Document:

exv4w3

 

Exhibit 4.3

COMSCORE, INC.

2007 EQUITY INCENTIVE PLAN

(as
amended and restated June 21, 2007)

     1. Purposes of the Plan. The purposes of this Plan are:

	 	•	 	to attract and retain the best available personnel for positions of
substantial responsibility,
	 
	 	•	 	to provide additional incentive to Employees, Directors and Consultants, and
	 
	 	•	 	to promote the success of the Company’s business.

          The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted
Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units and Performance Shares.

     2. Definitions. As used herein, the following definitions will apply:

          (a) “Administrator” means the Board or any of its Committees as will be administering
the Plan, in accordance with Section 4 of the Plan.

          (b) “Applicable Laws” means the requirements relating to the administration of
equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the
Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under
the Plan.

          (c) “Award” means, individually or collectively, a grant under the Plan of Options,
Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units or
Performance Shares.

          (d) “Award Agreement” means the written or electronic agreement setting forth the
terms and provisions applicable to each Award granted under the Plan. The Award Agreement is
subject to the terms and conditions of the Plan.

          (e) “Board” means the Board of Directors of the Company.

          (f) “Change in Control” means the occurrence of any of the following events:

               (i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or more of the total
voting power represented by the Company’s then outstanding voting securities;

 

 

               (ii) The consummation of the sale or disposition by the Company of all or substantially all of
the Company’s assets;

               (iii) A change in the composition of the Board occurring within a two (2)-year period, as a
result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent
Directors” means directors who either (A) are Directors as of the effective date of the Plan, or
(B) are elected, or nominated for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or nomination (but will not
include an individual whose election or nomination is in connection with an actual or threatened
proxy contest relating to the election of directors to the Company); or

               (iv) The consummation of a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting securities of the Company or such
surviving entity or its parent outstanding immediately after such merger or consolidation.

          (g) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a
section of the Code herein will be a reference to any successor or amended section of the Code.

          (h) “Committee” means a committee of Directors or of other individuals satisfying
Applicable Laws appointed by the Board in accordance with Section 4 hereof.

          (i) “Common Stock” means the common stock of the Company.

          (j) “Company” means comScore, Inc., a Delaware corporation, or any successor thereto.

          (k) “Consultant” means any person, including an advisor, engaged by the Company or a
Parent or Subsidiary to render services to such entity.

          (l) “Director” means a member of the Board.

          (m) “Disability” means total and permanent disability as defined in Section 22(e)(3)
of the Code, provided that in the case of Awards other than Incentive Stock Options, the
Administrator in its discretion may determine whether a permanent and total disability exists in
accordance with uniform and non-discriminatory standards adopted by the Administrator from time to
time.

          (n) “Employee” means any person, including Officers and Directors, employed by the
Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a
director’s fee by the Company will be sufficient to constitute “employment” by the Company.

          (o) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

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          (p) “Exchange Program” means a program under which (i) outstanding Awards are
surrendered or cancelled in exchange for Awards of the same type (which may have higher or lower
exercise prices and different terms), Awards of a different type, and/or cash, (ii) Participants
would have the opportunity to transfer any outstanding Awards to a financial institution or other
person or entity selected by the Administrator, and/or (iii) the exercise price of an outstanding
Award is reduced. The Administrator will determine the terms and conditions of any Exchange
Program in its sole discretion.

          (q) “Fair Market Value” means, as of any date, the value of Common Stock determined as
follows:

               (i) If the Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq Global Select Market, the Nasdaq Global Market or
the Nasdaq Capital Market of The Nasdaq Stock Market, its Fair Market Value will be the closing
sales price for such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system on the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable;

               (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of a Share will be the mean between the high bid and
low asked prices for the Common Stock on the day of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;

               (iii) For purposes of any Awards granted on the Registration Date, the Fair Market Value will
be the initial price to the public as set forth in the final prospectus included within the
registration statement in Form S-1 filed with the Securities and Exchange Commission for the
initial public offering of the Company’s Common Stock; or

               (iv) In the absence of an established market for the Common Stock, the Fair Market Value will
be determined in good faith by the Administrator.

          (r) “Fiscal Year” means the fiscal year of the Company.

          (s) “Incentive Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

          (t) “Inside Director” means a Director who is an Employee.

          (u) “Nonstatutory Stock Option” means an Option that by its terms does not qualify or
is not intended to qualify as an Incentive Stock Option.

          (v) “Officer” means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

          (w) “Option” means a stock option granted pursuant to the Plan.

          (x) “Outside Director” means a Director who is not an Employee.

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          (y) “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

          (z) “Participant” means the holder of an outstanding Award.

          (aa) “Performance Share” means an Award denominated in Shares which may be earned in
whole or in part upon attainment of performance goals or other vesting criteria as the
Administrator may determine pursuant to Section 10.

          (bb) “Performance Unit” means an Award which may be earned in whole or in part upon
attainment of performance goals or other vesting criteria as the Administrator may determine and
which may be settled for cash, Shares or other securities or a combination of the foregoing
pursuant to Section 10.

          (cc) “Period of Restriction” means the period during which the transfer of Shares of
Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial
risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of
target levels of performance, or the occurrence of other events as determined by the Administrator.

          (dd) “Plan” means this 2007 Equity Incentive Plan.

          (ee) “Registration Date” means the effective date of the first registration statement
that is filed by the Company and declared effective pursuant to Section 12(g) of the Exchange Act,
with respect to any class of the Company’s securities.

          (ff) “Restricted Stock” means Shares issued pursuant to a Restricted Stock award under
Section 7 of the Plan, or issued pursuant to the early exercise of an Option.

          (gg) “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to
the Fair Market Value of one Share, granted pursuant to Section 8. Each Restricted Stock Unit
represents an unfunded and unsecured obligation of the Company.

          (hh) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3,
as in effect when discretion is being exercised with respect to the Plan.

          (ii) “Section 16(b)” means Section 16(b) of the Exchange Act.

          (jj) “Service Provider” means an Employee, Director or Consultant.

          (kk) “Share” means a share of the Common Stock, as adjusted in accordance with Section
13 of the Plan.

          (ll) “Stock Appreciation Right” means an Award, granted alone or in connection with an
Option, that pursuant to Section 9 is designated as a Stock Appreciation Right.

          (mm) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing,
as defined in Section 424(f) of the Code.

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     3. Stock Subject to the Plan.

          (a) Stock Subject to the Plan. Subject to the provisions of Section 13 of the Plan,
the maximum aggregate number of Shares that may be issued under the
Plan is 1,400,000 Shares (following the 1-for-5 reverse stock split
of the Company’s outstanding capital stock occurring on
June 21, 2007), plus
(i) any Shares that, as of the Registration Date, have been reserved but not issued pursuant to any
awards granted under the Company’s Incentive Plan (the “Existing Plan”) and are not subject
to any awards granted thereunder, and (ii) any Shares subject to stock options or similar awards
granted under the Existing Plan that expire or otherwise terminate without having been exercised in
full and Shares issued pursuant to awards granted under the Existing Plan that are forfeited to or
repurchased by the Company, with the maximum number of Shares to be added to the Plan pursuant to
clauses (i) and (ii) equal to 1,000,000 Shares. The Shares may be authorized, but unissued, or
reacquired Common Stock.

          (b) Automatic Share Reserve Increase. The number of Shares available for issuance
under the Plan will be increased on the first day of each Fiscal Year beginning with the 2008
Fiscal Year, in an amount equal to the least of (i) 1,800,000 Shares, (ii) 4% of the
outstanding Shares on the last day of the immediately preceding Fiscal Year or (iii) such number of
Shares determined by the Board.

          (c) Lapsed Awards. If an Award expires or becomes unexercisable without having been
exercised in full, is surrendered pursuant to an Exchange Program, or, with respect to Restricted
Stock, Restricted Stock Units, Performance Units or Performance Shares, is forfeited to or
repurchased by the Company due to failure to vest, the unpurchased Shares (or for Awards other than
Options or Stock Appreciation Rights the forfeited or repurchased Shares) which were subject
thereto will become available for future grant or sale under the Plan (unless the Plan has
terminated). With respect to Stock Appreciation Rights, only Shares actually issued pursuant to a
Stock Appreciation Right will cease to be available under the Plan; all remaining Shares under
Stock Appreciation Rights will remain available for future grant or sale under the Plan (unless the
Plan has terminated). Shares that have actually been issued under the Plan under any Award will
not be returned to the Plan and will not become available for future distribution under the Plan;
provided, however, that if Shares issued pursuant to Awards of Restricted Stock, Restricted Stock
Units, Performance Shares or Performance Units are repurchased by the Company or are forfeited to
the Company, such Shares will become available for future grant under the Plan. Shares used to pay
the exercise price of an Award or to satisfy the tax withholding obligations related to an Award
will become available for future grant or sale under the Plan. To the extent an Award under the
Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the
number of Shares available for issuance under the Plan. Notwithstanding the foregoing and, subject
to adjustment as provided in Section 13, the maximum number of Shares that may be issued upon the
exercise of Incentive Stock Options will equal the aggregate Share number stated in Section 3(a),
plus, to the extent allowable under Section 422 of the Code and the Treasury Regulations
promulgated thereunder, any Shares that become available for issuance under the Plan pursuant to
Sections 3(b) and 3(c).

