Exhibit 10.4

 

 

GLOBAL EAGLE ENTERTAINMENT INC.

WARRANTHOLDERS AGREEMENT

Dated as of March 27, 2018

 

 

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TABLE OF CONTENTS

 

         Page   ARTICLE I   CERTAIN DEFINITIONS  

Section 1.1.

 

Certain Definitions

     1  

Section 1.2.

 

General Interpretive Principles

     8   ARTICLE II   REPRESENTATIONS AND WARRANTIES  

Section 2.1.

 

Representations and Warranties of the Parties

     9   ARTICLE III   GOVERNANCE; OTHER COVENANTS  

Section 3.1.

 

Board of Directors

     10  

Section 3.2.

 

Corporate Opportunities

     13  

Section 3.3.

 

NASDAQ Listing of Warrant Shares

     13  

Section 3.4.

 

Public Disclosure

     13  

Section 3.5.

 

Acquisition of Common Stock

     13   ARTICLE IV   TRANSFER RESTRICTIONS  

Section 4.1.

 

General Restrictions on Transfers

     14  

Section 4.2.

 

Certain Permitted Transfers

     14   ARTICLE V   REGISTRATION RIGHTS  

Section 5.1.

 

Piggyback Registrations

     15  

Section 5.2.

 

Demand Registration

     16  

Section 5.3.

 

Exceptions to the Company’s Obligations

     20  

Section 5.4.

 

Registration Procedures

     22  

Section 5.5.

 

Information Supplied

     25  

Section 5.6.

 

Expenses

     25  

Section 5.7.

 

Restrictions on Disposition

     26  

Section 5.8.

 

Indemnification

     26  

Section 5.9.

 

Selection of Counsel

     29  

Section 5.10.

 

Market Standoff Agreement

     29  

 

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Section 5.11.

  

No Inconsistent Agreements

     29  

Section 5.12.

  

Termination of Registration Rights

     30   ARTICLE VI   PARTICIPATION RIGHTS  

Section 6.1.

  

General

     30  

ARTICLE VII

 

STANDSTILL

 

 

Section 7.1.

  

General

     33  

Section 7.2.

  

Exceptions

     34   ARTICLE VIII   INFORMATION RIGHTS  

Section 8.1.

  

Information Rights

     35   ARTICLE IX   MISCELLANEOUS  

Section 9.1.

  

Entire Agreement

     35  

Section 9.2.

  

Specific Performance

     35  

Section 9.3.

  

Governing Law

     36  

Section 9.4.

  

Amendment and Waiver

     36  

Section 9.5.

  

Binding Effect

     36  

Section 9.6.

  

Termination

     36  

Section 9.7.

  

Notices

     37  

Section 9.8.

  

Severability

     38  

Section 9.9.

  

Counterparts

     38  

Section 9.10.

  

Effectiveness

     38  

Section 9.11.

  

No Third Party Beneficiaries; Non-Recourse

     38  

Section 9.12.

  

WAIVER OF JURY TRIAL

     39  

Section 9.13.

  

Assignment

     39  

 

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WARRANTHOLDERS AGREEMENT

This WARRANTHOLDERS AGREEMENT is dated as of March 27, 2018, and effective as
provided in Section 9.10, by and among Global Eagle Entertainment Inc., a
Delaware corporation (together with its successors and assigns, the “Company”),
Searchlight II TBO-W, L.P., a Delaware limited partnership (together with its
Permitted Warrant Transferees, the “Holders”), and any other Person who becomes
a party hereto pursuant to Article IX.

WHEREAS, the Company, Searchlight II TBO-W, L.P. and Searchlight II TBO, L.P.,
have entered into a Securities Purchase Agreement, dated as of the date hereof
(as amended from time to time, the “Securities Purchase Agreement”), pursuant to
which Searchlight II TBO-W, L.P. and Searchlight II TBO, L.P. have agreed to
purchase (i) Notes (as defined below), (ii) Penny Warrants (as defined below)
initially exercisable for an aggregate of 18,065,775 Warrant Shares (as defined
below) and (iii) Market Warrants (as defined below) initially exercisable for an
aggregate of 13,000,000 Warrant Shares; and

WHEREAS, the parties hereto desire to enter into certain arrangements relating
to the Company and the Warrant Shares.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties mutually agree as follows:

ARTICLE I

CERTAIN DEFINITIONS

Section 1.1.    Certain Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:

“Acquisition” shall have the meaning set forth in Section 3.5.

“Actions” shall have the meaning set forth in Section 9.3.

“Affiliate” means, with respect to any Person, any other Person that controls,
is controlled by, or is under common control with such Person. The term
“control,” as used in this definition, means the power to direct or cause the
direction of the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise.
The terms “controlled” and “controlling” have meanings correlative to the
foregoing. Notwithstanding the foregoing, (i) the Company, its Subsidiaries and
its other Affiliates shall not be considered Affiliates of any of the Holders or
any of their respective Affiliates and (ii) except with respect to the
definition of “Permitted Warrant Transferee,” Section 3.2, Section 5.8,
Section 7.1, Section 7.2 and Section 9.11, none of the Holders shall be
considered Affiliates of any Portfolio Company in which any of the Holders or
any of their investment fund Affiliates have made any debt or equity investment.

“Agreement” means this Warrantholders Agreement as the same may be amended,
supplemented, restated or otherwise modified.

 

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“Approved Stock Plan” means any stock option plan or other equity-based
compensation plan of the Company that has been approved by the Board, which
provides for the issuance of Common Securities to the directors, officers,
employees, agents or consultants of the Company or its Subsidiaries.

“as exercised basis” means, with respect to the outstanding shares of Common
Stock as of any date, all outstanding shares of Common Stock calculated on a
basis in which all the Warrants are assumed to be exercised for cash and all
shares of Common Stock issuable upon such exercise are assumed to be outstanding
as of such date.

“beneficially own” and similar terms have the meaning set forth in Rule 13d-3
under the Securities Exchange Act of 1934, as amended from time to time, and the
rules and regulations promulgated pursuant thereto; provided that any Person
shall be deemed to beneficially own any securities that such Person has the
right to acquire, whether or not such right is exercisable immediately
(including assuming exercise of all Warrants, if any, owned by such Person to
Common Stock).

“Board” means the Board of Directors of the Company.

“Business Day” means a day other than a Saturday, Sunday or other day on which
the commercial banks in the State of New York are authorized or required by law
or executive order to close or be closed.

“Business of the Company” means any business with the primary purpose of which
is to be a provider of media, content, connectivity and data analytics to
markets across air, sea or land.

“Capital Stock” means any and all shares of capital stock of the Company,
including, without limitation, any and all shares of Common Stock.

“Certificate of Incorporation” means the Second Amended and Restated Certificate
of Incorporation of the Company, as amended and restated on January 31, 2013 and
as may be further amended from time to time.

“Claims” shall have the meaning set forth in Section 5.8(a).

“Closing” shall have the meaning set forth in the Securities Purchase Agreement.

“Common Securities” means Shares and any other security of the Company which is
convertible into or exercisable for Shares.

“Common Stock” means the common stock of the Company, par value $0.0001 per
share.

“Company Indemnified Parties” shall have the meaning set forth in
Section 5.8(b).

 

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“Competitor” means the entities listed on an officer’s certificate delivered by
the Company to the Holders on the date hereof, which certificate may be updated
after the date hereof, from time to time, upon the mutual agreement of the
Company and the Holders acting reasonably and in good faith.

“Competitor Director” shall have the meaning set forth in Section 3.1(b)(v).

“Controlling Person” shall have the meaning set forth in Section 5.8(a).

“Corporate Opportunity” shall have the meaning set forth in Section 3.2.

“Demand Notice” shall have the meaning set forth in Section 5.2(a).

“Demand Party” shall have the meaning set forth in Section 5.2(a).

“DGCL” means General Corporation Law of the State of Delaware, as amended.

“Equity Securities” means any and all shares of Common Stock of the Company,
securities of the Company convertible into, or exchangeable or exercisable for,
such shares, and options, warrants or other rights to acquire such shares
(including the Warrants and the Warrant Shares).

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations promulgated pursuant thereto.

“Fair Market Value” means, with respect to any security or other property, the
fair market value of such security or other property as reasonably determined in
good faith by a majority of the Board, or an authorized committee thereof.

“FINRA” means the Financial Industry Regulatory Authority.

“Form S-1” means a registration statement on Form S-1 under the Securities Act,
or any successor form thereto.

“Form S-3” means a registration statement on Form S-3 (other than on Form
S-3ASR) under the Securities Act, or any successor form thereto.

“Form S-3ASR” means an “automatic shelf” registration statement on Form S-3
filed by a Well-Known Seasoned Issuer (as defined in the Securities Act).

“Form S-4” means a registration statement on Form S-4 under the Securities Act,
or any successor form thereto.

“Form S-8” means a registration statement on Form S-8 under the Securities Act,
or any successor form thereto.

“Fundamental Change Event” shall have the meaning set forth in Section 7.1.

“Indemnified Party” shall have the meaning set forth in Section 5.8(c).

 

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“Information Rights Period” shall mean the period beginning with the Issue Date
and ending when the Searchlight Holder and its Affiliates beneficially owns less
than 50% of the Penny Warrants (and/or the Warrant Shares issued upon exercise
of such Penny Warrants) issued on the Issue Date.

“Issue Date” means March 27, 2018.

“Issuer Free Writing Prospectus” shall have the meaning set forth in Rule 433 of
the Securities Act.

“Lock-Up Period End Date” shall have the meaning set forth in Section 4.1(a).

“Marketed Underwritten Offering” shall have the meaning set forth in
Section 5.4(q).

“Market Warrant” shall have the meaning set forth in the Securities Purchase
Agreement.

“Material Pending Event” shall have the meaning set forth in Section 5.3(b)(iv).

“Maximum Offering Size” shall have the meaning set forth in Section 5.2(e).

“NASDAQ” means any national stock exchanges now or hereafter maintained by
NASDAQ, including, without limitation, the NASDAQ Global Select Market, the
NASDAQ Global Market and the NASDAQ Capital Market.

“Non-Recourse Party” shall have the meaning set forth in Section 9.11.

“Options” shall mean any option to purchase or otherwise acquire Shares granted
pursuant to any employment or consulting agreement with the Company or its
Subsidiaries or pursuant to any equity compensation plan or program of the
Company.

“PAR Agreement” shall have the meaning set forth in Section 5.11.

“Participation Amount” shall have the meaning set forth in Section 6.1(c).

“Participation Right” shall have the meaning set forth in Section 6.1(a).

“Participation Rights Closing” shall have the meaning set forth in
Section 6.1(b).

“Participation Rights Notice” shall have the meaning set forth in
Section 6.1(b).

“Penny Warrant” shall have the meaning set forth in the Securities Purchase
Agreement.

“Permitted Warrant Transferee” means, with respect to a Holder, any Person who
is both (i) an Affiliate of such Holder and (ii) a controlled Affiliate of
Searchlight Capital Partners, L.P. and who has executed and delivered a Warrant
Assignment Form in substantially in the form of Exhibit D attached to the
applicable Warrant.

 

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“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, governmental authority
or other entity.

“Piggyback Offering Notice” shall have the meaning set forth in Section 5.1(a).

“Portfolio Company” means any corporation, limited liability company, trust,
joint venture, association, company, partnership, collective investment scheme
or other entity in which a Person has invested, directly or indirectly.

“Prospectus” means the prospectus included in any registration statement,
including any preliminary prospectus, any final prospectus and any such
prospectus as amended or supplemented by any prospectus supplement, including
any such prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by a registration statement, and
by all other amendments and supplements to a prospectus, including
post-effective amendments, and, in each case, including all materials
incorporated by reference therein.

“Public Sale” shall mean (i) an underwritten public offering pursuant to an
effective registration statement (other than a registration statement on Form
S-4, Form S-8 or any successor or other forms promulgated for similar purposes)
filed under the Securities Act or (ii) a “brokers’ transaction” (as defined in
Rule 144).

“Registrable Securities” means (i) the Warrant Shares held by any Holder or
issuable upon the exercise of Warrants held by the Holders, (ii) any shares of
Common Stock held by any Holder at any time, however acquired; provided that
such shares of Common Stock shall only be Registrable Securities if such Holder
also owns at such time Warrant Shares, and (iii) any other Securities with
respect to the Registrable Securities described in clauses (i) and (ii). As to
any particular Registrable Securities, once issued, such Registrable Securities
shall cease to be Registrable Securities when a registration statement with
respect to the sale by the Holder of such securities shall have become effective
under the Securities Act and such securities shall have been disposed of in
accordance with such registration statement, such securities shall have been
distributed to the public pursuant to Rule 144, or such securities shall have
ceased to be outstanding; provided that Registrable Securities will cease to be
Registrable Securities at such time as a Holder and its Affiliates beneficially
own Warrant Shares and Warrants that could be exercised into Warrant Shares that
together represent less than 2.5% of the outstanding Common Stock and neither
such Holder nor any of its Affiliates is or has in the prior six months been an
Affiliate of the Company (as reasonably determined in good faith by such
Holder). For purposes of this Agreement, any required calculation of the amount
of, or percentage of, Registrable Securities shall be based on the number of
shares of Common Stock which are Registrable Securities, including shares
issuable upon the conversion, exchange or exercise of any security exercisable
into Common Stock (including the Warrants).

