve a sale of greater than 90% of the Company’s outstanding shares of
capital stock, on an as-converted basis, whether by way of merger, consolidation, sale of
stock, or otherwise, or the sale of all or substantially all of the assets of the Company to
a bona fide third party purchaser (an “Approved Sale”), then the Dragging Stockholders may
require (the “Drag Along Right”) each other Investor and each Founder (solely in its
capacity as a shareholder of the Company) (each a “Non-Participating Stockholder”) to sell,
or cause to be sold, all shares of the Company’s capital stock held by such
Non-Participating Stockholder in the Approved Sale; provided that, to the extent such Drag
Along Right is being exercised prior to the date that is thirty-six (36) months following
the Initial Series C Closing, the Non-Participating Stockholders’ obligations under this
Section 4 shall be contingent on the Company’s Board of Directors approving the terms of
such Approved Sale. Without limiting the foregoing, in the event the Dragging Stockholders
are exercising the Drag Along Right pursuant to and in accordance with the terms and
conditions set forth in the immediately preceding sentence, the Dragging Stockholders may
require the Non-Participating Stockholders to consent to, vote in favor of, and raise no
objection against, such Approved Sale, and, as applicable, if such Approved Sale is
structured as a merger or consolidation, or a sale of all or substantially all of the assets
of the Company, waive any dissenters’ rights, appraisal rights or similar rights in
connection with such merger, consolidation or asset sale. Subject to Section 4.2 below, the
terms and conditions of any such Approved Sale applicable to the Series C Preferred Stock
and the Series C-1 Preferred Stock shall be identical in all material respects.

     4.2 In the event of any Approved Sale in which the Drag Along Right is exercised, the
proceeds from such Approved Sale shall be allocated among Investors based upon the per share
amount that would be received by such Investor as provided in the Restated Articles, as if
the assets of the Company had been sold for the aggregate consideration to be received in
the Approved Sale, and the proceeds distributed to Investors in accordance with the
provisions of Article III, Section B(2).

     4.3 In the event the Dragging Stockholders desire to exercise their Drag Along Right,
such Dragging Stockholders shall deliver to the Company and the Non Participating
Stockholders written notice (the “Drag Notice”) setting forth the consideration per Share to
be paid by such bona fide third-party purchaser and the other terms and conditions of the
Approved Sale. Within ten (10) business days following the receipt of the Drag Notice, each
of the Non Participating Stockholders (solely in its capacity as a shareholder of the
Company) shall deliver to such Dragging Stockholders (i) in the case of an Approved Sale
that involves the sale of shares of the Company’s

22

 

capital stock, a certificate or certificates evidencing the shares of capital stock of
the Company held by such Non Participating Stockholder, and an appropriate assignment
separate from the certificate duly executed in a proper form to
effect the transfer of such shares from the Non Participating Stockholders on the books and records of the Company
pursuant to the terms of the Approved Sale and/or (ii) such other instruments, documents or
agreements as may be required to effect the Approved Sale. Each Non Participating
Stockholder (solely in its capacity as a shareholder of the Company) hereby grants to the
Chairman of the Board of Directors a limited special power-of-attorney (as further described
in Section 5 hereof) authorizing the Chairman of the Board of Directors to (i) effect the
transfer of all such Non Participating Stockholder’s shares of the Company’s capital stock
(and related transactions) pursuant to the terms of this Section 4 and the terms of such
Approved Sale and/or (ii) consent to and/or vote in favor of such Approved Sale and waive
any dissenters’ rights, appraisal rights or similar rights in connection with such Approved
Sale. In the event that any Non Participating Stockholder shall fail to deliver such
certificate(s), assignment separate from the certificate or other instruments, documents or
agreements to the Dragging Stockholders exercising a Drag Along Right, then the Company
shall cause a notation to be made on its books and records to reflect that the Shares of
such Non Participating Stockholder are bound by the provisions of this Section 4, and the
transfer of such shares of the Company’s capital stock may be effected in accordance with
this Section 4 without such Non Participating Stockholder’s
consent or surrender of its shares of the Company’s capital stock. In addition, in the event the Dragging.
Stockholders exercise their Drag Along Right in accordance with the terms of this Section 4,
the Non Participating Stockholders shall be required to make only such representations,
warranties and indemnities as are made by the Dragging Stockholders.

     5. Limited Power of Attorney. Each Investor and each Founder (other than the Dragging
Stockholders exercising their duly authorized Drag Along Right) (a “Granting Stockholder”), hereby
constitutes the Chairman of the Board of Directors, with full power of substitution and
resubstitution, its true and lawful attorney-in-fact for such Granting Stockholder and in such
Granting Stockholder’s name, place and stead and for such Granting Stockholder’s use and benefit,
to sign, execute, certify, acknowledge, swear to, file, deliver and record any and all agreements,
certificates, instruments and other documents necessary in connection with the Dragging
Stockholders exercising their duly authorized Drag Along Right for the purposes of effectuating
such Drag Along Right. Each Granting Stockholder authorizes each such attorney-in-fact full power
and authority to do and perform each and every act or thing whatsoever requisite to be done in
connection with the foregoing as fully as such Granting Stockholder might or could do so
personally, and hereby ratifying and confirming all that any such attorney-in-fact shall lawfully
do or cause to be done by virtue thereof or hereof. This power of attorney is a special power of
attorney coupled with an interest and is irrevocable, may be exercised by any such attorney-in-fact
by listing the Granting Stockholder executing any agreement, certificate, instrument or other
document with the single signature of any such attorney-in-fact acting as attorney-in-fact for such
Granting Stockholder, shall survive the death, disability or cessation of existence of an Investor
and shall survive the delivery of an assignment by a Granting Stockholder of the whole or a portion
of the Granting Stockholder’s shares of the Company’s capital stock.

