FIRST AMENDMENT
TO
INVESTORS’ RIGHTS AGREEMENT
This First
Amendment (this “ Amendment ”), dated as of this
17th day of March, 2005, amends that certain Investors’
Rights Agreement dated as of January 28, 2004 (the “
Agreement ”), by and among Restore Medical Inc., a
Delaware corporation (f/k/a Restore Medical, Inc., a Minnesota
corporation) (the “ Company ”), the investors
and other stockholders of the Company listed on
Schedule A thereto (the “ Investors
”) and the holders of the Company’s capital stock
listed on Schedule B , thereto (the “
Founders ”).
WHEREAS, pursuant
to Section 9.7 of the Agreement, the parties reserved the
right to amend the Agreement; and
WHEREAS, the
undersigned parties to this Amendment include the Company, the
holders of at least a majority of Registrable Securities and the
holders of at least a majority of the issued and outstanding shares
of Series C Preferred Stock, and therefore, as provided in
Section 9.7 of the Agreement, this Amendment shall be binding
upon all parties to the Agreement; and
WHEREAS, the
undersigned parties to this Amendment desire to make certain
modifications to the terms of the right of first offer set forth in
Section 2.4(d) of the Agreement; and
WHEREAS, in
connection with a working capital loan facility with Lighthouse
Capital Partners V, L.P. (“ Lighthouse ”), the
Company will issue a warrant to Lighthouse to acquire shares of the
Company’s Series C-1 Preferred Stock (the “
Warrant ”); and
WHEREAS, as a
condition to the financing, the Company has agreed to grant
Lighthouse registration rights with respect to the shares of the
Company’s Common Stock issuable upon conversion of the
Preferred Stock subject to the Warrant, and the Investors desire to
amend the Agreement to include Lighthouse thereunder.
NOW, THEREFORE, in
consideration of the foregoing, and for other good and valuable
consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto hereby agree as
follows:
1. Section 2.4(d)
is hereby amended in its entirety to read as follows:
“(d) The
right of first offer in this Section 2.4 shall not be
applicable to (i) the issuance or sale of shares of Common
Stock (or options therefor) to employees, directors, consultants
and other service providers for the primary purpose of soliciting
or retaining their services pursuant to plans or agreements
approved by the Company’s Board of Directors; (ii) the
issuance of securities pursuant to a bona fide, firmly underwritten
public offering of shares of Common Stock registered under the Act,
(iii) the issuance of securities pursuant to the conversion or
exercise of convertible or exercisable securities, (iv) the
issuance of securities in connection with a bona fide business
acquisition of or by
the Company,
whether by merger, consolidation, sale of assets, sale or exchange
of stock or otherwise, (v) the issuance and sale of
Series C Preferred Stock pursuant to the Series C/C-1
Agreement, or (vi) the issuance of warrants to purchase up to
an aggregate of 200,000 shares of Series C-1 Preferred Stock
with a per share exercise price equal to at least the fair market
value as of the date of issue, as determined in good faith by the
corporation’s Board of Directors (and the Common Stock
issuable upon conversion thereof) in connection with the incurrence
of indebtedness for money borrowed up to an aggregate of $5,000,000
from recognized commercial lending institutions. In addition to the
foregoing, the right of first offer in this Section 2.4 shall
not be applicable with respect to any Investor in any subsequent
offering of Shares if (i) at the time of such offering, the
Investor is not an “accredited investor,” as that term
is then defined in Rule 501 (a) of the Act and
(ii) such offering of Shares is otherwise being offered only
to accredited investors.
2. The
Company and the Investors hereby amend the Agreement to include
Lighthouse as a “Holder�
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