Exhibit 10.2
NORTHSTAR NEUROSCIENCE,
INC.
FOURTH AMENDED AND
RESTATED
INVESTORS’ RIGHTS
AGREEMENT
This Fourth Amended and Restated
Investors’ Rights Agreement (the “ Agreement
”) is made as of the 9th day of April 2004, by and among
Northstar Neuroscience, Inc., a Washington corporation (the “
Company ”), Boston Scientific Corporation, a Delaware
corporation (“ BSX ”), and the investors listed
on Exhibit A hereto (BSX, together with the parties listed
on Exhibit A , the “ Investors ,” and
each individually, an “ Investor ”).
RECITALS
A. The Company and certain of the
Investors have previously entered into that certain Third Amended
and Restated Investors’ Rights Agreement with the Company in
connection with the purchase of Series D Preferred Stock pursuant
to a Stock Purchase Agreement by and between such prior Investors
and the Company dated April 8, 2002.
B. The Company and BSX have entered
into a Series E Preferred Stock Purchase Agreement (the “
Purchase Agreement ”) of even date herewith pursuant
to which the Company desires to sell to BSX, and BSX desires to
purchase from the Company, shares of the Company’s Series E
Preferred Stock. A condition to BSX’s obligations under the
Purchase Agreement is that the Company and the Investors enter into
this Agreement in order to provide BSX with (i) certain rights
to register shares of the Company’s Common Stock issuable
upon conversion of the Series E Preferred Stock held by BSX,
(ii) certain rights to receive or inspect information
pertaining to the Company, and (iii) a right of first offer
with respect to certain issuances by the Company of its securities.
The Company desires to induce BSX to purchase shares of Series E
Preferred Stock pursuant to the Purchase Agreement by agreeing to
the terms and conditions set forth herein.
AGREEMENT
The parties hereby agree as
follows:
1. Registration Rights
. The Company and the Investors covenant and agree as
follows:
1.1 Definitions . For
purposes of this Section 1:
(a) The terms “
register , “ registered ,” and “
registration ” refer to a registration effected by
preparing and filing a registration statement or similar document
in compliance with the Securities Act of 1933, as amended (the
“ Securities Act ”), and the declaration or
ordering of effectiveness of such registration statement or
document;
(b) The term “ Registrable
Securities ” means (i) the shares of Common Stock
issuable or issued upon conversion of the Series A Preferred Stock,
(ii) the shares of Common Stock issuable or issued upon
conversion of the Series B Preferred Stock, (iii) the shares
of Common Stock issuable or issued upon conversion of the Series C
Preferred Stock, (iv)
the shares of Common Stock issuable or issued
upon conversion of the Series D Preferred Stock, (v) the
shares of Common Stock issuable or issued upon conversion of the
Series E Preferred Stock, (vi) an aggregate of 125,000 shares
of Common Stock purchased by certain of the Investors pursuant to
those certain Common Stock Purchase Agreements dated as of
June 9, 1999, and (vii) any other shares of Common Stock
of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in
exchange for or in replacement of, the shares listed in (i), (ii),
(iii), (iv), (v) or (vi) and any other shares acquired
under a right of first refusal or preemptive right; provided
, however , that the foregoing definition shall exclude in
all cases any Registrable Securities sold by a person in a
transaction in which his or her rights under this Agreement are not
assigned. Notwithstanding the foregoing, Registrable Securities
shall not include (a) any Registrable Securities sold by a
Holder pursuant to a registration statement under this Agreement,
(b) any Registrable Securities transferred to a Holder in a
transaction pursuant to Rule 144 promulgated under the Securities
Act, (c) any Registrable Securities transferred by a Holder in
which registration rights are not transferred pursuant to
Section 1.12 hereof, or (d) any Registrable Securities
held by a Holder who is then permitted to sell all of the
Registrable Securities then held by such Holder pursuant to Rule
144(k) or otherwise pursuant to Rule 144 in any three-month
period;
(c) The number of shares of “
Registrable Securities then outstanding ” shall be
determined by the number of shares of Common Stock outstanding
which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are,
Registrable Securities;
(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 of this Agreement;
(e) The term “ Form S-3
” means such form under the Securities Act as in effect on
the date hereof or any successor form under the Securities Act that
permits significant incorporation by reference of the
Company’s public filings under the Securities Exchange Act of
1934;
(f) The term “ SEC
” means the Securities and Exchange Commission;