23

 

     6. Pay-to-Play Financing. Subject to Section 8.2, each Investor and each Founder
agrees (solely in its capacity as a shareholder of the Company) that it shall take all actions
reasonably necessary to consummate a Pay-to-Play Financing (as defined in Article III, Section
(B)(4)(m)(i) of the Restated Articles), including, without limitation, consenting to or voting in
favor of any amendment to the Restated Articles required in order to consummate such Pay-to-Play
Financing. This provision shall in no way be interpreted to create a requirement that any Investor
participate in any such Pay-to-Play Financing.

     7. Reorganization of the Company. The Company agrees that it will use its reasonable
best efforts to reorganize the Company as a Delaware corporation with the same capitalization and
series and classes of shares, in each case having the same terms as existed immediately prior to
such reorganization (the “Reorganization”), within ninety (90) days of the date hereof. In
connection therewith, each Investor and each Founder (solely in its capacity as a shareholder of
the Company) agrees to take all actions reasonably necessary to consummate the Reorganization,
including, without limitation, consenting to or voting in favor of such actions as are reasonably
necessary to effect the Reorganization. In connection with the consummation of the Reorganization,
the Company, if requested by a member of the Board of Directors, will enter into an indemnification
agreement with such member substantially in the form attached hereto as Exhibit A.

     8. Additional Covenants.

     8.1 Required Financing. If at any time after the date hereof, the Company’s
aggregate available cash and cash equivalents (as set forth on the financial statements of
the Company identified in Section 2.1 hereof) are less than:

     (a) $5 million but in excess of $2 million, the Company agrees that it will use
its reasonable best efforts to (x) seek to raise additional debt and/or equity
capital of not less than $6 million or (y) seek offers from bona fide third party
purchasers to acquire the Company (whether by merger, stock sale, asset sale or
otherwise); and

     (b) $2 million, the Company and each Investor and each Founder agrees (solely
in its capacity as a shareholder of the Company) that Investors and their affiliates
(other than MPM and its affiliates or their respective transferees) holding a
majority of the outstanding shares of Series C Preferred Stock shall have the right
to compel a Required Financing. For the purposes of this section a “Required
Financing” shall mean an equity financing of the Company on terms and conditions
(including, without limitation, pricing, dividends, liquidation preference,
conversion price, anti-dilution rights and special voting rights) proposed by
Investors and their affiliates (other than MPM and its affiliates or their
respective transferees) holding a majority of the outstanding shares of Series C
Preferred Stock.

Notwithstanding anything to the contrary (including, without limitation, Section 2.4
hereof), in the event that Investors and their affiliates (other than MPM and its affiliates
or their respective transferees) holding a majority of the outstanding shares of Series C

24

 

Preferred Stock compel a Required Financing, each holder of Preferred Stock and each holder
of Common Stock shall have the right to participate in such Required Financing on a pro
rata, as converted basis (the “Participation Right”). In furtherance of the foregoing, for
the purposes of Article III, Section (B)(4)(m)(i) of the Restated Articles, each holder of
Preferred Stock agrees that the Participation Right shall be deemed to be included in the
right of first offer set forth in Section 2.4 hereof. In addition, each Investor and each
Founder (solely in its capacity as a shareholder of the Company) agrees that it shall take
all actions reasonably necessary to consummate such Required Financing, including, without
limitation, consenting to or voting in favor of any amendment to the Restated Articles
required in order to consummate such Required Financing. This provision shall in no way be
interpreted to create a requirement that any Investor or Founder participate in any such
Required Financing.

     8.2 Consent to Pay-to-Play. Notwithstanding anything to the contrary
(including, without limitation, any provision of the Restated Articles), the Company agrees
that so long as at least 1,200,000 shares of Series C Preferred Stock remain outstanding (as
adjusted for any stock splits, stock dividends, combinations, subdivisions,
recapitalizations or the like), the Company shall not (by amendment, merger, consolidation
or otherwise) without first obtaining the approval (by vote or written consent, as provided
by law) of the holders of a majority of the then outstanding shares of Series C Preferred
Stock not held by MPM or any of its affiliates or their respective transferees (as adjusted
for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the
like) consummate any Pay-to-Play Financing (as defined in Article III, Section (B)(4)(m)(i)
of the Restated Articles as in effect on the date hereof).

     8.3 Investors’ Rights Agreement. As a result of a typographical error, the
date of the Agreement referred to in the Restated Articles is January 23, 2004. The Company
and each party hereto agrees that for all purposes, this Agreement shall be the agreement
referred to in the Articles as “the Investors’ Rights Agreement dated as of January 23,
2004”.

     9. Miscellaneous.

     9.1 Successors and Assigns. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties (including transferees of any shares of
Registrable Securities). Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.

     9.2 Governing Law. This Agreement shall be interpreted under the laws of the
State of Minnesota without reference to Minnesota conflicts of law provisions.

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

25

 

     9.4 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or interpreting this
Agreement.

     9.5 Notices. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed effectively given: (i) upon personal
delivery to the party to be notified, (ii) when sent by confirmed electronic mail or
facsimile if sent during normal business hours of the recipient; if not, then on the next
business day, (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the respective parties at the
addresses set forth on the signature pages attached hereto (or at such other addresses as
shall be specified by notice given in accordance with this Section 9.5).

     9.6 Expenses. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable
attorneys’ fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.

     9.7 Entire Agreement; Amendments and Waivers. This Agreement (including the
Exhibits hereto, if any) constitutes the full and entire understanding and agreement among
the parties with regard to the subjects hereof and thereof Any term of this Agreement (other
than Section 2.1, Section 2.2, Section 2.3, Section 3, Section 4 and Section 5) may be
amended and the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively) only with the written
consent of the Company, the holders of a majority of the Registrable Securities and the
holders of at least a majority of the issued and outstanding shares of Series C Preferred
Stock. The provisions of Section 2.1, Section 2.2 and Section 2.3 may be amended or waived
(either generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Company, the holders of a majority of the Registrable
Securities that are held by Major Investors, and the holders of at least a majority of the
issued and outstanding shares of Series C Preferred Stock. The provisions of Section 3 may
be amended and the observance of any term hereof may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the written consent
of the Company and the holders of a majority of the then outstanding voting securities held
by the Investors; provided, however, that notwithstanding the foregoing, (a) the provisions
of Section 3.4(b) may be amended and the observance of any term thereof may be waived
(either generally or in a particular instance and either retroactively or prospectively)
only with the written consent of Venturi I, LLC, (b) the provisions of Section 3.4(c) may be
amended and the observance of any term thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the written consent
of MPM, (c) the provisions of Section 3.4(d)(i) may be amended and the observance of any
term thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of Bessemer, (d) the
provisions of Section 3.4(d)(ii) may be amended and the observance of any term thereof

