Document:

Exhibit 10.29

 

RESTRICTED UNIT AGREEMENT

 

This Restricted Unit
Agreement (this “Agreement”) is made as of the       
day of                 ,
200   (the “Effective Date”) between New Refco Group Ltd.,
LLC, a Delaware limited liability company (the “Company”), and the
undersigned employee (the “Employee”). 
Certain capitalized terms used herein are defined in Section 7
hereof.

 

WHEREAS, the Company
believes it to be in the best interests of the Company and its unitholders to
take action to promote work-force stability, to reward performance and
otherwise align interests of key management employees with those of the
Company;

 

WHEREAS, accordingly the
Company has determined to issue restricted units in accordance with the
provisions of this Agreement; and

 

WHEREAS, the Company desires
to be assured that the confidential information and goodwill of the Company
will be preserved for the exclusive benefit of the Company.

 

NOW, THEREFORE, in
consideration of the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

 

1.                                       Issuance of Employee Units.

 

(a)                                  Upon execution of this Agreement, the
Company will issue to the Employee that number of Class B Common Units of the
Company (the “Class B Common Units”) set forth below such Employee’s
name on the signature page attached hereto. 
All of such Class B Common Units issued to the Employee hereby are
referred to herein as “Employee Units.” 
To secure the Company’s rights under the Repurchase Option in Section 3,
the Company will retain possession of the certificates representing the
Employee Units and will provide the Employee with copies thereof.

 

(b)                                 If the Employee is a U.S. taxpayer, the
Employee will make an effective election with the Internal Revenue Service (the
“IRS”) under Section 83(b) of the Code and the regulations
promulgated thereunder in the form of Exhibit A attached hereto.  The Employee understands that under
applicable law such election must be filed with the IRS no later than thirty
(30) days after the date hereof to be effective.  Pursuant to such election, the fair market
value of the Employee Units covered by such election shall be treated as ordinary
income received by the Employee.

 

(c)                                  In connection with the acquisition of the
Employee Units hereunder, the Employee represents and warrants to the Company
that:

 

(i)                                     the Employee Units to be acquired by the
Employee pursuant to this Agreement will be acquired for the Employee’s own
account, for investment only and not with a view to, or intention of,
distribution thereof in violation of the

 

 

Securities Act, or any applicable state securities
laws, and the Employee Units will not be disposed of in contravention of the
Securities Act or any applicable state securities laws or this Agreement or the
Securityholders’ Agreement;

 

(ii)                                  the Employee has such knowledge and
experience in business and financial matters and with respect to investments in
securities of privately held companies so as to enable the Employee to
understand and evaluate the risks and benefits of his or her investment in the
Employee Units;

 

(iii)                               the Employee has no need for liquidity in
his or her investment in the Employee Units and is able to bear the economic
risk of his or her investment in the Employee Units for an indefinite period of
time and understands that the Employee Units have not been registered or
qualified under the Securities Act or any applicable state securities laws, by
reason of the issuance of the Employee Units in a transaction exempt from the
registration and qualification requirements of the Securities Act or such state
securities laws and, therefore, cannot be sold unless subsequently registered
or qualified under the Securities Act or such state securities laws or an
exemption from such registration or qualification is available;

 

(iv)                              the Employee acknowledges that he or she
is aware that the Employee Units may not be sold pursuant to Rule 144
promulgated under the Securities Act unless all of the conditions of that Rule
are met.  Among the current conditions
for use of Rule 144 by certain holders is the availability to the public of
current information about the Company. 
Such information is not now available, and the Company has no current
plans to make such information available; and

 

(v)                                 the Employee has had an opportunity to
ask questions and receive answers concerning the terms and conditions of the
offering of the Employee Units and has had full access to or been provided with
such other information concerning the Company as the Employee has requested.

 

(d)                                 This Agreement constitutes the legal,
valid and binding obligation of the Employee, enforceable in accordance with
its terms, and the execution, delivery and performance of this Agreement by the
Employee does not and will not conflict with, violate or cause a breach of any
agreement, contract or instrument to which the Employee is a party or any
judgment, order or decree to which the Employee is subject.

 

(e)                                  As an inducement to the Company to issue
the Employee Units to the Employee and as a condition thereto, the Employee
acknowledges and agrees that:

 

(i)                                     neither the issuance of the Employee
Units to the Employee nor any provision contained herein shall entitle the
Employee to remain in the employment of the Company or its subsidiaries or
affect the right of the Company to terminate the Employee’s employment at any
time for any reason; and

 

2

 

(ii)                                  except as provided in any other agreement
between the Company or any subsidiary thereof and the Employee, the Company
shall have no duty or obligation to disclose to the Employee, and the Employee
shall have no right to be advised of, any material information regarding the
Company and its subsidiaries, if any, at any time prior to, upon or in
connection with the forfeiture of the Employee Units upon the termination of
the Employee’s employment with the Company or a subsidiary thereof.

 

(f)                                    In connection with the issuance
and sale by the Company to the Employee of the Employee Units, the Company
represents and warrants that:

 

(i)                                     the Company is a
limited liability company validly existing under the laws of the jurisdiction
of its incorporation and has all requisite limited liability company power and
authority to own, lease and operate the assets used in its business, to carry
on its business as presently conducted, to enter into this Agreement, to
perform its obligations hereunder, and to consummate the transactions
contemplated hereby;

 

(ii)                                  the Company has
taken all limited liability company action necessary to authorize its execution
and delivery of this Agreement, its performance of its obligations thereunder,
and its consummation of the transactions contemplated thereby; and

 

(iii)                               this Agreement
constitutes a valid and binding obligation of the Company, enforceable in
accordance with its terms.

 

2.                                       Vesting of Employee Units.

 

(a)                                  General.

 

(i)                                     Vesting. 
The Employee Units granted hereunder (the “Units”) will be deemed
“vested” (the “Vested Units”) in accordance with this Section 2.  One half of the Units (the “Non
Performance-Based Units”) will vest 25% on each of February 28, 2005, February 28,
2006, February 28, 2007 and February 29, 2008, subject to the
provisions of Section 2(b). 
The other half of the Units (the “Performance Units”) will vest
based upon the Company’s achievement of the EBITDA targets set forth below for
each of the Company’s fiscal years ending February 28, 2005, February 28,
2006, February 28, 2007 and February 29, 2008 (each, a “Measurement
Year”).  The vesting for the
Performance Units will be based on the following schedule:

 

3

 

EBITDA Targets

(dollars in millions)

 

	
  Measurement

  Year

  	
   

  	
  Target

  EBITDA

  	
   

  	
  Cumulative

  Target

  EBITDA

  	
   

  	
  90% of

  Target

  EBITDA

  	
   

  	
  90% of

  Cumulative

  Target

  EBITDA

  	
   

  	
  Eligible

  Performance

  Units

  	
   

  
	
  2005

  	
   

  	
  $

  	
  294.7

  	
   

  	
  $

  	
  294.7

  	
   

  	
  $

  	
  265.2

  	
   

  	
  $

  	
  265.2

  	
   

  	
  25% of Performance Units

  	
   

  
	
  2006

  	
   

  	
  $

  	
  348.9

  	
   

  	
  $

  	
  643.6

  	
   

  	
  $

  	
  314.01

  	
   

  	
  $

  	
  579.2

  	
   

  	
  25% of Performance Units

  	
   

  
	
  2007

  	
   

  	
  $

  	
  403.9

  	
   

  	
  $

  	
  1,047.5

  	
   

  	
  $

  	
  363.51

  	
   

  	
  $

  	
  942.75

  	
   

  	
  25% of Performance Units

  	
   

  
	
  2008

  	
   

  	
  $

  	
  464.6

  	
   

  	
  $

  	
  1,512.1

  	
   

  	
  $

  	
  418.14

  	
   

  	
  $

  	
  1,360.89

  	
   

  	
  25% of Performance Units

  	
   

  

 

The minimum EBITDA targets
set forth above shall be appropriately adjusted by the Company’s Board of
Managers for acquisitions and dispositions made by the Company (whether by
purchase or sale of assets, merger or otherwise) and such adjustments shall
take into account the pro forma annual EBITDA of any acquired business.

 

(A)                              Performance Based Vesting. 
Following the end of each Measurement Year, on the Measurement Date, the
number of Performance Units set forth above that are identified above as first
being eligible to vest for that Measurement Year (the “Eligible Performance
Units”) shall be eligible to vest. 
On each Measurement Date, 50% of the Eligible Performance Units with
respect to the prior Measurement Year shall become Vested Units if at least 90%
of the annual EBITDA target amount was met for the prior Measurement Year.  If more than 90% of the annual EBITDA target
amount was met for the prior Measurement Year, then the Eligible Performance
Units with respect to the prior Measurement Year shall become Vested Units on a
straight line basis such that an additional 5% of Eligible Performance Units
shall become Vested Units for each 1% that actual EBITDA exceeds 90% of the
annual EBITDA target amount.

 

(B)                                Catch Up.  On the fourth
Measurement Date, in addition to the vesting provided in subsection (A)
above, the Eligible Performance Units for all prior Measurement Years that have
not previously vested due to the Company’s failure to meet any annual EBITDA
target as of such

 

4

 

date (collectively, the “Missed Performance Units”)
shall be eligible for “catch-up” vesting. 
Such “catch-up” vesting shall occur if the cumulative EBITDA target set
forth above in the column for Measurement Year 2008 (which represents the
cumulative EBITDA target for Measurement Years 2005 through 2008) is met; provided,
that (a) at least 90% of the annual EBITDA target for Measurement Year 2008 is
met and (b) the actual EBITDA for Measurement Year 2008 exceeds the actual
EBITDA for Measurement Year 2007 (collectively, the “Catch-Up Targets”).  If 90% of the cumulative EBITDA target for
Measurement Years 2005 through 2008 is met, then 50% of the Missed Performance
Units shall become Vested Units.  If over
90% of the cumulative EBITDA target for Measurement Years 2005 through 2008 is
met, then a number of Missed Performance Units will become Vested Units, determined
on a straight line basis such that an additional 5% of the Missed Performance
Units will become Vested Units for each 1% that actual cumulative EBITDA
exceeds 90% of the cumulative EBITDA target for Measurement Years 2005 through
2008.

