Document:

Exhibit 10.4

 

Execution
Version

 

AMENDED AND RESTATED

EQUITY PLEDGE AGREEMENT

 

THIS AMENDED AND RESTATED EQUITY PLEDGE AGREEMENT (this “Agreement”)
dated as of this 20th day of September, 2010, between MAIN STREET
CAPITAL CORPORATION, a Maryland corporation (the “Borrower”), MAIN
STREET EQUITY INTERESTS, INC., a Delaware corporation (“MSEI” and
together with the Borrower, the “Pledgors” and each, a “Pledgor”),
and BRANCH BANKING AND TRUST COMPANY (“BB&T”), acting as agent (in
such capacity, the “Administrative Agent”) for itself and the other
Secured Parties (as defined in the Credit Agreement referred to below).

 

W I T N E S S E T H

 

WHEREAS, the Administrative Agent and the
Lenders (as defined in the Credit Agreement defined below) have agreed to
extend credit to Borrower pursuant to the terms of that certain Amended and
Restated Credit Agreement of even date herewith among the Pledgors, the other
Guarantors, the Administrative Agent, the Lenders signatory thereto, Regions Capital Markets, as Syndication Agent, and BB&T Capital Markets, as Lead Arranger (as amended,
restated, or otherwise modified from time to time (the “Credit Agreement”),
which amends and restates in its entirety that certain Credit Agreement dated
as of October 24, 2008 among the Borrower, the Pledgors, the other
Guarantors, the lenders signatory thereto and BB&T, as a lender and as
administrative agent (as amended or modified prior to the date of the Credit
Agreement, the “Original Credit Agreement”);

 

WHEREAS, the Pledgors may from time to
time enter into or guarantee one or more Hedge Transactions (as defined in the
Credit Agreement) with the Hedge Counterparties (as defined in the Credit
Agreement);

 

WHEREAS, each Pledgor beneficially and
legally owns the limited liability company membership interests,
limited partnership interests, stock and other equity interests in the
Guarantor and/or the other Loan Parties and the Subsidiaries (as each such term
is defined in the Credit Agreement) described on Schedule I attached
hereto (the “Pledged Entities”);

 

WHEREAS, it is a condition of the Lenders’ agreement to
extend credit to Borrower pursuant to the Credit Agreement that the
Administrative Agent, on behalf of the Secured Parties (as defined in the
Credit Agreement), receive a pledge of the Collateral (as defined below)
hereunder by Pledgors’ execution and delivery of this Agreement to secure:  (a) the due and punctual payment by
Borrower of: (i) the principal of and interest on the Notes (including,
without limitation, any and all Revolver Advances), when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise and any renewals, modifications or extensions thereof, in whole or in
part; (ii) each payment required to be made by any Pledgor under the
Credit Agreement, when and as due, including payments in respect of
reimbursement of disbursements, interest thereon, and obligations, if any, to
provide cash collateral and any renewals, modifications or extensions thereof,
in whole or in part; and (iii) all 

 

 

other monetary obligations of any Pledgor to the Secured
Parties under the Credit Agreement and the other Loan Documents to which any
Pledgor is or is to be a party and any renewals, modifications or extensions
thereof, in whole or in part; (b) the due and punctual performance of all
other obligations of any Pledgor under the Credit Agreement and the other Loan
Documents to which such Pledgor is or is to be a party, and any renewals,
modifications or extensions thereof, in whole or in part; (c) the due and
punctual payment (whether at the stated maturity, by acceleration or otherwise)
of all obligations (including any and all Hedging Obligations (as defined in
the Credit Agreement) arising under Hedging Agreements and obligations which,
but for the automatic stay under Section 362(a) of the Bankruptcy
Code, would become due), indebtedness and liabilities of any Pledgor, now
existing or hereafter incurred under, arising out of or in connection with any
and all Hedging Agreements and any renewals, modifications or extensions
thereof (including, all obligations, if any, of any Pledgor as guarantor under
the Credit Agreement in respect of Hedging Agreements), and the due and
punctual performance and compliance by each Pledgor with all of the terms, conditions
and agreements contained in any Hedging Agreements and any renewals,
modifications or extensions thereof; (d) the due and punctual payment and
performance of all indebtedness, liabilities and obligations of any one or more
of Pledgors and the Guarantors arising out of or relating to any Bank Products;
(e) the due and punctual payment and performance of all indebtedness,
liabilities and obligations of any one or more of Pledgors and the Guarantors
arising out of or relating to any Cash Management Services; and (f) the
due and punctual payment and performance of all obligations of each of the
Guarantors under the Credit Agreement and the other Loan Documents to which
they are or are to be a party and any and all renewals, modifications or
extensions thereof, in whole or in part (all of the foregoing indebtedness,
liabilities and obligations being collectively called the “Obligations”);
and

 

WHEREAS, this Agreement amends and restates in its
entirety that certain Equity Pledge Agreement dated as of October 24, 2008
executed by Pledgors in connection with the Original Credit Agreement.

 

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

 

SECTION 1.         Definitions.  Any
capitalized terms used but not defined herein shall have the meanings assigned
to them in the Credit Agreement.

 

SECTION 2.         Pledge; Perfection.

 

(a)           As collateral security for the due and punctual
payment of the Obligations, each Pledgor hereby pledges, hypothecates, delivers
and assigns and grants unto Administrative Agent, as agent for itself and the
Secured Parties, a security interest (which security interest shall constitute
a first priority security interest), in all of Pledgor’s membership interests,
limited partnership interests, common stock and other equity interests in the
Pledged Entities and all securities instruments or other rights convertible
into or exercisable for the foregoing (the “Equity Interests”), together
with all proceeds, profits, interests, capital accounts, accounts, contract
rights, general intangibles, deposits, funds, dividends, distributions, rights
to dividends, rights to distributions, 

 

 

including
both distributions of money and of property, and other rights, claims and
interests relating to or arising out of Pledgor’s Equity Interests, now owned
or hereafter acquired, in the Pledged Entities, together with any and all
replacements or substitutions for or proceeds of all of the foregoing
(collectively, the “Collateral”); provided  that,
notwithstanding anything herein to the contrary, Collateral shall not include,
and the security interest herein shall not attach to, (i) the Equity
Interests issued by the entities identified as SBIC Entities on Schedule I,
(ii) any outstanding Equity Interests of a Foreign Subsidiary in excess of
65% of the voting power of all classes of Equity Interests of such Foreign
Subsidiary entitled to vote or (iii) any property rights in Equity
Interests (other than Equity Interests issued by any Subsidiary), or any
Operating Documents of any issuer of such Equity Interests to which Pledgor is
a party, or any of its rights or interests thereunder, if the grant of such
security interest shall constitute or result in (A) the abandonment,
invalidation or unenforceability of any right, title or interest of the Pledgor
therein or (B) a breach or termination pursuant to the terms of, or a
default under, any such property rights or Operating Documents (other than to
the extent that any such term would be rendered ineffective pursuant to
Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provisions)
of any relevant jurisdiction or any other Applicable Law (including the
Bankruptcy Code) or principles of equity) (the Equity Interests described in
foregoing clauses (i) through (iii), the “Excluded Equity Interests”);
provided  further  that, (x) immediately upon any
amendment, modification or repeal of the Restrictive Provisions to allow the
pledge of any Excluded Equity Interests of the type described in clause (i),
the Collateral shall include, and the security interest granted hereunder shall
attach to, such Equity Interests that are no longer subject to such Restrictive
Provisions and (y) until such time as attachment occurs with respect to
any Excluded Equity Interest of the type described in clause (i) or (iii),
references in this Agreement to “Pledged Entities” shall be deemed not to
include the issuers of such Excluded Equity Interest.

 

This Agreement is not intended to place
Administrative Agent or any Secured Party in a position of being a member,
shareholder or partner of any Pledged Entity, but is intended to grant
Administrative Agent, on behalf of the Secured Parties, a lien on and security
interest in Pledgor’s Equity Interests in the Pledged Entities including,
without limitation, any and all of the Collateral but specifically excluding
any general partnership interests.

 

(b)           Each
Pledgor hereby delivers to the Administrative Agent (or to the Collateral
Custodian as its agent and bailee), on behalf of the Secured Parties, including
itself, herewith all certificates, instruments and documents, if any,
representing the Equity Interests in the Pledged Entities to be held by the
Administrative Agent as Collateral, together with a transfer power in blank
duly executed by Pledgor.

 

SECTION 3.         Representations and Warranties.  Each
Pledgor hereby represents and warrants, as of the date hereof and each day on
which a Borrowing is made, that:

 

(a)           Pledgor has all requisite
power and authority to enter into this Agreement, to grant a security interest
in the Collateral for the purposes described in Section 2 and to carry out
the transactions contemplated by this Agreement;

 

 

(b)           No approval of or consent
from any person or entity (other than the acknowledgement and consent of any
Pledged Entity which is a Subsidiary as evidenced by its signature hereto) is
required in connection with the execution and delivery by Pledgor of this
Agreement, the granting and perfection of the security interests in the
Collateral, or the carrying out of the transactions contemplated by this
Agreement (including the exercise by the Administrative Agent of the voting or
other rights provided for in this Agreement or the exercise of remedies in
respect thereof);

 

(c)           Pledgor is the record and
beneficial owner of the Collateral as of the date hereof;

 

(d)           All of the Collateral is
owned by Pledgor free and clear of any pledge, mortgage, hypothecation, lien,
charge, encumbrance or any security interest in such Collateral or the proceeds
thereof, except for the security interest granted to the Administrative Agent
on behalf of the Secured Parties hereunder, and there are no outstanding warrants,
options or other rights to purchase, or shareholder, voting trust or similar
agreements outstanding with respect to, or property that is convertible into,
or that requires the issuance of sale of, any Equity Interests;

 

(e)           The execution, delivery
and performance by Pledgor of this Agreement do not and will not contravene or
constitute a default under or result in any violation of any agreement
(including, without limitation, the operating or partnership agreement of any
Pledged Entity), indenture or other instrument, license, judgment, decree,
order, law, statute, ordinance or other governmental rule or regulation
applicable to Pledgor;

 

(f)            On each Representation
Date (as defined in the Security Agreement), Schedule I hereto (as such
schedule may be amended or supplemented from time to time pursuant to the terms
of this Agreement) sets forth all of the issued and outstanding Equity
Interests held by Pledgor and such Equity Interests constitute the percentage
of issued and outstanding shares of stock, percentage of membership interests
or percentage of partnership interests of the respective Pledged Entities
indicated on Schedule I.

