FOURTH AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

 

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                                                                     Exhibit 4.3

 

 

 

 

 

 

 

 

 

 

 

 

                           FOURTH AMENDED AND RESTATED

 

                            INVESTOR RIGHTS AGREEMENT

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                                 STEREOTAXIS, INC.

 

                           FOURTH AMENDED AND RESTATED

 

                            INVESTOR RIGHTS AGREEMENT

 

      This Fourth Amended and Restated Investor Rights Agreement (the

"Agreement") is entered into as of the 17th day of December, 2002, by and among

Stereotaxis, Inc., a Delaware corporation (the "Company"), persons holding at

least two-thirds of the Registrable Securities under the Third Amended and

Restated Investor Rights Agreement (as defined below), and the D-2 Purchasers

(as defined below).

 

                                    RECITALS

 

      WHEREAS, the Company is issuing shares of its Series D-2 Preferred Stock

pursuant to that certain Series D-2 Preferred Stock Purchase Agreement as of the

date hereof (the "Purchase Agreement") and in connection with the offer, sale

and issuance of the Series D-2 Preferred Stock is issuing Warrants to purchase

shares of Common Stock;

 

      WHEREAS, as a condition of entering into the Purchase Agreement, the

purchasers thereunder (the "D-2 Purchasers") have requested that the Company

extend to them registration rights and other rights and the Company desires to

grant such rights to the D-2 Purchasers; and

 

      WHEREAS, the Company has previously extended registration rights and other

rights to certain of its stockholders pursuant to that certain Third Amended and

Restated Investor Rights Agreement among the Company and certain of the

Company's stockholders party thereto (the "Third Amended and Restated Investor

Rights Agreement"), and wishes to set forth the rights of such stockholders and

of the D-2 Purchasers (collectively, the "Investors") in a single integrated

agreement as set forth below;

 

      NOW, THEREFORE, in consideration of the mutual promises, representations,

warranties, covenants and conditions set forth in this Agreement and in the

Purchase Agreement, the Investors and the Company hereby agree as follows:

 

SECTION 1.   REGISTRATION RIGHTS

 

      1.1 DEFINITIONS. As used in this Agreement the following terms shall have

the following respective meanings:

 

            (a) The term "Holder" shall mean (i) each Investor, for so long as

it holds or has the right to acquire Registrable Securities; and (ii) any other

person holding or having the right to acquire Registrable Securities to whom

these registration rights have been transferred pursuant to paragraph 1.8

hereof.

 

            (b) The terms "register," "registered," and "registration" refer to

a registration effected by filing with the Securities and Exchange Commission

(the "SEC") a registration

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statement (the "registration statement") in compliance with the Securities Act

of 1933, as amended (the "Securities Act"), and the declaration or ordering by

the SEC of the effectiveness of such registration statement.

 

             (c) The term "Registrable Securities" means (i) Common Stock issued

or issuable upon conversion of shares of Series A Preferred Stock, Series B

Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series D-1

Preferred Stock and Series D-2 Preferred Stock held by Investors; (ii) any

Common Stock held by Investors; (iii) 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, Registrable Securities; and (iv) any

Common Stock issued or issuable to the Investors upon the exercise of warrants

issued in connection with the offer, sale and issuance of the Series D-1

Preferred Stock and Series D-2 Preferred Stock. In the event of any

recapitalization by the Company, whether by stock split, reverse stock split,

stock dividend or the like, the number of shares of Registrable Securities used

throughout this Agreement for various purposes shall be proportionately

increased or decreased.

 

            (d) The term "Initiating Holders" means any Holder or Holders of not

less than twenty percent (20%) of the Registrable Securities then outstanding

and not registered at the time of any request for registration pursuant to

paragraph 1.2 of this Agreement.

 

      1.2    DEMAND REGISTRATION.

 

            (a) DEMAND FOR REGISTRATION. If the Company shall receive from

Initiating Holders a written demand (a "Demand Registration") that the Company

effect any registration under the Securities Act of all or a portion of the

Registrable Securities (other than a registration on Form S-3 or any related

form of registration statement, such a request being provided for under

paragraph 1.9 hereof) the Company will:

 

                  (i) promptly (but in any event within 10 days) give written

notice of the proposed registration to all other Holders; and

 

                  (ii) use its diligent best efforts to effect such registration

as soon as practicable and as soon as will permit or facilitate the sale and

distribution of all or such portion of such Initiating Holders' Registrable

Securities as are specified in such demand, together with all or such portion of

the Registrable Securities of any Holder or Holders joining in such demand as

are specified in a written demand received by the Company within 30 days after

such written notice is given, provided that the Company shall not be obligated

to take any action to effect any such registration pursuant to this paragraph

1.2:

 

                        (A) Within 180 days immediately following the effective

      date of any registration statement pertaining to an underwritten public

      offering of securities of the Company for its own account (other than a

      registration relating solely to employee benefit plans);

 

 

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                        (B) After the Company has effected one such registration

      pursuant to this paragraph 1.2 and the sale of the shares of Common Stock

      under such registration has closed;

 

                        (C) If the Company shall furnish to such Holders a

      certificate signed by the President 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 shareholders for such

      registration statement to be filed at the date on which filing would be

      required, in which case the Company shall have an additional period of not

      more than 120 days within which to file such registration statement;

      provided, however, that the Company shall not use this right more than

      once in any twelve-month period; or

 

                        (D) If more than 50% of the Registrable Securities

      requested to be registered by Initiating Holders are withdrawn from such

      registration.

 

            (b) UNDERWRITING. If the Initiating Holders intend to distribute the

Registrable Securities covered by their demand by means of an underwriting, they

shall so advise the Company as part of their demand made pursuant to this

paragraph 1.2; and the Company shall include such information in the written

notice referred to in subparagraph 1.2(a)(i). In such event, the right of any

Holder to registration pursuant to this paragraph 1.2 shall be conditioned upon

such Holder's participation in such underwriting and the inclusion of such

Holder's Registrable Securities in the underwriting (unless otherwise mutually

agreed by a majority in interest of the Initiating Holders and such Holder) to

the extent provided herein.

 

      The Company shall, together with all Holders proposing to distribute their

securities through such underwriting, enter into an underwriting agreement in

customary form with the underwriter or underwriters selected by a majority in

interest of the Initiating Holders and reasonably satisfactory to the Company.

Notwithstanding any other provision of this paragraph 1.2, if the underwriter

shall advise the Company in writing that marketing factors (including, without

limitation, an adverse effect on the per share offering price) require a

limitation of the number of shares to be underwritten, then the Company shall so

advise all Holders of Registrable Securities that would otherwise be registered

and underwritten pursuant hereto, and the number of shares of Registrable

Securities that may be included in the registration and underwriting shall be

allocated pro rata among such Holders thereof in proportion, as nearly as

practicable, to the respective amounts of Registrable Securities held by such

Holders at the time of filing the registration statement. No Registrable

Securities excluded from the underwriting by reason of the underwriter's

marketing limitation shall be included in such registration.

 

      If any Holder disapproves of the terms of the underwriting, such Holder

may elect to withdraw therefrom by written notice to the Company, the

underwriter, and the Initiating Holders. The Registrable Securities so withdrawn

shall also be withdrawn from registration.

 

      If the underwriter has not limited the number of Registrable Securities to

be underwritten, the Company may include securities for its own account (or for

the account of other stockholders) in such registration if the underwriter so

agrees and if the number of Registrable

 

 

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Securities that would otherwise have been included in such registration and

underwriting will not thereby be limited.

 

       1.3    COMPANY REGISTRATION.

 

            (a) If at any time or from time to time the Company shall determine

to register any of its securities, either for its own account or the account of

security holders (other than the Holders), other than a registration relating

solely to employee benefit plans, a registration on Form S-4, or a registration

pursuant to paragraph 1.2 hereof, the Company will:

 

                  (i) promptly give to each Holder written notice thereof (which

shall include a list of the jurisdictions in which the Company intends to

attempt to qualify such securities under the applicable blue sky or other state

securities laws); and

 

                  (ii) include in such registration (and any related

qualification under blue sky laws or other compliance), and in any underwriting

involved therein, all the Registrable Securities specified in a written request

or requests, made within 20 days after receipt of such written notice from the

Company, by any Holder or Holders, except as set forth in subparagraph 1.3(b)

below.

 