          (d) Share Reserve. The Company, during the term of this Plan, will at all times
reserve and keep available such number of Shares as will be sufficient to satisfy the requirements
of the Plan.

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     4. Administration of the Plan.

          (a) Procedure.

               (i) Multiple Administrative Bodies. Different Committees with respect to different
groups of Service Providers may administer the Plan.

               (ii) Section 162(m). To the extent that the Administrator determines it to be
desirable to qualify Awards granted hereunder as “performance-based compensation” within the
meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two (2) or
more “outside directors” within the meaning of Section 162(m) of the Code.

               (iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt
under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the
requirements for exemption under Rule 16b-3.

               (iv) Other Administration. Other than as provided above, the Plan will be
administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy
Applicable Laws.

          (b) Powers of the Administrator. Subject to the provisions of the Plan, and in the
case of a Committee, subject to the specific duties delegated by the Board to such Committee, the
Administrator will have the authority, in its discretion:

               (i) to determine the Fair Market Value;

               (ii) to select the Service Providers to whom Awards may be granted hereunder;

               (iii) to determine the number of Shares to be covered by each Award granted hereunder;

               (iv) to approve forms of Award Agreements for use under the Plan;

               (v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any
Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise
price, the time or times when Awards may be exercised (which may be based on performance criteria),
any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation
regarding any Award or the Shares relating thereto, based in each case on such factors as the
Administrator will determine;

               (vi) to determine the terms and conditions of any, and to institute any Exchange Program;

               (vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;

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               (viii) to prescribe, amend and rescind rules and regulations relating to the Plan, including
rules and regulations relating to sub-plans established for the purpose of satisfying applicable
foreign laws;

               (ix) to modify or amend each Award (subject to Section 18(c) of the Plan), including but not
limited to the discretionary authority to extend the post-termination exercisability period of
Awards and to extend the maximum term of an Option (subject to Section 6(b) regarding Incentive
Stock Options);

               (x) to allow Participants to satisfy withholding tax obligations in such manner as prescribed
in Section 14;

               (xi) to authorize any person to execute on behalf of the Company any instrument required to
effect the grant of an Award previously granted by the Administrator;

               (xii) to allow a Participant to defer the receipt of the payment of cash or the delivery of
Shares that would otherwise be due to such Participant under an Award; and

               (xiii) to make all other determinations deemed necessary or advisable for administering the
Plan.

          (c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations
and interpretations will be final and binding on all Participants and any other holders of Awards.

     5. Eligibility. Nonstatutory Stock Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, Performance Shares and Performance Units may be granted to Service
Providers. Incentive Stock Options may be granted only to Employees.

     6. Stock Options.

          (a) Limitations. Each Option will be designated in the Award Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation,
to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive
Stock Options are exercisable for the first time by the Participant during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars
($100,000), such Options will be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options will be taken into account in the order in which they were
granted. The Fair Market Value of the Shares will be determined as of the time the Option with
respect to such Shares is granted.

          (b) Term of Option. The term of each Option will be stated in the Award Agreement.
In the case of an Incentive Stock Option, the term will be ten (10) years from the date of grant or
such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive
Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns
stock representing more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock

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Option will be five (5) years from the date of grant or such shorter term as may be provided
in the Award Agreement.

          (c) Option Exercise Price and Consideration.

               (i) Exercise Price. The per share exercise price for the Shares to be issued pursuant
to exercise of an Option will be determined by the Administrator, subject to the following:

                    (1) In the case of an Incentive Stock Option

                         a) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of stock of the Company
or any Parent or Subsidiary, the per Share exercise price will be no less than one hundred ten
percent (110%) of the Fair Market Value per Share on the date of grant.

                         b) granted to any Employee other than an Employee described in paragraph (A) immediately
above, the per Share exercise price will be no less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant.

                    (2) In the case of a Nonstatutory Stock Option, the per Share exercise price will be no less
than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

                    (3) Notwithstanding the foregoing, Options may be granted with a per Share exercise price of
less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant
pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the
Code.

               (ii) Waiting Period and Exercise Dates. At the time an Option is granted, the
Administrator will fix the period within which the Option may be exercised and will determine any
conditions that must be satisfied before the Option may be exercised.

               (iii) Form of Consideration. The Administrator will determine the acceptable form of
consideration for exercising an Option, including the method of payment. In the case of an
Incentive Stock Option, the Administrator will determine the acceptable form of consideration at
the time of grant. Such consideration may consist entirely of: (1) cash; (2) check; (3) promissory
note, (4) other Shares, provided that such Shares have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which such Option will be exercised and
provided that accepting such Shares, in the sole discretion of the Administrator, will not result
in any adverse accounting consequences to the Company; (5) consideration received by the Company
under a broker-assisted (or other) cashless exercise program implemented by the Company in
connection with the Plan; (6) any combination of the foregoing methods of payment; or (7) such
other consideration and method of payment for the issuance of Shares to the extent permitted by
Applicable Laws.

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          (d) Exercise of Option.

               (i) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder
will be exercisable according to the terms of the Plan and at such times and under such conditions
as determined by the Administrator and set forth in the Award Agreement. An Option may not be
exercised for a fraction of a Share.

                            An Option will be deemed exercised when the Company receives: (i) notice of exercise (in such
form as the Administrator may specify from time to time) from the person entitled to exercise the
Option, and (ii) full payment for the Shares with respect to which the Option is exercised
(together with applicable withholding taxes). Full payment may consist of any consideration and
method of payment authorized by the Administrator and permitted by the Award Agreement and the
Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or,
if requested by the Participant, in the name of the Participant and his or her spouse. Until the
Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive dividends or any other
rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding
the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly
after the Option is exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided in Section 13 of the
Plan.

               Exercising an Option in any manner will decrease the number of Shares thereafter available,
both for purposes of the Plan and for sale under the Option, by the number of Shares as to which
the Option is exercised.

               (ii) Termination of Relationship as a Service Provider. If a Participant ceases to be
a Service Provider, other than upon the Participant’s termination as the result of the
Participant’s death or Disability, the Participant may exercise his or her Option within such
period of time as is specified in the Award Agreement to the extent that the Option is vested on
the date of termination (but in no event later than the expiration of the term of such Option as
set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the
Option will remain exercisable for three (3) months following the Participant’s termination.
Unless otherwise provided by the Administrator, if on the date of termination the Participant is
not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option
will revert to the Plan. If after termination the Participant does not exercise his or her Option
within the time specified by the Administrator, the Option will terminate, and the Shares covered
by such Option will revert to the Plan.

               (iii) Disability of Participant. If a Participant ceases to be a Service Provider as
a result of the Participant’s Disability, the Participant may exercise his or her Option within
such period of time as is specified in the Award Agreement to the extent the Option is vested on
the date of termination (but in no event later than the expiration of the term of such Option as
set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the
Option will remain exercisable for twelve (12) months following the Participant’s termination.
Unless otherwise provided by the Administrator, if on the date of termination the Participant is
not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option
will revert to the Plan. If after termination the Participant does not exercise his or her Option
within the

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time specified herein, the Option will terminate, and the Shares covered by such Option will
revert to the Plan.

               (iv) Death of Participant. If a Participant dies while a Service Provider, the Option
may be exercised following the Participant’s death within such period of time as is specified in
the Award Agreement to the extent that the Option is vested on the date of death (but in no event
may the option be exercised later than the expiration of the term of such Option as set forth in
the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has
been designated prior to Participant’s death in a form acceptable to the Administrator. If no such
beneficiary has been designated by the Participant, then such Option may be exercised by the
personal representative of the Participant’s estate or by the person(s) to whom the Option is
transferred pursuant to the Participant’s will or in accordance with the laws of descent and
distribution. In the absence of a specified time in the Award Agreement, the Option will remain
exercisable for twelve (12) months following Participant’s death. Unless otherwise provided by the
Administrator, if at the time of death Participant is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If
the Option is not so exercised within the time specified herein, the Option will terminate, and the
Shares covered by such Option will revert to the Plan.

     7. Restricted Stock.

          (a) Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the
Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service
Providers in such amounts as the Administrator, in its sole discretion, will determine.

          (b) Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced by
an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and
such other terms and conditions as the Administrator, in its sole discretion, will determine.
Unless the Administrator determines otherwise, the Company as escrow agent will hold Shares of
Restricted Stock until the restrictions on such Shares have lapsed.

          (c) Transferability. Except as provided in this Section 7, Shares of Restricted Stock
may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the
end of the applicable Period of Restriction.

          (d) Other Restrictions. The Administrator, in its sole discretion, may impose such
other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.

          (e) Removal of Restrictions. Except as otherwise provided in this Section 7, Shares
of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released
from escrow as soon as practicable after the last day of the Period of Restriction or at such other
time as the Administrator may determine. The Administrator, in its discretion, may accelerate the
time at which any restrictions will lapse or be removed.

          (f) Voting Rights. During the Period of Restriction, Service Providers holding Shares
of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares,
unless the Administrator determines otherwise.

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          (g) Dividends and Other Distributions. During the Period of Restriction, Service
Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other
distributions paid with respect to such Shares, unless the Administrator provides otherwise. If
any such dividends or distributions are paid in Shares, the Shares will be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect
to which they were paid.

          (h) Return of Restricted Stock to Company. On the date set forth in the Award
Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company
and again will become available for grant under the Plan.