 

(g)           Each Pledged Entity is a
limited liability company, limited partnership or corporation duly formed,
validly existing and in good standing as such under the laws of the
jurisdiction of its organization as set forth on Schedule I hereto, and
the execution and delivery of this Agreement require no action by or in respect
of, or filing with, any governmental body, agency or official (except for the
Uniform Commercial Code filings set forth in paragraph (h) below) and do
not contravene, or constitute a default under, the operating agreement,
partnership agreement, charter or by-laws of any Pledged Entity;

 

(h)           Upon filing of a Uniform
Commercial Code Financing Statement with the U.C.C. records of the Secretary of
State of the state of organization of each Pledgor, this Agreement creates and
grants a valid lien on and perfected security interest in the Collateral and
the proceeds thereof, subject to no prior security interest, lien, charge or
encumbrance, or to any agreement purporting to grant to any third party a
security interest in the property or assets of such Pledgor which would include
the Collateral;

 

 

(i)            A true, correct and
complete copy of the operating agreement, limited partnership agreement,
charter and by-laws, as the case may be, of each Pledged Entity (together with
all amendments thereto) has been provided to the Administrative Agent;

 

(j)            to the extent that any
limited liability company interests or partnership interests pledged as
Collateral are or represent issuers that have opted to be treated as securities
under the applicable U.C.C., the certificates representing such securities have
been delivered to the Administrative Agent (or to the Collateral Custodian as
its agent and bailee), and no limited liability company interests or
partnership interests pledged as Collateral are dealt in or traded on
securities exchanges or markets; and

 

(k)           None of the Equity
Interests constitutes Margin Stock.

 

SECTION 4.         Voting Rights; Distributions, Etc.

 

(a)           So long as no Event of
Default, as defined in the Credit Agreement, shall have occurred and be
continuing:

 

(i)            Each Pledgor shall be entitled to exercise any
and all voting and/or other consensual rights and powers relating or pertaining
to the Collateral or any part thereof, provided, however, that no vote shall be
cast or right exercised or other action taken which would (x) impair the
Collateral or any portion thereof or the rights and remedies of the
Administrative Agent under the Loan Documents, or (y) have or would
reasonably be expected to have a material adverse effect on the Collateral or
any material part thereof or (z) result in any violation of the provisions
of this Agreement, the Credit Agreement or any other Loan Document,

 

(ii)           except to the extent limited by this Agreement,
the Credit Agreement or any other Loan Document, each Pledgor shall be entitled
to receive and retain any and all cash dividends or cash distributions payable
on the Collateral, but any and all equity interests and/or liquidating
dividends, distributions in property, returns of capital, or other
distributions made on or in respect of the Collateral, whether resulting from a
subdivision, combination, or reclassification of the outstanding ownership
units or other interests of the Pledged Entities or received in exchange for
the Collateral or any part thereof or as a result of any merger, consolidation,
acquisition, or other exchange of assets to which any Pledged Entity may be a
party or otherwise, and any and all cash and other property received in
redemption of or in exchange for any Collateral (either upon call for
redemption or otherwise), shall be and become part of the Collateral pledged
hereunder and, if received by Pledgor, shall forthwith be delivered to
Administrative Agent (accompanied by proper instruments of assignment and/or
powers of attorneys executed by Pledgor) to be held subject to the terms of
this Agreement;

 

 

(b)           Upon the occurrence and
during the continuance of an Event of Default, all rights of each Pledgor to
exercise the voting and/or other consensual rights and powers that  Pledgor is entitled to exercise pursuant to Section 4(a)(i) hereof
and/or to receive the payments that Pledgor is authorized to receive and retain
pursuant to Section 4(a)(ii) hereof shall cease, and all such rights
shall thereupon become vested in Administrative Agent for the benefit of the
Secured Parties, who shall have the sole and exclusive right and authority to
exercise such voting and/or other consensual rights and powers and/or to
receive and retain such payments; provided, that nothing herein shall
obligate Administrative Agent to exercise such voting and/or other consensual
rights, all such action in such regard being solely in Administrative Agent’s
or Secured Parties’ discretion.  Any and
all money and other property paid over to or received by Administrative Agent
pursuant to the provisions of this paragraph (b) shall be retained by
Administrative Agent as additional Collateral hereunder and be applied in
accordance with the provisions hereof.

 

SECTION 5.         Covenants.  Each
Pledgor hereby covenants that until such time as the Obligations shall have
been indefeasibly paid in full:

 

(a)           Pledgor will not, without
the prior written consent of the Administrative Agent, sell, convey, assign, or
otherwise dispose of, or grant any option with respect to, all or any part of
the Collateral or any interest therein, except that Pledgor shall be permitted
to receive and dispose of distributions to the extent permitted by Section 4
(a)(ii) above; nor will Pledgor create, incur or permit to exist any
pledge, mortgage, lien, charge, encumbrance or security interest whatsoever
with respect to all or any part of the Collateral or the proceeds thereof,
other than that created hereby; nor will Pledgor amend or terminate, or waive
any default under or breach of the terms of the operating agreement, limited
partnership agreement or charter of any Pledged Entity or consent to or permit
any amendment, termination or waiver thereof, except as not otherwise
prohibited under the Loan Documents and to the extent such action does not and
would not reasonably be likely to have a material adverse effect with respect
to the Pledged Entity or the Collateral; nor will Pledgor enter into any
contractual obligations that restrict or inhibit, or which would reasonably be
expected to restrict or inhibit, the Administrative Agent’s rights or ability
to vote or sell or otherwise dispose of the Collateral or any part thereof
after an Event of Default; nor will Pledgor consent to or permit the issuance
of any additional Equity Interests in any Pledged Entity (unless pledged to
Administrative Agent hereunder), or any securities or instruments exercisable
or exchangeable for Equity Interests in any Pledged Entity or otherwise
representing any right to acquire any Equity Interest in any Pledged Entity or
any general partnership interests in any Pledged Entity that is a limited partnership.

 

(b)           Pledgor will not permit
any Pledged Entity to change its entity form or, except as permitted under the
Credit Agreement, merge into or consolidate into any other entity and will give
to Administrative Agent not less than 20 days’ prior written notice of (i) any
change in the name of any Pledgor or the name of any Pledged Entity or (ii) any
change in the location of the principal place of business (or, in the case of
an individual Pledgor, the principal residence) of Pledgor or any Pledged Entity;
provided that Pledgor shall not permit any change described in the
preceding clauses (i) and (ii) unless Pledgor 

 

 

shall have taken all actions necessary or
reasonably requested by the Administrative Agent to maintain the continuance,
validity, perfection and the same or better priority of the Administrative
Agent in the Collateral.

 

(c)           Pledgor will, at Pledgor’s
own expense, defend Administrative Agent’s and Secured Parties’ right, title,
special property and security interest in and to the Collateral and any
distributions with respect thereto against the claims of any Person (other than
the holders of Permitted Encumbrances).

 

(d)           Pledgor will comply with
all its obligations under any limited liability company or partnership
agreement relating to the Equity Interests and will preserve and protect the
Collateral.

 

(e)           Pledgor will promptly pay
and discharge before the same become delinquent, all taxes, assessments and
governmental charges or levies imposed on Pledgor or the Collateral, except for
taxes timely disputed in good faith, for which adequate reserves have been
made.

 

(f)            The Secured Parties shall
have the right, upon request on the terms set forth in Section 5.02 of the
Credit Agreement, to review, examine and audit the books and records of any
Pledged Entity and of Pledgor with regard to the Collateral and any
distributions with respect thereto.

 

(g)           Pledgor
consents to the transfer pursuant to the collateral assignment, pledge or grant
of security interest in any limited liability company or partnership interest
pledged as Collateral to the Administrative Agent or its nominee and, following
the occurrence and during the continuance of an Event of Default, consents to
the transfer of any such interests to and the admission of the Administrative
Agent or its nominee as a member in any limited liability company or partner in
any partnership, as the case may be, with all the rights and powers related
thereto.

 

(h)           In the
event that Pledgor acquires rights in any Equity Interests after the date of
this Agreement, Pledgor shall deliver to the Administrative Agent, on or before
the Reporting Date (as defined in the Security Agreement) immediately following
the end of the Fiscal Quarter during which it acquires any such rights, a
completed Pledge Supplement, substantially in the form of Exhibit A
attached hereto, reflecting such new Equity Interests and all other Equity
Interests.  Notwithstanding the foregoing
it is understood and agreed that the security interest of the Administrative
Agent shall attach to all such newly acquired Equity Interests immediately upon
Pledgor’s acquisition of rights therein and shall not be affected by the
failure of Pledgor to deliver such supplement.