 

(ii)                                  Change of
Control.  All Non Performance-Based Units that have not
previously vested will vest in full upon a Change of Control.  Performance Units that have not become Vested
Units will accelerate as set forth below upon a Change of Control solely if the
Company (a) achieves at least 90% of the EBITDA target for the Measurement Year
immediately preceding the year in which the Change of Control occurs, and (b)
the actual EBITDA for the Measurement Year immediately preceding the year in
which the Change of Control occurs exceeded the actual EBITDA for the preceding
year.  If (x) the conditions set forth in
clauses (a) and (b) above are met, and (y) the Company achieved 90% of the
cumulative EBITDA target for the Measurement Year completed immediately prior
to the Change of Control, then 50% of the Missed Performance Units and 50% of
the Performance Units that are not Eligible Performance Units shall become
Vested Units.  If (x) the conditions set
forth in clauses (a) and (b) above are met, and (y) the Company achieved more
than 90% of the cumulative EBITDA target for such immediately prior Measurement
Year, then a number of Missed Performance Units and Performance Units that are
not Eligible Performance Units will become Vested Units, determined on a
straight line basis such that an additional 5% of the Missed Performance Units
and 5% of the Performance Units that are not Eligible Performance Units will
become Vested Units for each 1% that actual cumulative EBITDA for such
immediately prior Measurement Year exceeds 90% of the cumulative EBITDA target
for such immediately prior Measurement Year.

 

(b)                                 In the event the Employee ceases to be
employed by the Company or any of its subsidiaries on a full-time basis for any
reason, then (i) all Employee Units shall cease vesting effective as of the
date upon which the Employee ceases to be so employed (the “Termination Date”),
(ii) a fraction of the Non Performance-Based Units that otherwise would become
Vested Units at the end of the Measurement Year in which such

 

5

 

termination occurs will
become Vested Units, the numerator of which fraction shall equal the number of
whole months during such year (or, in the case of such termination prior to February 28,
2005, the number of whole months since August 5, 2004) that the Employee
remained employed by the Company and the denominator of which shall be twelve
(12), and, (iii) in the event that the Company achieves the EBITDA target with
respect to the Measurement Year in which such termination occurs, then the
Eligible Performance Units with respect to such year multiplied by a fraction,
the numerator of which shall equal the number of whole months during such year
that the Employee remained employed with the Company and the denominator of
which is 12, shall become Vested Units as of the next Measurement Date.

 

(c)                                  Notwithstanding the vesting terms set
forth in clause (a) above, if the Employee remains employed on a full-time
basis with the Company or any of its subsidiaries from the Effective Date
through the eighth anniversary of the Effective Date, all Performance Units
that have not previously vested shall automatically and immediately vest on the
eighth anniversary of the Effective Date.

 

3.                                       Repurchase or Forfeiture of Units.

 

(a)                                  In the event that the Employee ceases to
be employed by the Company or any of its subsidiaries on a full-time basis for
any reason, then all Employee Units (whether held by the Employee or by one or
more of the Employee’s transferees) which as of the date of termination:

 

(i)                                     have not vested pursuant to Section 2
hereof, will be forfeited and returned to the Company;

 

(ii)                                  have vested pursuant to Section 2
hereof, will be subject to repurchase by the Company, at its option (the “Repurchase
Option”), for Fair Market Value.

 

(b)                                 In the event of a Change of Control, then
all Performance Units (whether held by the Employee or by one or more of the
Employee’s transferees) which, as of the date of such Change of Control, have
not become Vested Units pursuant to Section 2, will be forfeited
and returned to the Company.

 

(c)                                  The
Repurchase Option shall be exercised by the Company, or its designee, from time
to time, by delivering to the Employee a written notice of exercise and a check
in the amount of the Fair Market Value. 
Upon delivery of such notice and payment of the purchase price as
described above (or automatically upon any forfeiture of units pursuant to Section 3(a)
or 3(b)), the Company, or its designee, shall become the legal and
beneficial owner of the Employee Units being repurchased and all rights and
interest therein or related thereto, and the Company, or its designee, shall
have the right to transfer to its own name the number of Employee Units being
repurchased without further action by the Employee or any of his or her
transferees.  If the Company or its
designee elect to exercise the Repurchase Option pursuant to this Section 3
and the Employee or his or her transferee fails to deliver the Employee Units
in accordance with

 

6

 

the terms hereof, the Company, or its designee, may, at its option, in
addition to all other remedies it may have, deposit the purchase price in an
escrow account administered by an independent third party (to be held for the
benefit of and payment over to the Employee or his or her transferee in
accordance herewith), whereupon (or, in any case, upon any forfeiture of units
pursuant to this Section 3) the Company shall by written notice to
the Employee cancel on its books the certificates(s) representing such Employee
Units registered in the name of the Employee and all of the Employee’s or his
or her transferee’s right, title, and interest in and to such Employee Units
shall terminate in all respects.

 

(d)                                 Notwithstanding
the foregoing, if at any time the Company elects to repurchase any Class B
Common Units pursuant to the Repurchase Option, the Company shall pay the
purchase price for the Class B Common Units it purchases (i) first,
by offsetting indebtedness, if any, owing from such Employee to the Company and
(ii) then, by the Company’s delivery of cash for the remainder of the purchase
price, if any, against delivery of the certificates or other instruments
representing the Class B Common Units so purchased, duly endorsed; provided
that, (x) if any such cash payment at the time such payment is required
to be made would result (A) in a violation of any law, statute, rule,
regulation, policy, order, writ, injunction, decree or judgment promulgated or
entered by any federal, state, local or foreign court or governmental authority
applicable to the Company or any of its subsidiaries or any of its or their
property or (B) after giving effect thereto, in a Financing Default, or
(y) if the Board determines in good faith that immediately prior to such
purchase there shall exist a Financing Default which prohibits such purchase
((x) and (y) collectively the “Cash Deferral Conditions”), the portion
of the cash payment so affected may be made by the Company’s delivery of a
promissory note or senior preferred units of the Company with a liquidation
preference equal to the balance of the purchase price.  The promissory note or senior preferred units
shall accrue interest or yield, as the case may be, annually at the “prime rate”
published in The Wall Street Journal on the date of issuance, which interest or
yield, as the case may be, shall be payable at maturity.  The value of each such senior preferred unit
shall as of its issuance be deemed to equal (A) the portion of the cash
payment paid by the issuance of such preferred units divided by (B) the
number of senior preferred units so issued. 
Any senior preferred units or the promissory
note shall be redeemed or payable when and to the extent the Cash Deferral
Condition which prompted their issuance no longer exists.

 

(e)                                  In the event that Employee Units are
repurchased or forfeited pursuant to this Section 3, the Employee
and his or her successors, assigns or Representatives shall take (at the
Company’s expense) all steps necessary and desirable to obtain all required
third-party, governmental and regulatory consents and approvals and take all
other actions necessary and desirable to facilitate consummation of such
repurchase in a timely manner.

 

4.                                       Legend.

 

The certificates
representing the Employee Units will bear the following legend:

 

7

 

“THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO FORFEITURE, REPURCHASE RIGHTS AND CERTAIN
OTHER AGREEMENTS SET FORTH IN A RESTRICTED UNIT AGREEMENT DATED                 
    , 200  , BETWEEN THE COMPANY AND THE OTHER
SIGNATORY THERETO.  A COPY OF SUCH
AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY’S PRINCIPAL PLACE
OF BUSINESS WITHOUT CHARGE.

 

THE SALE, TRANSFER,
ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE AND THE RIGHTS OF THE HOLDER OF SUCH SECURITIES IN RESPECT OF THE
ELECTION OF DIRECTORS ARE SUBJECT TO A SECURITYHOLDERS’ AGREEMENT DATED AUGUST 5,
2004 AMONG THE COMPANY AND CERTAIN HOLDERS OF ITS EQUITY INTERESTS.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT
NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF THE COMPANY.

 

THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES OR BLUE SKY LAWS.  THESE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN EXEMPTION THEREFROM UNDER SAID ACT OR LAWS.”

 

5.                                       Restrictions on Transfer, Conversion and
Voting.

 

(a)                                  The Company and the Employee acknowledge
and agree that the Employee Units are subject to and restricted by the
Securityholders’ Agreement. 
Notwithstanding anything to the contrary contained in the
Securityholders’ Agreement, no Employee Units that have not become Vested Units
pursuant to Section 2 hereof may be transferred to any Person and
no Employee Units that are Vested Units may be transferred to any Person who is
not an Affiliate of the Employee.  The
Vested Units may be transferred by will or the laws of descent and
distribution.

 

(b)                                 Prior to any Transfer, the transferee
shall agree, by execution of a Joinder Agreement, to be bound by this Agreement
as holder of Employee Units and by the Securityholders’ Agreement.  Any Transfer or attempted Transfer of any
Employee Units in violation of the preceding sentence shall be void, and the
Company shall not record such Transfer on its books or treat any purported
transferee of such Employee Units as the owner of such units for any purpose.

 

(c)                                  The Employee agrees that so long as the Employee owns Employee Units
which have not become Vested Units pursuant to Section 2 hereof, the Employee shall be obligated to vote all of his, her or its
Employee Units which have not become Vested Units pursuant to Section 2 hereof in the same manner and proportions as the votes cast

 

8

 

by the holders of a majority of the Company’s voting
equity interests not subject to such repurchase rights.  If the Employee fails or refuses to vote his,
her or its Employee Units which have not become Vested Units pursuant to Section 2 hereof as required by, or votes his, her or its Employee Units which
have not become Vested Units pursuant to Section 2 hereof in contravention of this Section 5(c), then the Employee hereby grants to each of the President and Treasurer
of the Company, acting solely in his or her capacity as such, an irrevocable
proxy, coupled with an interest, to vote such units in accordance with Section 5(c).

 

6.                                       Restricted Activities.

 

(a)                                  The Employee acknowledges and agrees that
the Company is engaged in a highly competitive business and that the success of
the Company’s business in the marketplace depends upon its goodwill and
reputation for quality and dependability.

 

(b)                                 The Employee further acknowledges and
agrees that (i) reasonable limits may be placed on the Employee’s ability to
compete against the Company and its Affiliates as provided herein to the extent
that they protect and preserve the legitimate business interests and goodwill
of the Company and/or its Affiliates and (ii) such limits are (A) in
consideration for and as an inducement for, among other things, the receipt of
the units, (B) the result of arms-length negotiations between the parties, (C)
reasonable in scope and duration, and (D) necessary to protect the legitimate
business interests of the Company and its Affiliates.  In addition, the Employee acknowledges (1)
that the business of the Company and its Affiliates is international in scope
and without geographical limitation and (2) notwithstanding the state of
incorporation or formation or principal office or location of the Company or
any of its Affiliates, or any of their respective executives or employees
(including the Employee), it is expected that the Company will have business
activities and have valuable business relationships within its industry
throughout the United States and the world.