26

 

may be waived (either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of MPM, (e) the provisions of Section 3.4(e)
may be amended and the observance of any term thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively) only with the written
consent of the holders of a majority of the outstanding voting securities held by the
holders of shares of Common Stock and Series A Preferred Stock (voting together as a single
class and not as separate series and on an as-converted to Common Stock basis), (f) the
provisions of Section 3.4(g)(i) may be amended and the observance of any term thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of holders of a majority
of the outstanding shares of Series C Preferred Stock, (g) the provisions of Section 3.4(g)(ii) may be amended
and the observance of any term thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written consent of the
holders of a majority of the then outstanding shares of Series C Preferred Stock and Series
C-1 Preferred Stock (voting together as a single class and not as separate series) and (h)
the provisions of Section 3.9 may be amended and the observance of any term thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of Bessemer, NGEN and General Electric Pension
Trust. The provisions of Section 4, Section 5, Section 6 and Section 7 may be amended or
waived (either generally or in a particular instance and either retroactively or
prospectively, as applicable) only with the written consent of the Company, and the holders
of at least a majority of the issued and outstanding shares of Series C Preferred Stock;
provided, however, that such provisions may not be amended or waived in such a way as to add
to the obligations of any Non Participating Stockholder without the consent of such Non
Participating Stockholder. The provisions of Section 8 may be amended or waived (either
generally or in a particular instance and either retroactively or prospectively, as
applicable) only with the written consent of the Company, and the holders of at least a
majority of the issued and outstanding shares of Series C Preferred Stock (other than MPM
and its affiliates or their transferees); provided, however, that such provisions may not be
amended or waived in such a way as to add to the obligations of any Investor or Founder
without the consent of such Investor or Founder. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon all the parties hereto.

     9.8 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision(s) shall be excluded from this Agreement
and the balance of the Agreement shall be interpreted as if such provision(s) were so
excluded and shall be enforceable in accordance with its terms.

     9.9 Aggregation of Stock. All shares of Registrable Securities held or
acquired by affiliated entities (including affiliated venture capital funds) or persons
shall be aggregated together for the purpose of determining the availability of any rights
under this Agreement.

     9.10 Restrictions of Transfer. In addition to, and not in limitation of the
rights of an Investor to transfer its rights hereunder, an Investor’s rights and obligations
hereunder may be transferred to any of such Investor’s “affiliates,” as that term is defined

27

 

under the Securities Act (and which, in the case of Putnam, shall include any fund or
account managed or advised by Putnam Investment Management, LLC, TH Lee, Putnam Capital
Management, LLC or their respective affiliates), so long as such affiliate is an “accredited
investor” (within the meaning of Regulation D under the Securities Act); provided that the
prospective transferee agrees in writing to be subject to the terms hereof to the same
extent as if he, she or it were an original Investor hereunder.

     9.11 Massachusetts Business Trusts. A copy of the Agreement and Declaration of
Trust of each Putnam fund or series investment company (each, a “Fund”) that is a
Massachusetts business trust is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this Agreement is executed on behalf of such
Fund by the Trustees of the relevant Fund as Trustees, and not individually, and that the
obligations of this Agreement are not binding upon any of the Trustees, officers or
shareholders of the Fund individually but are binding only upon the assets and property of
such Fund.

28

 

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

	 	 	 	 	 	 	 	 	 
	 	 	RESTORE MEDICAL, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Susan L. Critzer	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Susan L. Critzer	 	 
	 

	 	 	 	Title:
	 	President and Chief Executive	 	 
	 

	 	 	 	 	 	Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	2800 Patton Road	 	 
	 

	 	 	 	 	 	St. Paul, MN 55113	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	FOUNDERS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Robert Campbell	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Robert Campbell	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	FOUNDERS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Timothy R. Conrad	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Timothy R. Conrad	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	FOUNDERS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Susan L. Critzer	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Susan L. Critzer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	FOUNDERS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Mark B. Knudson	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Mark B. Knudson	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	FOUNDERS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Edward W. Numainville	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Edward W. Numainville	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	INVESTORS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	MPM BIOVENTURES II, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By: MPM Asset Management II, L.P., its General Partner	 	 
	 	 	By: MPM Asset Management II LLC, its General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Luke Evnin	 	 
	 	 	 	 	 	 	 
	 	 	Name: Luke Evnin	 	 
	 	 	Title: Manager	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	MPM BIOVENTURES II-QP, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By: MPM Asset Management II, L.P., its General Partner	 	 
	 	 	By: MPM Asset Management II LLC, its General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Luke Evnin	 	 
	 	 	 	 	 	 	 
	 	 	Name: Luke Evnin	 	 
	 	 	Title: Manager	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	MPM BIOVENTURES GMBH & CO. PARALLEL BETEILIGUNGS KG	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By: MPM Asset Management II, L.P., in its capacity as 	 	 
	 	 	the Special Limited Partner	 	 
	 	 	By: MPM Asset Management II LLC, its General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Luke Evnin	 	 
	 	 	 	 	 	 	 
	 	 	Name: Luke Evnin	 	 
	 	 	Title: Manager	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	MPM ASSET MANAGEMENT INVESTORS 2000 B LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Luke Evnin	 	 
	 	 	 	 	 	 	 
	 	 	Name: Luke Evnin	 	 
	 	 	Title: Manager	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	INVESTORS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	BESSEMER VENTURE PARTNERS VI L.P.	 	 
	 	 	By: Deer VI & Co. LLC, General Partner/Managing Member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ J. Edmund Colloton	 	 
	 	 	 	 	 	 	 