     8. Restricted Stock Units.

          (a) Grant. Restricted Stock Units may be granted at any time and from time to time as
determined by the Administrator. After the Administrator determines that it will grant Restricted
Stock Units under the Plan, it will advise the Participant in an Award Agreement of the terms,
conditions, and restrictions related to the grant, including the number of Restricted Stock Units.

          (b) Vesting Criteria and Other Terms. The Administrator will set vesting criteria in
its discretion, which, depending on the extent to which the criteria are met, will determine the
number of Restricted Stock Units that will be paid out to the Participant. The Administrator may
set vesting criteria based upon the achievement of Company-wide, business unit, or individual goals
(including, but not limited to, continued employment), or any other basis determined by the
Administrator in its discretion.

          (c) Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the
Participant will be entitled to receive a payout as determined by the Administrator.
Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the
Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to
receive a payout.

          (d) Form and Timing of Payment. Payment of earned Restricted Stock Units will be made
as soon as practicable after the date(s) determined by the Administrator and set forth in the Award
Agreement. The Administrator, in its sole discretion, may only settle earned Restricted Stock
Units in cash, Shares, or a combination of both.

          (e) Cancellation. On the date set forth in the Award Agreement, all unearned
Restricted Stock Units will be forfeited to the Company.

     9. Stock Appreciation Rights.

          (a) Grant of Stock Appreciation Rights. Subject to the terms and conditions of the
Plan, a Stock Appreciation Right may be granted to Service Providers at any time and from time to
time as will be determined by the Administrator, in its sole discretion.

          (b) Number of Shares. The Administrator will have complete discretion to determine
the number of Stock Appreciation Rights granted to any Service Provider.

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          (c) Exercise Price and Other Terms. The per share exercise price for the Shares to be
issued pursuant to exercise of a Stock Appreciation Right will be determined by the Administrator
and will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date
of grant. Otherwise, subject to Section 6(a) of the Plan, the Administrator, subject to the
provisions of the Plan, will have complete discretion to determine the terms and conditions of
Stock Appreciation Rights granted under the Plan.

          (d) Stock Appreciation Right Agreement. Each Stock Appreciation Right grant will be
evidenced by an Award Agreement that will specify the exercise price, the term of the Stock
Appreciation Right, the conditions of exercise, and such other terms and conditions as the
Administrator, in its sole discretion, will determine.

          (e) Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted under
the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set
forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 6(d) also will
apply to Stock Appreciation Rights.

          (f) Payment of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation
Right, a Participant will be entitled to receive payment from the Company in an amount determined
by multiplying:

               (i) The difference between the Fair Market Value of a Share on the date of exercise over the
exercise price; times

               (ii) The number of Shares with respect to which the Stock Appreciation Right is exercised.

     At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may
be in cash, in Shares of equivalent value, or in some combination thereof.

     10. Performance Units and Performance Shares.

          (a) Grant of Performance Units/Shares. Performance Units and Performance Shares may
be granted to Service Providers at any time and from time to time, as will be determined by the
Administrator, in its sole discretion. The Administrator will have complete discretion in
determining the number of Performance Units and Performance Shares granted to each Participant.

          (b) Value of Performance Units/Shares. Each Performance Unit will have an initial
value that is established by the Administrator on or before the date of grant. Each Performance
Share will have an initial value equal to the Fair Market Value of a Share on the date of grant.

          (c) Performance Objectives and Other Terms. The Administrator will set performance
objectives or other vesting provisions (including, without limitation, continued status as a
Service Provider) in its discretion which, depending on the extent to which they are met, will
determine the number or value of Performance Units/Shares that will be paid out to the Service
Providers. The time period during which the performance objectives or other vesting provisions
must be met will be called the “Performance Period.” Each Award of Performance Units/Shares will

-12-

 

be evidenced by an Award Agreement that will specify the Performance Period, and such other
terms and conditions as the Administrator, in its sole discretion, will determine. The
Administrator may set performance objectives based upon the achievement of Company-wide,
divisional, or individual goals, applicable federal or state securities laws, or any other basis
determined by the Administrator in its discretion.

          (d) Earning of Performance Units/Shares. After the applicable Performance Period has
ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of
Performance Units/Shares earned by the Participant over the Performance Period, to be determined as
a function of the extent to which the corresponding performance objectives or other vesting
provisions have been achieved. After the grant of a Performance Unit/Share, the Administrator, in
its sole discretion, may reduce or waive any performance objectives or other vesting provisions for
such Performance Unit/Share.

          (e) Form and Timing of Payment of Performance Units/Shares. Payment of earned
Performance Units/Shares will be made as soon as practicable after the expiration of the applicable
Performance Period. The Administrator, in its sole discretion, may pay earned Performance
Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the
value of the earned Performance Units/Shares at the close of the applicable Performance Period) or
in a combination thereof.

          (f) Cancellation of Performance Units/Shares. On the date set forth in the Award
Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and
again will be available for grant under the Plan.

     11. Leaves of Absence/Transfer Between Locations. Unless the Administrator provides
otherwise, vesting of Awards granted hereunder will be suspended during any unpaid leave of
absence. A Service Provider will not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the Company or between the
Company, its Parent, or any Subsidiary. For purposes of Incentive Stock Options, no such leave may
exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute
or contract. If reemployment upon expiration of a leave of absence approved by the Company is not
so guaranteed, then three (3) months following the ninety-first (91st) day of such leave
any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock
Option and will be treated for tax purposes as a Nonstatutory Stock Option.

     12. Transferability of Awards. Unless determined otherwise by the Administrator, an
Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Participant, only by the Participant. If the Administrator makes an Award
transferable, such Award will contain such additional terms and conditions as the Administrator
deems appropriate.

     13. Adjustments; Dissolution or Liquidation; Merger or Change in Control.

          (a) Adjustments. In the event that any dividend or other distribution (whether in the
form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or

-13-

 

exchange of Shares or other securities of the Company, or other change in the corporate
structure of the Company affecting the Shares occurs, the Administrator, in order to prevent
diminution or enlargement of the benefits or potential benefits intended to be made available under
the Plan, will adjust the number and class of Shares that may be delivered under the Plan and/or
the number, class, and price of Shares covered by each outstanding Award, and the numerical Share
limits in Section 3 of the Plan.

          (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify each Participant as soon as practicable
prior to the effective date of such proposed transaction. To the extent it has not been previously
exercised, an Award will terminate immediately prior to the consummation of such proposed action.

          (c) Change in Control. In the event of a merger or Change in Control, each
outstanding Award will be treated as the Administrator determines, including, without limitation,
that each Award be assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. The Administrator will not be
required to treat all Awards similarly in the transaction.

          In the event that the successor corporation does not assume or substitute for the Award, the
Participant will fully vest in and have the right to exercise all of his or her outstanding Options
and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be
vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse,
and, with respect to Awards with performance-based vesting, all performance goals or other vesting
criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms
and conditions met. In addition, if an Option or Stock Appreciation Right is not assumed or
substituted in the event of a Change in Control, the Administrator will notify the Participant in
writing or electronically that the Option or Stock Appreciation Right will be exercisable for a
period of time determined by the Administrator in its sole discretion, and the Option or Stock
Appreciation Right will terminate upon the expiration of such period.

          For the purposes of this subsection (c), an Award will be considered assumed if, following the
Change in Control, the Award confers the right to purchase or receive, for each Share subject to
the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or
other securities or property) received in the Change in Control by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the Change in Control is not
solely common stock of the successor corporation or its Parent, the Administrator may, with the
consent of the successor corporation, provide for the consideration to be received upon the
exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit,
Performance Unit or Performance Share, for each Share subject to such Award, to be solely common
stock of the successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Change in Control.

          Notwithstanding anything in this Section 13(c) to the contrary, an Award that vests, is earned
or paid-out upon the satisfaction of one or more performance goals will not be considered assumed
if the Company or its successor modifies any of such performance goals without the

-14-

 

Participant’s consent; provided, however, a modification to such performance goals only to
reflect the successor corporation’s post-Change in Control corporate structure will not be deemed
to invalidate an otherwise valid Award assumption.

          (d) Outside Director Awards. With respect to Awards granted to an Outside Director
that are assumed or substituted for, if on the date of or following such assumption or substitution
the Participant’s status as a Director or a director of the successor corporation, as applicable,
is terminated other than upon a voluntary resignation by the Participant (unless such resignation
is at the request of the acquirer), then the Participant will fully vest in and have the right to
exercise Options and/or Stock Appreciation Rights as to all of the Shares underlying such Award,
including those Shares which would not otherwise be vested or exercisable, all restrictions on
Restricted Stock and Restricted Stock Units will lapse, and, with respect to Performance Units and
Performance Shares, all performance goals or other vesting criteria will be deemed achieved at one
hundred percent (100%) of target levels and all other terms and conditions met.

     14. Tax Withholding.

          (a) Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to
an Award (or exercise thereof), the Company will have the power and the right to deduct or
withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy
federal, state, local, foreign or other taxes (including the Participant’s FICA obligation)
required to be withheld with respect to such Award (or exercise thereof).