 

SECTION 6.         Remedies upon Default.  Upon
the occurrence and during the continuance of an Event of Default,
Administrative Agent may, in addition to the exercise by Administrative Agent
of its rights and remedies under any other Section of this Agreement or
under the Credit Agreement or any other agreement relating to the Obligations
or otherwise available to it at law or in equity:

 

 

(a)           declare the principal of
and all accrued interest on and any other amounts owing with respect to the
Obligations immediately due and payable, without demand, protest, notice of
default, notice of acceleration or of intention to accelerate or other notices
of any kind, and

 

(b)           exercise all the rights
and remedies of a secured party under the Uniform Commercial Code in effect in
the State of North Carolina at that time and sell (in compliance with
applicable laws, including securities laws) the Collateral, or any part
thereof, at public or private sale, at any broker’s board, upon any securities
exchange, or elsewhere, for cash, upon credit, or for future delivery, as
Administrative Agent may deem appropriate in the circumstances and commercially
reasonable.  Administrative Agent shall
have the right to impose limitations and restrictions on the sale of the
Collateral as Administrative Agent may deem to be necessary or appropriate to
comply with any law, rule, or regulation (Federal, state, or local) having
applicability to the sale, including, but without limitation, restrictions on
the number and qualifications of the offerees and requirements for any
necessary governmental approvals, and Administrative Agent shall be authorized
at any such sale (if it deems it necessary or advisable to do so) to restrict
the prospective offerees or purchasers to Persons who will represent and agree
that they are purchasing securities included in the Collateral for their own
account and not with a view to the distribution or sale thereof in violation of
applicable securities laws and Pledgor hereby waives, to the maximum extent
permitted by law, any claim arising because the price at which the Collateral
may have been sold at such private sale was less than the price that might have
been obtained at public sale, even if Administrative Agent accepts the first
offer received and does not offer such Collateral to more than one offeree.  Upon consummation of any such sale,
Administrative Agent shall have the right to assign, transfer, and deliver to
the purchaser or purchasers thereof the Collateral so sold.  Each such purchaser at any such sale shall
hold the property sold absolutely free from any claim or right on the part of
Pledgor, and Pledgor hereby waives (to the extent permitted by law) all rights
of redemption, stay, and/or appraisal that Pledgor now has or may at any time
in the future have under any rule of law or statute now existing or
hereafter enacted.  To the extent that
notice of sale shall be required to be given by law, Administrative Agent shall
give Pledgor at least ten (10) days’ prior written notice of its intention
to make any such public or private sale. 
Such notice shall state the time and place fixed for sale, and the
Collateral, or portion thereof, to be offered for sale.  Any such sale shall be held at such time or
times within ordinary business hours and at such place or places as
Administrative Agent may fix in the notice of such sale.  At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as Administrative Agent may determine, and Administrative Agent may
itself bid (which bid may be in whole or in part in the form of cancellation of
the Obligations) for and purchase the whole or any part of the Collateral.  Administrative Agent shall not be obligated
to make any sale of the Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of the Collateral may have been
given.  Administrative Agent may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned.  In
case sale of all or any part of the Collateral is made to any Person other than
the Administrative Agent or any Lender on 

 

 

credit or for future delivery, the Collateral so
sold may be retained by Administrative Agent until the sale price is paid by
the purchaser or purchasers thereof. 
Administrative Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may be sold again upon
like notice.  Pledgor hereby agrees that
any sale or disposition of the Collateral conducted in conformity with
reasonable commercial practices of banks, insurance companies or other
financial institutions in the city and state where Administrative Agent is
located in disposing of property similar to the Collateral shall be deemed to
be commercially reasonable.

 

(c)           Pledgor recognizes that
the Administrative Agent and Secured Parties may be unable to effect a public
sale of all or part of the Collateral by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws but may be compelled to resort to one or more private sales to
a restricted group of purchasers who will be obligated to agree, among other
things, to acquire all or a part of the Collateral for their own account, for
investment, and not with a view to the distribution or resale thereof.  Pledgor acknowledges and agrees that any
private sale so made may be at prices and on other terms less favorable to the
seller than if such Collateral were sold at public sale and that the
Administrative Agent has no obligation to delay the sale of such Collateral for
the period of time necessary to permit the registration of such Collateral for
public sale under any securities laws. 
Pledgor agrees that a private sale or sales made under the foregoing
circumstances shall not be deemed to have not been made in a commercially
reasonable manner solely as a result of being a private sale.  If any consent, approval, or authorization of
any federal, state, municipal, or other governmental department, agency, or
authority should be necessary to effectuate any sale or other disposition of
the Collateral, or any partial sale or other disposition of the Collateral,
Pledgor will execute all applications and other instruments as may be required
in connection with securing any such consent, approval, or authorization and
will otherwise use its best efforts to secure the same.  In addition, if the Collateral is disposed of
pursuant to Rule 144, Pledgor agrees to complete and execute a Form 144,
or comparable successor form, at the Administrative Agent’s request; and
Pledgor agrees to provide any material adverse information in regard to the
current and prospective operations of each Pledged Entity of which Pledgor has
knowledge and which has not been publicly disclosed, and Pledgor hereby
acknowledge that Pledgor’s failure to provide such information may result in
criminal and/or civil liability.

 

SECTION 7.         Application of Proceeds of Sale.  The
proceeds of sale of the Collateral sold pursuant to Section 6 hereof shall
be applied by Administrative Agent as set forth in Section 6.04 of the
Credit Agreement.

 

SECTION 8.         Administrative Agent Appointed Attorney-in-Fact.  Each
Pledgor hereby appoints Administrative Agent as Pledgor’s attorney-in-fact,
effective during the continuance of an Event of Default, with full power of
substitution, for the purpose of carrying out the provisions of this Agreement
and taking any action and executing any instrument that Administrative Agent
may deem necessary or advisable to accomplish the purposes hereof, which
appointment is coupled with an interest and is irrevocable.  Without limiting the generality of the
foregoing, after the occurrence and during the continuance of an Event of
Default,

 

 

Administrative Agent shall
have the right and power to receive, endorse, and collect all checks and other
orders for the payment of money made payable to any Pledgor representing any
dividend or other distribution payable or distributable in respect of the
Collateral or any part thereof, and to give full discharge for same.

 

SECTION 9.         Responsibility.  Notwithstanding the provisions of Section 4(b) hereof,
Administrative Agent shall have no duty to exercise any voting and/or other
consensual rights and powers becoming vested in Administrative Agent with
respect to the Collateral or any part thereof, to exercise any right to redeem,
convert, or exchange any securities included in the Collateral, to enforce or
see to the payment of any dividend or any other distribution payable or
distributable on or with respect to the Collateral or any part thereof, or
otherwise to preserve any rights in respect of the Collateral against any third
parties.

 

SECTION 10.       No
Waiver; Cumulative Remedies.  No
failure on the part of Administrative Agent to exercise, and no delay in
exercising, any right, power, or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy by Administrative Agent preclude any other or further exercise thereof
or the exercise of any other right, power or remedy.  All remedies of Administrative Agent
hereunder are cumulative and are not exclusive of any other remedies available
to Administrative Agent at law or in equity.

 

SECTION 11.       Termination.  This Agreement shall terminate upon the
complete performance of each Loan Party’s obligations under each Loan Document
and the final and indefeasible payment in full of the Obligations.  Upon termination of this Agreement,
Administrative Agent shall reassign and redeliver (or cause to be reassigned or
redelivered) to Pledgor such Collateral (if any) as shall not have been sold or
otherwise applied by Administrative Agent pursuant to the terms hereof and as
shall still be held by it hereunder together with appropriate instruments of
assignment and release.

 

SECTION 12.       Notices.  Any notice or communication required or
permitted hereunder shall be given in the manner prescribed in the Credit
Agreement to such Person at its address set forth in the Credit Agreement or on
Schedule I to this Agreement.

 

SECTION 13.       Further
Assurances.  Each Pledgor agrees to
do such further acts and things, and to execute and deliver such agreements and
instruments, as Administrative Agent may at any time reasonably request in
connection with the administration or enforcement of this Agreement or related
to the Collateral or any part thereof or in order better to assure and confirm
unto Administrative Agent and the Secured Parties their rights, powers and
remedies hereunder.  Each Pledgor hereby
authorizes Administrative Agent to file one or more Uniform Commercial Code
financing or continuation statements, or amendments thereto, relative to all or
any part of the Collateral. Each Pledgor will execute and deliver to the
Administrative Agent (or to the Collateral Custodian as its agent and bailee)
all assignments, endorsements, powers, hypothecations, and other documents
required at any time and from time to time by the Administrative Agent with
respect to the Collateral in order to effect the purposes of this
Agreement.  If any Pledgor shall become
entitled to receive or shall receive with respect to the Collateral any:  (i) certificate (including, but without
limitation, any certificate representing a dividend or a distribution in
connection with any increase or reduction of capital, reclassification, 

 

 

merger, consolidation, sale of
assets, combination of shares, stock split, spin-off or split-off); (ii) option,
warrant or right, whether as an addition to, in substitution of, in exchange
for the Collateral, or otherwise; (iii) dividends or distributions payable
in property, including, without limitation, securities issued by any person
other than the issuer of the Collateral; or (iv) dividends or
distributions on dissolution, or in partial or total liquidation, or from
capital, capital surplus, or paid-in surplus, then, Pledgor shall accept any
such instruments or distributions as the Administrative Agent’s agent, shall
receive them in trust for the Administrative Agent, and shall deliver them
forthwith to the Administrative Agent (or to the Collateral Custodian as its
agent and bailee) in the exact form received with, as applicable, Pledgor’s
endorsement when necessary or appropriate undated stock or bond powers duly executed
in blank, to be held by the Administrative Agent (or to the Collateral
Custodian as its agent and bailee), subject to the terms hereof, as further
collateral security for the Obligations.

 

SECTION 14.       Binding
Agreement.  This Agreement and the
terms, covenants, and conditions hereof, shall be binding upon and inure to the
benefit of the parties hereto, and their respective heirs, executors,
administrators, successors and assigns.

 

SECTION 15.       Modification.  Neither this Agreement nor any provisions
hereof may be amended, modified, waived, discharged, or terminated, nor may any
of the Collateral be released or the pledge or the security interest created
hereby extended, except by an instrument in writing signed by the parties
hereto.

 

SECTION 16.       Severability.  In case any lien, security interest, or other
right of Administrative Agent hereunder shall be held to be invalid, illegal,
or unenforceable, such invalidity, illegality, and/or unenforceability shall
not affect any other lien, security interest, or other right of Administrative
Agent hereunder.