	 	 	 	 	J. Edmund Colloton, Manager	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	 
	 	 	c/o Bessemer Venture Partners	 	 
	 	 	1865 Palmer Ave #104	 	 
	 	 	Larchmont, NY 10538	 	 
	 	 	Attn: J. Edmund Colloton	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 
	 	INVESTORS: 

 	 
	 	/s/ Chris Gabriel
 	 
	 	Chris Gabriel 	 
	 	 	 
	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	INVESTORS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	TH LEE, PUTNAM INVESTMENT TRUST — TH LEE,	 	 
	 	 	PUTNAM EMERGING OPPORTUNITIES PORTFOLIO	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By: TH Lee, Putnam Capital Management, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Michael E. DeFao	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Michael E. DeFao	 	 
	 	 	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	Putnam Investments	 	 
	 

	 	 	 	 	 	One Post Office Square	 	 
	 

	 	 	 	 	 	Boston, MA 02109	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	INVESTORS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	GENERAL ELECTRIC PENSION TRUST	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By. GE Asset Management Incorporated, its	 	 
	 	 	Investment Manager	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Patrick J. McNeela	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Patrick J. McNeela	 	 
	 	 	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	3003 Summer Street	 	 
	 

	 	 	 	 	 	Stramford, CT 06905	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	INVESTORS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	NGEN ENABLING TECHNOLOGIES FUND, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Steven Park	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Steven Park	 	 
	 	 	 	 	Title: Member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	 	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	INVESTORS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	3V SOURCEONE VENTURES FUND LIMITED	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Michael Ming-Yih Wu	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Michael Ming-Yih Wu	 	 
	 

	 	 	 	Title:
	 	Managing Director	 	 
	 

	 	 	 	 	 	3V SourceOne Capital Pte Ltd, Fund Manager	 	 
	 

	 	 	 	 	 	of 3V SourceOne Ventures Fund Limted	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	321 Orchard Road, #08-06	 	 
	 

	 	 	 	 	 	Orchard Shopping Centre	 	 
	 

	 	 	 	 	 	Singapore 238866	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	3V SOURCEONE VENTURES FUND, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Michael Ming-Yih Wu	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Michael Ming-Yih Wu	 	 
	 

	 	 	 	Title:
	 	Manager	 	 
	 

	 	 	 	 	 	3V SourceOne Capital, LLC, General Partner	 	 
	 

	 	 	 	 	 	of 3V SourceOne Ventures Fund, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	13888 Trinity Avenue	 	 
	 

	 	 	 	 	 	Saratoga, CA 95070	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	INVESTORS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	/s/ Wes Sterman	 	 
	 	 	 	 	 
	 	 	Wes Sterman	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	2121 Sacramento Street, #604	 	 
	 

	 	 	 	 	 	San Francisco, CA 94109	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	INVESTORS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CHARTER VENTURES L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ A. Barr Dolan	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: A. Barr Dolan	 	 
	 	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	 	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	INVESTORS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	EVENTYR INVESTMENTS, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Roe H. Hatlen	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Roe H. Hatlen	 	 
	 	 	 	 	Title: General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	 	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 
	 	 	INVESTORS:
	 
	 	 	 	 	 	 
	 	 	VENTURI I, LLC
	 
	 	 	 	 	 	 
	 	 	By:	/s/ Mark B. Knudson
	 	 	 	 
	 	 	 	Name: Mark B. Knudson
	 	 	 	Title:   Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	Address:	 	 	   2800
Patton Road
   St.
Paul, MN 55113

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	INVESTORS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	/s/ Mark B. Knudson	 	 
	 	 	 	 	 
	 	 	Mark B. Knudson	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	 	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 
	 	 	INVESTORS:
	 
	 	 	 	 	 	 
	 	 	/s/ Linda Johnson
	 	 	 
	 	 	Linda Johnson
	 
	 	 	 	 	 	 
	 	 	Address: 11 Brunswick Lane
	 

	 	 	 	 	 	      Lincolnshire, IL 60069

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	INVESTORS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	/s/ Timothy I. Maudlin	 	 
	 	 	 	 	 
	 	 	Timothy I. Maudlin	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address: 8833 Hidden Oaks Drive
	 	 
	 	 	 	 	          Eden Prairie, MN 55344	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	INVESTORS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	/s/ Robert S. Nickoloff	 	 
	 	 	 	 	 
	 	 	Robert S. Nickoloff	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	INVESTORS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	STATE STREET BANK AND TRUST COMPANY AS TRUSTEE	 	 
	 	 	FOR THE DUPONT PENSION TRUST	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Joette T. Levine	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Joette T. Levine	 	 
	 	 	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	 	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

	 	 	 	 	 	 	 	 	 
	 	 	INVESTORS:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	WILTON PRIVATE EQUITY FUND, LLC	 	 
	 	 	By:	 	Wilton Asset Management, L.L.C., its	 	 
	 	 	 	 	Manager	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Carmen J. Gigliotti	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Carmen J. Gigliotti	 	 
	 	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Carmen Gigliotti	 	 
	 	 	 	 	DuPont Capital Management	 	 
	 	 	 	 	Delaware Corporate Center	 	 
	 	 	 	 	One Righter Parkway, Suite 3200	 	 
	 	 	 	 	Wilmington, DE 19803	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Please send copy of all notices to:	 	 
	 	 	 	 	Joseph Lyons	 	 
	 	 	 	 	State Street Global Advisors	 	 
	 	 	 	 	State Street Financial Center	 	 
	 	 	 	 	One Lincoln Street	 	 
	 	 	 	 	Boston, MA 02111-2900	 	 

SIGNATURE PAGE TO RESTORE MEDICAL, INC.

INVESTORS’ RIGHTS AGREEMENT

 

 

SCHEDULE A

Bessemer Venture Partners VI L.P.

Christopher Gabrieli

TH Lee, Putnam Investment Trust — TH Lee, Putnam Emerging Opportunities Portfolio

MPM BioVentures II, L.P.