(g) The term “ Qualified
IPO ” means a firm commitment underwritten public
offering by the Company of shares of its Common Stock pursuant to a
registration statement on Form S-l (or a successor form under the
Securities Act) under the Securities Act, the public offering price
of which is not less than $7.00 per share (appropriately adjusted
for any stock split, dividend, combination or other
recapitalization) and which results in aggregate gross cash
proceeds to the Company and/or any selling shareholders of at least
$40,000,000;
(h) The term “ Series A
Preferred Stock ” means the shares of Series A Preferred
Stock issued and sold to certain Investors pursuant to that certain
Series A Preferred Stock Purchase Agreement dated as of
June 25, 1999;
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(i) The term “ Series B
Preferred Stock ” means the shares of Series B Preferred
Stock issued and sold to certain Investors pursuant to that certain
Series B Preferred Stock Purchase Agreement dated as of
February 14, 2000;
(j) The term “ Series C
Preferred Stock ” means the shares of Series C Preferred
Stock issued and sold to certain Investors pursuant to that certain
Series C Preferred Stock Purchase Agreement dated as of
December 15, 2000;
(k) The term “ Series D
Preferred Stock ” means the shares of Series D Preferred
Stock issued and sold to certain Investors pursuant to that certain
Series D Preferred Stock Purchase Agreement dated as of
April 8, 2002; and
(l) The term “ Series E
Preferred Stock ” means the shares of Series E Preferred
Stock issued and sold to BSX pursuant to that certain Series E
Preferred Stock Purchase Agreement dated as of April 9,
2004.
1.2 Request for
Registration .
(a) If the Company shall receive at
any time after the earlier of (i) June 30, 2008, or
(ii) six (6) months after the effective date of the first
registration statement for a public offering of securities of the
Company (other than a registration statement relating either to the
sale of securities to employees of the Company pursuant to a stock
option, stock purchase or similar plan or an SEC Rule 145
transaction), a written request from the Holders of not less than
25% of the Registrable Securities then outstanding that the Company
file a registration statement under the Securities Act covering at
least such number of the Registrable Securities, then the Company
shall, within ten (10) days of the receipt thereof, give
written notice of such request to all Holders and shall, subject to
the limitations of subsection 1.2(b), file a registration statement
under the Securities Act within 60 days of the receipt of such
request and use its best efforts to effect as soon as practicable
the registration under the Securities Act of all Registrable
Securities which the Holders request to be registered within ten
(10) days of the mailing of such notice by the Company in
accordance with Section 5.3.
(b) If the Holders initiating the
registration request hereunder (“ 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 1.2 and the Company shall include such information in
the written notice referred to in subsection 1.2(a). The
underwriter will be selected by a majority in interest of the
Initiating Holders and shall be reasonably acceptable to the
Company. In such event, the right of any Holder to include his
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 to the extent provided herein. All Holders proposing
to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 1.5(e)) enter
into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting.
Notwithstanding any other provision of this Section 1.2, if
the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to
be underwritten, then the Initiating Holders shall so advise all
Holders of Registrable Securities which would otherwise be
underwritten pursuant
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hereto, and the number of shares of Registrable
Securities that may be included in the underwriting shall be
allocated among all Holders thereof, including the Initiating
Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder;
provided , however , that the number of shares of
Registrable Securities to be included in such underwriting shall
not be reduced unless all other securities are first entirely
excluded from the underwriting.
(c) Notwithstanding the foregoing,
if the Company shall furnish to Holders requesting a registration
statement pursuant to this Section 1.2, 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 and it is therefore essential to
defer the filing of such registration statement, the Company shall
have the right to defer such filing for a period of not more than
120 days after receipt of the request of the Initiating Holders;
provided , however , that the Company may not utilize
this right more than once in any twelve-month period.