 

SECTION 17.       Governing
Law.  This Agreement (including
matters of construction, validity, and performance) , the rights, remedies, and
obligations of the parties with respect to the Collateral to the extent not
provided for herein, and all matters concerning the validity, perfection, and
the effect of non-perfection of the pledge contemplated hereby, shall be
governed by and construed in accordance with the laws of the State of North
Carolina or other mandatory applicable laws. 
Notwithstanding anything herein, EACH PLEDGOR AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NORTH CAROLINA  AND THE UNITED STATES DISTRICT COURTS SITTING
THEREIN IN ANY ACTION TAKEN BY ADMINISTRATIVE AGENT RELATING TO THIS AGREEMENT
OR ANY PROVISIONS, RIGHTS OR REMEDIES HEREOF. 
EACH PLEDGOR FURTHER AGREES THAT ANY ACTION TAKEN BY PLEDGOR RELATING TO
THIS AGREEMENT OR ANY PROVISIONS, RIGHTS OR REMEDIES HEREOF SHALL BE TAKEN IN
SAID COURTS AND SHALL NOT BE TAKEN IN ANY OTHER JURISDICTION.  PLEDGOR RECOGNIZES THAT THIS COVENANT IS AN
ESSENTIAL PROVISION OF THIS AGREEMENT, THE ABSENCE OF WHICH WOULD MATERIALLY
ALTER THE CONSIDERATION GIVEN BY ADMINISTRATIVE AGENT AND SECURED PARTIES TO
PLEDGOR.

 

SECTION 18.       Duties
of Administrative Agent.  The
Administrative Agent has been appointed by the Secured Parties pursuant to the
Credit Agreement.  Its duties to the
Secured 

 

 

Parties, powers to act on
behalf of the Secured Parties, and immunity are set forth solely therein, and
shall not be altered by this Security Agreement.  Any amounts realized by the Administrative
Agent hereunder shall be allocated pursuant to Section 6.04 of the Credit
Agreement.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this
Amended and Restated Equity Pledge Agreement to be duly executed and delivered
as of the date first above written.

 

 

	
   

  	
  MAIN STREET CAPITAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Todd A. Reppert

  
	
   

  	
  Name:

  	
  Todd A. Reppert

  
	
   

  	
  Title:

  	
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADMINISTRATIVE AGENT:

  
	
   

  	
   

  
	
   

  	
  BRANCH BANKING AND TRUST COMPANY,

  
	
   

  	
  as Administrative Agent for itself and the other
  Secured Parties

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gregory Drabik

  
	
   

  	
  Name:

  	
  Gregory Drabik

  
	
   

  	
  Title:

  	
  Senior Vice President

  

 

 

	
   

  	
  MAIN STREET EQUITY
  INTERESTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rodger Stout

  
	
   

  	
   

  	
  Rodger Stout

  
	
   

  	
   

  	
  Vice President, Treasurer, and Assistant SecretaryExhibit 10.1

 

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

 

Case
No. 08-CV-2102-REB-MJW

(Consolidated
with Civil Action Nos. 08-CV-02467-REB-MJW and 

09-cv-00161-REB-MJW)

 

DOUGLAS
A. KOPP, derivatively on behalf of Nominal Defendant

The
Spectranetics Corporation,

 

Plaintiff,

 

v.

 

EMILE J. GEISENHEIMER,

DAVID
G. BLACKBURN,

R.
JOHN FLETCHER,

MARTIN
T. HART,

JOSEPH
M. RUGGIO, M.D.,

JOHN
G. SCHULTE, and

CRAIG
M. WALKER, M.D.

 

Defendants,

 

And

 

THE
SPECTRANETICS CORPORATION,

 

Nominal
Defendant.

 

STIPULATION OF SETTLEMENT

 

 

 

This
Stipulation of Settlement (the “Stipulation”), dated as of September 10,
2010, is made and entered into by and among the following parties, by and
through their respective counsel of record: 
(1) the Settling Derivative Plaintiffs (as defined below), on
behalf of themselves and derivatively on behalf of The Spectranetics
Corporation (“Spectranetics” or the “Company,” as defined below); (2)  the
Settling Derivative Defendants (as defined below); and (3) Spectranetics (collectively,
and as defined below, the “Settling Derivative Parties”).  The Settlement set forth in this Stipulation
(the “Settlement”) is intended by the Settling Derivative Parties to fully,
finally and forever resolve, discharge and settle the Released Claims (as
defined below) against the Released Derivative Parties (as defined below), upon
and subject to the terms and conditions hereof and subject to the approval of
the U.S. District Court for the District of Colorado (the “Federal Court”)
pursuant to Rule 23.1 of the Federal Rules of Civil Procedure.

 

I.                                         THE
DERIVATIVE ACTIONS AND RELATED LITIGATION

 

1.                                      Background

 

Spectranetics
develops, manufactures, markets, and distributes single-use fiber-optic laser
catheters for use in minimally invasive surgical procedures to clear blocked
arteries within the body.  It has a range
of laser catheters that are used to treat peripheral arterial disease (“PAD”)
by removing stenoses and occlusions in the legs both above and below the
knee.  Spectranetics also has a range of
laser catheters used to clear blockages in and around the heart.

 

1

 

On
September 4, 2008, the FDA and the U.S. Immigration and Customs
Enforcement (“ICE”) executed a search warrant on Spectranetics.  The search warrant requested information in
four areas related to potential violations of FDA and immigration rules and
regulations including (i) the promotion, use, testing, marketing and sales
regarding certain of the Company’s products for the treatment of in-stent
restenosis, payments made to medical personnel and an identified institution
for this application, (ii) the promotion, use, testing, experimentation,
delivery, marketing and sales of catheter guidewires and balloon catheters
manufactured by certain third parties outside of the United States, (iii) two
post-market studies completed during the period from 2002 to 2005 and payments
to medical personnel in connection with those studies and (iv) compensation
packages for certain of the Company’s personnel.

 

On
December 29, 2009, the Company announced that it had reached a resolution
with the United States Department of Justice (DOJ) and the Office of Inspector
General (“OIG”) of the U.S. Department of Health and Human Services regarding
the federal investigation which had commenced on September 4, 2008.  As part of the resolution, in December 2009,
the Company entered into a Non-Prosecution Agreement with the DOJ, a civil
Settlement Agreement with the DOJ and the OIG, and a five-year Corporate Integrity
Agreement with the OIG.  There were no
criminal charges brought against the Company. 
As part of the Settlement Agreement, the Company also expressly denied
the contentions of the United States, except those specifically included in the
Non-Prosecution Agreement, and there was no admission of wrongdoing by the
Company.

 

2

 

2.                                      The
Derivative Actions

 

On
or after September 29, 2008, two shareholder derivative actions were filed
in Federal Court, entitled Douglas A. Kopp v. Emile J. Geisenheimer, et al.,
Civil Case No. 08-cv-02102-REB-MJW, and Peter Y. Kiama v. John Schulte,
et al., Civil Case No. 08-cv-02467-REB-CBS (the “Federal Actions”).  On November 24, 2009, the Federal Court
issued an order consolidating the Federal Actions and appointing Federman &
Sherwood as Lead Counsel and Bader & Associates as Liaison Counsel.

 

On
January 13, 2009, a shareholder derivative action was filed in the
District Court, El Paso County, Colorado (the “State Court”), entitled Martin
and Violet Clarke v. John Schulte, et al., Case No. 2009-CV-567 (the “State
Action”).  On January 27, 2009, the
State Action was removed from the State Court to the Federal Court and entitled
Martin and Violet Clarke v. John Schulte, et al., Civil Case No. 09-cv-00161-PAB-MJW
(the “Clarke Action”).  On February 6, 2009, the Federal Court
issued an order consolidating the Clarke Action
with the Federal Actions (collectively, the “Derivative Actions”) under the
caption Douglas A. Kopp v. Emile J. Geisenheimer, et al., Civil Case No. 08-cv-02102-REB-MJW.

 

The
Complaints in the Derivative Actions named as Defendants the following former
and/or current officers and members of the Board of Directors (the “Board”) of
Spectranetics:  Emile J. Geisenheimer,
David G. Blackburn, R. John Fletcher, Martin T. Hart, Joseph M. Ruggio, M.D.,
John G. Schulte, Guy Childs and Craig M. Walker, M.D. (collectively, the “Individual
Defendants”).  The Complaints also named
Spectranetics as Nominal Defendant. 
Generally, the Complaints in the Derivative Actions alleged that 

 

3

 

Individual
Defendants breached fiduciary duties owed to Spectranetics and its shareholders
by, inter alia, (1) causing or allowing
the Company to disseminate to the market materially misleading and inaccurate
information through public statements and disclosures; (2) placing their
own personal interests above the Company’s; (3) failing to prevent the
Company and its officers and directors from committing actions which would, and
did, injure the Company; and/or (4) failing to establish and maintain
adequate accounting and internal controls at the Company.

 

Pursuant
to Spectranetics’ unopposed request, all formal proceedings in the Derivative
Actions were stayed pending resolution of the Motions to Dismiss in the Class Action
(as defined below) though the parties participated in five status conferences
with the Court during the pendency of the Derivative Actions.

 

3.                                      The
Class Action

 

On
or after September 23, 2008, six federal securities class action
complaints, including Hancook v. Spectranetics Corp.,
08-cv-02048-REB-KLM, were filed against Spectranetics and various other
defendants, including John G. Schulte, Guy A. Childs, Emile J. Geisenheimer,
Jonathan W. McGuire, Donald Fletcher, and Craig M. Walker, M.D.  These cases alleged class periods either
between April 19, 2007 and September 4, 2008 or April 26, 2005
and September 4, 2008.  Pursuant to
a Court Order dated January 16, 2009, these complaints were consolidated
in the Federal Court and captioned In re Spectranetics Corporation
Securities Litigation, Civil Case No. 08-cv-02048-REB-KLM (the “Class Action”).

 

4

 

By
Order dated June 15, 2009, the Federal Court appointed the Spectranetics
Investor Group — comprised of Genesee County Employees’ Retirement System, the
Wayne County Employees’ Retirement System, and Peter J. Tortora — as Lead
Plaintiff (hereinafter, “Class Action Plaintiff”), appointed Labaton Sucharow
LLP and Brower Piven as Co-Lead Counsel, and appointed The Shuman Law Firm as
Liaison Counsel.