MPM BioVentures II-QP, L.P.

MPM BioVentures GmbH & Co. Parallel-Beteiligungs KG

MPM Asset Management Investors 2000 B LLC

Venturi I, LLC

General Electric Pension Trust

NGEN Enabling Technologies Fund, L.P.

3V SourceOne Ventures Fund Limited

3V SourceOne Ventures Fund, L.P.

Wes Sterman

Charter Ventures L.P.

Eventyr Investments, L.P.

Mark B. Knudson

Timothy I. Maudlin

Robert S. Nickoloff

Linda Johnson

S-A-1

 

SCHEDULE B

Susan L. Critzer

Robert Campbell

Mark B. Knudson

Timothy R. Conrad

Edward W. Numainville

S-B-1

 

EXHIBIT A

INDEMNIFICATION AGREEMENT

     THIS
AGREEMENT (the “Agreement”) is made and entered into as of _________, 200___ between
Restore Medical Inc., a Minnesota corporation (the “Company”), and ____________(“Director”).

     WITNESSETH THAT:

     WHEREAS, Director performs a valuable service for the Company;

     WHEREAS, the Board of Directors of the Company has adopted Bylaws (the “Bylaws”) providing for
the indemnification of the officers and directors of the Company to the maximum extent authorized
by Section 145 of the Delaware General Corporation Law, as amended (“Law”);

     WHEREAS, the Bylaws and the Law, by their nonexclusive nature, permit contracts between the
Company and the officers or directors of the Company with respect to indemnification of such
officers or directors;

     WHEREAS, in accordance with the authorization as provided by the Law, the Company may purchase
and maintain a policy or policies of directors’ and officers’ liability insurance (“D & 0
Insurance”), covering certain liabilities which may be incurred by its officers or directors in the
performance of their obligations to the Company; and

     WHEREAS, in order to induce Director to continue to serve as a director of the Company, the
Company has determined and agreed to enter into this contract with Director with the explicit
acknowledgement of the intended third party beneficiaries set forth in Section 1 hereof.

     NOW, THEREFORE, in consideration of Director’s service as a director after the date hereof,
the parties hereto agree as follows:

     1. Indemnity of Indemnitee. The Company hereby agrees to hold harmless and indemnify
Director and each venture capital entity of which Director is a partner, member, officer or
director and each of the respective directors, officers, partners, members, stockholders,
employees, agents and spouses, as applicable, of each such entity (each, including, without
limitation, the Director, an “Indemnitee”) to the full extent authorized or permitted by the
provisions of the Law, as such may be amended from time to time, and the Bylaws (or other
applicable charter documents of the Company), as such may be amended. In furtherance of the
foregoing indemnification, and without limiting the generality thereof:

     (a) Proceedings Other Than Proceedings by or in the Right of the Company.
Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(a)
if, by reason of Director’s Corporate Status (as hereinafter defined), he is, or is
threatened

A-1

 

to be made, a party to or participant in any Proceeding (as hereinafter defined) other
than a Proceeding by or in the right of the Company. Pursuant to this Section 1(a),
Indemnitee shall be indemnified against all Expenses (as hereinafter defined), judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred by him or
on his behalf in connection with such Proceeding or any claim, issue or matter therein, if
the Director acted in good faith and in a manner Director reasonably believed to be in or
not opposed to the best interests of the Company and, with respect to any criminal
Proceeding, the Director had no reasonable cause to believe his conduct was unlawful.

     (b) Proceedings by or in the Right of the Company. Indemnitee shall be
entitled to the rights of indemnification provided in this Section 1(b) if, by reason of
Director’s Corporate Status, he is, or is threatened to be made, a party to or participant
in any Proceeding brought by or in the right of the Company. Pursuant to this Section 1(b),
Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by him
or on his behalf in connection with such Proceeding if the Director acted in good faith and
in a manner the Director reasonably believed to be in or not opposed to the best interests
of the Company; provided, however, that, if applicable law so provides, no indemnification
against such Expenses shall be made in respect of any claim, issue or matter in such
Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company
unless and to the extent that the Court of Chancery of the State of Delaware shall determine
that such indemnification may be made.

     (c) Indemnification for Expenses of a Party Who is Wholly or Partly Successful.
Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by
reason of Director’s Corporate Status, a party to and is successful, on the merits or
otherwise, in any Proceeding, he shall be indemnified to the maximum extent permitted by law
against all Expenses actually and reasonably incurred by him or on his behalf in connection
therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on
the merits or otherwise, as to one or more but less than all claims, issues or matters in
such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and
reasonably incurred by him or on his behalf in connection with each successfully resolved
claim, issue or matter. For purposes of this Section and without limitation, the
termination of any claim, issue or matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

     2. Additional Indemnity. In addition to, and without regard to any limitations on,
the indemnification provided for in Section 1, the Company shall and hereby does indemnify and hold
harmless Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by him or on his behalf if, by reason of Director’s
Corporate Status, he is, or is threatened to be made, a party to or participant in any Proceeding
(including a Proceeding by or in the right of the Company), including, without limitation, all
liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The only
limitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that
the Company shall not be obligated to make any payment to Indemnitee that is finally determined
(under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be
unlawful under Delaware law.

A-2

 

     3. Contribution in the Event of Joint Liability.

     (a) Whether or not the indemnification provided in Sections 1 and 2 hereof is
available, in respect of any threatened, pending or completed action, suit or proceeding in
which Company is jointly liable with Indemnitee (or would be if joined in such action, suit
or proceeding), Company shall pay, in the first instance, the entire amount of any judgment
or settlement of such action, suit or proceeding without requiring Indemnitee to contribute
to such payment and Company hereby waives and relinquishes any right of contribution it may
have against Indemnitee. Company shall not enter into any settlement of any action, suit or
proceeding in which Company is jointly liable with Indemnitee (or would be if joined in such
action, suit or proceeding) unless such settlement provides for a full and final release of
all claims asserted against Indemnitee.