          (b) Withholding Arrangements. The Administrator, in its sole discretion and pursuant
to such procedures as it may specify from time to time, may permit a Participant to satisfy such
tax withholding obligation, in whole or in part by (without limitation) (a) paying cash, (b)
electing to have the Company withhold otherwise deliverable cash or Shares having a Fair Market
Value equal to the minimum statutory amount required to be withheld, or (c) delivering to the
Company already-owned Shares having a Fair Market Value equal to the minimum statutory amount
required to be withheld. The Fair Market Value of the Shares to be withheld or delivered will be
determined as of the date that the taxes are required to be withheld.

     15. No Effect on Employment or Service. Neither the Plan nor any Award will confer
upon a Participant any right with respect to continuing the Participant’s relationship as a Service
Provider with the Company, nor will they interfere in any way with the Participant’s right or the
Company’s right to terminate such relationship at any time, with or without cause, to the extent
permitted by Applicable Laws.

     16. Date of Grant. The date of grant of an Award will be, for all purposes, the date
on which the Administrator makes the determination granting such Award, or such other later date as
is determined by the Administrator. Notice of the determination will be provided to each
Participant within a reasonable time after the date of such grant.

-15-

 

     17. Term of Plan. Subject to Section 21 of the Plan, the Plan will become effective
upon its adoption by the Board. It will continue in effect for a term of ten (10) years from the
date adopted by the Board, unless terminated earlier under Section 18 of the Plan.

     18. Amendment and Termination of the Plan.

          (a) Amendment and Termination. The Board may at any time amend, alter, suspend or
terminate the Plan.

          (b) Stockholder Approval. The Company will obtain stockholder approval of any Plan
amendment to the extent necessary and desirable to comply with Applicable Laws.

          (c) Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise
between the Participant and the Administrator, which agreement must be in writing and signed by the
Participant and the Company. Termination of the Plan will not affect the Administrator’s ability
to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior
to the date of such termination.

     19. Conditions Upon Issuance of Shares.

          (a) Legal Compliance. Shares will not be issued pursuant to the exercise of an Award
unless the exercise of such Award and the issuance and delivery of such Shares will comply with
Applicable Laws and will be further subject to the approval of counsel for the Company with respect
to such compliance.

          (b) Investment Representations. As a condition to the exercise of an Award, the
Company may require the person exercising such Award to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.

     20. Inability to Obtain Authority. The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of
any liability in respect of the failure to issue or sell such Shares as to which such requisite
authority will not have been obtained.

     21. Stockholder Approval. The Plan will be subject to approval by the stockholders of
the Company within twelve (12) months after the date the Plan is adopted by the Board. Such
stockholder approval will be obtained in the manner and to the degree required under Applicable
Laws.

-16-exv10w1

 

Exhibit
10.1

Execution Copy

COMPELLENT TECHNOLOGIES, INC.

THIRD AMENDED AND RESTATED

INVESTORS’ RIGHTS AGREEMENT

     THIS SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (this “Agreement”) is made as of
the 22nd day of September, 2006, by and among Compellent Technologies, Inc., a Delaware
corporation (the “Company”) and the investors listed on Schedule A hereto (the “Investors”).

RECITALS

     WHEREAS, the Company and certain Investors are parties to the Compellent Technologies, Inc.
Second Amended and Restated Investors’ Rights Agreement, dated as of April 7, 2005 (the “Prior
Agreement”), and the Company and such Investors wish to amend and restate such agreement in its
entirety;

     WHEREAS, the Company and the Investors are parties to the Series C Preferred Stock Purchase
Agreement, dated as of the date hereof (the “Purchase Agreement”), pursuant to which the Company
has agreed to sell, and the Investors have agreed to purchase, shares of the Series C Preferred
Stock (as defined below) subject to the terms contained therein;

     WHEREAS, the Company’s and the Investors’ respective obligations under the Purchase Agreement
are conditioned upon the execution and delivery of this Agreement; and

     WHEREAS, to induce the Investors to enter into the Purchase Agreement and purchase shares of
Series C Preferred Stock thereunder, the Company desires to enter into this Agreement with the
Investors.

     NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

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

          1.1 Definitions. For purposes of this Agreement:

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

               (b) The term “Common Stock” means the common stock of the Company, par value $0.001.

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

               (d) The term “Holder” means any person owning or having the right to acquire Registrable
Securities or any assignee thereof in accordance with Section 1.12 hereof.

 

 

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

               (f) The term “Initiating Holders” means the holder(s) of thirty percent (30%) of the Common
Stock issued or issuable upon conversion of the Preferred Stock then outstanding.

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

               (h) The term “Major Investor” shall mean any Investor or transferee that holds at least 5% of
the then outstanding shares of Series C Preferred Stock or 3% of the outstanding shares of
Registrable Securities.

               (i) The term “Options” means any options, warrants or other rights to acquire Common Stock.

               (j) The term “Preferred Stock” means the Series A-1 Preferred Stock of the Company, par value
$0.001 per share, the Series A-2 Preferred Stock of the Company, par value $0.001 per share, the
Series B Preferred Stock, par value $0.001 per share, and the Series C Preferred Stock.

               (k) The term “Preferred Stock Directors” shall have the meaning set forth in the Third Amended
and Restated Voting Rights Agreement, dated as of September 22, 2006, by and among the Company and
the other parties listed on Exhibits A and B thereto.

               (l) The term “Qualified IPO” means a firm commitment underwritten public offering of the
Company’s Common Stock under the Act which causes the conversion of all outstanding shares of
Preferred Stock.

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

               (n) The term “Registrable Securities” means (i) the Common Stock issued or issuable upon
conversion of the Preferred Stock, and (ii) any Common Stock of the Company issued as (or issuable
upon the conversion or exercise of any warrant, right or other security that is issued as) a
dividend or other distribution with respect to, or in exchange for, or in replacement of, the
shares referenced in (i) above. Notwithstanding the foregoing, Registrable Securities shall not
include (i) any securities sold by a person to the public either pursuant to a registration
statement or Rule 144 under the Act or sold in a private transaction in which the transferor’s
rights under Section 1 of this Agreement are not assigned or (ii) any shares of Common Stock issued
upon the conversion of shares of Preferred Stock pursuant to Article IV(D)(4)(n) (“Special
Mandatory Conversion”) of the Company’s Amended and Restated Certificate of Incorporation (the
"Restated Certificate”), as such provision may be amended from time to time (the “Special Mandatory
Conversion Shares”). The number of shares of Registrable Securities outstanding shall be
determined by the number of shares of Common Stock

2

 

outstanding that are, and the number of shares of Common Stock issuable pursuant to then
exercisable or convertible securities that are, Registrable Securities.

               (o) The term “Rule 144” means Rule 144 promulgated under the Act.

               (p) The term “SEC” means the Securities and Exchange Commission.

               (q) The term “Series C Preferred Stock” means the Series C Preferred Stock of the Company, par
value $0.001.

          1.2 Amendment and Restatement. The Company and such Investors that are parties to the
Compellent Technologies, Inc. Second Amended and Restated Investors’ Rights Agreement, dated as of
April 7, 2005, agree to hereby amend and restate such agreement in its entirety. By their
execution of this Agreement, the Investors that are parties to the Compellent Technologies Second
Amended and Restated Investors’ Rights Agreement, dated as of April 7, 2005, agree and consent to
this amendment and the terms and conditions of this amended and restated Agreement.

          1.3 Request for Registration.

               (a) Subject to the conditions of this Section 1.3, if the Company shall receive at any time
after the earlier of (i) September 30, 2008 or (ii) six months after the effective date of the
Initial Offering, a written request from the Initiating Holders that the Company file a
registration statement under the Act covering the registration of at least 30% of the
then-outstanding Registrable Securities (or a lesser percentage provided the aggregate offering
price to the public is at least $5,000,000 (before deducting underwriters’ discount and
commissions)), then the Company shall, within ten days of the receipt thereof, give written notice
of such request to all Holders, and subject to the limitations of this Section 1.3, use best
efforts to effect, as soon as practicable, the registration under the Act of all Registrable
Securities that the Holders request to be registered in such written request (and in all notices
received by the Company from other holders within twenty (20) days of the mailing of the Company’s
notice pursuant to this Section 1.3(a)).

               (b) If the Initiating Holders intend to distribute the Registrable Securities covered by their
request by means of an underwriting, they shall so advise the Company as a part of their request
made pursuant to this Section 1.3 and the Company shall include such information in the written
notice referred to in Section 1.3(a). In such event the right of any Holder to include its
Registrable Securities in such registration shall be conditioned upon such Holder’s participation
in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting
(unless otherwise mutually agreed by the holders of a majority of the Registrable Securities) to
the extent provided herein. All Holders proposing to distribute their securities through such
underwriting shall enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in interest of the Initiating Holders
(which underwriter or underwriters shall be reasonably acceptable to the Company). Notwithstanding
any other provision of this Section 1.3, if the underwriter advises the Company that marketing
factors require a limitation of the number of securities underwritten (including Registrable
Securities), then the Company shall so advise

3

 

all Holders of Registrable Securities that would otherwise be underwritten pursuant hereto,
and the number of shares that may be included in the underwriting shall be allocated to the Holders
of such Registrable Securities on a pro rata basis based on the number of Registrable Securities
held by all such Holders (including the Initiating Holders). Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from the registration. In no event will shares
of any other selling stockholder be included in such registration that would reduce the number of
shares that may be included by Holders without the written consent of Holders of not less than a
majority of the Registrable Securities proposed to be sold in the offering.