“Registration Expenses” means any and all reasonable, documented expenses
incident to performance of or compliance with Article V, including (i) all SEC
and securities exchange, FINRA registration and filing fees (including, if
applicable, the fees and expenses of any “qualified independent underwriter,” as
such term is defined in FINRA rule 5121(f), and of its counsel), other than SEC
filing fees relating to Registrable Securities referred to in clause (ii)

 

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of the definition of Registrable Securities (which fees shall be for the account
of the Holders), (ii) all reasonable, documented fees and expenses of complying
with securities or blue sky laws (including fees and disbursements of counsel
for the underwriters in connection with blue sky qualifications of the
Registrable Securities and any escrow fees), (iii) all printing, messenger and
delivery expenses, (iv) all reasonable, documented fees and expenses incurred in
connection with the listing of the Registrable Securities on any securities
exchange, (v) the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special audits
and/or “cold comfort” letters required by or incident to such performance and
compliance, (vi) the reasonable expenses incurred by the Company or any
underwriters in connection with any “road show” undertaken pursuant to
Section 5.1 or Section 5.4(q) and (vii) all reasonable fees and disbursements of
one lead counsel (and any local counsel, if necessary) to the Holders to
represent such Holders, with such counsel selected by such Holders.

“Representative” means directors, officers, employees, principals, partners,
managers, members, agents, advisors (including, without limitation, attorneys,
accountants, consultants, bankers and financial advisors) and other
representatives of a Person.

“Restricted Issuance Notice” shall have the meaning set forth in Section 6.1(c).

“Restricted Period” shall mean the period of time from the Issue Date to and
including December 31, 2020.

“Restricted Period Termination Date” shall have the meaning set forth in
Section 5.1(a).

“Searchlight” means Searchlight Capital Partners, L.P. and its controlled
Affiliates.

“Searchlight Board Right Period” shall have the meaning set forth in
Section 3.1(b)(iv).

“Searchlight Director” means a member of the Board who was appointed or elected
to the Board as a Searchlight Nominee.

“Searchlight Director Replacement” shall have the meaning set forth in
Section 3.1(b)(iii).

“Searchlight Group Member” shall have the meaning set forth in Section 3.2.

“Searchlight Holder” means Searchlight II TBO-W, L.P.

“Searchlight Nominees” shall have the meaning set forth in Section 3.1(b)(iv).

“SEC” means the U. S. Securities and Exchange Commission or any successor
agency.

 

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“Securities” means any Warrant Shares or other securities which may be issued,
converted, exchanged or distributed in respect of such Warrant Shares, or in
substitution of such Warrant Shares, in connection with any stock split,
dividend or combination, or any recapitalization, reclassification, merger,
consolidation, exchange or other similar reorganization with respect to such
Warrant Shares.

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations promulgated pursuant thereto.

“Seller Indemnified Parties” shall have the meaning set forth in Section 5.8(a).

“Shares” means any shares of Common Stock.

“Shelf Registration” shall have the meaning set forth in Section 5.2(a).

“Shelf Take-Down” shall have the meaning set forth in Section 5.2(b).

“Standstill Period” shall have the meaning set forth in Section 7.1.

“Subsequent Notice” shall have the meaning set forth in Section 6.1(d).

“Subsidiary” when used with respect to any Person, means any corporation,
limited liability company, partnership, association, trust or other entity of
which (i) securities or other ownership interests representing more than 50% of
the ordinary voting power (or, in the case of a partnership or a limited
liability company, more than 50% of the general partnership or managing member
interests, respectively) or (ii) sufficient voting rights to elect at least a
majority of the board of directors or other governing body are, as of such date,
owned by such Person or one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries of such Person.

“Transfer” includes any sale, assignment, exchange, gift, bequest, pledge,
participation, hypothecation or other disposition or encumbrance, whether
directly, indirectly, voluntarily, involuntarily, synthetically, in whole or in
part, by operation of law or merger, pursuant to judicial process or otherwise;
provided, however, that, notwithstanding anything to the contrary in this
Agreement, a Transfer shall not include (i) the exercise of one or more Warrants
or other Securities convertible or exercisable into Common Stock, (ii) the
redemption or other acquisition of Common Stock or Warrants by the Company or
(iii) the transfer of any limited partnership interests or other equity
interests in a Holder (or any direct or indirect parent entity of such Holder);
provided that such transfer does not result in the transfer of control of such
Holder to a third party who is not a controlled Affiliate of Searchlight Capital
Partners, L.P. The terms “Transferor,” “Transferee” and “Transferable” have
meanings correlative to the foregoing.

“Underwritten Shelf Take-Down” shall have the meaning set forth in
Section 5.2(b).

“Voting Securities” means, at any time, shares of any class of Equity Securities
which are then entitled to vote generally in the election of directors to the
Board.

 

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“Warrants” means the collective reference to the Penny Warrants and the Market
Warrants.

“Warrant Shares” means the shares of Common Stock that may be issued upon the
exercise of the Warrants, as may be adjusted from time to time in accordance
with the terms of the Warrants.

Section 1.2.    General Interpretive Principles. The name assigned to this
Agreement and the section captions used herein are for convenience of reference
only and shall not be construed to affect the meaning, construction or effect
hereof. Unless otherwise specified, the terms “hereof,” “herein” and similar
terms refer to this Agreement as a whole, and references herein to Articles or
Sections refer to Articles or Sections of this Agreement. For purposes of this
Agreement, the words, “include,” “includes” and “including,” when used herein,
shall be deemed in each case to be followed by the words “without limitation.”
The words “date hereof” when used in this Agreement shall refer to the date of
this Agreement. The terms “or”, “any” and “either” are not exclusive. The word
“extent” in the phrase “to the extent” shall mean the degree to which a subject
or other thing extends, and such phrase shall not mean simply “if”. The word
“will” shall be construed to have the same meaning and effect as the word
“shall”. The terms “dollars” and “$” shall mean United States dollars. Except as
otherwise set forth herein, Shares underlying unexercised Options or warrants
that have been issued by the Company shall not be deemed “outstanding” for any
purposes in this Agreement. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein. The
parties hereto have participated jointly in the negotiation and drafting of this
Agreement. If an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly by the parties and no
presumption or burden of proof will arise favoring or disfavoring any party
because of the authorship of any provision of this Agreement. Any time this
Agreement states that the “consent” of Searchlight or any of its Affiliates is
required for any action to be taken pursuant to the terms of this Agreement or
otherwise, such “consent” shall deemed to mean the prior written consent of the
beneficial owners of a majority of the Warrant Shares then beneficially owned by
Searchlight. References to a Person are also to its permitted assigns and
successors. When calculating the period of time between which, within which or
following which any act is to be done or step taken pursuant to this Agreement,
the date that is the reference date in calculating such period shall be excluded
(unless, otherwise required by applicable law, if the last day of such period is
not a Business Day, the period in question shall end on the next succeeding
Business Day).

 

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ARTICLE II

REPRESENTATIONS AND WARRANTIES

Section 2.1.    Representations and Warranties of the Parties. Each of the
parties hereto hereby represents and warrants to each of the other parties on
the date hereof and as of the Closing as follows:

(a)    Such party is duly organized or incorporated, validly existing and in
good standing under the laws of the jurisdiction of its organization or
incorporation and has all requisite power and authority to conduct its business
as it is now being conducted and is proposed to be conducted.

(b)    Such party has the full power, authority and legal right to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated herein. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein have been duly
authorized by all necessary action, corporate or otherwise, of such party. This
Agreement has been duly executed and delivered by such party and constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally.

(c)    The execution and delivery by such party of this Agreement, the
performance by such party of its obligations hereunder and the consummation of
the transactions contemplated herein by such party does not and will not violate
(i) any provision of its by-laws, charter, articles of association, partnership
agreement or other similar governing or organizational document, (ii) any
provision of any material agreement to which it is a party or by which it is
bound or (iii) any law, rule, regulation, judgment, order or decree to which it
is subject.

(d)    Except to the extent provided in the Securities Purchase Agreement, no
consent, waiver, approval, authorization, exemption, registration, license or
declaration is required to be made or obtained by such party in connection with
the execution, delivery or enforceability of this Agreement or the consummation
of any of the transactions contemplated herein.

(e)    Such party is not currently in violation of any law, rule, regulation,
judgment, order or decree, which violation could reasonably be expected at any
time to have a material adverse effect upon such party’s ability to enter into
this Agreement or to perform its obligations hereunder.

(f)    There is no pending legal action, suit or proceeding that would
materially and adversely affect the ability of such party to enter into this
Agreement or to perform its obligations hereunder.

 

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ARTICLE III

GOVERNANCE; OTHER COVENANTS

Section 3.1.    Board of Directors.

(a)    Board Size. The size of the Board shall be determined in the manner set
forth from time to time in the Company’s Certificate of Incorporation or bylaws
and as further set forth below.

(b)    Board Representation.

(i)    Initial Director Designees. Effective as of the Closing, the Board will
take all corporate and other actions necessary to (A) increase the size of the
Board to ten members, and (B) appoint Eric Zinterhofer and Eric Sondag as
Class III directors (as such term is used in the Certificate of Incorporation)
of the Company with a term expiring at the 2020 annual meeting of the
stockholders of the Company and until their respective successors are duly
elected and qualified to stand for reelection at the 2020 annual meeting of the
stockholders of the Company and until their respective successors are duly
elected and qualified, (which individuals shall meet the conditions set forth in
Section 3.1(b)(vi)). Messrs. Zinterhofer and Sondag (and each of their
successors) shall be deemed Searchlight Directors and Searchlight Nominees.

(ii)    For so long as the Searchlight Holder has the right to nominate members
to the Board pursuant to Section 3.1(b)(iv), the Company shall (i) cause the
Board to have sufficient vacancies to permit the Searchlight Nominees to be
added as members of the Board, (ii) nominate the Searchlight Nominees for
election to the Board and include such Searchlight Nominees in the Company’s
preliminary and definitive proxy statements filed with the SEC for any
applicable annual meeting of stockholders at which stockholders of the Company
will vote on the election of directors to the Board, (iii) recommend that the
Company’s stockholders vote in favor of the Searchlight Nominees or Searchlight
Directors, as applicable, in all subsequent stockholder meetings at which such
Searchlight Nominees or Searchlight Directors, as applicable, stand for election
or reelection to the Board, and (iv) support the Searchlight Nominees or
Searchlight Directors, as applicable, in a manner no less favorably than the
manner in which the Company supports its other director nominees.

(iii)    For so long as the Searchlight Holder has the right to nominate members
of the Board pursuant to Section 3.1(b)(iv), if a vacancy on the Board is
created as a result of a Searchlight Director’s death, disability, resignation
(other than pursuant to Section 3.1(b)(v)) or removal, then the Searchlight
Holder and the Company shall discuss together in good faith the recommendation
by the Searchlight Holder of an individual (a “Searchlight Director
Replacement”) to fill such vacancy, which individual shall meet the conditions
set forth in Section 3.1(b)(vi); provided that the Company’s consent to such
Searchlight Director Replacement shall not be required. The Company shall take
all actions that are reasonable or appropriate to cause the Searchlight Director
Replacement to fill such resulting vacancy and such individual shall be deemed a
Searchlight Director and a Searchlight Nominee. Each Searchlight Director on the
Board shall be entitled to serve on, and the Board shall appoint such
Searchlight Director to, any committee or committees of the Board upon which
such Searchlight Director

 

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may wish to serve (or any committee or committees established by the board of
directors or board of managers maintained by any Subsidiary of the Company),
subject, solely with respect to a committee appointment, to such Searchlight
Director satisfying qualification and independence rules and regulations of the
applicable stock exchange on which the Common Stock is listed or the SEC as in
effect at the time of determination with respect to any such committees; and,
provided, further, that no more than one Searchlight Director may serve on any
particular committee. Further, each Searchlight Director shall be entitled to
receive compensation in his or her capacity as a director consistent with the
compensation received in such capacity by other non-employee members of the
Board, including any fees and equity awards, and reimbursement for reasonable
out-of-pocket expenses incurred in attending meetings of the Board and its
committees.