     (b) Without diminishing or impairing the obligations of the Company set forth in the
preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all
or any portion of any judgment or settlement in any threatened, pending or completed action,
suit or proceeding in which Company is jointly liable with Indenmitee (or would be if joined
in such action, suit or proceeding), Company shall contribute to the amount of expenses
(including attorneys’ fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits
received by the Company and all officers, directors or employees of the Company other than
the Director who are jointly liable with Indemnitee (or would be if joined in such action,
suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the
transaction from which such action, suit or proceeding arose; provided, however, that the
proportion determined on the basis of relative benefit may, to the extent necessary to
conform to law, be further adjusted by reference to the relative fault of Company and all
officers, directors or employees of the Company other than the Director who are jointly
liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the
one hand, and Indemnitee, on the other hand, in connection with the events that resulted in
such expenses, judgments, fines or settlement amounts, as well as any other equitable
considerations which the law may require to be considered.

     (c) Company hereby agrees to fully indemnify and hold Indemnitee harmless from any
claims of contribution which may be brought by officers, directors or employees of the
Company other than the Director who may be jointly liable with Indemnitee.

     4. Indemnification for Expenses of a Witness. Notwithstanding any other provision of
this Agreement, to the extent that Indemnitee is, by reason of Director’s Corporate Status, a
witness in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all
Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

     5. Advancement of Expenses. Notwithstanding any other provision of this Agreement,
the Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding by reason of Director’s Corporate Status within ten (10) days after the receipt by
the Company of a statement or statements from Indemnitee requesting such

A-3

 

advance or advances from time to time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of
Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is
not entitled to be indemnified against such Expenses. Any advances and undertakings to repay
pursuant to this Section 5 shall be unsecured and interest free. Notwithstanding the foregoing,
the obligation of the Company to advance Expenses pursuant to this Section 5 shall be subject to
the condition that, if, when and to the extent that the Company determines that Indemnitee would
not be permitted to be indemnified under applicable law, the Company shall be entitled to be
reimbursed, within thirty (30) days of such determination, by Indemnitee (who hereby agrees to
reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee
has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to
secure a determination that Indemnitee should be indemnified under applicable law, any
determination made by the Company that Indemnitee would not be permitted to be indemnified under
applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company
for any advance of Expenses until a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or lapsed).

     6. Procedures and Presumptions for Determination of Entitlement to Indemnification.
It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as
favorable as may be permitted under the law and public policy of the State of Delaware.
Accordingly, the parties agree that the following procedures and presumptions shall apply in the
event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:

     (a) To obtain indemnification (including, but not limited to, the advancement of
Expenses and contribution by the Company) under this Agreement, Indemnitee shall submit to
the Company a written request, including therein or therewith such documentation and
information as is reasonably available to Indemnitee and is reasonably necessary to
determine whether and to what extent Indemnitee is entitled to indemnification. The
Secretary of the Company shall, promptly upon receipt of such a request for indemnification,
advise the Board of Directors in writing that Indemnitee has requested indemnification.

     (b) Upon written request by Indemnitee for indemnification pursuant to the first
sentence of Section 6(a) hereof, a determination, if required by applicable law, with
respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the
following three methods, which shall be at the election of Indemnitee: (1) by a majority
vote of the disinterested directors, even though less than a quorum, or (2) by independent
legal counsel in a written opinion, or (3) by the stockholders.

     (c) If the determination of entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 6(b) hereof, the Independent Counsel shall be selected as
provided in this Section 6(c). The Independent Counsel shall be selected by Indemnitee
(unless Indemnitee shall request that such selection be made by the Board of Directors).
Indemnitee or the Company, as the case may be, may, within ten (10) days

A-4

 

after such written notice of selection shall have been given, deliver to the Company or
to Indemnitee, as the case may be, a written objection to such selection; provided, however,
that such objection may be asserted only on the ground that the Independent Counsel so
selected does not meet the requirements of “Independent Counsel” as defined in Section 13 of
this Agreement, and the objection shall set forth with particularity the factual basis of
such assertion. Absent a proper and timely objection, the person so selected shall act as
Independent Counsel. If a written objection is made and substantiated, the Independent
Counsel selected may not serve as Independent Counsel unless and until such objection is
withdrawn or a court has determined that such objection is without merit. If, within twenty
(20) days after submission by Indemnitee of a written request for indemnification pursuant
to Section 6(a) hereof, no Independent Counsel shall have been selected and not objected to,
either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware
or other court of competent jurisdiction for resolution of any objection which shall have
been made by the Company or Indemnitee to the other’s selection of Independent Counsel
and/or for the appointment as Independent Counsel of a person selected by the court or by
such other person as the court shall designate, and the person with respect to whom all
objections are so resolved or the person so appointed shall act as Independent Counsel under
Section 6(b) hereof. The Company shall pay any and all reasonable fees and expenses of
Independent Counsel incurred by such Independent Counsel in connection with acting pursuant
to Section 6(b) hereof, and the Company shall pay all reasonable fees and expenses incident
to the procedures of this Section 6(c), regardless of the manner in which such Independent
Counsel was selected or appointed.

     (d) In making a determination with respect to entitlement to indemnification hereunder,
the person or persons or entity making such determination shall presume that Indemnitee is
entitled to indemnification under this Agreement if Indemnitee has submitted a request for
indemnification in accordance with Section 6(a) of this Agreement. Anyone seeking to
overcome this presumption shall have the burden of proof and the burden of persuasion, by
clear and convincing evidence.

     (e) Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is
based on the records or books of account of the Enterprise, including financial statements,
or on information supplied to an Indemnitee by the officers of the Enterprise in the course
of their duties, or on the advice of legal counsel for the Enterprise or on information or
records given or reports made to the Enterprise by an independent certified public
accountant or by an appraiser or other expert selected with reasonable care by the
Enterprise. In addition, the knowledge and/or actions, or failure to act, of any director,
officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes
of determining the right to indemnification under this Agreement. Whether or not the
foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed
that Indemnitee has at all times acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Company. Anyone seeking to overcome
this presumption shall have the burden of proof and the burden of persuasion, by clear and
convincing evidence.