 

(c)                                  The Employee acknowledges that he has
carefully read this Agreement and has given careful consideration to the
restraints imposed upon by the Employee by this Agreement, and is in full
accord as to their necessity for the reasonable and proper protection of
Proprietary Information, whether now existing or to be developed in the
future.  The Employee expressly
acknowledges and agrees that each and every restraint imposed by this Agreement
is reasonable with respect to subject matter, time period and geographical
area.

 

(d)                                 Having acknowledged the foregoing, the
Employee covenants and agrees with the Company as follows:

 

6.1                                 Proprietary Information.

 

(a)                                   In the course of service to the Company, the
Employee will have access to confidential information regarding the
organization, business and finances of the Company and its Affiliates,
including products, services, designs,
methods, techniques, systems, specifications, know-how, strategic or technical

 

9

 

data, marketing research data, product
research and development data, sales techniques, confidential customer lists
and information, sources of supply and trade secrets, all of which are
confidential and may be proprietary and are owned or used by the Company, or
any of its Affiliates.  Such information
shall hereinafter be called “Proprietary Information” and shall include
any and all items enumerated in the preceding sentence and coming within the
scope of the business of the Company or any of its Affiliates as to which the
Employee may have access, whether conceived or developed by others or by the
Employee alone or with others during the period of service to the Company,
whether or not conceived or developed during regular working hours.  Proprietary Information shall not include any
records, data or information which are (i) in the public domain during or after
the Employee’s term of employment provided the same are not in the public
domain as a consequence of disclosure directly or indirectly by the Employee in
violation of this Agreement, (ii) required to be disclosed by law, or (iii)
reasonably required to be disclosed in defending any suit, proceeding or
investigation to which the Employee is a party.

 

(b)                                  The Employee agrees that Proprietary
Information is of critical importance to the Company and a violation of this Section 6.1(b)
would seriously and irreparably impair and damage the Company’s business.  The Employee agrees that he shall keep all
Proprietary Information in a fiduciary capacity for the sole benefit of the
Company.

 

(c)                                   The Employee shall not during the Employee’s
term of employment or at any time thereafter: 
(i) disclose, directly or indirectly, any Proprietary Information to any
person, other than any person who, in the reasonable judgment of the Employee,
needs to know such Proprietary Information or such other persons to whom the
Employee has been specifically instructed to make disclosure by the Board of
Managers and in all such cases only to the extent required in the course of the
Employee’s service to the Company; or (ii) use any Proprietary Information,
directly or indirectly, for the Employee’s own benefit or for the benefit of
any person or entity other than the Company.

 

(d)                                  The Employee agrees to assign and transfer to
the Company or its designee, without any separate remuneration or compensation,
his entire right, title and interest in and to all Inventions in the Field (as
defined below), together with all United States and foreign rights with respect
thereto, and, at the Company’s expense, to execute and deliver all appropriate
patent and copyright applications for securing United States and foreign
patents and copyrights on Inventions in the Field and to perform all lawful
acts, including giving testimony, and to execute and deliver all such
instruments that may be necessary or proper to vest all such Inventions in the
Field and patents and copyrights with respect thereto in the Company, and to
assist the Company in the prosecution or defense of any interference which may
be declared involving any of said patent applications, patents, copyright
applications or copyrights.  For the
purposes of this Agreement, the words “Inventions in the Field” shall
include any

 

10

 

discovery, process, design, development,
improvement, application, technique, or invention, whether patentable or
copyrightable or not and whether reduced to practice or not, conceived,
created, discovered, invented or made by the Employee, individually or jointly
with others (whether on or off the Company’s premises or during or after normal
working hours), while in the employ of the Company or any of its affiliated
companies, and which was or is directly or indirectly related to the business
of the Company or any of its affiliated companies or suppliers or customers, or
which resulted or results from any work performed by, or use of any Documents,
Property or other personal property of the Company (whether tangible or
intangible and whether owned, leased or contracted for) by, any executive,
employee or agent of the Company or any of its affiliated companies.

 

6.2                                 Protection of Documents.  All
(i) notes, memoranda, reports, lists, letters, documents, records,
specifications, software programs, software code, data, tapes and other media
of every kind, form and description relating to or within the scope of the
business of the Company or any of its Affiliates and any copies, in whole or in
part, thereof (collectively, the “Documents”), whether or not prepared
by the Employee, and (ii) all computers, cellular telephones, pagers, credit
and/or calling cards, keys, access cards or other  personal property of or relating to the
Company or any of its Affiliates (collectively, the “Property”) shall be
the sole and exclusive property of the Company. 
The Employee shall safeguard all Documents and Property and shall
surrender to the Company within five (5) days of the date of termination of the
Employee, or at such earlier time or times as the Board of Managers or its
designee may specify, all Documents and Property then in the Employee’s
possession or control; provided, however, that the Employee may
retain a copy of any personnel-related materials relating to his or her
employment with the Company, including, but not limited to, this Agreement, any
compensation or benefit plan or program, or any awards or evidence of
participation in such plans or programs, or any other communications to or from
the Company related to Employee’s employment. 
During the Employee’s term of employment, the Employee shall not make,
use or permit to be used any Documents or Property otherwise than for the
benefit of the Company.  After the
Employee’s term of employment, the Employee shall not use or permit others to
use any Documents or Property.  This Section 6.2
and Section 6.1 shall not be construed to unreasonably restrict the
Employee’s ability to disclose Proprietary Information in an arbitration or
court proceeding regarding the assertion of, or defense against, any claim of
breach of this Agreement.

 

6.3                                 Non-Competition.  During
the Non-Competition Period (as defined below), the Employee will not and will
not permit any of his Affiliates to anywhere in the Territory (as defined
below) engage or participate in, directly or indirectly, alone or as principal,
agent, employee, employer, consultant, investor or partner of, or assist in the
management of, or provide advisory or other services to, or own any stock or
any other ownership interest in, or make any financial investment in, any
business or entity which is Competitive with the Company (as defined below); provided,
however, that the ownership of not more than two percent (2%) of the
outstanding securities of any class of

 

11

 

securities listed on a
national exchange or inter-dealer quotation system shall not constitute a
violation of this Section 6.3. 
For purposes of this Agreement, a business or entity shall be considered
“Competitive with the Company” as of any point in time during the
Non-Competition Period if it competes with (A) the products then marketed or
sold by the Company and/or any of its Affiliates and as such products may be
improved and/or modified, (B) the services then marketed, sold or provided by
the Company and/or any of its Affiliates and as such services may be improved
and/or modified or (C) the products and/or services that the Company and/or any
of its Affiliates is then actively developing, designing, marketing, producing
or supplying in the future including, without limitation, the business of
providing financial products or services, including those involving or related
to exchange-traded derivatives, managed futures, prime brokerage services,
fixed income securities, foreign exchange, equities, over-the-counter
derivatives and asset management of structured products related to the Company’s
core business.  For purposes of this
Agreement, the “Non-Competition Period” shall mean the period commencing
on the date of this Agreement and ending twelve (12) months after the date of
termination of the Employee’s employment with the Company.  For purposes of this Agreement, “Territory”
shall mean the States of New York and Illinois and every other State or foreign
country where the Company and/or any of its Affiliates maintains employees,
owns or leases property or otherwise conducts business during the
Non-Competition Period.

 

6.4                                 Non-Solicitation and No-Hire Restrictions. 
During the Non-Competition Period, the Employee will not and will not
permit any of his Affiliates (i) solicit, or attempt to solicit any officer,
director, consultant or executive of the Company or any of its Affiliates (each
such individual, a “Company Affiliate”) to leave his or her engagement
with the Company or such Affiliate, (ii) hire any Company Affiliate or (iii)
call upon, solicit, divert or attempt to solicit or divert from the Company or
any of its Affiliates any of their customers or suppliers or potential or
prospective customers or suppliers of whom the Employee was aware were
potential customers prior to or during the Employee’s term of employment in any
manner that harms or interferes with such person’s relationship with the
Company; provided, however, that nothing in this Section 6.4
shall be deemed to prohibit the Employee from calling upon or soliciting a
customer or supplier of the Company or any Affiliate during the Non-Competition
Period if such action relates solely to a business which is not Competitive
with the Company; provided, further, that nothing in this Section 6.4
shall be deemed to prohibit the Employee from (A) soliciting or hiring any Company
Affiliate if such Company Affiliate is a member of the Employee’s immediate
family; (B) placing advertisements in newspapers or other media of general
circulation advertising employment opportunities; and (C) hiring any Company
Affiliate who responds to such advertisements without any prior notice thereof
by the Employee; provided that such Company Affiliate was not otherwise
solicited by the Employee or any of his Affiliates in violation of this
Agreement.

 

6.5                                 No Disparagement.  Each
of the Company and the Employee covenants and agrees that during the
Non-Competition Period, such party will not, directly or indirectly, either in
writing or by any other medium, make any disparaging, derogatory or negative
statement, comment or remark about the other party or any of its

 

12

 

Affiliates, or
Thomas H. Lee Partners or any of its Affiliates, or any of their
respective officers, directors, employees, Affiliates, subsidiaries, successors
and assigns, as the case may be; provided, however, that either party may make
such statements, comments or remarks as are necessary to comply with law.

 

6.6                                 Further Assurances.  The
Employee will not circumvent the purpose of any restriction contained in this Section 6
by engaging in business outside the Territory through remote means such as
telephone, correspondence or computerized communication.

 

7.                                       Definitions.

 

The
following terms shall have the meanings ascribed below:

 

“Affiliate” of any
particular Person means any other Person controlling, controlled by or under
common control with such particular Person or, with respect to any individual,
such individual’s spouse and descendants (whether natural or adopted) and any
trust, partnership, limited liability company or similar vehicle established
and maintained solely for the benefit of (or the sole members or partners of
which are) such individual, such individual’s spouse and/or such individual’s
descendants.

 

“Board” means the
Board of Managers of the Company.