(iv)    Director Nomination Rights. To the extent permitted by applicable law
and the rules of the principal stock exchange or market on which the Shares are
then traded or listed, for so long as Searchlight beneficially owns at least 25%
of the number of Penny Warrants issued on the Issue Date (and/or the respective
Warrant Shares issued in connection with the exercise of the Penny Warrants)
(the “Searchlight Board Right Period”), Searchlight Holder shall have the right
to nominate a number (rounded up to the nearest whole number) of individuals for
election to the Board equal to the product of the following and the Company
shall include such directors in its recommended Board slate (such individuals,
the “Searchlight Nominees”): (i) the number of directors then serving on the
Board multiplied by (ii) a fraction, the numerator of which is the total number
of outstanding Warrant Shares underlying the Penny Warrants beneficially owned
by Searchlight (after giving effect to the exercise of the Penny Warrants) and
the denominator of which is the sum of (A) the total number of outstanding
shares of Common Stock plus (B) the number of Warrant Shares underlying the
Penny Warrants that have not yet been exercised; provided, however, that, in any
event, the number of individuals that Searchlight Holder may be entitled to
nominate under this Section 3.1(b) shall not exceed one if Searchlight
beneficially owns less than 50% of the Penny Warrants (or the Warrant Shares
issued in connection with the exercise of the Penny Warrants) issued or issuable
on the Issue Date; provided, further, that in the event that Searchlight
beneficially owns at least 50% of the Penny Warrants (or the Warrant Shares
issued in connection with the exercise of the Penny Warrants) issued or issuable
on the Issue Date, the number of individuals that Searchlight Holder may be
entitled to nominate under this Section 3.1(b) shall not exceed two.

(v)    Exceptions. Notwithstanding anything herein to the contrary, Searchlight
Holder shall not have any rights to nominate an individual for election to the
Board pursuant to this Section 3.1(b), and shall cause any such individuals
previously so nominated by Searchlight Holder, including Messrs. Zinterhofer and
Sondag, to resign as a member of the Board within five (5) Business Days after
receiving a written request from the Company if Searchlight has, at any time
after the date of this Agreement, (a) an employee, member or partner (other than
any third party limited partner who is an investor in Searchlight) of
Searchlight that is a director or executive officer of a Competitor of the
Company (each such person, a “Competitor Director”), (b) a Portfolio Company
that is a Competitor of the Company or (c) if the Searchlight Board Right Period
has ended; provided, however, that Searchlight’s right to nominate individuals
to the Board pursuant to this Section 3.1 shall not be impaired, restricted or
rescinded in any manner, if prior to the appointment of any Competitor Director
or any investment in a Portfolio Company that would constitute a Competitor
hereunder, Searchlight has first obtained

 

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the prior written consent of the Board (with the Searchlight Directors
abstaining) (such consent not to be unreasonably withheld, conditioned or
delayed) to such Searchlight employee, member or partner (other than any third
party limited partner who is an investor in Searchlight) serving as a Competitor
Director or to such investment in such Portfolio Company.

(vi)    Searchlight Nominee Qualifications. As a condition to any Searchlight
Nominee’s appointment or nomination to the Board pursuant to this Agreement,
such Searchlight Nominee shall agree to provide to the Company information
required to be or customarily disclosed for directors, candidates for directors
and their Affiliates and Representatives in a proxy statement or other filings
under applicable law or stock exchange rules or listing standards, information
in connection with assessing eligibility, independence and other criteria
applicable to directors or satisfying compliance and legal obligations and such
other information as reasonably requested by the Company from time to time with
respect to such Searchlight Nominee; provided that in no event shall such
Searchlight Director’s relationship with Searchlight or its Affiliates (or any
other actual or potential lack of independence resulting therefrom), in and of
itself, be considered to disqualify such Searchlight Director from being a
member of the Board pursuant to this Section 3.1. Each Searchlight Nominee
shall, prior to being appointed or nominated, submit to the Company a fully
completed, true and accurate copy of Company’s standard director questionnaire
and other reasonable and customary director onboarding documentation (including
an authorization form to conduct a background check) required by the Company in
connection with the appointment or nomination of any new Board member. Each
Searchlight Nominee shall ensure, that, at all times while serving as a member
of the Board, he or she will (i) meet all director independence and other
standards of the Company, NASDAQ and the SEC and applicable provisions of the
Exchange Act, including Rule 10A-3, and (ii) be qualified to serve as a director
under applicable law and comply with requirements applicable to directors
thereunder. In addition, while serving as a member of the Board, each
Searchlight Nominee shall comply with all policies, procedures, processes,
codes, rules, standards and guidelines of the Company that have been adopted by
the Board and which are applicable to all non-employee Board members, and shall
preserve the confidentiality of Company business and information, including
discussions or matters considered in meetings of the Board or Board committees
to the extent not disclosed publicly by the Company; provided that, subject to
the Company, such Searchlight Director and Searchlight entering into a customary
and reasonable mutually acceptable confidentiality agreement, such Searchlight
Director shall be entitled to discuss Company business and matters discussed at
meetings of the Board with other Representatives of Searchlight and its
Affiliates so long as such interaction is covered by such confidentiality
agreement and does not jeopardize any attorney-client privilege.

(vii)    Director Indemnification. The Company shall indemnify the Searchlight
Directors in accordance with the indemnity agreement entered into by the Company
and the Searchlight Nominees on the date hereof.

(viii)    Board Size. Prior to the expiration of the Searchlight Board Right
Period, (i) the Company shall not increase the size of the Board to more than a
total of 12 director seats; provided that the Company may temporarily increase
the size of the Board to facilitate the retirement or resignation of any
incumbent director and the replacement thereof with a new director and (ii) the
Company shall not decrease the size of the Board if such

 

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decrease would require the resignation of any Searchlight Director, in each
case, without the prior written consent of Searchlight.

Section 3.2.    Corporate Opportunities. (a) No Holder, nor any stockholder,
member, manager, partner or Affiliate of any Holder or their respective
officers, directors, employees or agents, and no Searchlight Director serving as
a member of the Board in accordance with Section 3.1 (any of the foregoing, a
“Searchlight Group Member”) shall have any duty to communicate or present an
investment or business opportunity or prospective economic advantage to the
Company or any of its Subsidiaries in which the Company or one of its
Subsidiaries may, but for the provisions of this Section 3.2, have an interest
or expectancy (“Corporate Opportunity”) and (b) no Holder nor any Searchlight
Group Member (even if such Person is also an officer or director of the Company
or any of its Subsidiaries) will be deemed to have breached any fiduciary or
other duty or obligation to the Company or any of its Subsidiaries by reason of
the fact that any such Person pursues or acquires a Corporate Opportunity for
itself or its Affiliates or directs, sells, assigns or transfers such Corporate
Opportunity to another Person or does not communicate information regarding such
Corporate Opportunity to the Company. The Company, on behalf of itself and its
Subsidiaries, renounces any interest in any Corporate Opportunity and any
expectancy that a Corporate Opportunity will be offered to the Company or any of
its Subsidiaries by Searchlight or its Affiliates.

Section 3.3.    NASDAQ Listing of Warrant Shares. To the extent the Company has
not done so prior to the date of this Agreement, the Company shall promptly
apply to cause the aggregate number of shares of Common Stock issuable upon the
exercise of the Warrants to be approved for listing on the NASDAQ, subject to
official notice of issuance. If required as a result of anti-dilution
adjustments contained in the Warrants, from time to time following the Issue
Date, the Company shall cause the number of shares of Common Stock issuable upon
exercise of the then outstanding Warrants to be approved for listing on the
NASDAQ, subject to official notice of issuance.

Section 3.4.    Public Disclosure. The Holders and the Company shall consult
with each other before issuing, and give each other the opportunity to review
and comment upon, any press release or other public statements with respect to
the transactions contemplated by this Agreement, the Securities Purchase
Agreement, the Warrants and each other document or agreement executed in
connection with any of the foregoing, and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by applicable law, judgment, court process or the rules and regulations
of any national securities exchange or national securities quotation system;
provided, however, that without the Company’s prior consent, Searchlight may
provide general information about the subject matter of this Agreement (but not
any material non-public information regarding the Company or its Subsidiares) to
any of its current or prospective investors or limited partners to the extent
such disclosure is made in the ordinary course of the Searchlight’s reporting or
review procedures or in connection with Searchlight’s ordinary course
fundraising, marketing, information or reporting activities, in each case,
subject to such communication being covered by a customary non-disclosure
agreement between Searchlight and such investors and/or limited partners.

Section 3.5.    Acquisition of Common Stock. Following the date of this
Agreement and until the earlier of (i) Searchlight no longer beneficially owning
at least 25% of

 

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the number of Market Warrants issued on the Issue Date (and/or the respective
Warrant Shares issued in connection with the exercise of the Market Warrants)
and (ii) the Lock-Up Period End Date, wihtout the prior consent of Searchlight,
the Company shall not, and shall not permit any Restricted Subsidiary (as
defined in the Securities Purchase Agreement) to, at any time or from time to
time directly or indirectly, redeem, purchase or otherwise acquire (any such
event, an “Acquisitions”) any Equity Securities of the Company for a
consideration per share (plus, in the case of any options, rights, or
securities, the additional consideration required to be paid to the Company upon
exercise, conversion or exchange) greater than the Market Price (as defined in
the Warrants) per share of Common Stock immediately prior to the earlier of
(x) the announcement of such Acquisition or (y) such Acquisition.

ARTICLE IV

TRANSFER RESTRICTIONS

Section 4.1.    General Restrictions on Transfers.

(a)    Except as expressly permitted by this Agreement or the Warrants, a Holder
may not Transfer all or any portion of the Warrants, the Warrant Shares or any
right or economic interest pertaining thereto prior to January 1, 2021 (the
“Lock-Up Period End Date”). For the avoidance of doubt and notwithstanding
anything set forth in this Agreement to the contrary, following the Lock-Up
Period End Date, the Holder and its Permitted Warrant Transferees shall be
entitled to Transfer all or a portion of the Warrants and Warrant Shares without
restriction or limitations (including any restrictions or limitations set forth
in Section 4.2 or elsewhere in this Agreement or the Warrant), subject to the
restrictions set forth in the first paragraph of the legends included on the
Warrants. Any Transfer that is not in compliance with the provisions of this
Article IV (other than a Transfer permitted pursuant to the other terms of this
Agreement and the Warrant) shall be deemed a Transfer by such Holder in
violation of this Agreement and the Warrants (and a breach of this Agreement and
the Warrants by such Holder) and shall be null and void ab initio.

Section 4.2.    Certain Permitted Transfers.

(a)    Notwithstanding anything to the contrary contained in this Article IV,
but subject to compliance with this Section 4.2, the Holder shall be permitted
at any time prior to the Lock-Up Period End Date to Transfer all or a portion of
the Warrant or the Warrant Shares under the following circumstances:

(i)    Transfers by a Holder to any Permitted Warrant Transferee;

(ii)    Transfers to the Company or any of its Subsidiaries;

(iii)    Transfers pursuant to any tender offer, exchange offer, merger,
consolidation, reclassification, reorganization, recapitalization or other
similar transaction involving the Company or any of its Subsidiaries in which
stockholders of the Company are offered, permitted or required to participate as
holders of the Company’s Capital Stock; and

 

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(iv)    Transfers that have been approved in writing by the Board.

(b)    If at any time prior to the Lock-Up Period End Date, a Permitted Warrant
Transferee ceases to qualify as a Permitted Warrant Transferee, then any portion
of the Warrant or Warrant Shares issued upon exercise hereof then held by such
Permitted Warrant Transferee (and all interest and rights related thereto) will,
without any further action required by such Permitted Warrant Transferee, be
automatically Transferred back to the original Holder of the Warrant, and such
former Permitted Warrant Transferee and the original Holder of the Warrant shall
take such action as the Company deems reasonably appropriate to document and
effect such Transfer. Upon surrender and delivery of the Warrants by the Holder
or a Permitted Warrant Transferee thereof, together with a written assignment of
the Warrant substantially in the form attached as Exhibit B to the Warrants duly
executed by the Holder and the Permitted Warrant Transferee and funds sufficient
to pay any applicable transfer taxes (if any) payable upon the making of such
Transfer, the Company shall (i) execute and deliver a new Warrant or Warrants in
the name of the original Holder and in the denominations specified in such
instrument of Transfer, (ii) issue to the Transferor a new Warrant evidencing
the portion of the Warrant, if any, not so Transferred, (iii) promptly cancel
the original Warrant and (iv) take such other ministerial actions as reasonably
necessary to accomplish and evidence such Transfer. Upon the transfer of any
Warrant Shares by the Holder or a Permitted Warrant Transferee, the Company
shall promptly issue or cause to be delivered a certificate or certificates (or
book entry shares) for such Warrant Shares in accordance with Section 1.4 of the
Warrant.

ARTICLE V

REGISTRATION RIGHTS

Section 5.1.    Piggyback Registrations.