(d) In addition, the Company shall
not be obligated to effect, or to take any action to effect, any
registration pursuant to this Section 1.2:
(i) After the Company has effected
four (4) registrations pursuant to this Section 1.2 and
such registrations have been declared or ordered
effective;
(ii) During the period starting with
the date sixty (60) days prior to the Company’s good
faith estimate of the date of filing of, and ending on a date one
hundred eighty (180) days after the effective date of, a
registration subject to Section 1.3 hereof; provided that the
Company is actively employing in good faith all reasonable efforts
to cause such registration statement to become effective;
or
(iii) If the Initiating Holders
propose to dispose of shares of Registrable Securities that may be
immediately registered on Form S-3 pursuant to a request made
pursuant to Section 1.4 below.
1.3 Company Registration
. If (but without any obligation to do so) the Company proposes
to register (including for this purpose a registration effected by
the Company for shareholders other than the Holders) any of its
stock under the Securities Act in connection with the public
offering of such securities solely for cash (other than a
registration relating solely to the sale of securities to
participants in a Company stock plan or a transaction covered by
Rule 145 under the Securities Act, a registration in which the only
stock being registered is Common Stock issuable upon conversion of
debt securities which are also being registered, or any
registration on any form which does not include substantially the
same information as would be required to be included in a
registration statement covering the sale of the Registrable
Securities), 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 5.3, the
Company shall, subject to the provisions of Section 1.8, cause to
be registered under the Securities Act all of the Registrable
Securities that each such Holder has requested to be
registered.
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1.4 Form S-3 Registration
. In case the Company shall receive from any Holder or Holders
of not less than 10% of the Registrable Securities then outstanding
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
will:
(a) promptly give written notice of
the proposed registration, and any related qualification or
compliance, to all other Holders; and
(b) as soon as practicable, effect
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 Holder’s or
Holders’ Registrable Securities as are specified in such
request, together with all or such portion of the Registrable
Securities of any other Holder or Holders joining in such request
as are specified in a written request given within 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 1.4: (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 a gross aggregate
price to the public of less than $l,000,000; (iii) if the
Company shall furnish to the 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 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 120 days after
receipt of the request of the Holder or Holders under this
Section 1.4; provided , however , that the
Company shall not utilize this right more than once in any twelve
(12) month period; (iv) if the Company has, within the
twelve (12) month period preceding the date of such request,
already effected two (2) registrations on Form S-3 for the
Holders pursuant to this Section 1.4; (v) in any
particular jurisdiction in which the Company would be required to
qualify to do business or to execute a general consent to service
of process in effecting such registration, qualification or
compliance; or (vi) during the period ending one hundred
eighty (180) days after the effective date of a registration
statement subject to Section 1.3.
(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 1.4 shall not be counted as demands for registration
or registrations effected pursuant to Sections 1.2 or 1.3,
respectively.
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
and use its best efforts to cause such registration statement to
become effective ( provided , that, before filing a
registration statement or any amendments or
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supplements thereto, the Company shall furnish
to the counsel selected by the Holders copies of all such documents
proposed to be filed), and, upon the request of the Holders of a
majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to one hundred twenty
(120) days. The Company shall not be required to file, cause
to become effective or maintain the effectiveness of any
registration statement that contemplates a distribution of
securities on a delayed or continuous basis pursuant to Rule 415
under the Securities Act.
(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 for up to one hundred twenty
(120) days.
(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, such
obligation to continue for one hundred twenty
(120) days.
(g) Cause all such Registrable
Securities registered pursuant hereunder to be listed on each
securities exchange on which similar securities issued by the
Company are then listed.
(h) Provide a transfer agent and
registrar for all Registrable Securities registered pursuant
hereunder and a CUSIP number for all such Registrable Securities,
in each case not later than the effective date of such
registration.
(i) If such securities are being
sold through underwriters, use its best efforts to furnish, at the
request of any Holder requesting registration of Registrable
Securities
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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, (i) a copy of the opinion, dated on or about
such date, of the counsel representing the Company for the purposes
of such registration, in form and substance as is customarily given
to underwriters in an underwritten public offering, addressed to
the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a copy of the
“comfort” letter, dated on or about such date, from the
independent certified public accountants of the Company addressed
to the underwriters in such underwritten public offering, if any,
and to the Holders requesting registration of Registrable
Securities.