A-5

 

     (f) If the person, persons or entity empowered or selected under Section 6 to determine
whether Indemnitee is entitled to indemnification shall not have made a determination within
thirty (30) days after receipt by the Company of the request therefor, the requisite
determination of entitlement to indemnification shall be deemed to have been made and
Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to make
Indemnitee’s statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under applicable law;
provided, however, that such thirty (30) day period may be extended for a reasonable time,
not to exceed an additional fifteen (15) days, if the person, persons or entity making the
determination with respect to entitlement to indemnification in good faith requires such
additional time for the obtaining or evaluating documentation and/or information relating
thereto; and provided, further, that the foregoing provisions of this Section 6(g) shall not
apply if the determination of entitlement to indemnification is to be made by the
stockholders pursuant to Section 6(b) of this Agreement and if (A) within fifteen (15) days
after receipt by the Company of the request for such determination the Board of Directors or
the Disinterested Directors, if appropriate, resolve to submit such determination to the
stockholders for their consideration at an annual meeting thereof to be held within seventy
five (75) days after such receipt and such determination is made thereat, or (B) a special
meeting of stockholders is called within fifteen (15) days after such receipt for the
purpose of making such determination, such meeting is held for such purpose within sixty
(60) days after having been so called and such determination is made thereat.

     (g) Indemnitee shall cooperate with the person, persons or entity making such
determination with respect to Indemnitee’s entitlement to indemnification, including
providing to such person, persons or entity upon reasonable advance request any
documentation or information which is not privileged or otherwise protected from disclosure
and which is reasonably available to Indemnitee and reasonably necessary to such
determination. Any Independent Counsel, member of the Board of Directors, or stockholder of
the Company shall act reasonably and in good faith in making a determination under the
Agreement of the Indemnitee’s entitlement to indemnification. Any costs or expenses
(including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with
the person, persons or entity making such determination shall be borne by the Company
(irrespective of the determination as to Indemnitee’s entitlement to indemnification) and
the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

     (h) The Company acknowledges that a settlement or other disposition short of final
judgment may be successful if it permits a party to avoid expense, delay, distraction,
disruption and uncertainty. In the event that any action, claim or proceeding to which
Indemnitee is a party is resolved in any manner other than by adverse judgment against
Indemnitee (including, without limitation, settlement of such action, claim or proceeding
with or without payment of money or other consideration) it shall be presumed that
Indemnitee has been successful on the merits or otherwise in such action, suit or
proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and
the burden of persuasion, by clear and convincing evidence.

A-6

 

     7. Remedies of Indemnitee.

     (a) In the event that (i) a determination is made pursuant to Section 6 of this
Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii)
advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no
determination of entitlement to indemnification shall have been made pursuant to Section
6(b) of this Agreement within ninety (90) days after receipt by the Company of the request
for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement
within ten (10) days after receipt by the Company of a written request therefor, or (v)
payment of indemnification is not made within ten (10) days after a determination has been
made that Indemnitee is entitled to indemnification or such determination is deemed to have
been made pursuant to Section 6 of this Agreement, Indemnitee shall be entitled to an
adjudication in an appropriate court of the State of Delaware, or in any other court of
competent jurisdiction, of his entitlement to such indemnification. Indemnitee shall
commence such proceeding seeking an adjudication within one hundred eighty (180) days
following the date on which Indemnitee first has the right to commence such proceeding
pursuant to this Section 7(a). The Company shall not oppose Indemnitee’s right to seek any
such adjudication.

     (b) In the event that a determination shall have been made pursuant to Section 6(b) of
this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding
commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial,
on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination
under Section 6(b).

     (c) If a determination shall have been made pursuant to Section 6(b) of this Agreement
that Indemnitee is entitled to indemnification, the Company shall be bound by such
determination in any judicial proceeding commenced pursuant to this Section 7, absent a
prohibition of such indemnification under applicable law.

     (d) In the event that Indemnitee, pursuant to this Section 7, seeks a judicial
adjudication of his rights under, or to recover damages for breach of, this Agreement, or to
recover under any directors’ and officers’ liability insurance policies maintained by the
Company the Company shall pay on his behalf, in advance, any and all expenses (of the types
described in the definition of Expenses in Section 13 of this Agreement) actually and
reasonably incurred by him in such judicial adjudication, regardless of whether Indemnitee
ultimately is determined to be entitled to such indemnification, advancement of expenses or
insurance recovery.

     (e) The Company shall be precluded from asserting in any judicial proceeding commenced
pursuant to this Section 7 that the procedures and presumptions of this Agreement are not
valid, binding and enforceable and shall stipulate in any such court that the Company is
bound by all the provisions of this Agreement.

A-7

 

     8. Non-Exclusivity; Survival of Rights; Insurance; Subrogation.

     (a) The rights of indemnification as provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnitee may at any time be entitled under
applicable law, the certificate of incorporation of the Company, the Bylaws, any agreement,
a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration
or repeal of this Agreement or of any provision hereof shall limit or restrict any right of
Indemnitee under this Agreement in respect of any action taken or omitted by the Director in
Director’s Corporate Status prior to such amendment, alteration or repeal. To the extent
that a change in the Law, whether by statute or judicial decision, permits greater
indemnification than would be afforded currently under the Bylaws and this Agreement, it is
the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change. No right or remedy herein conferred is intended to be
exclusive of any other right or remedy, and every other right and remedy shall be cumulative
and in addition to every other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any
other right or remedy.

     (b) To the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, employees, or agents or fiduciaries of the
Company (or related persons thereof) or of any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise which such person serves at the
request of the Company, Indemnitee shall be covered by such policy or policies in accordance
with its or their terms to the maximum extent of the coverage available for any such
director, officer, employee or agent (or related person thereof) under such policy or
policies.

     (c) In the event of any payment under this Agreement, the Company shall be subrogated
to the extent of such payment to all of the rights of recovery of Indemnitee, who shall
execute all papers required and take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the Company to bring suit to enforce
such rights.