(a)    General. If the Company proposes to register Common Securities under the
Securities Act (other than a registration on Form S-4 or Form S-8, or any
successor or other forms promulgated for similar purposes, and other than demand
registrations pursuant to Section 5.2) involving the offering of such Common
Securities at any time after the last day of the Restricted Period (the
“Restricted Period Termination Date”), whether or not for sale for its own
account, in a manner which would permit registration of Registrable Securities
that are the same class of such Common Securities for sale to the public under
the Securities Act, it will, at each such time, give prompt written or
telephonic notice (a “Piggyback Offering Notice”) to the Holders of its
intention to do so, the form on which the Company expects to effect such
registration (e.g., Form S-1, Form S-3 or Form S-3ASR), the anticipated filing
date with the SEC of such registration statement, the anticipated date that the
registration statement will be declared or otherwise become effective, whether
the offering is to be underwritten, in the case of Form S-3 or Form S-3ASR, the
anticipated date and time that the offering will be made. The registration
rights provided for in this Section 5.1 are in addition to, and not in lieu of,
registrations made upon the demand of any Holder in accordance with
Section 5.2(a).

(b)    Form S-1. If the Company indicates in the Piggyback Offering Notice that
it intends to effect a registration pursuant to Form S-1, upon the written
request of any Holder (which request shall specify the Registrable Securities
intended to be registered by such Holder),

 

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made within ten days after the receipt of any such notice but in no event later
than two (2) Business Days prior to the date the Form S-1 is filed with the SEC,
the Company will, subject to the conditions set forth in Section 5.3 and the
provision of the information specified in Section 5.5, use commercially
reasonable efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the Holders thereof.

(c)    Form S-3. If the Company indicates in the Piggyback Offering Notice that
it intends to effect a registration pursuant to Form S-3, upon the written
request of any Holder (which request shall specify the Registrable Securities
intended to be registered by such Holder), made within ten days after the
receipt of any such notice, notifying the Company whether any Holders intend to
include within the Form S-3 or any Prospectus included therein Registrable
Securities, the Company will, subject to the conditions set forth in Section 5.3
and the provision of the information specified in Section 5.5, use commercially
reasonable efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the Holders thereof.

(d)    Form S-3ASR. If the Company indicates in the Piggyback Offering Notice
that it intends to effect a registration pursuant to Form S-3ASR, upon the
written request of any Holder (which request shall specify the Registrable
Securities intended to be registered by such Holder), made within ten days after
the receipt of any such notice, prior to the date and time of the offering as
specified in the Company’s notice, notifying the Company whether any Holders
intend to include within such Form S-3ASR or any Prospectus included therein
Registrable Securities, the Company will, subject to the conditions set forth in
Section 5.3 and the provision of the information specified in Section 5.5, use
commercially reasonable efforts to effect the registration under the Securities
Act of all Registrable Securities which the Company has been so requested to
register by the Holders thereof.

(e)    Exercise into Registrable Securities. Nothing in this Section 5.1 shall
limit the right of any Holder to request the registration of the Registrable
Securities issuable upon exercise of the Warrants by such Holder (subject to
such exercise occurring prior to the completion of the sale of the underlying
Registrable Securities prior to such registration), notwithstanding the fact
that at the time of the request such Holder holds Warrants and not the
underlying Common Stock.

(f)    Right to Withdraw. If a registration pursuant to this Section 5.1
involves an underwritten offering, any Holder requesting to be included in such
registration may elect, in writing prior to the effective date of the
registration statement (or the date of any prospectus supplement filed in
connection therewith, in the case of a shelf registration) filed in connection
with such registration, not to register all or any part of such Holder’s
Registrable Securities in connection with such registration.

Section 5.2.    Demand Registration.

(a)    Subject to the provisions of this Section 5.2(a), upon the written
request (a “Demand Notice”) of a Holder (the “Demand Party”) requesting that the
Company effect the registration under the Securities Act of all or part of such
Demand Party’s Registrable Securities,

 

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which Registrable Securities will be offered for sale after the Restricted
Period Termination Date, and specifying the amount and intended methods of
disposition thereof, including pursuant to a shelf registration statement
utilizing Rule 415 of the Securities Act (or its successor provision) (a “Shelf
Registration”), which Shelf Registration shall only be permitted hereunder if
the Company is then eligible to use Form S-3, thereupon the Company will
promptly give written notice of such requested registration to each of the other
Holders and thereupon will, as expeditiously as reasonably practicable (and in
any event no later than 45 days after the date of the Demand Notice), file and
use its commercially reasonable efforts to cause to be declared effective under
the Securities Act as promptly as practical a registration statement to effect
the registration under the Securities Act of the following; provided that,
notwithstanding the foregoing: (x) to the extent a Demand Notice is delivered
not less than 45 days prior to the Restricted Period Termination Date requesting
a Shelf Registration, the Company shall use its commercially reasonable efforts
to cause such registration statement to become effective no later than the first
(1st) Business Day after the Restricted Period Termination Date, and (y) under
no circumstances under this Section 5.2(a) (including the foregoing clause (x))
shall the Company be required to file any registration statement prior to the
date that is 45 days prior to the Restricted Period Termination Date:

(i)    such Registrable Securities which the Company has been so requested to
register by the Demand Party under the Demand Notice; and

(ii)    the Registrable Securities of Holders which the Company has been
requested to register by written request to the Company by the Holders within
ten days after the giving of such written notice by the Company to the Holders
(which request shall specify the amount and intended methods of disposition of
such securities);

all to the extent necessary to permit the disposition (in accordance with the
intended method thereof as aforesaid) of the Registrable Securities and such
other securities so to be registered.

(b)    Shelf Take-Downs. Any of the Holders whose Registrable Securities have
been registered pursuant to a Shelf Registration may initiate an offering or
sale of Registrable Securities pursuant to such Shelf Registration (each, a
“Shelf Take-Down”) and, except as set forth in this Section 5.2(b) with respect
to Marketed Underwritten Offerings (as defined below), such Holder shall not be
required to permit the offer and sale of Registrable Securities by other Holders
in connection with such Shelf Take-Down. If the initiating Holders so elect by
written request to the Company, a Shelf Take-Down may be in the form of an
underwritten offering (an “Underwritten Shelf Take-Down”), and the Company
shall, if so requested, file and effect an amendment or supplement of the Shelf
Registration for such purpose as soon as practicable. Only the Demand Party
shall have the right to initiate an Underwritten Shelf Take-Down, and the
Company shall provide notice to the other Holders of such registration in
accordance with the provisions of Section 5.2(a), if required with respect to
Marketed Underwritten Offering.

(c)    Effective Registration Statement. A registration requested pursuant to
this Section 5.2 will not be deemed to have been effected unless: (i) it has
been declared effective by the SEC or has otherwise become effective under the
Securities Act, or (ii) it has been filed with the SEC but abandoned or
withdrawn at the request of the Demand Party prior to effectiveness, other than
an abandonment or withdrawal requested because of: (A) the stock price of the

 

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Common Stock falling 10% or more since the delivery of a request for
registration pursuant to this Section 5.2 (provided that such registration shall
be deemed to have been effected, unless (x) the Holders participating in the
registration reimburse the Company for Registration Expenses incurred or payable
by the Company up until the receipt of notice of an abandonment or withdrawal
pursuant to this clause (A) and for the withdrawal of the registration
statement, and (y) a Demand Party has not previously requested abandonment or
withdrawal of a registration pursuant to this clause (A) more than twice in any
12 month period, (B) the delivery of a postponement notice pursuant to
Section 5.3(b)(iv), (C) a material adverse change in the Company’s and its
Subsidiaries’ prospects, business, operations, properties, assets, liabilities,
financial condition or results of operations, taken as a whole, which became
known to the Holders or the public after the delivery of a request for
registration pursuant to this Section 5.2 or (D) the discovery of materially
adverse, non-public information concerning the Company and its Subsidiaries,
taken as a whole.

(d)    Selection of Underwriters. If a requested registration pursuant to this
Section 5.2 involves an underwritten offering, the investment bankers,
underwriters and managers for such registration shall be selected by the Demand
Party, subject to the reasonable agreement by the Company, which shall not be
withheld or delayed.

(e)    Priority in Demand Registrations; Right to Abandon or Withdraw. If a
requested registration pursuant to this Section 5.2 involves an underwritten
offering and the managing underwriter advises the Company in writing that, in
its opinion, the number of Common Securities (including Registrable Securities)
to be included in such registration as contemplated by the Holders and the
Company would be likely to exceed the largest number of Common Securities that
can be sold without having an adverse effect on the success of such offering,
including any impact on the selling price or the number of Common Securities
that can be sold (the “Maximum Offering Size”), then the Company shall include
in such registration (i) first, 100% of the Registrable Securities requested to
be included in such registration by the Demand Party and other Holders of
Registrable Securities who have requested that their Registrable Securities be
included up to the Maximum Offering Size (such Registrable Securities allocated,
if necessary for the offering not to exceed the Maximum Offering Size, pro rata
among the Demand Party and the other Holders of Registrable Securities so
requested to be included in such registration by each) and (ii) second, to the
extent the managing underwriter believes additional securities can be sold in
the offering without exceeding the Maximum Offering Size, the securities the
Company proposes to sell up to the number of securities that, in the opinion of
such managing underwriter, can be sold without exceeding the Maximum Offering
Size. Notwithstanding the foregoing, if the managing underwriter of any
underwritten offering shall advise the Holders participating in a registration
pursuant to this Section 5.2 that the Registrable Securities covered by the
registration statement cannot be sold in such offering within a price range
acceptable to the Demand Party or that all of the Registrable Securities
requested to be included in a registration by a Demand Party pursuant to this
Section 5.2 cannot be sold in the manner requested, then the Demand Party shall
have the right to notify the Company that it has determined that the
registration statement be abandoned or withdrawn, in which event the Company
shall abandon or withdraw such registration statement; it being understood that
in the event the Demand Party exercises its right set forth in this sentence,
the Company shall remain liable for any Registration Expenses pursuant to
Section 5.6 and that the abandonment or withdrawal of the registration statement
shall nevertheless constitute a registration for purposes

 

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of Section 5.3(b)(i) unless the Demand Party elects to pay (or reimburse the
Company for) such Registration Expenses, in which case such registration
statement shall not constitute a registration for purposes of Section 5.3(b)(i).

(f)    Minimum Offering Size. Any underwritten sale pursuant to a Shelf
Registration pursuant to this Section 5.2 must be for a number of Registrable
Securities which, based on the good-faith determination of the Holders, will
result in gross proceeds of at least $10 million.

(g)    Method of Disposition. Subject to Section 5.7, each Holder of Registrable
Securities may, pursuant to the registration statement covering such Registrable
Securities, from time to time, sell, transfer or otherwise dispose of any or all
of such Holder’s shares of Registrable Securities on any stock exchange, market
or trading facility on which the Registrable Securities are traded or in private
transactions. Each Holder of Registrable Securities may use any method, or
combination of methods, of disposing of such Registrable Securities or interests
therein by any method, or combination of methods, permitted pursuant to
applicable law, including, without limitation, short sales entered into after
the effective date of the registration statement covering such Registrable
Securities and through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise. For the
avoidance of doubt, to the extent permitted by applicable law, each Holder may,
in connection with the sale of Registrable Securities or interests in
Registrable Securities, enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn, to the extent so permitted,
engage in short sales of the Common Stock in the course of hedging the positions
they assume, and each Holder may also sell shares of Common Stock short and
deliver these securities to close out such Holder’s short positions, or loan or
pledge the Common Stock to broker-dealers that in turn may sell these
securities. Each Holder may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of Registrable Securities offered by the applicable
registration statement, which Registrable Securities, to the extent they may be
included on such registration statement and the required information has been
timely provided to the Company in accordance herewith and is appropriately
reflected therein, such broker-dealer or other financial institution may resell
pursuant to the applicable registration statement. Subject to Article IV, each
Holder may, to the extent permitted by applicable law, enter into derivative
transactions with third parties, or sell securities not covered by an applicable
registration statement to third parties in privately negotiated transactions. To
the extent they may be included on such registration statement and the required
information has been timely provided to the Company in accordance herewith and
is appropriately reflected therein, in connection with those derivatives, such
third parties may sell securities covered by the applicable registration
statement, including in short sale transactions. If the foregoing applies, the
third party may use securities pledged by the Holder or borrowed from the Holder
or others to settle those sales or to close out any related open borrowings of
securities, and may use securities received from the Holders in settlement of
those derivatives to close out any related open borrowings of securities. In
each of the foregoing cases, the third party in the transactions described in
this Section 5.2(g) will be an underwriter subject to the provisions of
Section 5.2(d), and the Holders seeking to include such transactions in the
applicable registration statement and the Company will comply with the same
procedures as are applicable to a Shelf Take-Down in preparing the necessary
amendment or supplement to such registration statement.

 

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In addition, for avoidance of doubt, the Holders of hedging Common Stock will be
subject to the provisions of Section 5.10.

Section 5.3.    Exceptions to the Company’s Obligations.