               (c) The Company shall not be required to effect a registration pursuant to this Section 1.3:

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

                    (ii) after the Company has effected two (2) registrations pursuant to this Section 1.3, and
such registrations have been declared or ordered effective, provided that, if, the Holders are
required to pay the registration expenses of a withdrawn offering pursuant to Section 1.8, then the
Holders shall forfeit their right to request one such registration; or

                    (iii) if (A) the registration request relates to the Company’s Initial Offering; and (B) the
Company delivers notice in writing to the holders of Registrable Securities that it in good faith
expects to file a registration statement (other than a registration statement relating solely to
employee benefit plans or related solely to a SEC Rule 145 transaction) related to the Company’s
Initial Offering within seventy-five (75) days of the date the Company receives such registration
request (provided that the Company continues to use good faith commercially reasonable efforts to
file such registration statement within such period of time);

                    (iv) during the period of effectiveness of any Market Stand-Off Agreement applicable to any of
the Holders requesting registration; or

                    (v) if the Initiating Holders propose to dispose of Registrable Securities that may be
registered on Form S-3 pursuant to Section 1.5 hereof; or

                    (vi) if the Company shall furnish to Holders requesting a registration statement pursuant to
this Section 1.3, a certificate signed by the Company’s Chief Executive Officer or Chairman of the
Board stating that in the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such registration statement to be
effected at such time, in which event the Company shall have the right to defer such filing for a
period of not more than ninety (90) days after receipt of the request of the Initiating Holders,
provided that such right to delay a request shall be exercised by the Company not more than once in
any twelve (12)-month period.

4

 

          1.4 Company Registration.

               (a) If (but without any obligation to do so) the Company proposes to register (including for
this purpose a registration effected by the Company for stockholders other than the Holders) any of
its stock or other securities under the Act in connection with the public offering of such
securities (other than a registration relating solely to the sale of securities to participants in
a Company stock plan or other employee benefit plan, a registration relating to a corporate
reorganization or other transaction under Rule 145 of the Act, or a registration in which the only
Common Stock being registered is Common Stock issuable upon conversion of debt securities that are
also being registered), the Company shall, at such time, promptly give each Holder written notice
of such registration. Upon the written request of each Holder given within twenty (20) days after
mailing of such notice by the Company in accordance with Section 3.5, the Company shall, subject to
the provisions of Section 13(c), use its best efforts to cause to be registered under the Act all
of the Registrable Securities that each such Holder has requested to be registered.
Notwithstanding the definitions of the term “Registrable Securities” in Section 1.1(n), the parties
agree that for purposes of this Section 1.4 only, such term shall be deemed to include, in addition
to the Registrable Securities described in Section 1.1(n), any Special Mandatory Conversion Shares
that are issued and outstanding.

               (b) Right to Terminate Registration. The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section 1.4 prior to the effectiveness of such
registration whether or not any Holder has elected to include securities in such registration. The
expenses of such withdrawn registration shall be borne by the Company in accordance with Section
1.8 hereof.

               (c) Underwriting Requirements. In connection with any offering involving an
underwriting of shares of the Company’s capital stock, the Company shall not be required under this
Section 1.4 to include any of the Holders’ securities in such underwriting unless such Holders
accept the terms of the underwriting as agreed upon between the Company and the underwriters
selected by it (or by other persons entitled to select the underwriters) and enter into an
underwriting agreement in customary form with such underwriter or underwriters. If the
underwriter(s) reasonably determines that marketing factors require a limitation of the number of
shares to be underwritten, then the managing underwriters) may exclude shares (including
Registrable Securities) from the registration and the underwriting and the number of shares that
may be included in the underwriting shall be allocated, first, to the Company; second, to the
Holders on a pro rata basis based on the total number of Registrable Securities held by the Holders
desiring inclusion in such registration; and third, to any other stockholder of the Company (other
than a Holder) on a pro rata basis; provided, however, that in no event shall the amount of
Registrable Securities of the selling Holders included in such registration be reduced below thirty
percent (30%) of the total amount of securities included in such registration, unless such offering
is the Initial Offering and such registration does not include shares of any other selling
stockholders (other than the stockholder(s), if any, requesting registration under this Section
1.4) in which event any or all of the Registrable Securities of the Holders may be excluded in
accordance with the immediately preceding sentence. In no event will shares of any other selling
stockholder be included in such registration that would reduce the number of shares that may be
included by Holders without the written consent of Holders of not less than a majority of the
Registrable Securities proposed to be sold in the offering. For purposes of the

5

 

preceding sentence concerning apportionment, for any selling stockholder that is a Holder of
Registrable Securities and that is a partnership or corporation, the partners, retired partners and
stockholders of such Holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be a
single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be
based upon the aggregate amount of Registrable Securities owned by all such related entities and
individuals.

          1.5 Form S-3 Registration. If the Company shall receive from the Holders of at least
17.5% of the shares of Preferred Stock (determined on an as converted basis) a written request or
requests that the Company effect a registration on Form S-3 and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by such Holder or
Holders, the Company shall:

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

               (b) use its best efforts to effect, as soon as practicable, such registration and all such
qualifications and compliances as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Holders’ Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities of any other Holders
joining in such request as are specified in a written request given by such Holders within fifteen
(15) days after receipt of such written notice from the Company, provided, however, that the
Company shall not be obligated to effect any such registration, qualification or compliance,
pursuant to this Section 1.5:

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

                    (ii) if the Holders, together with the holders of any other securities of the Company entitled
to inclusion in such registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public (net of any underwriters’ discounts or commissions) of
less than $500,000;

                    (iii) if the Company shall furnish to the Holders a certificate signed by the Chief Executive
Officer or Chairman of the Board of the Company stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the Company and its
stockholders for such Form S-3 Registration to be effected at such time, in which event the Company
shall have the right to defer the filing of the Form S-3 registration statement for a period of not
more than ninety (90) days after receipt of the request of the Holder or Holders under this Section
1.5; provided, however, that the Company shall not utilize this right more than once in any twelve
month period;

                    (iv) if the Company has, within the twelve (12) month period preceding the date of such
request, already effected two registrations on Form S-3 for the Holders pursuant to this Section
1.5, provided that, if, the Holders are required to pay the registration expenses of a withdrawn
offering pursuant to Section 1.8, then such withdrawn

6

 

offering shall count as an effected registration for purposes determining the number of
registrations within the twelve (12) month period preceding the date of a request for registration
under this Section 1.5; or

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

               (c) Subject to the foregoing, the Company shall file a registration statement covering the
Registrable Securities and other securities so requested to be registered as soon as practicable
after receipt of the request or requests of the Holders. Registrations effected pursuant to this
Section 1.5 shall not be counted as requests for registration effected pursuant to Section 1.3. In
the event the Holders of Registrable Securities propose to offer the shares of Registrable
Securities pursuant to this Section 1.5 by means of an underwriting, then the provisions of Section
1.3(c) shall apply to all participants in the offering.

          1.6 Obligations of the Company. Whenever required under this Section 1 to effect the
registration of any Registrable Securities, the Company shall, as expeditiously as possible:

               (a) prepare and file with the SEC a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration statement to become effective, and
shall keep such registration statement effective for a period of not less than one hundred twenty
(120) days or, if earlier, until the distribution contemplated in such registration statement has
been completed;

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

               (c) furnish to the Holders such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable Securities owned by them;

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

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

7

 

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

               (g) cause all such Registrable Securities registered pursuant hereto to be listed on each
securities exchange on which similar securities issued by the Company are then listed; and

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

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

          1.8 Expenses of Registration. All expenses (other than underwriting discounts and
commissions, and stock transfer taxes applicable to the sale of Registrable Securities) incurred in
connection with registrations, filings or qualifications pursuant to Sections 1.3, 1.4 and 1.5,
including (without limitation) all registration, filing and qualification fees, printers’ and
accounting fees, fees and disbursements of counsel for the Company and the reasonable fees and
disbursements of one counsel for the selling Holders shall be borne by the Company. Notwithstanding
the foregoing, the Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 1.3 or Section 1.5 if the registration request is subsequently
withdrawn at the request of the Holders of seventy-five (75%) percent of the Registrable Securities
to be registered, in which case all participating Holders shall bear such expenses pro rata based
upon the number of Registrable Securities that were to be requested in the withdrawn registration,
unless withdrawal is based upon material adverse information concerning the Company of which the
Holders were not aware, or should not have reasonably been aware, at the time of such request. If
the Company is required to pay the registration expenses of a withdrawn offering, then the Holders
shall not forfeit their rights pursuant to Section 1.3 to a demand registration or Section 1.5 to a
registration on Form S-3.

          1.9 Delay of Registration. No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any registration as the result of any controversy that
might arise with respect to the interpretation or implementation of this Section 1.

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

8

 

               (a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder,
the partners or officers, directors and stockholders of each Holder, legal counsel and accountants
for each Holder, any underwriter (as defined in the Act) for such Holder and each person, if any,
who controls such Holder or underwriter within the meaning of the Act or the 1934 Act, against any
losses, claims, damages or liabilities (joint or several) to which they may become subject under
the Act, the 1934 Act or any state securities laws, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a “Violation”): (i) any untrue statement or
alleged untrue statement of a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments or supplements
thereto, (ii) the omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company of the Act, the 1934 Act, any state securities laws or any rule
or regulation promulgated under the Act, the 1934 Act or any state securities laws; and the Company
will reimburse each such Holder, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement contained in this
subsection 1.10(a) shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for
any such loss, claim, damage, liability or action to the extent that it arises out of or is based
upon a Violation that occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder, underwriter or
controlling person.