 

“Change of Control” shall mean the
consummation of a transaction, whether in a single transaction or in a series
of related transactions that are consummated contemporaneously (or consummated
pursuant to contemporaneous agreements), with any other party or parties, other
than an Affiliate of THL or an Affiliate of Phillip Bennett, on an arm’s-length
basis, pursuant to which (a) a party or group (as defined under Rule 13d under the Securities Exchange Act of 1934,
as amended) who is not a unitholder of the Company on the Effective Date,
acquires, directly or indirectly (whether by merger, stock purchase,
recapitalization, reorganization, redemption, issuance of capital stock or
otherwise), more than 50% of the voting power of the Company or otherwise
becomes entitled to designate a majority of the members of the Company’s Board
of Managers, or (b) such party or parties, directly or indirectly, acquire
assets constituting all or substantially all of the assets of the Company and
its subsidiaries on a consolidated basis.

 

“Class A Common Units”
means the Company’s Class A Common Units.

 

“Class B Common Units”
has the meaning set forth in Section 1(a) hereof.

 

“Code” shall mean the
Internal Revenue Code of 1986, as amended.

 

“Credit Agreement”
shall mean the Credit Agreement made as of August  5, 2004, between Refco
Finance Holdings LLC, a Delaware limited liability company, Refco Group Ltd.,
LLC, a Delaware limited liability company, each lender from time to time party
thereto, Banc of America Securities LLC, Credit Suisse First Boston, acting

 

13

 

through its Cayman Islands
Branch, and Deutsche Bank Securities Inc., as co-lead arrangers and joint book
running managers, Credit Suisse First Boston, acting through its Cayman Islands
Branch, as Syndication Agent, Deutsche Bank Securities Inc., as Documentation
Agent, and Bank of America, N.A., as Administrative Agent, Swing Line Lender
and L/C Issuer, as may be amended, supplemented or otherwise modified in
accordance with its terms.

 

“EBITDA” has the
meaning set forth in the Securityholders’ Agreement.

 

“Employee Units” has
the meaning set forth in Section 1(a) hereof.  The Employee Units will continue to be
Employee Units in the hands of any holder other than the Employee (except for
the Company and except for transferees in a public sale) and, except as
otherwise provided herein, each such other holder of the Employee Units will
succeed to all rights and obligations attributable to the Employee as a holder
of the Employee Units hereunder.  The
Employee Units will also include equity interests of the Company issued with
respect to the Employee Units by way of an equity split, dividend of equity or
other recapitalization.

 

“Fair Market Value”
shall be determined by the Board based on methods consistently applied in good
faith.  Upon such determination, the
Company shall promptly provide the Employee with notice of the Fair Market
Value so determined (the “Board Notice”).

 

“Financing
Default” means any event of default or breach under the Credit Agreement.

 

“IRS”
has the meaning set forth in Section 1(b) hereof.

 

“Measurement Date”
shall mean, for any Measurement Year, the date following the end of such
Measurement Year upon which the Company shall have received its audited
financial statements for such Measurement Year, beginning with the Measurement
Year ending February 28, 2005.

 

“Person” shall be
construed broadly and shall include, without limitation, an individual, a
partnership, an investment fund, a limited liability company, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.

 

“Representative”
means, with respect to the deceased Employee, the duly appointed, qualified and
acting personal representative (or personal representatives collectively) of
the estate of the deceased Employee (or portion of such estate that includes
Employee Units), whether such personal representative holds the position of
executor, administrator or other similar position qualified to act on behalf of
such estate.

 

“Securities Act”
means the Securities Act of 1933, as amended, or any successor federal law then
in force.

 

14

 

“Securityholders’
Agreement” means the Securityholders’ Agreement dated August 5, 2004
between the Company and certain securityholders of the Company, as amended,
modified or supplemented from time to time.

 

“THL” means Thomas H.
Lee Equity Fund V, L.P., a Delaware limited partnership, and its Affiliates.

 

“Transfer” means the
sale, transfer, assignment, pledge or other disposal (whether with or without
consideration and whether voluntarily or involuntarily or by operation of law)
of any Employee Units.

 

8.                                       General Provisions.

 

(a)                                  Severability. 
The parties agree that each provision herein shall be treated as a
separate and independent clause, and the unenforceability of any one clause
shall in no way impair the enforceability of any other clauses of this
Agreement.  If any one or more provisions
of this Agreement is held to be invalid or unenforceable for any reason,
including due to being overbroad in scope activity, subject or otherwise: (i)
this Agreement shall be considered divisible; (ii) such provision shall be
deemed inoperative to the extent it is deemed invalid or unenforceable; and
(iii) in all other respects this Agreement shall remain full force and effect;
provided, however, that if any such provision maybe made valid or enforceable
by limitation thereof, then such provision shall be deemed to be so limited and
shall be valid and/or enforceable to the maximum extent permitted by applicable
law.

 

(b)                                 Entire Agreement. 
This Agreement and the Securityholders Agreement constitute
the entire agreement and understanding of the parties hereto concerning the
subject matter hereof and from and after the date of this Agreement, this
Agreement shall supersede any other prior negotiations, discussions, writings,
agreements or understandings, both written and oral, between the parties with
respect to such subject matter.

 

(c)                                  Counterparts. 
This Agreement may be executed in separate counterparts, each of which
is deemed to be an original and all of which taken together constitute one and
the same agreement.

 

(d)                                 Successors and Assigns.

 

(i)                                        This Agreement is personal to the
Employee and without the prior written consent of the Company shall not be
assignable by the Employee.  This
Agreement shall inure to the benefit of and shall be enforceable by the Employee
and the Employee’s legal representatives.

 

(ii)                                     This Agreement shall inure to the benefit
of and be binding upon the Company and its successors and assigns.

 

15

 

(iii)                                  Nothing in this Agreement, express or
implied, is intended to or shall confer upon any person other than the parties
hereto, and their respective heirs, legal representatives, successors, and
permitted assigns, any rights, benefits, or remedies of any nature whatsoever
under or by reason of this Agreement.

 

(e)                                  Governing Law. 
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any
other jurisdiction) that would cause the application of the law of any
jurisdiction other than the State of New York.

 

(f)                                    Remedies.  Each of the
parties to this Agreement and any such Person granted rights hereunder whether
or not such Person is a signatory hereto shall be entitled to enforce its
rights under this Agreement specifically to recover damages and costs
(including reasonable attorney’s fees) for any breach of any provision of this
Agreement and to exercise all other rights existing in its favor.  The parties hereto agree and acknowledge that
money damages may not be an adequate remedy for any breach of the provisions of
this Agreement and that any party and any such Person granted rights hereunder whether
or not such Person is a signatory hereto may in its sole discretion apply to
any court of law or equity of competent jurisdiction for specific performance
and/or other injunctive relief (without posting any bond or deposit) in order
to enforce or prevent any violations of the provisions of this Agreement.

 

(g)                                 Amendment and Waiver. 
The provisions of this Agreement may be amended and waived only with the
prior written consent of the Company and the Employee and no course of conduct
or failure or delay in enforcing the provisions of this Agreement shall be
construed as a waiver of such provisions or affect the validity, binding effect
or enforceability of this Agreement or any provision hereof.

 

(h)                                 Notices.  Any notice
provided for in this Agreement must be in writing and must be either personally
delivered, transmitted via facsimile, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipient at the address below indicated or at
such other address or to the attention of such other person as the recipient
party has specified by prior written notice to the sending party.  Notices will be deemed to have been given
hereunder and received when delivered personally, when received if transmitted
via facsimile, five (5) days after deposit in the U.S. mail and one (1) day
after deposit with a reputable overnight courier service.

 

If to the Company, to:

 

New Refco Group Ltd., LLC

c/o Refco Group Ltd., LLC

One World Financial Center

200 Liberty Street

New York, NY 10281

Attention: 
General Counsel

 

16

 

With a copy to:

 

Thomas H. Lee Partners, L.P.

100 Federal Street, 35th Floor

Boston, MA 
02110

Attention: 
Scott A. Schoen

Scott Jaeckel

George Taylor

 

If to the Employee, to the address set forth
underneath the Employee’s name on the signature pages hereto.

 

(i)                                     Business Days. 
If any time period for giving notice or taking action hereunder expires
on a day which is a Saturday, Sunday or holiday in the state in which the
Company’s chief executive office is located, the time period for giving notice
or taking action shall be automatically extended to the business day
immediately following such Saturday, Sunday or holiday.

 

(j)                                     Survival of Representations, Warranties
and Agreements.  All representations, warranties and
agreements contained herein shall survive the consummation of the transactions
contemplated hereby and the termination of this Agreement indefinitely.

 

(k)                                  Descriptive Headings. 
The descriptive headings of this Agreement are inserted for convenience
only and do not constitute a part of this Agreement.

 

(l)                                     Construction. 
Where specific language is used to clarify by example a general
statement contained herein, such specific language shall not be deemed to
modify, limit or restrict in any manner the construction of the general
statement to which it relates.  The
language used in this Agreement shall be deemed to be the language chosen by
the parties to express their mutual intent, and no rule of strict construction
shall be applied against any party.

 

(m)                               WAIVER OF JURY TRIAL. 
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT.

 

(n)                                 Nouns and Pronouns. 
Whenever the context may require, any pronouns used herein shall include
the corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.

 

[SIGNATURE PAGE FOLLOWS]

 

17

 

IN WITNESS WHEREOF, the parties hereto have executed
this Restricted Unit Agreement as of the date first written above.

 

	
   

  	
  NEW REFCO GROUP LTD, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Phillip Bennett

  
	
   

  	
   

  	
  President

  

 

SIGNATURE PAGE TO 

RESTRICTED UNIT AGREEMENT

 

18

 

	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Employee]

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Number of Employee Units Received:

  

 

19

 

EXHIBIT A

 

ELECTION
TO INCLUDE STOCK IN GROSS

INCOME PURSUANT TO SECTION 83(b) OF THE

INTERNAL REVENUE CODE

 

The undersigned was issued                    Class B Common Units (the “Class B Common Units”),
of New Refco Group Ltd., LLC (the “Company”) pursuant to a Restricted Unit
Agreement (the “Restricted Unit Agreement”), effective as of August 5,
2004 (the “Effective Date”), between the Company and the
undersigned.  The undersigned desires to
make an election under Section 83(b) of the Internal Revenue Code of 1986,
as amended (“Code”) to have the Class B Common Units taxed at the time
the undersigned was issued the Class B Common Units.

 

Therefore, pursuant to Code §  83(b) and Treasury
Regulation §  1.83-2 promulgated thereunder, the undersigned hereby makes
an election, with respect to the Class B Common Units, to report as taxable
income for the undersigned’s taxable year ending December 31, 2004 the
Class B Common Unit’s fair market value on               ,
2004.