(a)    Notwithstanding anything in Section 5.1 to the contrary:

(i)    if, at any time after giving a Piggyback Offering Notice, the Company
shall determine for any reason not to proceed with the proposed registration of
the securities to be sold by it, the Company may, at its election, give written
notice of such determination to the Holders and, thereupon, shall be relieved of
its obligation to register any Registrable Securities in connection with such
registration; and

(ii)    if a registration pursuant to Section 5.1 involves an underwritten
offering and the managing underwriter advises the Company in writing that, in
its opinion, the number of Common Securities (including Registrable Securities
requested to be included in such registration) to be included in such
registration as contemplated by the Company and the Holders would be likely to
exceed the Maximum Offering Size, then the Company shall include in such
registration (a) first, 100% of the securities the Company proposes to sell, and
(b) second, to the extent of the amount of Registrable Securities requested to
be included in such registration which, in the opinion of such managing
underwriter can be sold without exceeding the Maximum Offering Size, the amount
of Registrable Securities which the Holders have requested to be included in
such registration, such amount to be allocated pro rata among all requesting
Holders and all other Persons entitled to registration rights, on the basis of
the relative amount of Registrable Securities then held by each such Person
(provided that any such amount thereby allocated to any such Person that exceeds
such Person’s request shall be reallocated among the remaining requesting
Persons in a like manner to the extent practicable).

(b)    Notwithstanding anything in Section 5.2 to the contrary:

(i)    in no event shall the Company be required to effect more than (A) three
demand registrations pursuant to Section 5.2(a) and (B) four Underwritten Shelf
Take-Downs, in the case of this clause (B), during any 12 month period; provided
that the addition of Registrable Securities as a result of a stock split or
dividend to an effective Shelf Registration Statement shall not constitute a
demand for purposes of clause (A);

(ii)    in no event shall the Company be obligated to prepare and file (x) any
such registration statement or (y) any prospectus supplement thereto relating to
an Underwritten Shelf Take-Down, in each case with respect to Registrable
Securities with a market value (based on then-current trading prices) of less
than $10 million;

(iii)    the Company shall not be obligated to (x) file a registration statement
under Section 5.2(a) within a period of 90 days after the effective date of any
other registration statement, (1) for which the Holders exercised their rights
pursuant Section 5.1 to include Registrable Securities, provided that the
Company and the underwriters did not limit the number of Registrable Securities
that such Holder was permitted to include in such registration statement or
(2) which the Company filed or effected pursuant to Section 5.2(a) or (y) effect
more than one Underwritten Shelf Take-Down pursuant to Section 5.2 in any 90-day
period;

 

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(iv)    if the Company receives a request for registration pursuant to
Section 5.2, at a time when (A) the Company has commenced, or has a bona fide
intention to commence, a public securities offering transaction,
(B) registration of the Registrable Securities would, in the good faith judgment
of the Board (after consultation with outside counsel), impede, delay or
otherwise interfere with any pending or contemplated material acquisition,
corporate reorganization or similar material transaction, or (C) non-public
material information not otherwise then required by law to be publicly disclosed
regarding the Company exists, the immediate disclosure of which would in the
good faith judgment of the Board be disadvantageous in any material respect to
the Company (clauses (A), (B) and (C), a “Material Pending Event”), then the
Company may postpone the filing (but not the preparation) of a registration
statement requested pursuant to Section 5.2 for a period not to exceed 90
consecutive calendar days from the date of a Demand Notice upon providing the
Demand Party with written notice of such postponement (which notice shall not
include a statement of the reason for such postponement); provided that the
Company shall at all times in good faith use commercially reasonable efforts to
cause any registration statement required by Section 5.2 to be filed as soon as
reasonably practicable thereafter; provided, further, that the Company shall
postpone the filing of a registration statement pursuant to this
Section 5.3(b)(iv) for no more than 120 days and no more than two (2) times, in
each case, in the aggregate in any 12 month period in respect of all requested
registrations; provided, however, that the Company shall make prompt and
adequate disclosure of any material information required to be disclosed from
time to time in accordance with law and NASDAQ rules. Each Holder shall keep
confidential any communications received by it from the Company regarding the
postponement pursuant to this Section 5.3(b)(iv) (including the fact of the
postponement), except as required by law. In the event that the Company gives
the Holders the notice specified in this Section 5.3(b)(iv), the Demand Party
shall have the right, within 15 days after receipt thereof, to withdraw its
request under Section 5.2, in which case such request shall not be counted as a
demand for purposes of Section 5.2 or for purposes of the limitations set forth
in Section 5.3(b)(i);

(v)    if the Company receives a request for registration pursuant to
Section 5.2, at a time when there is a Material Pending Event, then the Company
may suspend sales under a shelf registration statement, or a registration
statement pursuant to which Registrable Securities are not immediately sold
after the effectiveness thereof, for a period not to exceed 90 days in any
180-day period upon providing the Holders with written notice of such suspension
(which notice shall not include a statement of the reason for such suspension);
provided, that the Company shall suspend the filing of a registration statement
pursuant to this Section 5.3(b)(v) for no more than 120 days in the aggregate in
any 12 month period and two (2) times in any 12 month period respect of all
requested registrations; provided, however, that the Company shall make prompt
and adequate disclosure of any material information required to be disclosed
from time to time in accordance with law and NASDAQ rules. Upon receipt of a
notice from the Company in accordance with the terms of this Section 5.3(b)(v),
each Holder agrees not to sell or offer to sell any Registrable Securities
pursuant to such shelf registration statement until the Company notifies such
Holder that the shelf registration statement may be used (which notice the
Company shall promptly provide following the termination of the event or
circumstance giving rise to such suspension). Each Holder shall keep
confidential any communications received by it from the Company regarding the
suspension of sales pursuant to this Section 5.3(b)(v) (including the fact of
the suspension), except as required by law; and

 

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(c)    Notwithstanding anything in Section 5.1 or Section 5.2 to the contrary:

(i)    At such time as all of the Warrant Shares and Warrants that could be
exercised into Warrant Shares together beneficially owned by a Holder (together
with those of its Affiliates) constitute less than 2.5% of the outstanding
Common Stock, the Company shall not be required to effect any registrations,
Shelf Take-Downs or Underwritten Shelf Take-Downs of any kind for such Holder
pursuant to Section 5.1 or Section 5.2 (but the Company shall be required to
maintain the effectiveness of any shelf registration statement that is in effect
at such time as required by Section 5.4(b) for six additional months following
such date); and

(ii)    if any registration involves an underwritten offering, all Holders
requesting to participate in any registration in connection with an underwritten
offering hereunder must sell its Registrable Securities on the basis provided in
any underwriting arrangements approved by the Persons entitled to approve such
arrangements (with such differences, including any with respect to
indemnification and liability insurance, as may be customary or appropriate in
combined primary and secondary offerings) and must complete and execute all
reasonable questionnaires, powers of attorney, underwriting agreements,
hold-back agreement letters (also customarily referred to as lock-up letters)
and other documents customarily required under the terms of such underwriting
arrangements; provided, however, that to the extent such Holder is obligated
under the terms of the underwriting arrangements to (i) make representations and
warranties other than generally as to his, her or its respective (A) execution,
delivery and performance of such underwriting agreement and the agreements
contemplated thereby, (B) individual ownership of the Registrable Securities
being sold pursuant to such underwriting agreement and (C) information provided
by such Holder in writing specifically for inclusion in the Prospectus and
(ii) agree to provide indemnification for any liability arising out of a breach
of any such representations or warranties of such Holder that would exceed the
total proceeds received by such Holder for the sale of such Registrable
Securities pursuant to such underwriting agreement, then such Holder, to the
extent he, she or it determined not to enter into such underwriting agreement,
shall not be obligated to enter into a lock-up agreement contemplated by
Section 5.10.

Section 5.4.    Registration Procedures. If and whenever the Company is required
to effect a registration of any Registrable Securities as provided in this
Agreement, subject to the limitations set forth in Section 5.3, the Company
will: (a)    promptly prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use commercially reasonable
efforts to cause a registration statement with respect to a demand registration
pursuant to Section 5.2 to be filed (in the case of a registration pursuant to
Form S-3ASR), or become effective (in the case of any registration other than
pursuant to Form S-3ASR) as promptly as practicable;

(b)    prepare and file with the SEC such amendments and supplements to such
registration statement (including Exchange Act documents incorporated by
reference into the registration statement) and the Prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period not in excess of 90 days (or such longer period as may be requested by
the Holders in the event of a shelf registration statement) and to comply with
the provisions of the Securities Act and the Exchange Act with respect to the
disposition of all securities covered by such registration statement during such
period in

 

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accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement; provided that before filing a
registration statement or prospectus or any amendments or supplements thereto in
accordance with Section 5.4(a) or this Section 5.4(b) to the extent that doing
so will not materially interfere with the timing of the offering: (i) the
Company will furnish to counsel selected pursuant to Section 5.9 copies of all
documents proposed to be filed, and (ii) such documents will be subject to the
review of such counsel reasonably in advance of any filing to permit a
reasonable opportunity to review and comment in light of the circumstances;

(c)    use commercially reasonable efforts to comply with all applicable
securities laws in the United States and register or qualify such Registrable
Securities covered by such registration in such jurisdictions in the United
States as each seller shall reasonably request, and do any and all other acts
and things which may be reasonably necessary to enable such seller to consummate
the disposition in such jurisdictions of the Registrable Securities owned by
such seller, except that the Company shall not for any such purpose be required
to qualify generally to do business as a foreign corporation in any jurisdiction
where, but for the requirements of this Section 5.4(c), it would not be
obligated to, subject itself to taxation in any such jurisdiction or to consent
to general service of process in any such jurisdiction;

(d)    promptly furnish to each seller of such Registrable Securities such
number of copies of such registration statement and of each amendment and
supplement thereto (in each case including all exhibits filed therewith,
including any documents incorporated by reference), such number of copies of the
Prospectus included in such registration statement (including each preliminary
prospectus and summary prospectus), in conformity with the requirements of the
Securities Act, and such other similar documents as such seller may reasonably
request necessary to facilitate the disposition of the Registrable Securities by
such seller;

(e)    notify each seller of any such Registrable Securities covered by such
registration statement promptly if the Company becomes aware that the Prospectus
included in such registration statement, as then in effect, or the registration
statement 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 and,
prepare and furnish to such seller a reasonable number of copies of an amended
or supplemental prospectus as may be necessary so that, as thereafter delivered
to the purchasers of such Registrable Securities, such Prospectus shall not
include an untrue statement of a material fact or omit 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;

(f)    otherwise use commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable (but not more than 18 months) after
the effective date of the registration statement, an earnings statement which
shall satisfy the provisions of Section 11(a) of the Securities Act;

(g)    (i) use commercially reasonable efforts to list such Registrable
Securities on the U.S. national securities exchange or market on which the
Common Stock is then listed or traded (if such Registrable Securities are not
already then listed and if such listing is then

 

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permitted under the rules of such exchange or market) to the extent required;
and (ii) use commercially reasonable efforts to provide for a transfer agent and
registrar for such Registrable Securities covered by such registration statement
not later than the effective date of such registration statement;

(h)    in connection with an underwritten offering pursuant to a demand
registration pursuant to Section 5.2, promptly enter into an underwriting
agreement in customary form, which may include indemnification provisions in
favor of underwriters and other Persons in addition to, or in substitution for,
the provisions of Section 5.8, and take such other actions as the managing
underwriters reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities;

(i)    in connection with an underwritten offering pursuant to a demand
registration pursuant to Section 5.2, promptly obtain a “cold comfort” letter or
letters from the Company’s independent public accounts in customary form and
covering matters of the type customarily covered by “cold comfort” letters
provided to sellers of securities as the seller or sellers of a majority of
shares of such Registrable Securities shall reasonably request;

(j)    promptly make available for inspection by any seller of such Registrable
Securities covered by such registration statement, by any underwriter
participating in any disposition to be effected pursuant to such registration
statement and by any attorney, accountant or other agent retained by any such
seller or any such underwriter, all pertinent financial and other records,
pertinent corporate documents and properties of the Company, and cause all of
the Company’s officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with the “due diligence” of such seller or such underwriter
with respect to such registration statement, subject to the execution of a
mutually acceptable confidentiality agreement;

(k)    promptly notify counsel (selected pursuant to Section 5.9) for the
Holders of Registrable Securities included in such registration statement and
the managing underwriter or agent and confirm such notice in writing (i) when
the registration statement, or any post-effective amendment to the registration
statement, shall have become effective, or any supplement to the Prospectus and
any amendments to the Prospectus shall have been filed (other than in the case
of a registration pursuant to Form S-3ASR), (ii) of the receipt of any comments
from the SEC, (iii) of any request by the SEC to amend the registration
statement or amend or supplement the Prospectus or for additional information,
and (iv) of the issuance by the SEC of any stop order suspending the
effectiveness of the registration statement or of any order preventing or
suspending the use of any Prospectus, or of the suspension of the qualification
of the registration statement for offering or sale in any jurisdiction, or of
the institution or threatening of any proceedings for any of such purposes;