               (b) To the extent permitted by law, each selling Holder will, severally and not jointly,
indemnify and hold harmless the Company, each of its directors, each of its officers who has signed
the registration statement, each person, if any, who controls the Company within the meaning of the
Act, legal counsel and accountants for the Company, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any such underwriter or
other Holder, against any losses, claims, damages or liabilities (joint or several) to which any of
the foregoing persons may become subject, under the Act, the 1934 Act or any state securities laws,
insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of
or are based upon any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such Holder will reimburse
any person intended to be indemnified pursuant to this subsection 1.10(b), for any legal or other
expenses reasonably incurred by such person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained
in this subsection 1.10(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the written consent of the
Holder (which consent shall not be unreasonably withheld), provided further that in no event shall
any indemnity under this subsection 1.10(b) exceed the net proceeds from the offering received by
such Holder.

9

 

               (c) Promptly after receipt by an indemnified party under this Section 1.10 of notice of the
commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 1.10, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying party similarly
noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party (together with all other indemnified parties that may be
represented without conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.10, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.10.

               (d) If the indemnification provided for in this Section 1.10 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim,
damage or expense referred to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions that resulted in such
loss, liability, claim, damage or expense, as well as any other relevant equitable considerations;
provided that, in no event shall any such contribution under this subsection 1.10(d) exceed the net
proceeds from the offering received by the indemnifying party. The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the omission to state
a material fact relates to information supplied by the indemnifying party or by the indemnified
party and the parties’ relative intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission.

               (e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection with the
underwritten public offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.

               (f) The obligations of the Company and Holders under this Section 1.10 shall survive the
completion of any offering of Registrable Securities in a registration statement under this Section
1, and otherwise.

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

10

 

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

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

               (c) furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith
upon request (i) a written statement by the Company that it has complied with the reporting
requirements of Rule 144 (at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any time after it has
become subject to such reporting requirements), or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports and documents so
filed by the Company, and (iii) such other information as may be reasonably requested in availing
any Holder of any rule or regulation of the SEC that permits the selling of any such securities
without registration or pursuant to Form S-3.

          1.12 Assignment of Registration Rights. The rights to cause the Company to register
Registrable Securities pursuant to this Section 1 may be assigned (but only with all related
obligations) by a Holder to a transferee or assignee of such securities that (i) is a subsidiary,
parent (or subsidiary thereof), partner, limited partner, retired partner, affiliate or stockholder
of a Holder (including in the case of a Holder that is a private equity fund, any side fund,
successor fund or predecessor fund of such Holder, or other venture capital fund that is an
affiliate of such Holder), (ii) is a Holder’s family member or trust for the benefit of an
individual Holder, or (iii) after such assignment or transfer, holds at least 1,000,000 shares of
Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends,
combinations and other recapitalizations), provided: (a) the Company is, within a reasonable time
after such transfer, furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are being assigned; and
(b) such transferee or assignee agrees in writing to be bound by and subject to the terms and
conditions of this Agreement, including without limitation the provisions of Section 1.13 below.

          1.13 “Market Stand-Off” Agreement. Each Holder hereby agrees that it will not,
without the prior written consent of the managing underwriter, during the period commencing on the
date of the final prospectus relating to the Initial Offering and ending on the date specified by
the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days)
(i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock (whether such shares or any such
securities are then owned by the Holder or are thereafter acquired), or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise
(a “Market Stand-Off Agreement”). The foregoing provisions of this Section 1.13 shall only be
applicable to the Holders to the extent all officers and directors of the Company, as well as any
holder owning more than 1% of the outstanding stock of the

11

 

Company, on an as-converted basis, enter into similar agreements. The underwriters in
connection with the Initial Offering are intended third party beneficiaries of this Section 1.13
and shall have the right, power and authority to enforce the provisions hereof as though they were
a party hereto.

     Notwithstanding the foregoing, all (but not less than all) Holders may be granted early
release from the provisions of this Section 1.13, if prior to the effectiveness of this provision,
the underwriters present a plan to the Board of Directors of the Company for the Holders’ release
from such provisions in the event market conditions are favorable following the effective date of a
registration statement pertaining to the Initial Offering.

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

          1.14 Termination of Registration Rights. No Holder shall be entitled to exercise any
right provided for in this Section 1 after the earlier of: (i) five (5) years following the
consummation of the Initial Offering, or (ii) after the Initial Offering when all Registrable
Securities held by such Holder (and any affiliate of the Holder with whom such Holder must
aggregate its sales under Rule 144) can be sold in any three (3)-month period without registration
in compliance with Rule 144 of the Act.

          1.15 Limitations on Subsequent Registration Rights. From and after the date of this
Agreement, the Company shall not, without the prior written consent of the Holders of seventy-five
(75%) percent of the outstanding Preferred Stock (voting on an as converted basis and as a single
class), enter into any agreement with any holder or prospective holder of any securities of the
Company which would allow such holder or prospective holder (a) registration rights which are pari
passu or superior to the registration rights granted pursuant to this Agreement, or (b) to make a
demand registration which could result in such registration statement being declared effective (i)
prior to the earlier of April 30, 2008 or twelve months after the effective date of the Initial
Offering, or (ii) within one hundred eighty (180) days of the effective date of any registration
effected pursuant to Section 1.3.

     2. Covenants of the Company.

          2.1 Delivery of Financial Statements. The Company shall deliver to each Major
Investor and each Investor that is an SBIC (as defined in the Purchase Agreement):

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

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

12

 

               (c) within thirty (30) days of the end of each month, an unaudited income statement and
statement of cash flows and balance sheet for and as of the end of such month, in reasonable
detail, and such financial statements shall include a report comparing such statements to the
monthly budget and business plan for the Company as provided to the Board of Directors;

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

               (e) with respect to the financial statements called for in subsections (b) and (c) of this
Section 2.1, an instrument executed by the Chief Financial Officer or President of the Company
certifying that such financials were prepared in accordance with GAAP consistently applied with
prior practice for earlier periods (with the exception of footnotes that may be required by GAAP)
and fairly present the financial condition of the Company and its results of operation for the
period specified, subject to year-end audit adjustments; and

               (f) such other information relating to the condition (financial or otherwise), business,
prospects or corporate affairs of the Company as the SBIC or the Major Investor or any assignee of
the Major Investor may from time to time reasonably request, provided, however, that the Company
shall not be obligated under this subsection (f) or any other subsection of Section 2.1 to provide
information that it deems in good faith to be a trade secret or similar confidential information.

          2.2 Inspection. The Company shall permit each Major Investor and each Investor that
is an SBIC, along with their authorized representatives, at such Major Investor’s or SBIC’s
expense, to visit and inspect the Company’s properties, to examine its books of account and records
and to discuss the Company’s affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by the Major Investor or the SBIC; provided, however, that the
Company shall not be obligated pursuant to this Section 2.2 to provide access to any information
that it reasonably considers to be a trade secret or similar confidential information.

          2.3 Termination of Information and Inspection Covenants. The covenants set forth in
Sections 2.1 and 2.2 shall terminate and be of no further force or effect upon the effectiveness of
a Qualified IPO.

          2.4 Right of First Offer. Subject to the terms and conditions specified in this
Section 2.4, the Company hereby grants to each Major Investor a right of first offer to purchase
its Pro Rata Share (as hereinafter defined) in whole or in part with respect to future sales by the
Company of its Shares (as hereinafter defined). A Major Investor shall be entitled to apportion or
assign the right of first offer hereby granted it among itself and its partners and affiliates in
such
 

13

 

proportions as it deems appropriate, including in the case of a Major Investor that is a
venture capital fund, side-funds, predecessor funds, successor funds and any other funds that are
affiliates of such fund. Each time the Company proposes to offer any shares of, or securities
convertible into or exchangeable or exercisable for any shares of, any class of its capital stock
(“Shares”), the Company shall first make an offering of such Shares to each Major Investor in
accordance with the following provisions:

          (a) The Company shall deliver a notice in accordance with Section 3.5 hereof (“Notice”) to the
Major Investors stating (i) its bona fide intention to offer such Shares, (ii) the number of such
Shares to be offered, (iii) the price and terms upon which it proposes to offer such Shares, and
(iv) each Major Investor’s Pro-Rata Share of such Shares.

          (b) By written notification received by the Company, within twenty (20) calendar days after
receipt of the Notice, the Major Investor may elect to purchase or obtain, at the price and on the
terms specified in the Notice, up to such Major Investors Pro Rata Share of such Shares. For
purposes of this Section 2.4, a Major Investor’s “Pro Rata Share” of the Shares shall mean the
number of Shares that equals the proportion that (i) the number of shares of Common Stock and
Common Stock issuable upon conversion of the Preferred Stock (excluding all Special Mandatory
Conversion Shares) then held by such Major Investor bears to (ii) the total number of shares of
Common Stock of the Company then outstanding (assuming full conversion of all convertible equity
securities and including all Special Mandatory Conversion Shares). The Company shall promptly, in
writing, inform each Major Investor that elects to purchase all the Shares available to it (a
"Fully-Exercising Investor”) of any other Major Investor’s failure to do likewise. During the
ten-day period commencing after such information is given in accordance with the provisions of
Section 3.5 hereof, each Fully-Exercising Investor may elect to purchase that portion of the Shares
for which Major Investors were entitled to subscribe, but that were not subscribed for by the Major
Investors, that equals the proportion that (i) the number of Registrable Securities then held by
such Fully-Exercising Investor bears to (ii) the total number of Registrable Securities then held
by all Fully-Exercising Investors who wish to purchase some of the unsubscribed shares.