 

The
Class Action Plaintiff filed a Consolidated Class Action Complaint
(the “Class Action Complaint”) on August 4, 2009.  The Class Action Complaint asserted
claims against Spectranetics and various individual defendants (collectively,
the “Class Action Defendants”) for alleged violations of Sections 10(b) and
20(a) of the Securities Exchange Act of 1934.  The Class Action Complaint sought
recovery for purchasers of Spectranetics common stock during the period between
March 16, 2007 and September 4, 2008, inclusive.  On September 18, 2009, Spectranetics and
the other defendants to the Class Action filed a Motion to Dismiss the Class Action
Complaint, which the Class Action Plaintiff opposed.

 

The
Class Action Plaintiff sought and received permission from the Federal
Court to file a Supplemental Class Action Complaint on February 10,
2010.  On March 12, 2010,
Spectranetics and the other defendants to the Class Action filed a
Supplemental Motion to Dismiss the Supplemental Class Action Complaint,
which the Class Action Plaintiff opposed.

 

The
settlement of the Class Action (as described below) has obviated the need
for any hearing or ruling on any Motion to Dismiss.

 

5

 

4.                                      Settlement
Negotiations and Mediation

 

Shortly
after counsel for the Class Action Plaintiff and Class Action
Defendants began to discuss the possible settlement of the Class Action in
January 2010, counsel for the Settling Derivative Parties began a dialogue
regarding the possible settlement of the Derivative Actions.  During the course of this dialogue the
Settling Derivative Parties exchanged certain non-public information with each
other.  Thereafter, on March 25,
2010, the Settling Derivative Parties participated in a joint mediation session
(the “Mediation”) with the Settling Class Action Parties.  The Honorable Nicholas H. Politan (Ret.) (“Judge
Politan” or the “Mediator”) presided over this joint Mediation, which occurred
after extensive briefing of Judge Politan by the Settling Class Action
Parties and the Settling Derivative Parties. 
At the Mediation, there were discussions with Judge Politan concerning, inter alia, the respective claims and defenses, expert
damages analyses, legal analyses, the discovery and motion practice conducted
and expected to be conducted in the Class Action and the Derivative
Actions, the evidence expected to be offered by the parties at trial, and other
important factual and legal issues and matters relating to the merits of the Class Action
and the Derivative Actions.

 

The
Settling Derivative Parties did not reach a settlement at the March 2010
Mediation, but through subsequent negotiations and conferences, including
additional discussions with Judge Politan, the Settling Derivative Plaintiffs
and the Settling Derivative Defendants were able to reach an agreement in
principle providing for the settlement of the Derivative Actions. The Class Action
Plaintiff and the Class Action Defendants also were able to reach an
agreement in principle providing for the settlement of the Class Action,
the substance of which is reflected in a Stipulation of 

 

6

 

Settlement
for the Class Action.  Concurrent
with the submission of this Stipulation, the Settling Class Action Parties
will submit their Stipulation of Settlement for the Class Action to the
Court, dated as of September 7, 2010, and attached hereto as Exhibit B
(without exhibits).

 

5.                                      Discovery, Investigation,
and Research Conducted by Settling Derivative Plaintiffs

 

Derivative
Plaintiffs’ Counsel (as defined below) have conducted a thorough investigation
of the facts and legal issues associated with the prosecution and Settlement of
the Derivative Actions.  This discovery
and investigation has included, inter alia, (1) a
comprehensive review of the Company’s public filings, annual reports, and other
public statements; (2) the review of certain non-public information; (3) preparing
a mediation brief; (4) attending the formal Mediation and participating in
numerous additional discussions with the Mediator and counsel for the Settling
Derivative Defendants; (5) researching corporate governance issues; and (6) research
into the applicable law with respect to the claims asserted in the Derivative
Actions and the potential defenses thereto.

 

II.                                     CLAIMS
OF THE SETTLING DERIVATIVE PLAINTIFFS AND BENEFITS OF SETTLEMENT

 

The
Settling Derivative Plaintiffs believe that the claims asserted in the
Derivative Actions have merit and that the evidence developed to date in the
Derivative Actions supports the claims asserted.  The Settling Derivative Plaintiffs assert and
believe that the Board breached fiduciary duties owed to Spectranetics and its
shareholders by, inter alia, causing or allowing
the Company to disseminate to the market materially 

 

7

 

misleading
and inaccurate information through public statements and disclosures; placing
their own personal interests above the Company’s; failing to prevent the
Company and its officers and directors from committing actions which would, and
did, injure the Company; and/or failing to establish and maintain adequate
accounting and internal controls at the Company.

 

However,
the Settling Derivative Plaintiffs recognize and acknowledge the expense and
length of continued proceedings, trial and appeals.  The Settling Derivative Plaintiffs also have
taken into account the uncertain outcome and the risk of any litigation,
especially in complex actions such as the Derivative Actions, as the Settling
Derivative Plaintiffs are also mindful of the inherent problems of proof under
and possible defenses to the claims asserted in the Derivative Actions,
including the defenses asserted by the Settling Derivative Defendants during
the litigation, in settlement negotiations, and in the mediation proceedings.

 

In
light of the foregoing, the Settling Derivative Plaintiffs believe that the
Settlement set forth in this Stipulation confers substantial benefits upon
Spectranetics and Current Spectranetics Shareholders.  Based on their evaluation, and their
substantial experience in this area of the law, Derivative Plaintiffs’ Counsel
has determined that the Settlement set forth in the Stipulation is in the best
interests of the Settling Derivative Plaintiffs, Spectranetics and Current
Spectranetics Shareholders.

 

III.                                 SETTLING
DERIVATIVE DEFENDANTS’ STATEMENT AND DENIALS OF WRONGDOING AND LIABILITY

 

The
Settling Derivative Defendants have denied and continue to deny each and all of
the claims and contentions alleged by the Settling Derivative Plaintiffs in the

 

8

 

Derivative
Actions.  The Settling Derivative
Defendants assert that their conduct was proper and that there was no breach of
fiduciary or other duties, deny any liability or wrongdoing whatsoever,
including, but not limited to, each of the allegations asserted in the
Derivative Actions and assert that the Derivative Actions are subject to a
number of procedural defenses.  Settling
Derivative Defendants have further asserted, and continue to assert, that at
all relevant times, they acted in good faith, and in a manner they reasonably
believed to be in the best interests of Spectranetics and its shareholders.

 

Nonetheless,
the Settling Derivative Defendants have concluded that further conduct of the
Derivative Actions would be protracted and expensive, and that it is desirable
that the Derivative Actions be fully and finally settled in the manner and upon
the terms and conditions set forth in this Stipulation in order to limit
further expense, inconvenience and distraction, to dispose of the burden of
protracted litigation, and (on the part of the Settling Derivative Defendants) to
permit the operation of the Company’s business without further distraction and
diversion of the Company’s executive personnel with respect to matters at issue
in the Derivative Actions.  The Settling
Derivative Defendants also have taken into account the uncertainty and risks
inherent in any litigation, especially in complex cases like this litigation.

 

The
Settling Derivative Defendants have, therefore, determined that it is desirable
and beneficial to them that the Derivative Actions be settled in the manner and
upon the terms and conditions set forth in this Stipulation.  The Settling Derivative Defendants enter into
this Stipulation and Settlement without in any way admitting to or 

 

9

 

acknowledging
any fault, liability, or wrongdoing of any kind.  There has been no adverse determination by
any court against any of the Settling Derivative Defendants on the merits of
the claims asserted by the Settling Derivative Plaintiffs.  Neither this Stipulation, nor any of its
terms or provisions, nor any of the negotiations or proceedings connected with
it, shall be construed as an admission or concession by any of the Settling
Derivative Defendants of the merit or truth of any of the allegations or
wrongdoing of any kind on the part of any of the Settling Derivative
Defendants.  The Settling Derivative
Defendants enter into this Stipulation and Settlement based upon, among other
things, the Settling Parties’ agreement herein that, to the fullest extent
permitted by law, neither the Settlement nor any of the terms or provisions of
this Stipulation or of a Memorandum of Understanding entered into between
Derivative Plaintiffs’ Counsel, counsel for Spectranetics, and counsel for
David G. Blackburn, Guy A. Childs, R. John Fletcher, Emile J. Geisenheimer,
Martin T. Hart, Joseph M. Ruggio, M.D., and Craig M. Walker, M.D. on June 18,
2010 (the “MOU”), nor any of the negotiations or proceedings connected
therewith, shall be offered as evidence in the Derivative Actions or in any
pending or future civil, criminal, or administrative action or other proceeding
to establish any liability or admission by any of the Settling Derivative
Defendants, or to any of their respective Related Entities, or any other matter
adverse to any of the Settling Derivative Defendants, or any of their
respective Related Entities, except as expressly set forth herein.  The Settling Derivative Defendants have
determined that the Settlement set forth in the Stipulation is in the best
interests of Spectranetics and Current Spectranetics Shareholders.

 

10

 

IV.                                TERMS
OF STIPULATION AND AGREEMENT OF SETTLEMENT

 

NOW,
THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among the Settling
Derivative Plaintiffs and the Settling Derivative Defendants, by and through
their respective counsel of record, that, subject to the approval of the Court,
the Derivative Actions and the Released Claims shall be finally and fully
compromised, settled, and released, and the Derivative Actions shall be
dismissed with prejudice, upon and subject to the terms and conditions of the
Stipulation, as follows:

 

1.                                        Definitions

 

As
used in the Stipulation the following terms have the meanings specified below:

 

1.1                                 “Class Action
Settlement Cash” shall mean the principal amount of $8.5 million in cash to be
paid for and on behalf of the Settling Class Action Defendants pursuant to
the settlement of the Class Action.

 

1.2                                 “Company” or “Spectranetics”
shall mean Nominal Defendant The Spectranetics Corporation, a Delaware
corporation, and all of its predecessors, successors, present and former parents,
subsidiaries, divisions, and related or affiliated entities.

 

1.3                                 “Current
Spectranetics Shareholders” shall mean all record and or beneficial owners of
Spectranetics common stock as of the date of this Stipulation.

 

1.4                                 “Derivative
Plaintiffs’ Counsel” shall mean Lead Counsel Federman & Sherwood.

 

11

 

1.5                                 “Effective Date”
shall mean the first date by which all of the events and conditions specified
in Section IV, ¶ 6.2(a)-(e) of this Stipulation have been met and
have occurred.