 

The following information is supplied in accordance
with Treasury Regulation §  1.83-2(e):

 

1.  The name,
address and social security number of the undersigned:

 

	
  Name:

  	
   

  
	
  Address:

  	
   

  
	
   

  	
   

  
	
  Social Security Number:

  	
   

  
			

 

2.  A description of the property with respect to
which the election is being made:                     
Class B Common Units of the Company.

 

3.  The date on which the property was
transferred:                 ,
2004.  The taxable year for which such
election is made:  the undersigned’s
taxable year ending December 31, 2004.

 

4.  The
restrictions to which the property is subject:

 

The Class B Common Units
issued to the undersigned are subject to vesting provisions.  All of such units vest on the eighth
anniversary of the issuance date and such vesting maybe accelerated if certain
interim performance targets are met by the Company.  The unvested Class B Common Units are subject
to forfeiture in the event the undersigned ceases to be employed by the Company
or any of its Subsidiaries (as defined in the Restricted Unit Agreement) for
any reason or no reason.  The undersigned
may not transfer any and all of the undersigned’s unvested Class B Common
Units.

 

A-1

 

5.  The fair market value on               ,
2004, of the property with respect to which the election is being made,
determined without regard to any lapse restrictions: $          
per Class B Common Unit.

 

6.  No amount was paid for the issuance of the
Class B Common Units.

 

7.  A copy of this election has been furnished to
the person for whom the services are performed: 
Secretary of the Company pursuant to Treasury Regulation § 1.83-2(e)(7).

 

A-2

 

This election is being sent to the Internal Revenue
Service office with which the undersigned files his or her return.  In addition, a copy of this election will be
submitted with the income tax return of the undersigned for the taxable year in
which the Class B Common Units were issued.

 

	
  Dated: 

  	
   

  	
  , 2004

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  

 

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Exhibit 4.2    
    

 
 

ev3 LLC
  
    HOLDERS AGREEMENT    
    

        Holders Agreement, dated as of this 29th day of August, 2003 (the "Agreement"), among the
institutional investors listed on Schedule I hereto (the "Institutional Investors"), Dale A.
Spencer ("Spencer"), Paul Buckman ("Buckman"), the individuals whose names and addresses appear from
time to time on Schedule II hereto (the "Management Investors"), the individuals whose names and
addresses appear from time to time on Schedule III hereto (the "Additional Investors") and ev3
LLC, a Delaware limited liability company (the "Company"). The Institutional Investors, Spencer and Buckman are hereinafter collectively referred to as
the "Preferred Investors." The Preferred Investors, the Management Investors and the Additional Investors are hereinafter collectively referred to as
the "Investors." Capitalized terms used in this Agreement and not otherwise defined are defined in Section 5 herein. 

 
 

RECITALS    
    

        WHEREAS, the Preferred Investors and the Management Investors have, pursuant to the terms of a Contribution and Exchange Agreement, dated as of August 29,
2003, by and among ev3 Acquisition Corp., a Delaware corporation ("Newco"), the Preferred Investors and the Management Investors (the
"Newco Contribution Agreement"), contributed to Newco, the shares of common stock, par value $0.01 per share, of ev3 Inc., a Delaware corporation
("ev3"), the shares of Series A Convertible Preferred Stock, par value $0.01 per share, of ev3 ("Series A
Preferred"), the shares of Series B Convertible Preferred Stock, par value $0,01 per share, of ev3 ("Series B
Preferred") and the shares of Series C Convertible Preferred Stock, par value $0.01 per share, of ev3 ("Series C
Preferred" and, together with the Series A Preferred and Series B Preferred, the "Preferred Stock") owned by each
of the Preferred Investors and the Management Investors in exchange for shares of common stock, par value $0.01 per share, of Newco ("Newco Common
Stock"), shares of Series A Convertible Preferred Stock, par value $0.01 per share, of Newco ("Newco Series A"),
shares of Series B Convertible Preferred Stock, par value $0.01 per share, of Newco ("Newco Series B") and shares of Series C
Convertible Preferred Stock, par value $0.01 per share, of Newco ("Newco Series C" and, together with the Newco Series A and Newco
Series B, the "Newco Preferred Stock"); 

        WHEREAS,
the Preferred Investors and certain of the Management Investors (the "MI LLC Members") have, pursuant to the terms of a
Contribution and Exchange Agreement, dated as of August 29, 2003, by and among Micro Investment, LLC, a Delaware limited liability company ("MI
LLC"), the Preferred Investors and certain of the Management Investors contributed to the Company, the membership interests of MI LLC owned by each of the Preferred Investors
and the MI LLC Members in exchange for Class A Preferred Membership units of the Company ("Class A Preferred Membership Units"); 

        WHEREAS,
the Preferred Investors and the Management Investors have, pursuant to the terms of a Contribution and Exchange Agreement, dated as of August 29, 2003, by and among the
Company, the Preferred Investors and the Management Investors contributed to the Company, the shares of Newco Common Stock and the shares of Newco Preferred Stock owned by each of the Preferred
Investors and the Management Investors in exchange for common membership units of the Company (the "Common Units") and Class B Preferred
Membership units of the Company ("Class B Preferred Membership Units" and together with the Class A Preferred Membership Units, the
"Preferred Units" and, together with the Common Units and such other units as the Company may create from time to time, collectively, the
"Units"); 

        WHEREAS,
concurrently with the execution of this Agreement, each of the Investors has executed that certain Operating Agreement, dated as of August 29, 2003, of the Company, as
the same may be amended from time to time (the "Operating Agreement"); and 

 

        WHEREAS,
the Investors and the Company desire to promote their mutual interests by agreeing to certain matters relating to the operations of the Company and the disposition and voting of
the Units. 

        NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto hereby agree as follows: 

1.     COVENANTS OF THE PARTIES.  

        (a)    Legends.    Units in the Company may be evidenced by certificates in a form approved by the Board of Managers
of the Company (the "Board"). The certificates evidencing the Units acquired by the Investors, if any, will bear the following legends reflecting the
restrictions on the transfer of such Units contained in this Agreement and the Operating Agreement: 

"The
securities evidenced hereby are subject to the terms of that certain Holders Agreement, dated as of August 29, 2003, among the Company and certain members identified therein, including
certain restrictions on transfer. A copy of the Holders Agreement has been filed with the Secretary of the Company and is available upon request." 

"The
securities evidenced hereby are subject to the terms of that certain Operating Agreement, dated as of August 29, 2003, by and among the Company and certain members identified therein,
including certain restrictions on transfer. A copy of the Operating Agreement has been filed with the Secretary of the Company and is available upon request." 

        The
Investors acknowledge that stop transfer orders shall be entered with the Company's transfer agent and registrar, if any, against the Transfer of legended Units. In addition to the
foregoing legends, the certificates representing the Units shall be subject to such other restrictions as the Company may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission and any applicable federal or state laws, and the Company may cause a legend or legends to be put on any such certificates to make appropriate reference to such
restrictions. 

        (b)    Additional Investors.    The parties hereto acknowledge that certain employees, directors and consultants of
the Company and its Subsidiaries may become members of the Company after the date hereof. As a condition to the issuance of Units to them, the Company shall require all such individuals to execute and
deliver to the Company and each party hereto a Joinder Agreement to this Agreement and the Operating Agreement, substantially in the form of  Exhibit A hereto (the "Joinder
Agreement"). Upon such execution and delivery,  Schedule III shall be deemed amended to include the name of such employee, director or consultant without the need for a
formal amendment of this
Agreement and such individual shall be deemed to be an Additional Investor for purposes hereof, including being bound by the terms set forth in Sections 3(a), (b), (c) and (d) with
respect to Spencer, Buckman, the Management Investors and the Additional Investors, and those restrictions that generally apply to all Investors hereto. 

        (c)    Option Units.    The Investors acknowledge that the Company has reserved not less than 12,549,655 Common Units
for grant or sale to certain employees, directors and consultants of the Company (the "Option Units"), in such amounts and in such manner (including
restricted Common Unit grants or other option or incentive plans) as the Board shall, from time to time, determine; provided,  however, that it shall be a
condition to the issuance of any Option Units that such individuals execute and deliver to the Company and each party hereto
a Joinder Agreement. Upon such execution and delivery. Schedule III hereto shall be deemed to be amended to include the name of such individual
without the need for a formal amendment of this Agreement and such individual shall be deemed to be an Additional Investor for purposes hereof, including being bound by the terms set forth in Sections
3(a), (b), (c) and (d) with respect to Spencer, Buckman, the Management Investors and the Additional Investors, and those restrictions that generally apply to all Investors hereto. 

2

 

2.     BOARD OF DIRECTORS.  

        (a)    Election of Directors.    

        (i)    As
of the date hereof, the Board will consist of Dale A. Spencer, Richard B. Emmitt, Elizabeth H. Weatherman, Paul Buckman and Jim Corbett. From and after the date
hereof, the Investors and the Company shall take all action within their respective power, including, but not limited
to, the voting of all Units of the Company Owned by them, required to cause the Board to consist of up to five (5) members or such other number as the Board may from
time to time establish, and at all times throughout the term of this Agreement to include, (w) as long as the Institutional Investors Own at least fifty percent (50%) of the Units, five
(5) representatives designated by the Institutional Investors (each, a "Preferred Director"); (x) as long as the Institutional Investors
Own at least thirty-five percent (35%), but less than fifty percent (50%), of the Units, four (4) Preferred Directors; (y) as long as the Institutional Investors Own at least
twenty percent (20%), but less than thirty-five percent (35%), of the Units, three (3) Preferred Directors; and (z) as long as the Institutional Investors Own at least five
percent (5%), but less than twenty percent (20%), of the Units, two (2) Preferred Director. 

        (ii)   From
the date on which the Company converts to a corporation (as contemplated by the Operating Agreement) and completes an underwritten public offering for shares of
common stock pursuant to a registration under the Securities Act (the "Initial Public Offering"), and for as long as the Institutional Investors Own at
least twenty percent (20%) of the common stock of the corporate successor to the Company (the "Common Stock"), the Company will nominate and use its
best efforts to have two (2) individuals designated by the Institutional Investors elected to the Board. From the date on which the Company completes its Initial Public Offering and for as long
as the Institutional Investors Own at least ten percent (10%) of the outstanding shares of Common Stock, the Company will nominate and
use its best efforts to have one (1) individual designated by the Institutional Investors elected to the Board. 