            (b) UNDERWRITING. If the registration of which the Company gives

notice is for a registered public offering involving an underwriting, the

Company shall so advise the Holders as a part of the written notice given

pursuant to subparagraph 1.3(a)(i). In such event the right of any Holder to

registration pursuant to this paragraph 1.3 shall be conditioned upon such

Holder's participation in such underwriting and the inclusion of such Holder's

Registrable Securities in the underwriting to the extent provided herein. All

Holders proposing to distribute their securities through such underwriting

shall, together with the Company and the other parties distributing their

securities through such underwriting, enter into an underwriting agreement in

customary form with the underwriter or underwriters selected for such

underwriting by the Company. Notwithstanding any other provision of this

paragraph 1.3, if the underwriter determines that marketing factors require a

limitation of the number of shares to be underwritten, the underwriter may limit

the number of Registrable Securities to be included in the registration and

underwriting, or may exclude Registrable Securities entirely from such

registration and underwriting subject to the terms of this paragraph. The

Company shall so advise all holders of the Company's securities that would

otherwise be registered and underwritten pursuant hereto, and the number of

shares of such securities, including Registrable Securities, that may be

included in the registration and underwriting shall be allocated in the

following manner: shares, other than Registrable Securities, requested to be

included in such registration by stockholders shall be excluded, and if a

limitation on the number of shares is still required, the number of Registrable

Securities that may be included shall be allocated among the Holders thereof in

proportion, as nearly as practicable, to the respective amounts of Registrable

Securities held by each such Holder at the time of filing the registration

statement. In the event of any underwriter cutback, any selling shareholder

which is a Holder of Registrable Securities and which is a partnership or

corporation, the partners, retired partners and shareholders of such Holder, or

the estates and family members of any such partners and retired partners and any

trusts for the

 

 

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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 shares carrying registration rights owned

by all entities and individuals included in such "selling Holder", as defined in

this sentence. No securities excluded from the underwriting by reason of the

underwriter's marketing limitation shall be included in such registration. If

any Holder disapproves of the terms of the underwriting, it may elect to

withdraw therefrom by written notice to the Company and the underwriter. The

Registrable Securities so withdrawn shall also be withdrawn from registration.

 

      1.4 EXPENSES OF REGISTRATION. All expenses incurred in connection with the

registration effected pursuant to paragraph 1.2 and all expenses incurred in

connection with the first two registrations effected pursuant to paragraphs 1.3

and 1.9, including without limitation all registration, filing, and

qualification fees (including blue sky fees and expenses), printing expenses,

escrow fees, fees and disbursements of counsel for the Company, reasonable fees

and disbursements of one special counsel for the participating Holders, and

expenses of any special audits incidental to or required by such registration

(collectively, "Registration Expenses"), shall be borne by the Company;

provided, however, that the term Registration Expenses shall not include, and in

no event will the Company be obligated to pay, stock transfer taxes or

underwriters' discounts, or commissions relating to Registrable Securities.

Registration Expenses incurred in any further registration pursuant to paragraph

1.3 shall be paid by the Company and the Holders including Registrable

Securities in such registration, pro rata according to the amount of securities

included by such parties in such registration, and Registration Expenses

incurred in any further registration pursuant to paragraph 1.9 shall be paid by

the Holders including Registrable Securities in such registration pro rata

according to the amount of securities so included. Notwithstanding anything to

the contrary above, the Company shall not be required to pay any Registration

Expenses of any registration pursuant to paragraph 1.2 in which more than 50% of

the Registrable Securities requested to be included in such registration are

withdrawn other than as a result of actions by the Company or a material adverse

change in its condition (financial or otherwise), unless the Initiating Holders

so requesting withdrawal of their Registrable Securities from such registration

agree to forfeit their right to one demand registration pursuant to paragraph

1.2 (in which event such right shall be forfeited by all Holders). In the

absence of such an agreement to forfeit, the Holders of Registrable Securities

to have been registered shall bear all such expenses pro rata on the basis of

the Registrable Securities to have been registered. Notwithstanding the

foregoing, however, if at the time of the withdrawal, the Holders have learned

of a material adverse change in the condition, business, or prospects of the

Company from that known to the Holders at the time of their request, of which

the Company had knowledge at the time of the request, then the Holders shall not

be required to pay any of said expenses and shall retain their full rights

pursuant to paragraph 1.2.

 

      1.5 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 1 to

effect the registration of any Registrable Securities, the Company shall, as

expeditiously as reasonably possible:

 

            (a) Prepare and file with the SEC a registration statement with

respect to such Registrable Securities (within ninety (90) days after a demand,

if pursuant to Sections 1.2 or 1.9)

 

 

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and use its diligent best efforts to cause such registration statement to become

effective, and, upon the request of the Holders of a majority of the Registrable

Securities registered thereunder, keep such registration statement effective for

up to ninety (90) days or until the Holder or Holders have completed the

distribution relating thereto.

 

            (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

Securities 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

Securities 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. Each Holder participating

in such underwriting shall also enter into and perform its obligations under

such an agreement.

 

            (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 Securities 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) Furnish, at the request of any Holder requesting registration of

Registrable Securities pursuant to this Section 1, on the date that such

Registrable Securities are delivered to the underwriters for sale in connection

with a registration pursuant to this Section 1, if such securities are being

sold through underwriters, and on the date that the registration statement with

respect to such securities