(l)    use commercially reasonable efforts to prevent the issuance of any stop
order suspending the effectiveness of the registration statement or of any order
preventing or suspending the use of any Prospectus and, if any such order is
issued, to obtain the withdrawal of any such order as soon as practicable;

 

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(m)    (i) if requested by the managing underwriter or agent or any Holder of
Registrable Securities covered by the registration statement, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or agent or such Holder reasonably
requests to be included therein, including, with respect to the number of
Registrable Securities being sold by such Holder to such underwriter or agent,
the purchase price being paid therefor by such underwriter or agent; and
(ii) make all required filings of such prospectus supplement or post-effective
amendment as soon as practicable after being notified of the matters
incorporated in such prospectus supplement or post-effective amendment;

(n)    cooperate with the Holders of Registrable Securities covered by the
registration statement and the managing underwriter or agent, if any, to
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legends) representing securities to be sold under the registration
statement, and enable such securities to be in such denominations and registered
in such names as the managing underwriter or agent, if any, or such Holders may
reasonably request;

(o)    in connection with an underwritten offering pursuant to a demand
registration pursuant to Section 5.2, promptly obtain for delivery to the
Holders of Registrable Securities being registered and to the underwriter or
agent an opinion or opinions from counsel for the Company in customary form and
scope for sellers of securities;

(p)    cooperate with each seller of Registrable Securities and each underwriter
or agent participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
FINRA;

(q)    use commercially reasonable efforts to make available certain of the
executive officers of the Company (which in any event shall include the
Company’s chief executive officer) to participate and to cooperate with the
Holders of Registrable Securities and any underwriters in any “road shows” or
other selling efforts that may be reasonably be requested upon reasonable notice
thereof by the Holders in connection with a firm commitment underwritten
offering for the Registrable Securities (an underwritten offering contemplated
by this Section 5.4(q), a “Marketed Underwritten Offering”); provided that the
Company and its executive officers shall not be obligated to participate and
cooperate in connection with more than one Marketed Underwritten Offering per
calendar year.

Section 5.5.    Information Supplied. It shall be a condition precedent to the
obligations of the Company to take any action to register the Registrable
Securities held by any Holder as to which any registration is being effected
that such Holder shall furnish the Company with such information regarding such
Holder that is pertinent to the disclosure requirements relating to the
registration and the distribution of such securities as the Company may from
time to time reasonably request. Each Holder agrees to promptly furnish to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not misleading.

Section 5.6.    Expenses. Except as provided herein, the Company will pay all
Registration Expenses in connection with registrations of Registrable Securities
requested pursuant to Section 5.1 or Section 5.2. Each Holder shall pay all
underwriting discounts and

 

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commissions, broker fees and commissions, and transfer taxes, if any, relating
to the sale or disposition of such Holder’s Registrable Securities pursuant to
any registration statement, as well as any SEC filing fees related to
Registrable Securities referred to in clause (ii) of the definition thereof.

Section 5.7.    Restrictions on Disposition. Each Holder agrees that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 5.4(e), Section 5.4(k)(iii) or Section 5.4(k)(iv), such
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the registration statement covering such Registrable Securities until such
Holder’s receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5.4(e) or written notice from the Company that the
registration statement is again effective and no amendment or supplement is
needed. In the event that the Company shall give any such notice, the period
referred to in Section 5.4(b) shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 5.4(e) and to and including the date when each seller of Registrable
Securities covered by such registration statement shall have receive the copies
of the supplemented and amended Prospectus contemplated by Section 5.4(e).

Section 5.8.    Indemnification.

(a)    Indemnification by the Company. In the event of any registration of any
securities of the Company under the Securities Act pursuant to Section 5.1 or
Section 5.2, to the fullest extent permitted by law, the Company will indemnify
and hold harmless each Holder, each Affiliate of such Holder and their
respective directors and officers, members or general and limited partners (and
the directors, officers, employees, affiliates and each Person who controls such
Holder (within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) (hereinafter referred to as a “Controlling Person”) of any of
the foregoing), and each underwriter, if any, and each Person who controls
within the meaning of Section 15 of the Securities Act any underwriter
(collectively, the “Seller Indemnified Parties”), against all claims, losses,
damages and liabilities, joint or several, actions or proceedings (whether
commenced or threatened in writing) in respect thereof (“Claims”) and expenses
arising out of or based on: (i) any untrue statement or alleged untrue statement
of a material fact contained in a registration statement (or any amendment or
supplement thereto), including all documents incorporated therein by reference,
or any omission or alleged omission therefrom of a material fact, in each case,
necessary in order to make the statements therein not misleading, in light of
the circumstances under which they were made, (ii) any untrue statement or
alleged untrue statement of a material fact contained in a Prospectus (or any
amendment or supplement thereto), including all documents incorporated therein
by reference, or any omission or alleged omission therefrom of a material fact,
in each case, necessary in order to make the statements therein not misleading,
in light of the circumstances under which they were made, or (iii) any untrue
statement or alleged untrue statement of a material fact contained in any Issuer
Free Writing Prospectus prepared by it or authorized by it in writing for use by
such Holder (or any amendment or supplement thereto), including all documents
incorporated therein by reference, or any omission or alleged omission therefrom
of a material fact, in each case, necessary in order to make the statements
therein not misleading, in light of the circumstances under which they were
made, and the Company will reimburse each such Seller Indemnified Party for any
reasonable fees and disbursements of counsel and any other reasonable
out-of-pocket expenses incurred in

 

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connection with investigating and defending or settling any such Claim; provided
that the Company will not be liable in any such case to the extent that any such
claim, loss, damage, liability, or action arises out of or is based on any
untrue statement or alleged untrue statement or omission or alleged omission by
such Holder or underwriter but only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission is made in such
registration statement, Prospectus, or Issuer Free Writing Prospectus in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Holder and stated to be specifically for use
therein; and provided, further, that the indemnity agreement contained in this
Section 5.8(a) shall not apply to amounts paid in settlement of any such Claim
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld or delayed); and provided, further, that the
Company will not be liable to any Seller Indemnified Parties pursuant to this
Section 5.8(a) to the extent that any Claims for which such Seller Indemnified
Party seeking indemnification relates to a sale of Registrable Securities in
violation of Section 5.3(b)(v).

(b)    Indemnification by the Holders. To the fullest extent permitted by law,
each Holder will, if Registrable Securities held by such Holder are included in
the registration statement or Prospectus, indemnify and hold harmless the
Company, all other Holders or any prospective underwriter, as the case may be,
and any of their respective Affiliates, directors, officers and Controlling
Persons (collectively, the “Company Indemnified Parties”), against all Claims
and expenses arising out of or based on: (i) any untrue statement or alleged
untrue statement of a material fact contained in a registration statement (or
any amendment or supplement thereto), including all documents incorporated
therein by reference, or any omission or alleged omission therefrom of a
material fact, in each case, necessary in order to make the statements therein
not misleading, in light of the circumstances under which they were made,
(ii) any untrue statement or alleged untrue statement of a material fact
contained in a Prospectus (or any amendment or supplement thereto), including
all documents incorporated therein by reference, or any omission or alleged
omission therefrom of a material fact, in each case, necessary in order to make
the statements therein not misleading, in light of the circumstances under which
they were made, or (iii) any untrue statement or alleged untrue statement of a
material fact contained in any Issuer Free Writing Prospectus (or any amendment
or supplement thereto), including all documents incorporated therein by
reference, or any omission or alleged omission therefrom of a material fact, in
each case, necessary in order to make the statements therein not misleading, in
light of the circumstances under which they were made, and the Holder will
reimburse each such Company Indemnified Party for any reasonable fees and
disbursements of counsel and any other reasonable expenses incurred in
connection with investigating and defending or settling any such Claim, in each
case to the extent, but only to the extent that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, Prospectus, or Issuer Free Writing Prospectus in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Holder and stated to be specifically for use
therein; and provided that the indemnity agreement contained in this
Section 5.8(b) shall not apply to amounts paid in settlement of any such Claim
if such settlement is effected without the consent of the applicable selling
Holder (which consent shall not be unreasonably withheld or delayed); and
provided, further, that in the absence of fraud (as determined in a final and
non-appealable judgement by a court of competent jurisdiction) by such Holder,
the liability of each selling Holder of Registrable Securities

 

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hereunder shall be limited to the net proceeds received by such selling Holder
from the sale of Registrable Securities covered by such registration statement.

(c)    Notification of Claims. Promptly after receipt by a Person entitled to
indemnification pursuant to Section 5.8 (an “Indemnified Party”) hereunder of
written notice of the commencement of any action or proceeding with respect to
which a claim for indemnification may be made pursuant to this Section 5.8, such
Indemnified Party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action or proceeding; provided that the failure of the Indemnified Party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under this Section 5.8, except to the extent that the indemnifying
party is prejudiced in any material respect by such failure to give notice. In
case any such action or proceeding is brought against an Indemnified Party,
unless in such Indemnified Party’s reasonable judgment, based upon advice of
counsel, a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such action or proceeding (in which case the
Indemnified Party shall have the right to assume or continue its own defense and
the indemnifying party shall be liable for any reasonable expenses therefor (but
in no event will bear the expenses for more than one firm of counsel for all
Indemnified Parties in each jurisdiction who shall, with respect to Seller
Indemnified Parties, be approved by the majority of the participating Holders in
the registration in respect of which such indemnification is sought), the
indemnifying party will be entitled to participate in and to assume the defense
thereof (at its expense), jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such Indemnified Party, and after notice from the indemnifying party to such
Indemnified Party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such Indemnified Party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation and shall have no
liability for any settlement made by the Indemnified Party without the consent
of the indemnifying party, such consent not to be unreasonably withheld. No
indemnifying party will settle any action or proceeding or consent to the entry
of any judgment without the prior written consent of the Indemnified Party,
unless such settlement or judgment (i) includes as an unconditional term thereof
the giving by the claimant or plaintiff of a release to such Indemnified Party
from all liability in respect of such action or proceeding and (ii) does not
involve the imposition of equitable remedies or the imposition of any
obligations on such Indemnified Party and does not otherwise adversely affect
such Indemnified Party, other than as a result of the imposition of financial
obligations for which such Indemnified Party will be indemnified hereunder. An
Indemnified Party may not settle any action or proceeding or the entry of any
judgment without the prior written consent of the indemnifying party.

(d)    Contribution. (i) If the indemnification provided for in this Section 5.8
from the indemnifying party is unavailable to an Indemnified Party hereunder in
respect of any Claim or expenses referred to herein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Claim or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and Indemnified Party in connection with the actions
which resulted in such Claim or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of

 

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a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
Indemnified Party, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party under this Section 5.8(d) as a result of the Claim and
expenses referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with any action or
proceeding; and (ii) the parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.8(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in Section 5.8(d)(i). No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.

(e)    Non-Exclusive Remedy. The obligations of the parties under this
Section 5.8 shall be in addition to any liability which any party may otherwise
have to any other party.

Section 5.9.    Selection of Counsel. In connection with any registration of
Registrable Securities pursuant to Section 5.1 and Section 5.2, the Holders of a
majority of the Registrable Securities covered by any such registration may
select one counsel to represent all Holders of Registrable Securities covered by
such registration; provided, however, that in the event that the counsel
selected as provided above is also acting as counsel to the Company in
connection with such registration, a majority of the remaining Holders shall be
entitled to select one additional counsel to represent all such remaining
Holders.

Section 5.10.    Market Standoff Agreement. Subject to the proviso in
Section 5.3(c)(ii), in connection with any underwritten public offering, each
Holder who holds Registrable Securities and who was offered or waived the
opportunity to include Registrable Securities in such offering pursuant to
Section 5.1 or Section 5.2 will agree upon the request of the managing
underwriter with respect to such offering not to effect any Public Sale or
distribution, including any sale pursuant to Rule 144 under the Securities Act,
of any Equity Security of the Company during the 14-day period prior to, and for
the 90 days after, the effective date of the registration statement for such
offering (or such lesser period as the managing underwriters may require or
permit), except for such Common Securities to be included in such offering;
provided that all of the Company’s stockholders that own more than 5% of the
outstanding Common Stock and have registration rights (other than PAR Investment
Partners, L.P.), executive officers and all of the members of the Company’s
Board are restricted in the same manner and for the same duration (and if any
such person is released from such restrictions, in whole or in part, the Holders
shall be so released to the same extent); provided, further, that the
obligations set forth in this Section 5.10 shall not apply to any Holder who was
limited in the number of Registrable Securities that such Holder could sell in
the offering pursuant to Section 5.2(e) or Section 5.3(a)(ii) and did not
otherwise sell Registrable Securities in such offering.