 

1.6                                 “Final” shall mean, with respect to the
Judgment, that one of the following events has occurred:  (1) the time for appealing the Judgment
has expired; (2) following a final affirmance on appeal of the Judgment,
the time to seek further discretionary review (including, without limitation,
from the United States Supreme Court) has expired, or if discretionary review
is allowed, such discretionary review proceedings are subsequently dismissed
with prejudice or the Judgment is finally affirmed on discretionary review; or (3) following
a final dismissal of an appeal from the Judgment, the time to seek further
discretionary review (including, without limitation, from the United States
Supreme Court) has expired, or if discretionary review is allowed, such
discretionary review proceedings are subsequently dismissed with prejudice or
the dismissal being challenged is itself finally affirmed on discretionary
review.  Any proceeding or order, or any
appeal or appeal for a writ of certiorari pertaining solely to any application
for attorneys’ fees, costs or expenses, shall not in any way delay or preclude
the Judgment from becoming Final.

 

1.7                                 “Insurers”
shall mean U.S. Specialty Insurance Company, Hudson Insurance Company, and
Carolina Casualty Insurance Company.

 

1.8                                 “Judgment” shall mean the judgment to be
rendered by the Court dismissing the Derivative Actions with prejudice as to
all of the Settling Derivative Defendants, substantially in the form and
content attached hereto as Exhibit D.

 

12

 

1.9                                 “Person” shall mean an individual, corporation
(including all divisions and subsidiaries), limited liability corporation,
professional corporation, partnership, limited partnership, limited liability
partnership, association, joint stock company, estate, legal representative,
trust, unincorporated association, government or any political subdivision or
agency thereof, and any business or legal entity and their spouses, heirs,
predecessors, successors, representatives, and assigns.

 

1.10                           “Released Claims” shall collectively mean all
claims (including “Unknown Claims” as defined in ¶ 1.18 below), debts, demands,
rights, liabilities and causes of action of every nature and description
whatsoever, known or unknown, whether in contract, tort, equity or otherwise,
whether or not concealed or hidden, asserted or that might have been asserted
in this or any other forum or proceeding, including, without limitation, claims
for negligence, negligent supervision, gross negligence, indemnification,
breach of duty of care and/or breach of duty of loyalty, fraud,
misrepresentation, breach of fiduciary duty, negligent misrepresentation,
unfair competition, insider trading, professional negligence, mismanagement,
corporate waste, breach of contract, or violations of any state or federal
statutes, rules or regulations, including but not limited to any claims
that arise from or relate to the matters or occurrences that were or could have
been alleged in the Derivative Actions, or any claims related to the public
disclosures or the transactions referenced therein, however described, through
and including the period of time from the alleged date of the commencement of
the class period (as set forth in the Class Action Settlement) until the
date of the execution of this Stipulation by Settling Derivative Plaintiffs
against the 

 

13

 

Released Derivative
Parties (as defined in ¶ 1.11 below) which have been or could have been alleged
in any of the Derivative Actions up through and including the date of this
Stipulation is signed.

 

1.11                           “Released Derivative Parties” means each and
every one of the Settling Derivative Defendants and, whether or not identified
in any Complaint filed in the Derivative Actions, each and all of Spectranetics’
and every Settling Derivative Defendant’s past and present directors, officers
and employees, controlling stockholders, partners, members, affiliates,
principals, agents, representatives, stockholders, predecessors, successors,
parents, subsidiaries, divisions, joint ventures, attorneys, investment
bankers, commercial bankers, underwriters, financial or investment advisors,
advisors, consultants, accountants, insurers, co-insurers and reinsurers,
assigns, spouses, heirs, assigns, executors, personal representatives, marital
communities, associates, related or affiliated entities, general or limited
partners or partnerships, limited liability companies, member firms, estates,
administrators, or any members of their immediate families, or any trusts for
which any of them are trustees, settlers or beneficiaries, or any persons or
other entities in which Spectranetics and/or any Settling Derivative Defendant
has a controlling interest or which is related to or affiliated with
Spectranetics and/or any Settling Derivative Defendant, and any other
representatives of any of these persons or other entities, whether or not any
such Released Derivative Parties were named, served with process or appeared in
the Derivative Actions.

 

14

 

1.12                           “Settling Class Action Defendants” shall
mean Spectranetics, Guy A. Childs, Emile J. Geisenheimer, Jonathan W. McGuire,
John G. Schulte, and Craig M. Walker, M.D.

 

1.13                           “Settling Class Action Parties” shall
mean Settling Class Action Plaintiff and Settling Class Action
Defendants.

 

1.14                           “Settling Class Action Plaintiff” shall
mean Class Action Plaintiff The Spectranetics Investor Group, comprised of
Genesee County Employees’ Retirement System, the Wayne County Employees’
Retirement System, and Peter J. Tortora.

 

1.15                           “Settling Derivative Defendants” shall mean
David G. Blackburn, Guy A. Childs, R. John Fletcher, Emile J. Geisenheimer,
Martin T. Hart, Joseph M. Ruggio, M.D., John G. Schulte, and Craig M. Walker,
M.D. and nominal defendant Spectranetics.

 

1.16                           “Settling Derivative Parties” shall mean
Settling Derivative Defendants and Settling Derivative Plaintiffs.

 

1.17                           “Settling Derivative Plaintiffs” shall mean
Douglas A. Kopp, Peter Y. Kiama, and Martin and Violet Clarke, on behalf of
themselves and derivatively on behalf of Spectranetics.

 

1.18                           “Unknown Claims” shall mean any Released
Claims which the Settling Derivative Plaintiffs do not know or suspect to exist
in his, her or its favor at the time of the release of the Released Derivative
Parties which, if known by him, her or it, might have affected his, her or its
settlement with and release of the Released Derivative Parties, or might have
affected his, her or its decision not to object to, or opt out of, this 

 

15

 

Settlement.  With respect to any and all Released Claims,
the Settling Derivative Parties stipulate and agree that, upon the Effective
Date, the Settling Derivative Plaintiffs expressly waive and relinquish, and by
operation of the Judgment shall have expressly waived and relinquished, to the
fullest extent permitted by law, the provisions, rights, and benefits of § 1542
of the California Civil Code, which provides:

 

A
general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release,
which if known by him or her must have materially affected his or her
settlement with the debtor.

 

The
Settling Derivative Plaintiffs expressly waive, and upon the Effective Date and
by operation of the Judgment shall have waived any and all provisions, rights
and benefits conferred by any law of the United States or of any state or
territory of the United States, or principle of common law, which is similar,
comparable or equivalent to § 1542 of the California Civil Code.  The Settling Derivative Plaintiffs may
hereafter discover facts in addition to or different from those which he, she
or it now knows or believes to be true with respect to the subject matter of
the Released Claims, but each of them hereby stipulate and agree that the
Settling Derivative Plaintiffs do settle and release, upon the Effective Date
and by operation of the Judgment shall have, fully, finally, and forever
settled and released any and all Released Claims, known or unknown, suspected
or unsuspected, contingent or non-contingent, whether or not concealed or
hidden, which now exist, or heretofore have existed upon any theory of law or
equity now existing or coming into existence in the future, including, but not
limited to, conduct which is negligent, intentional, with or without malice, or
a breach of 

 

16

 

any
duty, law or rule, without regard to the subsequent discovery or existence of
such different or additional facts.  The
Settling Derivative Parties acknowledge that the foregoing waiver was bargained
for and a key element of the Settlement of which this release is a part.

 

2.                                        The
Settlement Consideration

 

2.1                                 In full and final settlement of all claims
asserted or referred to in the Derivative Actions, and all claims that have
been or could be asserted against the Settling Derivative Defendants in the
Derivative Actions, Spectranetics has agreed to substantially strengthen the
Company’s internal controls, processes and procedures through the adoption of a
new set of corporate governance principles, which are attached hereto as Exhibit A.

 

2.2                                 In addition to the substantial corporate
governance changes and releases obtained, as a result of the initiation and
prosecution of the Derivative Actions, participation in the Mediation, and the
subsequent settlement of the Derivative Actions, the Settling Derivative
Plaintiffs have helped to confer substantial financial benefits upon
Spectranetics and Current Spectranetics Shareholders by helping to preserve
funds from the Company’s Insurers for payment of defense costs that otherwise
may have been borne by the Company and by helping to identify a number of
corporate governance changes that the Company has agreed to undertake.

 

2.3                                 Spectranetics and the Board are satisfied that
the foregoing constitutes reasonably equivalent value for the dismissal of the
Derivative Actions with prejudice and the release of the Released Claims, and
is a fair, reasonable and adequate 

 

17

 

resolution of the
Derivative Actions and the Released Claims on the Company’s behalf and is in
the best interests of the Company and Current Spectranetics Shareholders.

 

3.                                        Notice Order And Settlement Hearing

 

3.1                                 Promptly after execution of this Stipulation,
but in no event later than ten (10) days after the Stipulation is signed
(unless such time is extended by the written agreement of counsel for the
Settling Derivative Plaintiffs and counsel for the Settling Derivative
Defendants), the Settling Derivative Parties shall submit this Stipulation
together with its Exhibits to the Court and shall jointly apply for entry of an
order (the “Notice Order”), substantially in the form and content of Exhibit C
hereto, requesting preliminary approval of the Settlement set forth in this
Stipulation and approval for Spectranetics to provide notice of the Settlement
to Current Spectranetics Shareholders by filing a “Current Report” on Form 8-K
with the United States Securities & Exchange Commission (the “SEC”)
that includes a copy of the Notice substantially in the form and content of Exhibit C-1
hereto and including a Notice similar to the Form 8-K on the Company’s
website, where it shall remain posted for at least thirty (30) days.  The Settling Derivative Parties agree, and
the proposed Notice Order shall provide, that the filing of a Form 8-K and
posting notice on the Company’s website shall constitute adequate notice of
this Settlement pursuant to applicable law and due process.