        (b)    Replacement Directors.    In the event that any Preferred Director designated in the manner set forth in
Section 2(a) hereof is unable to serve, or once having commenced to serve, is removed or withdraws from the Board (a "Withdrawing Director"),
such Withdrawing Director's replacement (the "Substitute Director") will be designated by the Institutional Investors. The Investors and the Company
agree to take all action within their respective power, including, but not limited to, the voting of
Units of the Company Owned by them (i) to cause the election of such Substitute Director promptly following his or her nomination pursuant to this Section 2(b) or (ii) upon the
written request of the Institutional Investors, to remove, with or without cause, the Preferred Director. 

3.     TRANSFER OF STOCK.  

        (a)    Resale of Securities.    No Investor shall Transfer any Units other than in accordance with the provisions of
this Section 3 and in accordance with the provisions of the Operating Agreement. Any Transfer or purported Transfer made in violation of this Section 3 or the Operating Agreement shall
be null and void and of no effect. 

        (b)    Rights of First Refusal.    

        (i)    Limitations on Transfer.    Neither Spencer, Buckman, the Management Investors nor the Additional Investors
shall Transfer any of the Units Owned by them unless Spencer, Buckman, the Management Investors or the Additional Investors, as the case may be, desiring to make the Transfer (hereinafter referred to
as the "Transferor") shall have first made an offer to sell to the Company and then to the Institutional Investors as contemplated by this
Section 3(b), and such offers shall not have been accepted. 

        (ii)    Offer by Transferor.    Copies of the Transferor's offer shall be given to the Company and the Institutional
Investors and shall consist of an offer to sell to the Company or, failing its 

3

 

election
to purchase, then to the Institutional Investors, all of the Units then proposed to be Transferred by the Transferor (the "Subject Units")
pursuant to a bona fide offer of a third party, to which copies shall be attached a statement of intention to Transfer to such third party, the name and address of the prospective third party
transferee, the number of Subject Units involved in the proposed Transfer, and the terms of such Transfer. 

        (iii)    Acceptance of Offer.    

        (A)  Within
twenty (20) days after the receipt of the offer described in Section 3(b)(ii) (such 20-day period, the
"Company Option Period"), the Company may, at its option, elect to purchase all, but not less than all, of the Subject Units. The Company shall give
notice of its intention to exercise, or that it does not intend to exercise, its option hereunder, to the Transferor and to each Institutional Investor within the Company Option Period. Failure by the
Company to give notice of its intention to exercise its option hereunder within the Company Option Period shall be deemed an election not to exercise such option. 

        (B)  In
the event that the Company does not exercise its option to purchase all of the Subject Units within the Company Option Period or the Company revokes its election to
purchase the Subject Units in accordance with Section 3(b)(v), the Transferor shall deliver to the Institutional Investors a written notice to the effect that the Company did not exercise its
option to purchase or that the Company revoked its election to purchase all of the Subject Units, as the case may be. In such event, the Institutional Investors may purchase all, but not less than
all, of the remaining Subject Units by giving written notice thereof to the Transferor and to the Company within twenty (20) days after receipt of written notice from the Transferor described
in the immediately preceding sentence (such 20-day period, the "Institutional Investor Option Period"). Any Institutional Investor that
fails to give such notice to the Transferor and to the Company within such Institutional Investor Option Period shall be deemed to have waived its rights under this Section 3(b) with respect to
the proposed Transfer. The Institutional Investors shall purchase the Subject Units pro rata among themselves (based on the number of Units then Owned by each Institutional Investor calculated as of
the date of commencement of the Institutional Investor Option Period) or as they shall otherwise agree upon among themselves. 

        (C)  In
either event, the notice required to be given by the purchasing party (the "Purchaser") shall specify a date for the
closing of the purchase which shall not be more than thirty (30) days after the date of the giving of such notice. 

        (iv)    Purchase Price.    The purchase price per share for the Subject Units shall be the price per share offered to
be paid by the prospective transferee described in the offer, which price shall be paid in cash
or, if so provided in the offer of the prospective transferee, cash plus deferred payments of cash in the same proportions, and with the same terms of deferred payment as therein set forth. 

        (v)    Consideration Other Than Cash.    If the offer of the Subject Units under this Section 3(b) is for
consideration other than cash or cash plus deferred payments of cash, then the Purchaser shall pay the cash equivalent of such other consideration. If the Transferor and the Purchaser cannot agree on
the amount of such cash equivalent within ten (10) days after the beginning of the Company Option Period or the Institutional Investor Option Period, as the case may be, any of such parties
may, by three (3) days' written notice to the other, initiate appraisal proceedings under Section 3(b)(vi) for determination of the cash equivalent. The Company Option Period and
the Institutional Investor Option Period, as applicable, shall automatically be extended during the period in which an appraisal is conducted pursuant to Section 3(b)(vi) below. The
Purchaser may give written notice to the Transferor revoking an election to purchase the Subject Units within ten (10) days after determination of the appraised value, if it chooses not to
purchase the Subject 

4

 

Units.
An appraisal conducted during the Company Option Period shall not be binding on the Institutional Investors and such Institutional Investors shall have the right (which shall be determined by
the approval of the electing Institutional Investors holding a majority of the Common Units Owned by such electing Institutional Investors), but not the obligation, to conduct a separate appraisal in
the event the Company revokes its election to purchase the Subject Units after determination of the appraised value. 

        (vi)    Appraisal Procedure.    If any party shall initiate an appraisal procedure to determine the amount of the cash
equivalent of any consideration for the Subject Units under Section 3(b)(v), then the Transferor, on the one hand, and the Purchaser, on the other hand, shall each promptly appoint as an
appraiser an individual who shall be a member of a nationally-recognized investment banking firm. Each appraiser shall, within thirty (30) days of appointment, separately investigate the value
of the consideration for the Subject Units as of the proposed Transfer date and shall submit a notice of an appraisal of that value to each party. Each appraiser shall be instructed to determine such
value without regard to income tax consequences to the Transferor as a result of receiving cash rather than other consideration. If the appraised values of such consideration (the
"Earlier Appraisals") vary by less than ten percent (10%) measured from the lower appraisal, the average of the two appraisals on a per share basis
shall be controlling as the amount of the cash equivalent. If the appraised values vary by more than ten percent (10%), measured from the lower appraisal, the appraisers, within ten (10) days
of the submission of the last appraisal, shall appoint a third appraiser who shall be a member of a nationally recognized investment banking firm. The third appraiser shall, within thirty
(30) days of his appointment, appraise the value of the consideration for the Subject Units (without regard to the income tax consequences to the Transferor as a result of receiving cash rather
than other consideration) as of the proposed Transfer date and submit notice of his appraisal to each party. The value determined by the third appraiser shall be controlling as to the amount of the
cash equivalent unless the value is greater than the two Earlier Appraisals, in which case the higher of the two Earlier Appraisals will control, and unless that value is lower than the two Earlier
Appraisals, in which case the lower of the two Earlier Appraisals will control. If any party fails to appoint an appraiser or if one of the two initial appraisers fails after appointment to submit his
appraisal within the required period, the appraisal submitted by the remaining appraiser shall be controlling. The Transferor and the Purchaser shall each bear the cost of
its respective appointed appraiser. The cost of the third appraisal shall be shared one-half by the Transferor and one-half by the Purchaser. 

        (vii)    Closing of Purchase.    The closing of the purchase shall take place at the office of the Company or such
other location as shall be mutually agreeable and the purchase price, to the extent comprised of cash, shall be paid at the closing, and cash equivalents and documents evidencing any deferred payments
of cash permitted pursuant to Section 3(b)(iv) above shall be delivered at the closing. At the closing, the Transferor shall deliver to the Purchaser the certificates evidencing the
Subject Units, if any, to be conveyed, free and clear of any and all liens and encumbrances, duly endorsed and in negotiable form with all the requisite documentary stamps affixed thereto. 

        (viii)    Release from Restriction; Termination of Rights.    If the offer to sell is neither accepted by the Company
nor fully accepted by the Institutional Investors, the Transferor may make a bona fide Transfer to the prospective transferee named in the statement attached to the offer in accordance with the agreed
upon terms of such Transfer, provided that (A) such Transfer shall be made only in strict accordance with the terms set forth in the written
notice delivered to the Company and the Institutional Investors pursuant to Section 3(b)(ii) hereof and (B) the transferee agrees, in writing (by executing a Joinder Agreement),
to be bound by the provisions of this Agreement and the Operating Agreement in the same manner as the Transferor. If the Transferor shall fail to make such Transfer within sixty (60) days
following the expiration of the Company 

5

 

Option
Period or the Institutional Investor Option Period, as applicable, or, in the event the Institutional Investors revoke their election to purchase the Subject Units pursuant to
Section 3(b)(v), within sixty (60) days of the date of such notice of revocation, such Subject Units shall again become subject to all the restrictions of this Section 3. 

        (ix)    Limitations.    The provisions of this Section 3(b) shall not apply to (i) sales by
Tag-Along Investors (as defined below) pursuant to Section 3(c) hereof, or (ii) sales by Investors pursuant to Section 3(d) hereof (Drag-Along Rights) or
(iii) Transfers to Permitted Transferees or to the Company. 

        (x)    Operating Agreement Obligations.    A Transfer pursuant to this Section 3(b) shall not be valid unless
the transferee delivers to the Company an executed copy of the Joinder Agreement. 

        (c)    Tag-Along Rights.    

        (i)    In
the event that the Investors Owning a majority of the Units (the "Majority Holders") intend to Transfer all of their
Units (other than Transfers to any Permitted Transferee or to the Company) in a single transaction or a series of related transactions (the "Selling
Investors"), such Selling Investors'
shall notify the other Investors (the "Tag-Along Investors"), in writing, of such proposed Transfer and its terms and conditions. Within ten
(10) business days of the date of such notice, each other Tag-Along Investor shall notify the Selling Investors if it elects to participate in such Transfer. Any
Tag-Along Investor that fails to notify the Selling Investors within such ten (10) business day period shall be deemed to have waived its rights under this Section 3(c) with
respect to the proposed Transfer. Each Tag-Along Investor that so notifies the Selling Investors shall have the right to sell, at the same price and on the same terms and conditions as the
Selling Investors, an amount of Units equal to the Units the third party actually proposes to purchase multiplied by a fraction, the numerator of which shall be the number of Units Owned by such
Tag-Along Investor and the denominator of which shall be the aggregate number of Units Owned by the Selling Holders and each Tag-Along Investor exercising its rights under this
Section 3(c). Notwithstanding the foregoing, in the event the Selling Investor is selling only Preferred Units, holders of the Common Units shall not have the right to sell Common Units
pursuant to this Section 3(c). 