          (c) If all Shares that Investors are entitled to subscribe for pursuant to subsection 2.4(b)
are not subscribed for as provided in subsection 2.4(b) hereof, the Company may, during the ninety
(60) day period following the expiration of the period provided in subsection 2.4(b) hereof, offer
the remaining unsubscribed portion of such Shares to any person or persons at a price not less
than, and upon terms no more favorable to the such person or persons than, those specified in the
Notice. If the Company does not enter into an agreement for the sale of the Shares within such
period, or if such agreement is not consummated within thirty (30) days of the execution thereof,
the right provided hereunder shall be deemed to be revived and such Shares shall not be offered
unless first reoffered to the Major Investors in accordance herewith.

          (d) The right of first offer in this Section 2.4 shall not be applicable to:

                    (i) shares of Common Stock issued or issuable upon conversion of the Preferred Stock;

14

 

                    (ii) securities issued as dividends or distributions on the Preferred Stock;

                    (iii) shares of Common Stock issued or issuable solely for compensatory purposes, to
directors, officers, employees or consultants of the Company, whether directly (as Common Stock or
Options) or pursuant to a stock option plan or a restricted stock plan, in each case approved by
the Board of Directors (including the affirmative vote of a majority of the Preferred Stock
Directors);

                    (iv) shares of Common Stock issued pursuant to the exercise of Options or the conversion of
stock or other equity securities of the Company outstanding as of the date hereof and convertible
into Common Stock;

                    (v) securities issued in connection with a bona fide business acquisition or license of
technology of or by the Company, whether by license, merger, consolidation, sale of assets, sale or
exchange of stock or otherwise that are not issued primarily for equity financing purposes, in each
case as approved by the Board of Directors (including the affirmative vote of a majority of the
Preferred Stock Directors);

                    (vi) securities issued to non-financial institutions in connection with bona fide
collaboration, technology license, development, original equipment manufacturer, distribution,
development, marketing, foundry or similar transactions that are not issued primarily for equity
financing purposes, in each case approved by the Board of Directors (including the affirmative vote
of a majority of the Preferred Stock Directors);

                    (vii) securities issued in connection with bona fide commercial borrowing, real estate leases,
capital equipment leases, licensing, distribution, development, corporate partnering or similar
transactions that are not issued primarily for equity financing purposes, in each case approved by
the Board of Directors (including the affirmative vote of a majority of the Preferred Stock
Directors); and

                    (viii) Shares of Common Stock issued to the public in connection with a firm-commitment
underwritten public offering of the Common Stock.

          2.5 Termination of Certain Covenants. The covenants set forth in Section 2.4 shall
terminate as to Major Investors and be of no further force or effect upon (i) the effectiveness of
the Qualified IPO or (ii) a Liquidation (as such term is defined in the Company’s then-current
Certificate of Incorporation).

          2.6 Real Property Holding Corporation. The Company covenants that it will operate in
a manner such that it will not become a “United States real property holding corporation” as that
term is defined in Section 897(c)(2) of the Internal Revenue Code of 1986, as amended (the “Code”),
and the regulations thereunder, and shall, from time to time upon the request of any Investor,
confirm to such Investor that it is not a United States real property holding corporation. If at
any time in the future the Company should become a United States real property holding corporation,
the Company shall, as promptly as possible, notify each Investor of such change in status.

15

 

          2.7 Compliance. The Company shall, and shall cause each of its subsidiaries to, use
its or their best efforts to:

               (a) at all times cause to be done all things necessary to maintain, preserve and renew its
corporate existence and all material licenses, authorization and permits necessary to the conduct
of its businesses;

               (b) maintain and keep its properties in good repair, working order and condition, and from
time to time make all necessary and desirable repairs, renewals and replacements for the conduct of
its business;

               (c) pay and discharge all taxes, assessments and governmental charges imposed upon its
properties or upon the income or profits therefrom (in each case before the same become delinquent
and before penalties accrue thereon) and all claims for labor, materials or supplies to the extent
to which the failure to pay or discharge such obligations would reasonably be expected to have a
material adverse effect upon the financial condition, operating results, assets, or operations of
the Company and its subsidiaries taken as a whole, unless and to the extent that the same are being
contested in good faith and by appropriate proceedings and adequate reserves (as determined in
accordance with GAAP in the applicable jurisdictions, consistently applied) have been established
on its books with respect thereto;

               (d) apply for and continue in force, with good and responsible insurance companies, adequate
insurance covering risks of such types and in such amounts as are customary for corporations of
similar size engaged in similar lines of business, including but not limited to, at such time as
determined by the Board of Directors, apply for and continue in good force with a good and
responsible insurance company, employment practices insurance reasonably acceptable to the holders
of a majority of the shares of Preferred Stock (voting together as a separate class and on an as
converted basis).

          2.8 Indemnification. The Company’s Certificate of Incorporation and Bylaws shall
provide, to the maximum extent permitted by law, for elimination of the liability of directors and
for indemnification of directors for acts on behalf of the Company.

          2.9 Unrelated Business Taxable Income. Any gross income derived by the Investors from
the Company shall be in the form of dividends or gains from the disposition of property and only
such dividends or gains that are not included under Section 512(b)(4) of the Code in calculating
unrelated business taxable income. This Section 2.9 shall not be deemed to apply to (i) any
compensation (in cash, stock or other form) received by designees of the Investors in their
capacities as directors of the Company that is transferred to the Investors, or (ii) any income
included under Section 512(b)(4) of the Code as a result of debt financed property incurred by any
Investor in connection with the purchase of an interest in the Company, or (iii) any income derived
by the Investors from the Company with respect to which the Investors have expressly waived in
writing the application of the provisions of this Section 2.9.

          2.10 Qualified Small Business Stock. The Company will not take any action that would
cause the Investors’ shares to not qualify as “Qualified Small Business Stock” under Section 1202
of the Code. The Company will use reasonable efforts to comply with the reporting

16

 

and record keeping requirements of Section 1202 of the Code, any regulations promulgated
thereunder and any similar state laws and regulations, and agrees not to repurchase any stock of
the Company if such repurchase would cause such shares not to so qualify as “Qualified Small
Business Stock.”

          2.11 Transactions with Affiliates. The Company will not engage in any transaction
with any affiliate on terms more favorable to the affiliate than would have been obtainable on an
arm’s-length basis in the ordinary course of business unless approved by a majority of the
disinterested Board of Directors.

          2.12 Stock Equivalent Vesting. All securities, options and other similar stock
equivalents issued after the date of this Agreement by the Company to employees, directors,
consultants and other service providers shall be subject to approval of the Board of Directors, and
unless otherwise approved by the Board of Directors, shall vest over four years as follows: 25% at
the end of the first year following such issuance, and in equal monthly amounts for the remaining
three years. The terms used in the previous sentence shall be set forth in a stock option agreement
between the Company and the optionee. In addition, all securities, options and other similar stock
equivalents issued after the date of this Agreement by the Company to employees, directors,
consultants and other service providers shall be subject to a repurchase option that entitles the
Company (or its assigns) to repurchase at cost any unvested shares held by a stockholder upon such
stockholder’s termination, with or without cause. All of the Company’s offer letters issued to
employees and consultants after the date of this Agreement shall state that the granting of options
is subject to approval by the Board of Directors.

          2.13 Proprietary Information Agreements. The Company will cause all employees to
enter into proprietary information and assignment agreements in a form approved by the Board of
Directors. Such agreements shall contain provisions regarding confidentiality, assignment of
inventions and innovations to the Company, non-solicitation of employees and customers during
employments and for one year following the termination of employment and non-compete provisions
during employment and for one year following the termination of employment.

          2.14 Stock Option Repurchase. The Company hereby agrees that, in the event that it
shall opt not to exercise its right to repurchase shares of Common Stock issued to employees,
directors and consultants pursuant to any stock option plan or a restricted stock plan of the
Company, including the agreements promulgated for use thereunder, or any other agreement that
grants repurchase rights to the Company, whether with respect to the repurchase of unvested shares
at cost or the right of first refusal in connection with proposed transfers (to the extent not
already covered by the Third Amended and Restated Right of First Refusal and Co-Sale Agreement,
dated as of the date hereof, by and among the Company and the parties listed on Exhibits A and B)
(collectively, the “Repurchase Rights”), the Company shall assign the Repurchase Rights to the
Major Investors so that each Major Investor shall have the option to purchase up to that portion of
an optionee’s shares of Common Stock that is subject to the Repurchase Rights and that equals the
proportion that the number of shares of Preferred Stock then held by such Major Investor bears to
the total number of shares of Preferred Stock then held by all of the Major Investors.

17

 

     3. Miscellaneous.

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

          3.2 Governing Law. This Agreement shall be governed by and construed under the laws
of the State of Delaware as applied to agreements among Delaware residents entered into and to be
performed entirely within Delaware.