 

3.2                                 The Settling Derivative Parties shall request
that, after notice is given, the Court hold a final settlement hearing (the “Settlement
Hearing”) and finally approve this Settlement as set forth herein.  If approval is granted, the Settling
Derivative Parties agree that the Derivative Actions will be dismissed with
prejudice as to all Settling 

 

18

 

Derivative Defendants
pursuant to a stipulated Judgment, substantially in the form and content of Exhibit D.

 

3.3                                 In the event that the Court orders notice
beyond that described above and in the proposed Notice Order attached as Exhibit C-1,
the costs of such notice will be borne by the Settling Derivative Defendants.

 

4.                                        Releases

 

4.1                                 Upon the Effective Date, except as set forth in ¶ 4.3 below, the Settling
Derivative Plaintiffs (on their own behalf and derivatively on behalf of
Spectranetics)  and all Current
Spectranetics Shareholders shall release, relinquish and discharge, and by
operation of the Judgment shall have, fully, finally, and forever released,
relinquished and discharged each and all of the Released Derivative Parties
from all Released Claims (including “Unknown Claims”), and from all claims
(including “Unknown Claims”), arising out of, relating to, or in connection
with the defense, or resolution of the Derivative Actions or the Released
Claims.  Claims for violation of this
Stipulation (including any exhibits) are preserved.

 

4.2                                 Upon the Effective Date, each of the Settling
Derivative Defendants and/or their Insurers shall be deemed to have, and by
operation of the Judgment shall have, fully, finally, and forever released,
relinquished and discharged the Settling Derivative Plaintiffs and Derivative
Plaintiffs’ Counsel from the filing and prosecution of any lawsuit or claim by
the Settling Derivative Defendants based on any claims (including “Unknown
Claims”) alleged or which could have been alleged in the Derivative Actions
against the Settling Derivative Plaintiffs or Derivative Plaintiffs’ Counsel
arising out of, relating to, or 

 

19

 

in connection with the
commencement, prosecution, assertion or resolution of the Derivative Actions or
the Released Claims.  Claims for
violation of this Stipulation (including any exhibits) are preserved.

 

4.3                             For the avoidance of doubt, nothing contained
herein shall affect the direct claims between or among Spectranetics and the Settling
Derivative Defendants (as opposed to derivative claims brought on behalf of
Spectranetics by a Spectranetics stockholder) as they currently exist
including, by way of example, claims under any applicable indemnity agreement
or undertaking agreement or claims for breach of fiduciary duty, wrongful
termination, breach of contract, tortious interference with contract, or
infliction of emotional distress. 
Nothing in the Stipulation nor the fact that the Stipulation has been
executed shall be construed as an admission or concession by any party
regarding the proper interpretation of any applicable indemnity agreement.

 

4.4                                 Except as otherwise expressly provided for in
this Stipulation, by Delaware law, or in any applicable indemnity agreement,
undertaking agreement, bylaw provision or certificate of incorporation
provision, the Settling Derivative Parties shall each bear their own respective
attorneys’ fees, expenses and costs incurred in connection with the conduct and
settlement of the Derivative Actions, and the preparation, implementation and
performance of the terms of this Stipulation.

 

4.5                                 Pending final determination of whether the
Settlement should be approved, all proceedings and all further activity between
the Settling Derivative Parties regarding or directed toward the Derivative
Actions, save for those activities and proceedings relating to this Stipulation
and the Settlement, shall be stayed.

 

20

 

4.6                                 Pending final determination of whether the
Settlement should be approved, neither the Settling Derivative Plaintiffs or
Spectranetics, nor any of the Current Spectranetics Shareholders shall
commence, maintain or prosecute against the Settling Derivative Defendants or
any other Released Derivative Parties, or any of them, any action or proceeding
any court or tribunal asserting any of the Released Claims.

 

5.                                      Derivative Plaintiffs’ Counsel’s Attorneys’ Fees And Reimbursement Of
Costs and Expenses

 

5.1                                 The Company recognizes and agrees that the
actions taken or to be taken in response to the Derivative Claims, including
the new set of corporate governance principles set forth in Exhibit A,
have conferred substantial benefits on the Company and Current Spectranetics
Shareholders, and that Derivative Plaintiffs’ Counsel therefore should be
entitled to a fee.

 

5.2                                 The Settling Derivative Parties have agreed
that the Settling Derivative Defendants’ Insurers shall pay $350,000 to
Derivative Plaintiffs’ Counsel, subject to Court approval, to cover all
attorneys’ fees, costs and expenses of all counsel to the Settling Derivative
Plaintiffs, including the fees of experts and consultants (the “Fee Award”).  Spectranetics and the Settling Derivative
Defendants shall not otherwise be liable for any fees or costs incurred by,
claimed by or awarded to Derivative Plaintiffs’ Counsel.

 

5.3                                 The Fee Award shall be funded within twenty
(20) business days of the later of: (1) a Court order preliminarily
awarding such attorneys’ fees, costs and expenses and Court order preliminarily
approving the Settlement of the Class Action; (2) Spectranetics
receipt of a W-9 from the payee to whom the Fee Award shall be paid; 

 

21

 

and (3) Spectranetics
receipt of wire transfer information from the payee to whom the Fee Award shall
be paid.  The Fee Award shall be paid
initially to an Escrow Account established by Derivative Plaintiffs’ Counsel
and shall be immediately released to Derivate Plaintiffs’ Counsel upon entry of
the Judgment by the Court even if appeals are taken from the Fee Award.  In the event that this Stipulation and the
Settlement set forth herein do not become Final for any reason, or the Judgment
or the Order making the Fee Award is reversed or modified on appeal, and in the
event that the Fee Award has been paid to any extent, then Derivative
Plaintiffs’ Counsel shall within five (5) business days from the event
which precludes the Effective Date from occurring, or such reversal or
modification, refund the fees, expenses, and costs previously paid to them in
connection with payment of the Fee Award. 
Such refund shall be a joint obligation of the Derivative Plaintiffs’
Counsel.  Derivative Plaintiffs’ Counsel,
as a condition of receiving such attorneys’ fees, costs and expenses, on behalf
of themselves and each partner and/or shareholder of them, agree that the law
firms and their partners and/or shareholders are subject to the jurisdiction of
the Court for the purpose of enforcing this ¶ 5.3 of this Stipulation.  Without limitation, Derivative Plaintiffs’
Counsel’s law firms and their partners and/or shareholders agree that the Court
may, upon application of Settling Derivative Defendants, summarily issue
orders, including, but not limited to, judgments and attachment orders, and may
make appropriate findings of or sanctions for contempt against it should
Derivative Plaintiffs’ Counsel fail timely to repay any portion of the Fee
Award previously paid to them.

 

22

 

5.4                                 Based on the benefits that Derivative
Plaintiffs’ Counsel believes that Derivative Plaintiffs have achieved through
their prosecution of the Derivative Actions, Derivative Plaintiffs’ Counsel
intends to seek Court approval for an award in the amount of up to $7,000.00
(the “Special Award”) for the Derivative Plaintiffs, to be allocated by
Derivative Plaintiffs’ Counsel.  Neither
Spectranetics nor the Settling Derivative Defendants shall object to the
request for Court approval of the Special Award.  The Special Award shall be paid out of the
Fee Award to the extent that the Special Award is approved by the Court, in
whole or in part.

 

5.5                                 Neither Spectranetics nor the Released
Derivative Parties shall have any responsibility for, and no liability
whatsoever with respect to, payment of the Fee Award or any other award of
attorneys’ fees, costs and expenses to Derivative Plaintiffs’ Counsel, or to
any other Person who may assert some claim thereto, except as provided herein.

 

5.6                                 The procedure for and the allowance or
disallowance by the Court of the Fee Award is not part of the Settlement, and
is to be considered by the Court separately from the Court’s consideration of
the fairness, reasonableness and adequacy of the Settlement.  Any order or proceedings relating to the Fee
Award, or any appeal from any order relating thereto, shall not operate to
terminate or cancel this Stipulation, or affect or delay the finality of the
Judgment approving this Stipulation and the Settlement of the Derivative
Actions set forth herein.

 

5.7                                 Derivative Plaintiffs’ Counsel shall be solely
responsible for the allocation among Derivative Plaintiff’s Counsel, and/or any
other Person who may assert some 

 

23

 

claim thereto, of any
portion of the Fee Award or any other award of attorneys’ fees, costs and
expenses.  Neither Spectranetics nor the
Released Derivative Parties shall have any responsibility for, and no liability
whatsoever with respect to, any such allocation whatsoever.  Any dispute among Derivative Plaintiffs’
Counsel concerning the allocation of the Fee Award or any other award of
attorneys’ fees, costs and expenses shall not operate to terminate or cancel
this Stipulation, or affect or delay the finality of the Judgment approving
this Stipulation and the Settlement set forth herein.

 

6.                                      Conditions Of Settlement, Effect Of Disapproval, Cancellation Or
Termination

 

6.1                                 The Settlement shall be terminated in the
event that any of the following occurs:  (1) any
of the conditions set forth in ¶ 6.2 below is not satisfied; (2) the
Settlement does not become Final for any reason; (3) failure on the part
of any of the Settling Derivative Parties to abide, in any material respect,
with the terms of this Stipulation.

 

6.2                                 Unless otherwise agreed to in writing, this
Stipulation shall be terminated in the event that any of the following
conditions is not met:

 

(a)                                  The Court has entered the Notice Order, as
required by ¶ 3.1 and ¶ 3.2, above;

 

(b)                                 Preliminary and final approval of this
Stipulation, independent of the determination of the Fee Award;

 

(c)                                  Upon final approval of the Settlement, the
Derivative Actions are dismissed with prejudice as to all Settling Derivative
Defendants pursuant to a stipulated Judgment, substantially in the form and
content of Exhibit B;

 

24

 

(d)                                 The Judgment has become Final;

 

(e)                                  That this Settlement is not otherwise
terminated pursuant to the terms set forth in this Stipulation;

 

6.3                                 In the event that this Stipulation is not
approved by the Court or the Settlement set forth in this Stipulation is
terminated or fails to become effective in accordance with its terms, this
Stipulation and all negotiations and proceedings relating hereto shall be
without prejudice to any or all Settling Derivative Parties who shall be
restored to their respective positions in the Derivative Actions as of September 10,
2010.  In such event, the terms and
provisions of this Stipulation, with the exception of ¶¶ 1.1-1.18, 4.3, 5.3,
5.4, 5.5, 6.1-6.5, 7.2, 7.3, 7.4, 7.6 and 7.7 herein, shall have no further
force and effect with respect to the Settling Derivative Parties and shall not
be used in the Derivative Actions or in any other proceeding for any purpose
and any Judgment or Order entered by the Court in accordance with the terms of
this Stipulation shall be treated as vacated, nunc
pro tunc.

