Overview of Other Industry Data

Third party reports on the venture industry generally reported a mildly improving venture investment and liquidity environment in 4Q09, but a poor 2009 overall.  Detailed results are as follows:

Detailed Fenwick & West Results

Financing Round — The financings broke down according to the following rounds:

Price Change — The direction of price changes for companies receiving financing this quarter, compared to their previous round, were as follows:

The percentage of down rounds by series were as follows:

The Fenwick & West Venture Capital Barometer™ (Magnitude of Price Change) —Set forth below is (i) for up rounds, the average per share percentage increase over the previous round, (ii) for down rounds, the average per share percentage decrease over the previous round, and (iii) the overall average per share percentage change from the previous round for all rounds taken together.  Such information is broken down by series for Q4'09 and is provided on an aggregate basis for comparison purposes for the prior four quarters.  In calculating the "net result" for all rounds, "flat rounds" are included.  For purposes of these calculations, all financings are considered equal, and accordingly the results are not weighted for the amount raised in a financing.

Liquidation Preference — Senior liquidation preferences were used in the following percentages of financings:

The percentage of senior liquidation preference by series was as follows:

Multiple Liquidation Preferences — The percentage of senior liquidation preferences that were multiple preferences were as follows:

Of the senior liquidation preferences, the ranges of the multiples broke down as follows:

Participation in Liquidation — The percentages of financings that provided for participation were as follows:

Of the financings that had participation, the percentages that were not capped were as follows:

Cumulative Dividends — Cumulative dividends were provided for in the following percentages of financings:

Antidilution Provisions — The uses of antidilution provisions in the financings were as follows:

Pay-to-Play Provisions — The use of pay-to-play provisions in the financings was as follows:

Percentages of financings having pay-to-play provisions.

Note that anecdotal evidence indicates that companies are increasingly using contractual "pull up" provisions instead of charter based "pay to play" provisions.  These two types of provisions have similar economic effect but are implemented differently.  The above information includes some, but likely not all, pull up provisions, and accordingly may understate the use of these provisions.

The pay-to-play provisions provided for conversion of non-participating investors' preferred stock into common stock or shadow preferred stock, in the percentages set forth below:

- Common Stock

- Shadow Preferred Stock

Redemption — The percentages of financings providing for mandatory redemption or redemption at the option of the venture capitalist were as follows:

Corporate Reorganizations — The percentages of post-Series A financings involving a corporate reorganization were as follows:

For additional information about this report please contact Barry Kramer at 650-335-7278; bkramer@fenwick.com or Michael Patrick at 650-335-7273; mpatrick@fenwick.com at Fenwick & West. The contents of this report are not intended, and should not be considered, as legal advice or opinion.

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