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

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

          3.5 Notices. Any notice required or permitted by any provision of this Agreement
shall be given in writing and shall be delivered personally or by courier, or by registered or
certified mail, postage prepaid, addressed (i) in the case of the Company, to its principal office,
and (ii) in the case of any Investor which is an original party to this Agreement, at the address
of such Investor as set forth on Schedule A hereto or, if not provided below, such other address
for such Investor as shall be designated in writing from time to time by such Investor; and, (iii)
in the case of any permitted transferee of a party to this Agreement or its transferee, to such
transferee at its address as designated in writing by such transferee to the Company from time to
time. Any notices required in connection with this Agreement shall be in writing and shall be
deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by
confirmed electronic mail or facsimile if sent during normal business hours of the recipient; if
not, then on the next business day, (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with written notification of
receipt.

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

          3.7 Entire Agreement. This Agreement (including the exhibits and schedules hereto, if
any) constitutes the full and entire understanding and agreement among the parties with regard to
the subjects hereof and thereof.

18

 

          3.8 Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written consent of the Company
and the holders of at least seventy percent (70%) of the Preferred Stock (voting together as a
single class and on an as converted basis). Any amendment or waiver effected in accordance with
this Section 3.8 shall be binding upon each holder of any Registrable Securities each future holder
of all such Registrable Securities, and the Company.

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

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

          3.11 Additional Investors. Notwithstanding anything to the contrary contained herein,
if the Company shall issue additional shares of Preferred Stock, pursuant to the Purchase Agreement
or otherwise to a purchaser (a) in such amount as such purchaser shall be considered a Major
Investor, or (b) that is an SBIC, such purchaser may become a party to this Agreement by executing
and delivering an additional counter part signature page to this Agreement, and upon so doing shall
be deemed a Major Investor or SBIC, as applicable hereunder.

          3.12 Termination of Prior Agreement. The Prior Agreement is hereby amended, restated
and superceded in its entirety by this Agreement and shall be terminated and of no further force
and effect.

[Signature pages follow]

19

 

     IN WITNESS WHEREOF, the parties hereto have executed this THIRD AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

	 	 	 	 	 
	 	COMPELLENT TECHNOLOGIES, INC.

 	 
	 	By:  	/s/ Philip E. Soran
 	 
	 	 	Philip E. Soran 	 
	 	 	Chief Executive Officer 	 
	 
	 	NOMURA INTERNATIONAL PLC

 	 
	 	By:  	/s/ Andrew Healey
 	 
	 	 	Name:  	Andrew Healey 	 
	 	 	Title:  	Head of Technology Private Equity 	 
	 
	 	CENTENNIAL VENTURES VII, LP

 	 
	 	By:  	/s/ Jeffrey H. Schultz
 	 
	 	 	Name:  	Jeffrey H. Schultz, Managing Director 	 
	 	 	 	 
	 
	 	CENTENNIAL ENTREPRENEURS FUND VII, LP

 	 
	 	By:  	/s/ Jeffrey H. Schultz
 	 
	 	 	Name:  	Jeffrey H. Schultz, Managing Director 	 
	 	 	 	 
	 
	 	CRESCENDO IV ENTREPRENEURS FUND A, L.P.

By: Crescendo Ventures IV, LLC

Its: General Partner

 	 
	 	By:  	/s/ Jeffrey R. Tollefson
 	 
	 	 	Name:  	Jeffrey R. Tollefson 	 
	 	 	Title:  	General Partner 	 
	 

Compellent Technologies, Inc.

Investor Rights Agreement Signature Page

 

 

	 	 	 	 	 
	 	CRESCENDO IV AG & CO. BETEILIGUNGS KG

By: Crescendo German Investments IV, LLC

Its: Managing Partner

 	 
	 	/s/ Jeffrey R. Tollefson
 	 
	 	 	Name:  	Jeffrey R. Tollefson 	 
	 	 	Title:  	General Partner 	 
	 
	 	CRESCENDO IV, L.P.

By: Crescendo Ventures IV, LLC

Its: General Partner

 	 
	 	/s/ Jeffrey R. Tollefson
 	 
	 	 	Name:  	Jeffrey R. Tollefson 	 
	 	 	Title:  	General Partner 	 
	 
	 	CRESCENDO IV ENTREPRENEURS FUND, L.P.

By: Crescendo Ventures IV, LLC

Its: General Partner

 	 
	 	/s/  	Jeffrey R. Tollefson
 	 
	 	 	Name:  	Jeffrey R. Tollefson 	 
	 	 	Title:  	General Partner 	 
	 
	 	EL DORADO VENTURES VI, L.P.

By: El Dorado Venture Partners VI, LLC

Its: General Partner

 	 
	 	/s/ Charles D. Beeler
 	 
	 	Managing Member 	 
	 	 	 
	 
	 	EL DORADO TECHNOLOGY ‘01, L.P.

By: El Dorado Venture Partners VI, LLC

Its: General Partner

 	 
	 	/s/ Charles D. Beeler
 	 
	 	Managing Member 	 
	 	 	 
	 

Compellent Technologies, Inc.

Investor Rights Agreement Signature Page

 

 

	 	 	 	 	 
	 	CARGILL INCORPORATED

 	 
	 	By:  	/s/ Paul Bieganski
 	 
	 	 	Name:  	Paul Bieganski 	 
	 	 	Title:  	VP Cargill Ventures 	 
	 
	 	AFFINITY VENTURES III, L.P.

By: Affinity Capital Advisors, LLC

Its: General Partner

 	 
	 	By:  	/s/ B. Kristine Johnson
 	 
	 	 	Name:  	B. Kristine Johnson 	 
	 	 	Title:  	Managing Member 	 
	 
	 	 	 
	 	                                                     /s/ Jeffrey Hinck
 	 
	 	Jeffrey Hinck 	 
	 	 	 
	 
	 	STARTEC INVESTMENTS, LLC

 	 
	 	By:  	/s/ Joy J. Lindsay
 	 
	 	 	Name:  	Joy J. Lindsay 	 
	 	 	Title:  	Chief Manager 	 
	 
	 	Rancho Partners II, L.P.

By: Knelman Asset Management Group, LLC

Its: General Partner

 	 
	 	By:  	/s/ I.P. Knelman
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	D&W VENTURES IV, LP

By: D&W Managers LLC

 	 
	 	By:  	/s/ Thomas Martin
 	 
	 	 	Name:  	Thomas Martin 	 
	 	 	Title:  	A Manager 	 
	 
	 	 	 
	 	                                                            /s/ Willis D. Heim
 	 
	 	Willis D. Heim 	 
	 	 	 
	 

Compellent Technologies, Inc.

Investor Rights Agreement Signature Page

 

 

Schedule A

Nomura International PLC

Nomura House

One St. Martin’s-le-Grand

London, EC1A 4NP, UK

Centennial Ventures VII, LP

600 Congress Avenue, Suite 200

Austin, TX 78701

Fax: (512) 505-4550

Phone: (512) 505-4500

Centennial Entrepreneurs Fund VII, LP

600 Congress Avenue, Suite 200

Austin, TX 78701

Fax: (512) 505-4550

Phone: (512) 505-4500

Crescendo IV, L.P.

800 LaSalle Avenue, Suite 2250

Minneapolis, MN 55402

Fax: (612) 607-2801

Phone: (612) 607-2800

Crescendo IV Entrepreneurs Fund, L.P.

800 LaSalle Avenue, Suite 2250

Minneapolis, MN 55402

Fax: (612) 607-2801

Phone: (612) 607-2800

Crescendo IV Entrepreneurs Fund A, L.P.

800 LaSalle Avenue, Suite 2250

Minneapolis, MN 55402

Fax: (612) 607-2801

Phone: (612) 607-2800

Crescendo IV AG & Co. Beteiligungs KG

800 LaSalle Avenue, Suite 2250

Minneapolis, MN 55402

Fax: (612) 607-2801

Phone: (612) 607-2800

El Dorado Ventures VI, L.P.

c/o El Dorado Ventures

2440 Sand Hill Road, Suite 200

Menlo Park, CA 94025

Phone: (650) 854-1200

Fax: (650) 854-1202

El Dorado Technology ‘01, L.P.

c/o El Dorado Ventures

2440 Sand Hill Road, Suite 200

Menlo Park, CA 94025

Phone: (650) 854-1200

Fax: (650) 854-1202

Cargill, Incorporated

15407 McGinty Road West

Wayzata, Minnesota 55391-2399

Affinity Ventures III, L.P.

901 Marquette Ave., Suite 1810

Minneapolis, MN 55424

Fax: (612) 252-9900

Phone: (612) 252-9911

Jeffrey Hinck

15 Gideons Point Road

Tonka Bay, MN 55331

Fax: (952) 995-7493

Phone: (612) 382-6191

Rancho Partners II, L.P.

225 South Sixth Street, Suite 3390

Minneapolis, MN 55402

Fax: (612) 341-8226

Willis D. Heim

6605 Glen Arbor Way

Naples, FL 34119

StarTec Investments, LLC

7900 International Drive, Suite 825

Bloomington, MN 55425

Fax: (952) 883-3239

Phone: (952) 883-3222

D&W Ventures IV, L.P.

50 South Sixth Street, Suite 1500

Minneapolis, MN 55402

Fax: (612) 340-8827

Phone: (612) 340-2665

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