Section 5.11.    No Inconsistent Agreements. The Company represents and warrants
that, except for the Amended and Restated Registration Rights Agreement, dated
as of January 31, 2013 (the “PAR Agreement”), among the Company, PAR Investment
Partners, L.P. and the other parties thereto, it is not a party to a contract
which conflicts with the exercise of the rights granted to the Holders of
Registrable Securities in this Article V. Notwithstanding any provision

 

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contained in Article V to the contrary, the provisions of this Article V shall
be deemed to be automatically modified solely to the extent any specific
provision or term of this Article V breaches or is otherwise inconsistent with
any applicable term of the PAR Agreement and the Company shall promptly take all
actions necessary and use its best efforts, including good faith negotiations
with the Holders and their Affiliates, to promptly (i) compensate, reimburse or
otherwise make-whole the Holders and their Affiliates for any damages, losses,
costs or expenses (in each case, economic or otherwise) incurred by the Holders
or their Affiliates in connection with any such automatic modification or any
challenge by PAR to the validity or enforceability of this Agreement or to any
of the terms hereof and (ii) restore in full any rights of the Holders or their
Affiliates under this Article V or elsewhere in this Agreement, which are
forfeited, impaired or otherwise modified or changed in any way as a result of
such automatic modification.

Section 5.12.    Termination of Registration Rights. The rights and obligations
of any Holder under this Article V shall terminate (other than Section 5.6,
Section 5.8 and Section 5.12) at such time as such Holder ceases to hold any
Registrable Securities.

ARTICLE VI

PARTICIPATION RIGHTS

Section 6.1.    General.

(a)    Offer. From Closing until the earlier of (x) the five-year anniversary of
the Issue Date and (y) the date on which the Holders no longer beneficially owns
50% or more of the number of Penny Warrants issued on the Issue Date (or the
respective Warrant Shares issued in connection with the exercise of the Penny
Warrants), the Company shall not issue any Common Securities to any Person,
unless the Company offers the right (the “Participation Right”) to each Holder
to purchase its Participation Amount (as defined below) of such Common
Securities at the same price per security (payable in cash) and otherwise upon
the same terms and conditions as those offered to such Person in accordance with
the procedures set forth in this Section 6.1; provided that Participation Rights
shall not be applicable to the issuance of Common Securities: (i) issued as
consideration pursuant to bona fide acquisitions of securities or material
assets or business of another Person, including any Subsidiary, division or
business line thereof (in each case, other than any Affiliates of the Company),
by the Company or any of its Subsidiaries, (ii) issued to directors, officers,
employees or consultants pursuant to any Approved Stock Plan, (iii) pursuant to
a stock split, stock dividend or similar transaction in which all holders of
Common Stock (or Common Securities convertible for shares of Common Stock) are
treated equally on a pro rata basis, and (iv) pursuant to the payment of paid in
kind interest on convertible indebtedness incurred by the Company or any of its
Subsidiaries, (v) pursuant to the conversion, exchange or exercise of a Common
Security that is either (A) outstanding on the Issue Date in accordance with the
terms in effect on the Issue Date, including the Warrants, or (B) outstanding
after the Issue Date as long as, in the case of clause (B), the Holders have had
an opportunity to exercise their Participation Rights with respect to the
underlying Common Security or such Common Security was issued pursuant to clause
(i), (ii) or (iv) of this sentence and (vi) pursuant to an offering of the type
described in clause (i) of the definition of “Public Sale” of Common Securities.
In connection with any Public Sale of Common Securities by the Company during
any period when the Holders are entitled to Participation Rights under this

 

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Section 6.1, the Company shall use its reasonable best efforts to facilitate
such Holders’ participation in such Public Sale to the extent such Holders would
have had Participation Rights in such Public Sale but for the provision of
clause (vi) in the preceding sentence.

(b)    No less than fifteen (15) Business Days prior to the closing of the
issuance of Common Securities pursuant to this Section 6.1 (the “Participation
Rights Closing”), the Company shall send a written notice (the “Participation
Rights Notice”) to the Holders stating, in reasonable detail, (i) the number of
Common Securities to be offered, (ii) the designation and all of the terms and
provisions of the Common Securities proposed to be issued, including, to the
extent applicable, the voting powers, preferences and relative participating,
optional or other special rights, and the qualification, limitations or
restrictions thereof and interest rate and maturity; (iii) the price and other
terms of the proposed sale of such Common Securities; (iv), a description of any
non-cash consideration, if any, and the Fair Market Value of such non-cash
consideration, and (v) reference to the Holders’ Participation Rights hereunder.
In addition, the Company shall promptly deliver to each Holder any such
information the Holder may reasonably request in order to evaluate the proposed
issuance.

(c)    Within ten (10) Business Days after the delivery of the Participation
Rights Notice, each Holder may elect by written notice to the Company, to
purchase such Common Securities, at the price and on the terms specified in the
Participation Rights Notice (or, if such price includes non-cash consideration,
an amount of cash equal to the Fair Market Value of such non-cash
consideration), up to an amount (such amount, the “Participation Amount”) equal
to the product of (i) the number of Common Securities of each class offered for
sale by the Company multiplied by (ii) the quotient obtained by dividing (x) the
number of shares of Warrant Shares beneficially owned by the Holder (on an
as-exercised basis), by (y) the total number of shares of Common Stock then
outstanding (on an as-exercised basis). Such exercise notice will set forth the
number of Common Securities of each class being purchased by each Holder;
provided, however, that subject to compliance with the terms and conditions set
forth in Section 6.1(f), the Holder shall not be permitted to purchase any
Common Securities pursuant to this Section 6.1 if, and to the extent that, such
acquisition by such Holder would require the consent of the Company’s
stockholders pursuant to the applicable NASDAQ rules and the Company is not
otherwise seeking the consent of its stockholders in connection with the
issuance of such Common Securities; provided, further, however, that the Company
shall still be obligated to provide written notice of such proposed issuance to
the Holders pursuant to Section 6.1(b) (the “Restricted Issuance Notice”) even
if such acquisition by such Holder would require the consent of the Company’s
stockholders pursuant to the applicable NASDAQ rules.

(d)    Subject to the next two sentences of this Section 6.1(d), the Company may
offer the Common Securities specified in the Participation Rights Notice in
excess of the Participation Amount, if any, to any Person or Persons at a price
not less than, and on terms no more favorable to such offerees than, those set
forth in such Participation Rights Notice, at any time after the Participation
Rights Notice is sent but on or before the 90th day after the Participation
Rights Notice was sent. In addition, during the period beginning twenty
(20) Business Days after the Participation Rights Notice was sent and ending on
the 90th day after the Participation Rights Notice was sent, if the Holders have
elected not to exercise their Participation Rights pursuant to this Section 6.1,
the Company may offer any Common Securities of the Participation Amount that are
not elected to be purchased by the Holders to any

 

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Person or Persons, provided that if such Common Securities are to be offered at
a price less than, or on terms materially more favorable to such offerees than,
those specified in the Participation Rights Notice, the Company shall promptly
notify the Holders in writing of such modified terms (a “Subsequent Notice”) and
the Holders shall have ten (10) Business Days after the receipt of such notice
in which to elect to purchase the Participation Amount of such Common Securities
at the price and on the terms specified in such Subsequent Notice. Following the
90th day after the Participation Rights Notice was sent, if the Company has not
closed the issuance of the Common Securities pursuant to the first two sentences
of this Section 6.1(d), then such Common Securities must be reoffered to issue
or sell to the Holders pursuant to the terms and conditions of this Section 6.1.

(e)    The Participation Rights Closing shall occur as promptly as practicable
following the notice to the Company by the Holders to exercise their
Participation Rights; provided that such closing shall be subject to and shall
occur not earlier than the later of (x) concurrently with the closing of the
purchase of Common Securities by such offeree and (y) ten (10) Business Days
after delivery of written notice by the Holders of their election to purchase
such Common Securities (provided that the closing of the purchase of Common
Securities shall be delayed with respect to the purchase by the Holders (i) in
order to obtain any required regulatory approval for the purchase by any Holders
that is not required for purchasers which are not Holders, in which case the
closing of the purchase by such Holders shall occur promptly after receipt of
such regulatory approval, and (ii) for a period not to exceed ten (10) calendar
days, to permit the Holder to receive proceeds from calling capital pursuant to
commitments made by its (or its affiliated investment funds’) limited partners).
The closing of the purchase of Common Securities by the Holders pursuant to this
Section 6.1 shall also be subject to the receipt of any necessary regulatory
approvals, the expiration of any required waiting periods and applicable law.
Unless otherwise set forth in writing by the Company, the Company shall have no
obligation to consummate the issuance to such third-party offerees giving rise
to the Participation Rights and the Company shall have no obligation to
negotiate the price or other terms of the offering of Common Securities with any
Holders.

(f)    In the event that the Company is not required to offer or reoffer to the
Holders any Equity Securities because such issuance would require the Company to
obtain stockholder approval in respect of the issuance of any Equity Securities
under the listing rules of NASDAQ, the Company shall, upon the Holder’s
reasonable request delivered to the Company in writing within no later than
seven (7) Business Days following its receipt of the written notice of such
issuance to the Holders pursuant to Section 6.1(b) (together with the Restricted
Issuance Notice), at the Holders’ election:

(i)    consider and discuss in good faith modifications proposed by the Holders
to the terms and conditions only of such portion of the Equity Securities which
would otherwise be issued to the Holders pursuant to this Section 6.1such that
the Company would not be required to obtain stockholder approval in respect of
the issuance of such Equity Securities as so modified; and/or

(ii)    solely to the extent that stockholder approval is required in connection
with the issuance of Equity Securities to Persons other than the

 

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Holders, take such actions as may be reasonably necessary to seek stockholder
approval in respect of the issuance of any Equity Securities to the Holders.

(g)    The election by any Holder not to exercise its Participation Right under
this Section 6.1 in any one instance shall not affect its right as to any
subsequent proposed issuance.

ARTICLE VII

STANDSTILL

Section 7.1.    General. Each Holder agrees that, until the earlier of (a) the
18 month-anniversary of the Issue Date and (b) the date such Holder (together
with its controlled Affiliates) owns less than 10% of the outstanding Common
Stock either directly or after giving effect to the exercise of the Warrants
held by such Holder (the “Standstill Period”), neither such Holder nor any of
its controlled Affiliates nor any Person acting on behalf of, or in concert with
it will, directly or indirectly, unless invited by the Board in writing:
(i) acquire, offer or propose to acquire, or agree or seek to acquire by
purchase or otherwise, any Voting Securities, or direct or indirect rights or
options to acquire any Voting Securities, of the Company or any Subsidiary
thereof or any material assets of the Company or any Subsidiary or division
thereof (other than pursuant to the penultimate sentence of this Section 7.1)
(provided that the foregoing shall not prohibit such Holder or its Affiliates
from acquiring at any time (subject to compliance with applicable law) up to (x)
9.9% of the aggregate principal amount of the Company’s outstanding 2.75%
convertible senior notes due 2035, or (y) 9.9% of the Company’s outstanding
Common Stock; (ii) enter into or agree, offer, propose or seek to enter into,
directly or indirectly, any acquisition transaction or other business
combination relating to all or a material part of the Company or its
Subsidiaries Voting Securities or any acquisition transaction for all or a
material part of the assets of the Company or any Subsidiary of the Company or
any of their respective businesses (other than pursuant to the penultimate
sentence of this Section 7.1); (iii) make, or in any way participate in,
directly or indirectly, any “solicitation” of “proxies” (as such terms are used
in the rules of the Securities and Exchange Commission) to vote, or seek to
advise or influence any Person or entity with respect to the voting of, any
voting securities of the Company; (iv) form, join or in any way participate in a
“group” (within the meaning of Section 13(d)(3) of the Exchange Act) with
respect to any Voting Securities of the Company or any of its Subsidiaries;
(v) seek or propose, alone or in concert with others, to influence or control
the Company’s management or policies (provided that the foregoing shall not in
any way limit or restrict the actions of the Searchlight Directors in their
capacities as such, provided, further that such Searchlight Directors shall at
all times act in accordance with their applicable fiduciary duties to the
Company and its stockholders); (vi) directly or indirectly enter into any
discussions, negotiations, arrangements or understandings with any other Person
with respect to any of the foregoing activities or propose any of such
activities to any other Person (excluding, for the avoidance of doubt, in each
case, any controlled Affiliates of Searchlight Capital Partners, L.P.); (vii)
advise, assist, encourage, act as a financing source for or otherwise invest in
any other Person in connection any of the foregoing activities; or
(viii) publicly disclose any intention, plan or arrangement inconsistent with
any of the foregoing; provided, however, that notwithstanding the foregoing
restrictions in this Section 7.1, the Holders and their respective Affiliates
shall be entitled to make any disclosure required by law other than the filing
or amending of a statement

 

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on Schedule 13D pursuant to Rule 13d-1(a) of the rules and regulations
promulgated under the Exchange Act in respect of any of the events described in
clauses (i) through (vii) above. Each Holder also agrees that, during the
Standstill Period, neither such Holder nor any of its controlled Affiliates will
take any action with respect to the Company or any of its Subsidiaries that
would be reasonably expected to require the Company to make a public
announcement regarding any of the activities referred to in clauses (i) through
(v) above. Notwithstanding the foregoing, the Holder, its Affiliates and its
Representatives shall be permitted to purchase the Company’s products and
services from the Company and its Subsidiaries in the ordinary course of
business. Notwithstanding anything in this Article VII to the contrary, each
Holder and their respective Affiliates may make proposals or offers (but only
privately to the Board and not publicly) regarding the transactions contemplated
by clause (i) or clause (ii) of this Section 7.1, including in connection with
any Fundamental Change Event (as defined below) proposed by any Holder or its
Affiliates. A “Fundamental Change Event” means (I) any acquisition of a majority
of the voting securities of the Company by any Person or group, (II) any
acquisition of a majority of the consolidated assets of the Company and its
Subsidiaries by any Person or group, or (III) any tender or exchange offer,
merger or other business combination (provided that, in the case of any
transaction covered by the foregoing clause (III), immediately following such
transaction, any Person (or the direct or indirect stockholders of such Person)
will beneficially own a majority of the outstanding voting power of the Company
or the surviving parent entity in such transaction).