 

6.4                                 In the event this Stipulation shall be
cancelled as set forth in ¶ 6.1 above, the Settling Derivative Plaintiffs and
Settling Derivative Defendants shall, within two weeks of such cancellation,
jointly request a status conference with the Court to be held on the Court’s
first available date.  At such status
conference, the Settling Derivative Plaintiffs and Settling Derivative
Defendants shall ask the Court’s assistance in scheduling continued proceedings
in the Derivative Actions as between them. 
Pending such status conference or the expiration of sixty (60) days from
the Settling Derivative Plaintiffs’ and Settling Derivative Defendants’ joint
request for a status conference, 

 

25

 

whichever occurs first,
none of the Settling Derivative Parties shall file or serve any further motions
or discovery requests on any of the other Settling Derivative Parties in
connection with the Derivative Actions, nor shall any response be due by any
Settling Derivative Party to any outstanding pleading by any other Settling
Derivative Party.

 

6.5                                 Neither a modification nor a reversal on
appeal of the Fee Award by the Court to any of the Derivative Plaintiffs’
Counsel shall constitute a condition to the Effective Date or grounds for
cancellation and termination of this Stipulation.

 

7.                                      Miscellaneous Provisions

 

7.1                                 The Settling Derivative Parties (a) acknowledge
that it is their intent to consummate this Settlement and Stipulation; and (b) agree
to cooperate to the extent necessary to effectuate and implement all terms and
conditions of this Stipulation and to exercise their best efforts to accomplish
the foregoing terms and conditions of this Stipulation.  For the avoidance of doubt, the finality of
the Settlement of the Derivative Actions is not conditioned upon approval of
the settlement of the Class Action, and the Effective Date in the
Derivative Actions is not conditioned upon final approval of settlement of the Class Action.

 

7.2                                 The Settling Derivative Parties intend the
Settlement to be a final and complete resolution of all disputes among them
with respect to the Derivative Actions. 
The Settling Derivative Defendants have denied, and continue to deny,
any and all allegations contained in the Derivative Actions, and they are
entering into the Settlement in order to eliminate the burden, expense, and
uncertainties of further litigation.  The
Settlement comprises claims that are contested and shall not be deemed 

 

26

 

an admission by any
Settling Derivative Party as to the merits of any claim or defense.  While the Settling Derivative Defendants deny
that the claims advanced in the Derivative Actions were meritorious, the
Settling Derivative Parties agree, and the Judgment will state, that the
Derivative Actions were filed, prosecuted and defended in good faith and in
accordance with the Federal Rules of Civil Procedure, including Rule 11
of the Federal Rules of Civil Procedure, and applicable Colorado law, and
are being settled voluntarily after consultation with competent legal counsel.

 

7.3                                 Neither the Settlement nor the provisions
contained in this Stipulation and the MOU, nor any of the negotiations or
proceedings connected therewith, nor any act performed or document executed
pursuant to or in furtherance of the Settlement or the provisions contained in
this Stipulation and the MOU, is or may be deemed to be, or offered or received
in evidence as, a presumption, concession, or admission of the validity of any
of the Released Claims, or of any fault, liability, omission, or wrongdoing by
any of the Released Derivative Parties and/or Spectranetics, in any civil,
criminal or administrative proceeding in any court, administrative agency or
other tribunal except as required to enforce the Settlement.  The Released Derivative Parties may file this
Stipulation and/or the Judgment in related litigation as evidence of the
Settlement, or in any action that may be brought against them in order to
support a defense or counterclaim based on principles of res judicata, collateral estoppel,
release, good faith settlement, judgment bar or reduction or any other theory
of claim preclusion or issue preclusion or similar defense or counterclaim.

 

27

 

7.4                                 No press announcement, press release, or other
public statement concerning the Settlement may be made by any of the Settling
Derivative Parties without approval from the other Settlement Derivative
Parties, except as required by law.  Any
such announcement made without such consent shall be grounds for termination of
the Settlement.

 

7.5                                 All of the Exhibits to this Stipulation are
material and integral parts hereof and are fully incorporated herein by this
reference.

 

7.6                                 This Stipulation may be amended or modified
only by mutual agreement of the Settling Derivative Parties to be negotiated in
good faith, if necessary, to effect the terms of the Settlement, and pursuant
to a written instrument signed by or on behalf of all Settling Derivative
Parties or their successors-in-interest.

 

7.7                                 This Stipulation and the Exhibits attached
hereto constitute the entire agreement among the parties hereto.  The Settling Derivative Parties expressly
warrant that, in entering into this Stipulation, they relied solely upon their
own knowledge and investigation, and not upon any promise, representation,
warrant, or other statement by any party or any person representing any party
to this Stipulation, not expressly contained in this Stipulation or its
Exhibits.  Except as otherwise provided
herein, each party shall bear its own costs.

 

7.8                                 This
Stipulation is deemed to have been prepared by counsel for the Settling
Derivative Parties, as a result of arms’ length negotiations among the Settling
Derivative Parties.  Whereas all Settling
Derivative Parties have contributed 

 

28

 

substantially
and materially to the preparation of this Stipulation, it shall not be
construed more strictly against one Party than another.

 

7.9                                 This Stipulation shall be binding upon, and
inure to the benefit of, the successors and assigns of the Settling Derivative
Parties and their respective agents, successors, executors, heirs and assigns.

 

7.10                           Each counsel or other Person executing this
Stipulation or any of its Exhibits on behalf of any party hereto hereby
warrants that such person has the full authority to do so.  All orders and agreements entered during the
course of the Derivative Actions relative to the confidentiality of information
shall survive this Stipulation.

 

7.11                           This Stipulation may be executed by facsimile
and in one or more counterparts.  All
executed counterparts and each of them shall be deemed to be one and the same
instrument.  Counsel for the parties to
the Stipulation shall exchange among themselves original signed counterparts
and a complete set of original executed counterparts shall be filed with the
Court.

 

7.12                           The Court shall retain jurisdiction with
respect to implementation and enforcement of the terms of this Stipulation, and
all parties hereto and their counsel submit to the jurisdiction of the Court
for purposes of implementing and enforcing the Settlement embodied in this
Stipulation.

 

7.13                           The rights and obligations of the parties to
this Stipulation, and all disputes arising out of or relating to this
Stipulation, shall be governed by, and construed and 

 

29

 

enforced in accordance
with, the substantive laws and procedural rules of the State of Colorado.

 

IN
WITNESS WHEREOF, the parties have hereto caused the Stipulation to be executed,
by their duly authorized attorneys, as of September 10, 2010.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
      /s/
  William B. Federman

  
	
   

  	
   

  	
  William
  B. Federman

  
	
   

  	
   

  	
  FEDERMAN &
  SHERWOOD

  
	
   

  	
   

  	
  10205
  North Pennsylvania Avenue

  
	
   

  	
   

  	
  Oklahoma
  City, OK 73120

  
	
   

  	
   

  	
  Telephone:
  

  	
  405-235-1560

  
	
   

  	
   

  	
  Facsimile:
  

  	
  405-239-2112

  
	
   

  	
   

  	
  Email:
  wbf@federmanlaw.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lead Counsel for Derivative
  Plaintiffs

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
      /s/
  Bruce G. Vanyo

  
	
   

  	
   

  	
  Bruce
  G. Vanyo

  
	
   

  	
   

  	
  Richard
  H. Zelichov

  
	
   

  	
   

  	
  KATTEN
  MUCHIN ROSENMAN LLP

  
	
   

  	
   

  	
  2029
  Century Park East, Suite 2600

  
	
   

  	
   

  	
  Los
  Angeles, CA 90067-3012

  
	
   

  	
   

  	
  Telephone:
  

  	
  310-788-4400

  
	
   

  	
   

  	
  Facsimile:
  

  	
  310-788-4471

  
	
   

  	
   

  	
  Email:
  bruce.vanyo@kattenlaw.com

  
	
   

  	
   

  	
  Email:
  richard.zelichov@kattenlaw.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Counsel for Nominal Defendant

  
	
   

  	
   

  	
  The Spectranetics Corporation

  

 

30

 

	
   

  	
   

  	
        /s/
  Kevin J. Toner

  
	
   

  	
   

  	
  Kevin
  J. Toner

  
	
   

  	
   

  	
  PATTON
  BOGGS LLP

  
	
   

  	
   

  	
  1185
  Avenue of the Americas

  
	
   

  	
   

  	
  New
  York, NY 10036

  
	
   

  	
   

  	
  Telephone:
  

  	
  646-557-5100

  
	
   

  	
   

  	
  Facsimile:
  

  	
  646-557-5101

  
	
   

  	
   

  	
  Email:
  ktoner@pattonboggs.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Counsel for Defendants Emile J.
  Geisenheimer, David G. Blackburn, R. John Fletcher, Martin T. Hart, Joseph M.
  Ruggio, M.D., Guy Childs and Craig M. Walker, M.D.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
      /s/
  Stephen C. Schulte

  
	
   

  	
   

  	
  Stephen
  C. Schulte

  
	
   

  	
   

  	
  WINSTON &
  STRAWN LLP

  
	
   

  	
   

  	
  35
  WEST WACKER DRIVE

  
	
   

  	
   

  	
  CHICAGO, IL
  60601-9703

  
	
   

  	
   

  	
  TELEPHONE:

  	
  312.558.5600

  
	
   

  	
   

  	
  FACSIMILE:

  	
  312.558.5700

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Counsel
  For Defendant

  
	
   

  	
   

  	
  John G.
  Schulte

  
					

 

31

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