        (ii)   Notwithstanding
anything contained in this Section 3(c), in the event that all or a portion of the purchase price consists of securities and the sale of such
securities to the Tag-Along Investors would require either a registration under the Securities Act or the preparation of a disclosure document pursuant to Regulation D under the
Securities Act or a similar provision of any state securities law, then, at the option of the Selling Investor, any one or more of the Tag-Along Investors may receive, in lieu of such
securities, the fair market value of such securities in cash, as determined in good faith by the Board. 

        (d)    Drag Along Right.    

        (i)    If
at any time and from time to time after the date of this Agreement, the Majority Holders wish to (i) Transfer in a bona fide arms' length sale all of their
Units to any Person or Persons who are not Affiliates of the Company or any of the Majority Holders or (ii) approve any merger of the Company with or into any other Person who is not an
Affiliate of the Company or the Majority Holders, or (iii) approve any sale of all or substantially all of the Company's assets to any Person or Persons who are not Affiliates of the Company or
any of the Majority Holders (for purposes of this Section 3(d), such Person or Persons shall be referred to as the "Proposed Transferee"), the
Majority Holders shall have the right (for purposes of Section 3(d), the "Drag-Along Right") to (x) in the case of a Transfer
of the type referred to in clause (i), require each Investor to sell to the Proposed Transferee all Units (including any warrants or options to acquire Units) then Owned by such Investor for
the same per Unit consideration as proposed to be received by the Majority Holders (less, in the case of options or warrants, the exercise price for 

6

 

such
options or warrants), or (y) in the case of a merger or sale of assets referred to in clauses (ii) or (iii) above, require each other Investor to vote all Units then Owned by
such other Investor in favor of such transaction. Each Investor agrees to take all steps necessary to enable him or it to comply with the provisions of this Section 3(d) to facilitate the
Majority Holder's exercise of a Drag-Along Right. 

        (ii)   To
exercise a Drag-Along Right, the Majority Holders shall give each Investor a written notice (for purposes of this Section 3(d), a
"Drag-AIong Notice") containing (1) the name and address of the Proposed Transferee and (2) the proposed purchase price, terms
of payment and other material terms and conditions of the Proposed Transferee's offer. Each Investor shall thereafter be obligated to sell its Units (including any warrants or options Owned by such
Investor) to the Proposed Transferee or vote its Units in favor of the proposed transaction, as the case may be; provided that the sale to the Proposed
Transferee or the merger or sale of assets, as applicable, is consummated within ninety (90) days of delivery of the Drag-Along Notice. If the sale to the Proposed Transferee or the
merger or asset sale is not consummated within such 90-day period, then each Investor shall no longer be obligated to sell such Investor's Units or vote (or, having voted such Units in
favor of such merger or sale of assets, such Investor may revoke such vote) for such merger or assets sale pursuant to that specific Drag-Along Right but shall remain subject to the
provisions of this Section 3(d). 

        (iii)  Notwithstanding
anything contained in this Section 3(d), in the event that all or a portion of the purchase price consists of securities and the sale of such
securities to the Investors would require either a registration under the Securities Act or the preparation of a disclosure document pursuant to Regulation D under the Securities Act or a
similar provision of any state securities law, then, at the option of the Majority Holders, the Investors may receive, in lieu of such securities, the fair market value of such securities in cash, as
determined in good faith by the Board. 

        (e)    Subscription Right.    

        (i)    If
at any time after the date hereof, the Company proposes to issue equity securities of any kind (for these purposes, the term "equity
securities" shall include, without limitation, any equity securities, any warrants, options or other rights to acquire equity securities and securities  (including, without limitation, debt securities) convertible into or exchangeable for equity securities)
of the Company (other than the issuance of securities (i) upon conversion of the Preferred Units pursuant to the Operating Agreement, (ii) to the public in a firm commitment underwriting
pursuant to a registration statement filed under the Securities Act, (iii) pursuant to the acquisition of another Person by the Company or its Subsidiaries, whether by purchase of stock,
merger, consolidation, purchase of all or substantially all of the assets of such Person or other form of reorganization or otherwise, (iv) pursuant to an employee unit option plan, unit bonus
plan, unit purchase plan or other management equity program in effect on the date hereof or subsequently approved by the Board, which approval shall include the approval of the Preferred Directors,
and not effected for the primary purpose of raising capital, (v) in the form of warrants issued to lessors of property and/or equipment or to financial institutions or related entities in
connection with commercial credit or financing or other similar arrangements which are approved by a majority of the Board, which approval shall include the approval of the Preferred Directors,
(vi) in connection with corporate partnering arrangements which are approved by a majority of the Board, which approval shall include the approval of the Preferred Directors, (vii) to
vendors, customers and consultants to the Company to the extent approved by the Board, which approval shall include the approval of the Preferred Directors, or (viii) upon contribution of all
or a portion of the ev3 Inc., a Delaware corporation ("ev3"), demand promissory notes held by the Warburg Investors and the Vertical Investors
for preferred units of the Company having the same rights, powers, preferences and relative participating, optional or other special rights as the Class B Preferred Membership 

7

 

Units,
as contemplated by the terms of that certain Option, Contribution and Exchange Agreement, dated as of August 29, 2003, by and among the Company, ev3, the Warburg Investors and the
Vertical Investors, as the same may be amended from time to time), then, as to the Preferred Investors (as long as the Preferred Investors Own, in the aggregate, at least five percent (5%) of the then
outstanding Common Units (hereinafter for purposes of this Section 3(e) referred to as the "Additional Purchasers"), the Company shall: 

        (A)  give
written notice setting forth in reasonable detail (i) all of the terms and provisions of the equity securities proposed to be issued (the
"Proposed Securities"), including, where applicable, the voting powers, preferences and relative participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof and interest rate and maturity; (ii) the price, proposed purchasers and other terms of the proposed sale of such securities;
(iii) the amount of such securities proposed to be issued; and (iv) such other information as the Additional Purchasers may reasonably request in order to evaluate the proposed issuance;
and 

        (B)  offer
to issue to each such Additional Purchaser a portion of the Proposed Securities equal to a percentage obtained by dividing (x) the number of Common Units
Owned by such Additional Purchaser, by (y) the total number of Common Units then outstanding, including for purposes of this calculation all Common Units issuable upon conversion in full of any
then outstanding convertible securities, including, without limitation, the Preferred Units. 

        (ii)   Each
such Additional Purchaser must exercise its purchase rights hereunder within twenty (20) days after receipt of such notice from the Company. If all of the
Proposed Securities offered to such Additional Purchasers are not fully subscribed by such Additional Purchasers, the remaining Proposed Securities will be reoffered to the Additional Purchasers
purchasing their full allotment upon the terms set forth in this Section 3(e), until all such Proposed Securities are fully subscribed for or until all such Additional Purchasers have
subscribed for all such Proposed Securities which they desire to purchase, except that such Additional Purchasers must exercise their purchase rights within five (5) days after receipt of all
such reoffers. To the extent that the Company offers two or more securities in units, Additional Purchasers must purchase such units as a whole and will not be given the opportunity to purchase only
one of the securities making up such unit. 

        (iii)  Upon
the expiration of the offering periods described above, the Company will be free to sell such Proposed Securities that the Additional Purchasers have not elected
to purchase during the ninety (90) days following such expiration at a price and on terms and conditions no more favorable to the purchasers thereof than those offered to such holders. Any
Proposed Securities offered or sold by the Company after such 90-day period must be reoffered to the Additional Purchasers pursuant to this Section 3(e). 

        (iv)  The
election by an Additional Purchaser not to exercise its subscription rights under this Section 3(e) in any one instance shall not affect its right (other
than in respect of a reduction in its percentage holdings) as to any subsequent proposed issuance. Any sale of such securities by the Company without first giving the Additional Purchasers the rights
described in this Section 3(e) shall be void and of no force and effect. 

        (f)    Injunctive Relief.    The Company and the Investors hereby declare that it is impossible to measure in money
the damages which will accrue to the parties hereto by reason of the failure of any Investors to perform any of its obligations set forth in this Section 3. Therefore, the Company and the
Investors shall have the right to specific performance of such Investors obligations, and if any party hereto shall institute any action or proceeding to enforce the provisions hereof, each of the
Investors hereby waives the claim or defense that the party instituting such action or proceeding has an adequate remedy at law. 

8

 

4.     TERMINATION.  

        (a)   The
Agreement shall terminate with respect to each Investor, from and after the date that such Investor ceases to Own any Units;  provided that such Investor shall continue to be bound by terms of this
Agreement that survive termination, if any. 

        (b)   Section 2(a)(i) and
Section 3 shall terminate upon the closing of a Qualified Public Offering (as defined in the Operating Agreement). 

        (c)   The
Agreement shall terminate on the date on which the each Institutional Investor and the Management Investors, Spencer and Buckman Owning a majority of the Common
Units (excluding for this purpose outstanding Option Units) collectively Owned by the Management Investors, Spencer and Buckman shall have agreed in writing to terminate this Agreement. 

5.     INTERPRETATION OF THIS AGREEMENT.  

        (a)    Terms Defined.    As used in this Agreement, the following terms have the respective meaning set forth below: 

        Affiliate:    shall mean any Person or entity, directly or indirectly, controlling, controlled by or under common control with
such Person or entity. For purposes of this definition, "control" has the meaning specified in Rule 405 promulgated pursuant to the Securities
Act. 

        Exchange Act:    shall mean the Securities Exchange Act of 1934, as amended (or any successor act), and the rules and
regulations promulgated thereunder. 

        Owns, Own or Owned:    shall mean beneficial ownership, within the meaning of Rule 13d-3 under the Exchange
Act. 

        Permitted Transferee:    shall mean (i) in the case of any Institutional Investor, any Affiliate of such Institutional
Investor and, (ii) in the case of Spencer, Buckman, the Management Investors or the Additional Investors listed on Schedule III hereto,
members of either Spencer's, Buckman's or such Management Investor's or Additional Investor's family, heirs, executors or legal representatives or trusts for the benefit of such persons family;  provided
in each instance that such Permitted Transferee executed a Joinder Agreement. A Permitted Transferee who immediately prior to owning such Units
was not a party to this Agreement, shall thereafter be added to Schedule III and shall be deemed an
Investor for purposes of this Agreement. In addition to the foregoing, "Permitted Transferees" of the Institutional Investors shall include any entity
controlled (x) by either the Warburg Investors or Vertical Investors or (y) in the aggregate, by both the Warburg Investors and Vertical Investors. 