     (d) The Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise
actually received such payment under any insurance policy, contract, agreement or otherwise.

     9. Exception to Right of Indemnification. Notwithstanding any other provision of this
Agreement, Indemnitee shall not be entitled to indemnification under this Agreement with respect to
any Proceeding brought by Indemnitee, or any claim therein, unless (a) the bringing of such
Proceeding or making of such claim shall have been approved by the Board of Directors of the
Company or (b) such Proceeding is being brought by the Indemnitee to assert, interpret or enforce
his rights under this Agreement.

A-8

 

     10. Duration of Agreement. All agreements and obligations of the Company contained
herein shall continue during the period Director is an officer or director of the Company (or is or
was serving at the request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter
so long as Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section
7 hereof) by reason of Director’s Corporate Status, whether or not Director is acting or serving in
any such capacity at the time any liability or expense is incurred for which indemnification can be
provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of
the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal
representatives. This Agreement shall continue in effect regardless of whether Director continues
to serve as an officer or director of the Company or any other Enterprise at the Company’s request.

     11. Security. To the extent requested by the Indemnitee and approved by the Board of
Directors of the Company, the Company may at any time and from time to time provide security to the
Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit,
funded trust or other collateral. Any such security, once provided to the Indemnitee, may not be
revoked or released without the prior written consent of the Indemnitee.

     12. Enforcement.

     (a) The Company expressly confirms and agrees that it has entered into this Agreement
and assumed the obligations imposed on it hereby in order to induce Director to serve as an
officer or director of the Company, and the Company acknowledges that Director is relying
upon this Agreement in serving as an officer or director of the Company.

     (b) This Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and understandings,
oral, written and implied, between the parties hereto with respect to the subject matter
hereof.

     13. Definitions. For purposes of this Agreement:

     (a) “Corporate Status” describes the status of a person who is or was a director,
officer, employee or agent or fiduciary of the Company or of any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise which such
person is or was serving at the express written request of the Company.

     (b) “Disinterested Director” means a director of the Company who is not and was not a
party to the Proceeding in respect of which indemnification is sought by Indemnitee.

     (c) “Enterprise” shall mean the Company and any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise of which

A-9

 

Director is or was serving at the express written request of the Company as a director,
officer, employee, agent or fiduciary.

     (d) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery service fees, and all other
disbursements or expenses of the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, participating, or being or
preparing to be a witness in a Proceeding.

     (e) “Independent Counsel” means a law firm, or a member of a law firm, that is
experienced in matters of corporation law and neither presently is, nor in the past five
years has been, retained to represent: (i) the Company or Indemnitee in any matter material
to either such party (other than with respect to matters concerning the Indemnitee under
this Agreement, or of other indemnitees under similar indemnification agreements), or (ii)
any other party to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person
who, under the applicable standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Company or Indemnitee in an action to
determine Indemnitee’s rights under this Agreement. The Company agrees to pay the
reasonable fees of the Independent Counsel referred to above and to fully indemnify such
counsel against any and all Expenses, claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto.

     (f) “Proceeding” includes any threatened, pending or completed action, suit,
arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative
hearing or any other actual, threatened or completed proceeding, whether brought by or in
the right of the Company or otherwise and whether civil, criminal, administrative or
investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by
reason of the fact that Director is or was a director of the Company, by reason of any
action taken by Director or of any inaction on Director’s part while acting as an officer or
director of the Company, or by reason of the -fact that Director is or was serving at the
request of the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other Enterprise; in each case whether or not Director
is acting or serving in any such capacity at the time any liability or expense is incurred
for which indemnification can be provided under this Agreement; including one pending on or
before the date of this Agreement; and excluding one initiated by an Indemnitee pursuant to
Section 7 of this Agreement to enforce his rights under this Agreement.

     14. Severability. If any provision or provisions of this Agreement shall be held by a
court of competent jurisdiction to be invalid, void, illegal or otherwise unenforceable for any
reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of
this Agreement (including without limitation, each portion of any section of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall
remain enforceable to the fullest extent permitted by law; and (b) to the fullest extent possible,

A-10

 

the provisions of this Agreement (including, without limitation, each portion of any section
of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that
is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the
intent manifested thereby.

     15. Modification and Waiver. No supplement, modification, termination or amendment of
this Agreement shall be binding unless executed in writing by both of the parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.

     16. Notice By Indemnitee. Indemnitee agrees promptly to notify the Company in writing
upon being served with any summons, citation, subpoena, complaint, indictment, information or other
document relating to any Proceeding or matter which may be subject to indemnification covered
hereunder. The failure to so notify the Company shall not relieve the Company of any obligation
which it may have to the Indemnitee under this Agreement or otherwise unless and only to the extent
that such failure or delay materially prejudices the Company.

     17. Notices. All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted
for by the party to whom said notice or other communication shall have been directed, or (ii)
mailed by certified or registered mail with postage prepaid, on the third business day after the
date on which it is so mailed:

     (a) If to Indemnitee, to the address set forth below Director’s signature hereto.

     (b) If to the Company, to:

Restore Medical, Inc.

2800 Patton Road

St. Paul, MN 55113

or to such other address as may have been furnished to Indemnitee by the Company or to the Company
by Indemnitee, as the case may be.

     18. Identical Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original but all of which
together shall constitute one and the same Agreement. Only one such counterpart signed by the
party against whom enforceability is sought needs to be produced to evidence the existence of this
Agreement.

     19. Headings. The headings of the paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or to affect the
construction thereof.

A-11

 

     20. Governing Law. The parties agree that this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware without application of
the conflict of laws principles thereof.

     21. Gender. Use of the masculine pronoun shall be deemed to include usage of the
feminine and gender-neutral pronoun where appropriate.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and
year first above written.

	 	 	 	 	 	 	 
	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	RESTORE MEDICAL INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	DIRECTOR:	 	 
	 
	 	 	 	 	 	 
	 	 	 
Name:	 	 
	 
	 	 	 	 	 	 
	 	 	Address:	 	 
	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 

A-12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00099-of-00352.parquet"}]]