1.6 Furnish Information
. 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. The Company shall have no obligation with respect to
any registration requested pursuant to Section 1.2 or Section 1.4
of this Agreement if, as a result of the application of the
preceding sentence, the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be
included in the registration does not equal or exceed the number of
shares or the anticipated aggregate offering price required to
originally trigger the Company’s obligation to initiate such
registration as specified in subsection 1.2(a) or subsection
1.4(b)(ii), whichever is applicable.
1.7 Expenses of
Registration .
(a) Demand Registration
. All expenses other than underwriting discounts and
commissions incurred in connection with up to two
(2) registrations, filings or qualifications pursuant to
Section 1.2, 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 selected by them with the approval of the Company, which
approval shall not be unreasonably withheld, shall be borne by the
Company (a “ Company Paid Registration ”);
provided , however , that no registration pursuant to
Section 1.2 shall count as a Company Paid Registration if the
Company withdraws such registration before it becomes effective
(subject to the remainder of this Section 1.7(a)); and
provided , further , that the Company shall not be
required to pay for any expenses of any registration proceeding
begun pursuant to Section 1.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority
of the Registrable Securities to be registered (in which case all
participating Holders shall bear such expenses), unless the Holders
of a majority of the Registrable Securities agree to forfeit their
right to one demand registration pursuant to Section 1.2;
provided further , however , that if at the time of
such 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 and have
withdrawn the request with reasonable promptness following
disclosure by the Company of such material adverse change, then the
Holders shall not be required to pay any of such expenses and shall
retain their rights pursuant to Section 1.2.
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(b) Company Registration
. All expenses other than underwriting discounts and
commissions incurred in connection with registrations, filings or
qualifications of Registrable Securities pursuant to
Section 1.3 for each Holder (which right may be assigned as
provided in Section 1.12), 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 Holder or Holders selected by them with the approval of the
Company, which approval shall not be unreasonably withheld, shall
be borne by the Company.
(c) Registration on Form
S-3 . All expenses incurred in connection with up to two
(2) registrations requested pursuant to Section 1.4,
including (without limitation) all registration, filing,
qualification, printers’ and accounting fees and the
reasonable fees and disbursements of one counsel for the selling
Holder or Holders selected by them with the approval of the
Company, which approval shall not be unreasonably withheld, and
counsel for the Company, each of which shall be paid by the Company
(a “ Company Paid S-3 Registration ”);
provided , however , that no registration pursuant to
Section 1.4 shall count as a Company Paid S-3 Registration if
the Company withdraws such registration before it becomes effective
(subject to the remainder of this Section 1.7(c)); and
provided , further , that the Company shall not be
required to pay for any expenses of any registration proceeding
begun pursuant to Section 1.4 if the registration request is
subsequently withdrawn at the request of the Holders of a majority
of the Registrable Securities to be registered (in which case all
participating Holders shall bear such expenses), unless the Holders
of a majority of the Registrable Securities agree to forfeit their
right to one S-3 registration pursuant to Section 1.4;
provided further , however , that if at the time of
such 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 and have
withdrawn the request with reasonable promptness following
disclosure by the Company of such material adverse change, then the
Holders shall not be required to pay any of such expenses and shall
retain their rights pursuant to Section 1.4. Any
underwriters’ discounts or commissions associated with
Registrable Securities, shall be borne pro rata by the Holder or
Holders participating in the Form S-3 Registration.
1.8 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 Section 1.3 to include any of
the Holders’ securities in such underwriting unless they
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 then only in such
quantity, if any, as the underwriters determine in their sole
discretion will not jeopardize the success of the offering by the
Company. If the total amount of securities, including Registrable
Securities, requested by shareholders to be included in such
offering exceeds the amount of securities sold other than by the
Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall
be required to include in the offering only that number of such
securities, if any, including Registrable Securities, which the
underwriters determine in their sole discretion will not jeopardize
the success of the offering (the securities so included to be
apportioned pro rata among the sell