Section 7.2.    Exceptions. For clarity, nothing in this Article VII shall be
deemed to, in any way to prohibit, condition, restrict or limit, directly or
indirectly, (i) the ability of any Holder or its Affiliates to Transfer the
Warrant or any Warrant Shares as specifically allowed pursuant to this Agreement
or the Warrant; (ii) any rights of any Holder pursuant to Section 6.1, (iii) the
exercise of the Warrants pursuant to their terms; (iv) any rights the Holders or
any of their respective Affiliates might have to receive any Common Securities
in connection with any stock split, stock dividend, distribution, spin-off,
combination, reclassification or recapitalization of the Company and its Common
Securities or other similar corporate action initiated by the Company); (v) the
ability of any Holder or their respective Affiliates from tendering or
exchanging any Common Securities of the Company in any tender offer or exchange
offer initiated by any unaffiliated third party; (vi) the right of any Holder or
its Affiliates to vote (including by proxy) its Warrant Shares, Shares or other
Common Securities or consent with respect to any matter properly brought before
stockholders of the Company for a vote or consent, (vii) any actions or rights
that any Searchlight Director may have in his or her capacity as such, including
any right such Searchlight Directors’ may have to receive issuances of Common
Securities or any other Securities from the Company as compensation for their
membership on the Board, or (viii) the Holders’ or their Affiliates’ acquisition
of shares of Common Stock or any other Company securities in the event that
bankruptcy or insolvency proceedings are commenced by the Company, including
through the (A) acquisition of shares of Common Stock or any other Company
securities through an exchange offer or through a plan of reorganization for the
Company which is confirmed by order of the United States Bankruptcy Court or
(B) participation in or consummation of any transaction relating to the Company
effected in connection with any proposed Company auction sale process under the
jurisdiction of a United States Bankruptcy Court.

 

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ARTICLE VIII

INFORMATION RIGHTS

Section 8.1.    Information Rights.

(b)    During the Information Rights Period, the Company will deliver to the
Holders and their designated Affiliates the following information if reasonably
requested in writing by the Holders and only if no Searchlight Nominee is then
serving as a director of the Board, subject, in each case, to the execution of a
customary and mutually acceptable confidentiality agreement, if deemed
reasonably necessary by the Company:

(i)    on an annual basis and promptly after it has been made available to the
Board, (A) an annual budget of the Company, (B) a business plan of the Company,
and (C) financial forecasts for the next fiscal year of the Company, in each
case, to the extent and in such manner and form prepared by or for the Board;
and

(ii)    on an annual, quarterly and monthly basis and promptly after it has been
made available to the Board, annual, quarterly and monthly unaudited financial
and operating reports of the Company, to the extent and in such manner and form
prepared by or for the Board.

(c)    During the Information Rights Period, upon reasonable notice as the
Holders may reasonably request, the Company shall (and shall cause its
Subsidiaries) to make available to the Holders and their Affiliates and
Representatives, during normal business hours (i) the appropriate individuals of
the Company’s management team to discuss its and their affairs, finances and
accounts and (ii) access to the books and records of the Company and its
Subsidiaries.

ARTICLE IX

MISCELLANEOUS

Section 9.1.    Entire Agreement. This Agreement, together with the Warrants,
constitutes the entire understanding and agreement between the parties as to
restrictions on the transferability of the Warrants and Securities for which
such Warrants are exercisable and the other matters covered herein and
supersedes and replaces any prior or contemporaneous understanding, term sheet,
agreement or statement of intent, in each case, written or oral, of any and
every nature with respect thereto.

Section 9.2.    Specific Performance. The parties hereto agree that the
obligations imposed on them in this Agreement are special, unique and of an
extraordinary character, and that, in the event of breach by any party, damages
would not be an adequate remedy and each of the other parties shall be entitled
to specific performance and injunctive and other equitable relief in addition to
any other remedy to which it may be entitled, at law or in equity to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in the courts described in Section 9.3 without proof of damages or
otherwise (in each case, subject to

 

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the terms and conditions of this Section 9.2), this being in addition to any
other remedy to which they are entitled under this Agreement and (b) the right
of specific enforcement is an integral part of the transactions contemplated by
this Agreement and without that right, neither the Company nor the Holders would
have entered into this Agreement. The parties hereto further agree (i) to waive
any requirement for the securing or posting of any bond in connection with the
obtaining of any such injunctive or other equitable relief, (ii) not to assert
that a remedy of specific enforcement is unenforceable, invalid, contrary to
applicable law or inequitable for any reason, and (iii) not to assert that a
remedy of monetary damages would provide an adequate remedy or that the parties
otherwise have an adequate remedy at law.

Section 9.3.    Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware applicable to
contracts entered into and performed entirely within such State. All
proceedings, suits, investigations, arbitrations or actions (collectively,
“Actions”) arising out of or relating to this Agreement shall be heard and
determined in the Chancery Court of the State of Delaware (or, if the Chancery
Court of the State of Delaware declines to accept jurisdiction over any Action,
any state or federal court within the State of Delaware) and the parties hereto
hereby irrevocably submit to the exclusive jurisdiction and venue of such courts
in any such Action and irrevocably waive the defense of an inconvenient forum or
lack of jurisdiction to the maintenance of any such Action. The consents to
jurisdiction and venue set forth in this Section 9.3 shall not constitute
general consents to service of process in the State of Delaware and shall have
no effect for any purpose except as provided in this paragraph and shall not be
deemed to confer rights on any Person other than the parties hereto. Each party
hereto agrees that service of process upon such party in any Action arising out
of or relating to this Agreement shall be effective if notice is given by in the
manner set forth in Section 9.7 of this Agreement. The parties hereto agree that
a final judgment in any such Action shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
applicable law; provided, however, that nothing in the foregoing shall restrict
any party’s rights to seek any post-judgment relief regarding, or any appeal
from, a final trial court judgment.

Section 9.4.    Amendment and Waiver.

(b)    This Agreement may be amended, modified or waived, in whole or in part,
at any time pursuant to an agreement in writing executed by the Company and
Searchlight.

(c)    Any failure by any party at any time to enforce any of the provisions of
this Agreement shall not be construed a waiver of such provision or any other
provisions hereof.

Section 9.5.    Binding Effect. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
parties’ successors and permitted assigns.

Section 9.6.    Termination. This Agreement shall terminate only by written
consent of Searchlight and the Company; provided that, except for the provisions
of Section 3.1(b)(vii), Section 3.2, Article V and Article IX, this Agreement
shall terminate automatically upon the consummation of a Fundamental Change
Event.

 

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Section 9.7.    Notices. Any and all notices, designations, offers, acceptances
or other communications provided for herein shall be given in writing by
registered or certified mail, or my electronic mail, which shall be addressed,
in the case of any Holder, to such party’s address appearing below or to such
other address as may be designated by such party in writing to the Company and,
in the case of each of the Company and the Holders at the following addresses
and e-mail addresses (or to such other address or e-mail address as a party may
have specified by notice given to the other party pursuant to this provision):

If to the Company, to:

Global Eagle Entertainment Inc.

6100 Center Drive, Suite 1020

Los Angeles, California

Attention: Stephen Ballas

Email: stephen.ballas@globaleagle.com

and to:

Global Eagle Entertainment Inc.

6100 Center Drive, Suite 1020

Los Angeles, California

Attention: Jeff Leddy

Email: jeff.leddy@globaleagle.com

with copies (which shall not constitute actual or constructive notice) to:

Simpson Thacher & Bartlett LLP

2475 Hanover Street

Palo Alto, CA 94304

Attention: William Brentani

Email: wbrentani@stblaw.com

If to the Holders, to:

Searchlight II TBO-W, L.P.

c/o Searchlight Capital Partners, L.P.

745 5th Avenue

New York, NY 10151

                    Attention:     Eric Zinterhofer, Founding Partner

                                          Eric Sondag, Partner

                    Email:          ezinterhofer@searchlightcap.com

                                          esondag@searchlightcap.com

with a copy (which shall not constitute actual or constructive notice) to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

 

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1285 Avenue of the Americas

New York, NY 10019

                Attention:    Taurie M. Zeitzer

                                     Tracey A. Zaccone

                                     David Beller

                Email:           tzeitzer@paulweiss.com

                                     tzaccone@paulweiss.com

                                     dabeller@paulweiss.com

Any demand, notice or other communication given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery thereof
and, if given by e-mail, upon delivery with non-automated receipt confirmed.

Section 9.8.    Severability. If any term, condition or other portion of this
Agreement shall be declared void or unenforceable by any court or administrative
body of competent jurisdiction, such term, condition or other portion shall be
deemed severable from the remainder of this Agreement, which shall continue in
all respects valid and enforceable. Upon such determination that any term,
condition or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law.

Section 9.9.    Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single instrument.

Section 9.10.    Effectiveness. Notwithstanding anything herein to the contrary
but subject to the immediately succeeding sentence, this Agreement shall only
become effective upon the occurrence of each of the following:

(b)    the Closing having occurred; and

(c)    the due execution and delivery of this Agreement by each of the Company
and the Holders.

Notwithstanding anything herein to the contrary, if the Closing does not occur
and the Securities Purchase Agreement is terminated in accordance with its
terms, this Agreement shall not become effective and shall be null and void with
no force or effect.

Section 9.11.    No Third Party Beneficiaries; Non-Recourse. No provision of
this Agreement shall confer upon any Person other than the parties hereto and
their permitted assigns any rights or remedies hereunder. This Agreement may
only be enforced against, and any claims or causes of action that may be based
upon, arise out of or relate to this Agreement, or the negotiation, execution or
performance of this Agreement may only be made against the entities that are
expressly identified as parties hereto, including entities that become parties
hereto after the date hereof or that agree in writing for the benefit of the
Company to be bound by the terms of this Agreement applicable to the Holders,
and no former, current or future equityholders,

 

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controlling Persons, directors, officers, employees, agents or Affiliates of any
party hereto or any former, current or future equityholder, controlling Person,
director, officer, employee, general or limited partner, member, manager,
advisor, agent or Affiliate of any of the foregoing (each, a “Non-Recourse
Party”) shall have any liability for any obligations or liabilities of the
parties to this Agreement or for any claim (whether in tort, contract or
otherwise) based on, in respect of, or by reason of, the transactions
contemplated hereby or in respect of any representations made or alleged to be
made in connection herewith. Without limiting the rights of any party against
the other parties hereto, in no event shall any party or any of its Affiliates
seek to enforce this Agreement against, make any claims for breach of this
Agreement against, or seek to recover monetary damages from, any Non-Recourse
Party.

Section 9.12.    WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVER, (C) IT MAKES SUCH WAIVER VOLUNTARILY AND (D) IT HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVER AND CERTIFICATIONS IN THIS SECTION 9.12.

Section 9.13.    Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties hereto without the prior
written consent of the other party hereto; provided, however, that each of the
Holders and Searchlight may assign its rights, interests and obligations under
this Agreement, in whole or in part, to one or more Permitted Warrant
Transferees in connection with any Transfer permitted by Section 4.2 (but
subject to Section 4.2(b)), and, provided, further, that any assignment that may
be deemed to occur as a result of any Fundamental Change Event shall not require
any consent of any party. Subject to the immediately preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties hereto and their respective successors and permitted assigns.

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39

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IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or
caused this Agreement to be signed by its officer thereunto duly authorized as
of the date first written above.

 

GLOBAL EAGLE ENTERTAINMENT INC.

By:  

/s/ Paul Rainey                                

Name:   Paul Rainey Title:   Chief Financial Officer

 

[Signature Page to Warrantholders Agreement]

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SEARCHLIGHT II TBO-W, L.P.

By:   Searchlight II TBO GP, LLC, its general partner By:  

/s/ Eric Sondag

Name:   Eric Sondag Title:   Authorized Officer

 

[Signature Page to Warrantholders Agreement]