        Person:    shall mean an individual, corporation, partnership (whether general or limited), joint-stock company corporation,
limited liability company, trust, estate, association, custodian, nominee or unincorporated organization, and a government or agency or subdivision thereof. 

        Preferred Units:    shall mean the Preferred Units that the Company may be authorized to issue from time to time, and any other
securities of the Company into which such Preferred Units shall hereafter be changed or for which such Preferred Units are exchanged after giving effect to the terms of such change or exchange (by way
of reorganization, recapitalization, merger, consolidation or otherwise). 

        Securities Act:    shall mean the Securities Act of 1933, as amended (or any successor act), and the rules and regulations
promulgated thereunder. 

        Subsidiaries:    shall mean any limited liability companies, partnerships (whether general or limited), corporations or other
legal entities in which the Company holds a controlling interest or has the right to direct the management of such entity. 

9

 

        Transfer:    shall mean a voluntary or involuntary sale, exchange, transfer, assignment, pledge, hypothecation, encumbrance or
other disposition. 

        Vertical Investors:    means, collectively, Vertical Fund I, L.P., a Delaware limited partnership, Vertical Fund II, L.P., a
Delaware limited partnership, Vertical Fund Associates, LP., a Delaware limited partnership, and Vertical Life Sciences L.P., a Delaware limited partnership. 

        Warburg Investors:    mean, collectively, Warburg, Pincus Equity Partners, L.P., a Delaware limited partnership; Warburg, Pincus
Netherlands Equity Partners I, C.V., a Netherlands Commanditaire Vennootschap; Warburg, Pincus Netherlands Equity Partners II, C.V., a Netherlands Commanditaire Vennootschap; and Warburg, Pincus
Netherlands Equity Partners III, C.V., a Netherlands Commanditaire Vennootschap. 

        (b)    Accounting Principles.    Where the character or amount of any asset or amount of any asset or liability or
item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, this shall be done in accordance
with U.S. generally accepted accounting principles at the time in effect, to the extent applicable, except where such principles are inconsistent with the requirements of this Agreement. 

        (c)    Directly or Indirectly.    Where any provision in this Agreement refers to any action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person. 

        (d)    Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the State of
Delaware applicable to contracts made and to be performed entirely within such State. 

        (e)    Section Headings.    The headings of the sections and subsections of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part thereof. 

6.     MISCELLANEOUS.  

        (a)    "Market Stand-Off" Agreement.    Each of the parties hereto agrees, if requested by the Company and
an underwriter of equity securities of the Company, not to sell or otherwise Transfer or dispose of any Units Owned by such party during (A) the 180-day period following the
effective date of an Initial Public Offering, provided that (i) such agreement only applies to the Initial Public Offering and (ii) all executive officers and directors of the Company
enter into similar agreements and (B) the 90-day period following the effective date of a registration statement of the Company filed under the Securities Act, provided that
(i) such agreement only applies to the first two registration statements of the Company filed after the Initial Public Offering and (ii) all executive officers and directors of the
Company enter into similar agreements. 

        If
requested by the underwriters, each party shall execute a separate agreement to the foregoing effect. The Company may impose stop-transfer instructions with respect to the
Units (or other securities) subject to the foregoing restriction until the end of said 180-day period or 90-day period, as applicable. The provisions of this
Section 6(a) shall be binding upon any transferee who acquires Units. 

        (b)    Notices.    

        (i)    All
communications under this Agreement shall be in writing and shall be delivered by hand or facsimile or mailed by overnight courier or by registered or certified
mail, postage prepaid: 

        (A)  if
to any of the Institutional Investors, at the address or facsimile number of such Institutional Investor shown on  Schedule I, or at such other address as the Institutional Investor may have
furnished the Company in writing, which notice the Company shall
subsequently send a copy of to the other Investors; 

10

 

        (B)  if
to Spencer or Buckman, c/o ev3 Inc. at 4600 Nathan Lane North, Plymouth, Minnesota 55442 (facsimile: (763) 398-7200), or at such other
address as Spencer or Buckman, as applicable, may have furnished to the Company in writing, which notice the Company shall subsequently send a copy of to the other Investors; 

        (C)  if
to any of the Management Investors, at the address or facsimile number of such Management Investor shown on  Schedule II, or at such other address as the Management Investor may have furnished the
Company in writing, which notice the Company shall
subsequently send a copy of to the other Investors; 

        (D)  if
to any of the Additional Investors, at the address or facsimile number of such Other Investor shown on  Schedule III, or at such other address as the Additional Investor may have furnished the
Company and the other Investors in writing; and 

        (E)  if
to the Company, at 4600 Nathan Lane North, Plymouth, Minnesota 55442 (facsimile: (763) 398-7200), marked for attention of President, or at such
other address as the Company may have furnished in writing to each of the Investors. 

        (ii)   Any
notice so addressed shall be deemed to be given: if delivered by hand or facsimile, on the date of such delivery, if a business day and delivered during regular
business hours, otherwise the first business day thereafter; if mailed by overnight courier, on the first business day following the date of such mailing; and if mailed by registered or certified
mail, on the third business day after the date of such mailing. 

        (c)    Reproduction of Documents.    This Agreement and all documents relating hereto,  including, without
limitation, (i) consents, waivers and modifications which may hereafter be
executed, (ii) documents received by each of the Investors pursuant hereto and (iii) financial statements, certificates and other
information previously or hereafter furnished to each Investor, may be reproduced by each Investor by a photographic, photostatic, microfilm, microcard, miniature photographic or other similar process
and each Investor may destroy any original document so reproduced. All parties hereto agree and stipulate that any such reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by each Investor in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. 

        (d)    Successors and Assigns.    This Agreement shall inure to the benefit of and be binding upon the successors and
assigns, whether by operation of law or otherwise, of each of the parties. 

        (e)    Third Party Beneficiaries.    Nothing in this Agreement shall confer upon any person or entity not a party to
this Agreement, or the legal representatives of such person or entity, any rights or remedies of any nature or kind whatsoever under or by reason of this Agreement. 

        (f)    Entire Agreement: Amendment and Waiver.    This Agreement and the Operating Agreement constitute the entire
understanding of the parties hereto relating to the subject matter hereof and supersede all prior understandings among such parties. This Agreement may be amended, and the observance of any term of
this Agreement may be waived, with (and only with) the written consent of each Institutional Investor and the Management Investors, Spencer and Buckman Owning a majority of the Common Units (excluding
for this purpose outstanding Option Units) collectively Owned by the Management Investors, Spencer and Buckman shall have agreed in writing to terminate this Agreement. 

        (g)    Severability.    In the event that any part or parts of this Agreement shall be held illegal or unenforceable
by any court or administrative body of competent jurisdiction, such determination shall not affect the remaining provisions of this Agreement which shall remain in full force and effect. 

11

 

        (h)    Counterparts.    This Agreement may be executed in one or more counterparts (including by facsimile), each of
which shall be deemed an original and all of which together shall be considered one and the same agreement. 

12

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

	 	 	EV3 LLC
	

 	
 	

By:	

/s/  PAUL BUCKMAN      

	 	 	Name:	Paul Buckman
	 	 	Title:	President and CEO
	

 	
 	

WARBURG, PINCUS EQUITY PARTNERS, L.P.
	

 	
 	

By:	

Warburg Pincus & Co.,

General Partner
	

 	
 	

By:	

/s/  ELIZABETH H. WEATHERMAN      

	 	 	Name:	Elizabeth H. Weatherman
	 	 	Title:	Partner
	

 	
 	

WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS I, C.V.
	

 	
 	

By:	

Warburg Pincus & Co.,

General Partner
	

 	
 	

By:	

/s/  ELIZABETH H. WEATHERMAN      

	 	 	Name:	Elizabeth H. Weatherman
	 	 	Title:	Partner
	

 	
 	

WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS II, C.V.
	

 	
 	

By:	

Warburg Pincus & Co.,

General Partner
	

 	
 	

By:	

/s/  ELIZABETH H. WEATHERMAN      

	 	 	Name:	Elizabeth H. Weatherman
	 	 	Title:	Partner
	

 	
 	

WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS III, C.V.
	

 	
 	

By:	

Warburg Pincus & Co.,

General Partner
	

 	
 	

By:	

/s/  ELIZABETH H. WEATHERMAN      

	 	 	Name:	Elizabeth H. Weatherman
	 	 	Title:	Partner
	 	 	 	 

	

 	
 	

VERTICAL FUND I, L.P.
	

 	
 	

By:	

Vertical Group, L.P.,

General Partner
	

 	
 	

By:	

/s/  JOHN E. RUNNELLS      

	 	 	Name:	John E. Runnells
	 	 	Title:	General Partner
	

 	
 	

VERTICAL FUND II, L.P.
	

 	
 	

By:	

Vertical Group, L.P.,

General Partner
	

 	
 	

By:	

/s/  JOHN E. RUNNELLS      

	 	 	Name:	John E. Runnells
	 	 	Title:	General Partner
	

 	
 	

 	

/s/  DALE A. SPENCER      
 Dale A. Spencer
	

 	
 	

 	

/s/  PAUL BUCKMAN      
 Paul Buckman
	

 	
 	

 	

/s/  JAMES M. CORBETT      
 James M. Corbett
	

 	
 	

 	

/s/  L. CECILY HINES      
 L. Cecily Hines
	

 	
 	

 	

/s/  STACY ENXING SENG      
 Stacy Enxing Seng
	

 	
 	

 	

/s/  PAUL KAPSNER      
 Paul Kapsner
	 	 	 	 

	

 	
 	

DALE A. SPENCER REVOCABLE TRUST U/A DATED 10/7/97
	

 	
 	

By:	

/s/  DALE SPENCER      

	 	 	Name:	Dale Spencer
	 	 	Title:	Trustee
	

 	
 	

By:	

/s/  D. WILLIAM KAUFMAN      

	 	 	Name:	D. William Kaufman
	 	 	Title:	Trustee

QuickLinks

Exhibit 4.2

ev3 LLC HOLDERS AGREEMENT

RECITALS

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00082-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00082-of-00352.parquet"}]]