November 5, 2014

 

 

Banner Corporation

10 South First Avenue

Walla Walla, Washington 99362

Attention: Mark J. Grescovich, Chief Executive Officer

Facsimile: (509) 526-8891

 

Ladies and Gentlemen:

Reference is made to the Agreement and Plan of Merger, dated as of the date
hereof, by and among SKBHC Holdings LLC, a Delaware limited liability company
(“Holdings”), Starbuck Bancshares, Inc., a Minnesota corporation (“Silicon”),
and Banner Corporation, a Washington corporation (“Boron”) (such agreement, the
“Merger Agreement”). Certain capitalized terms used in this investor letter
agreement shall have the meanings ascribed to such terms in Section 7.

The undersigned, collectively a Major Silicon Member (the “Subject Sellers”),
will receive at the Effective Time cash and shares of Boron Common Stock and
Boron Non-Voting Common Stock as part of the Merger Consideration (such shares,
the “Merger Consideration Shares”). In order to induce Boron to enter into the
Merger Agreement and for other good and valuable consideration, the Subject
Sellers and Boron have entered into this investor letter agreement (this
“Agreement”). Boron has provided to the Subject Sellers true and complete copies
of the investor letter agreements to be entered contemporaneously herewith by
the other Major Silicon Members and Boron.

1.                     Commitment to Comply with Requirements of Regulatory
Agencies and Governmental Entities. The Subject Sellers shall (a) if required by
the staff of the Federal Reserve Board in connection with obtaining the
Requisite Regulatory Approvals, promptly deliver to the Federal Reserve Board
executed passivity and anti-association commitments substantially in the form
attached hereto as Annex A (or in such other form as may be reasonably required
by the Federal Reserve Board that is no less favorable in any material respect
to the Subject Sellers than the commitments attached hereto as Annex A) and (b)
if required by the staff of the Federal Reserve Board or FDIC, use its
commercially reasonable efforts to promptly provide directly to the Federal
Reserve Board or FDIC, as applicable, such information about the Subject Sellers
as is reasonable and customary in connection with obtaining the Requisite
Regulatory Approvals. The Subject Sellers shall not be required to provide any
information specified in the foregoing clause (b) directly to Silicon, Boron or
any other Silicon Shareholder. Notwithstanding anything herein to the contrary,
except as set forth in the first sentence of this Section 1, the Subject Sellers
and their Affiliates (other than, to avoid doubt, Holdings and its Subsidiaries)
shall not be required to file any applications, notices, petitions or filings
with, or seek any permits, consents or approvals, or authorizations from, any
Regulatory Agency or Governmental Entity in connection with the transactions
contemplated by the Merger Agreement or the Bank Merger. The failure of any
Affiliate (including any Affiliate not listed on Annex D)

 

 

of the Subject Sellers to execute and deliver passivity and anti-association
commitments in the form required to be delivered by the Subject Sellers pursuant
to this Section 1 by any Controlled Affiliate of the Subject Sellers not a party
hereto shall be deemed a breach of this Section 1 by the Subject Sellers.

2.                   Transfer Restrictions.

(a)          Each Subject Seller agrees to the following terms and conditions
regarding such Subject Seller’s ownership of the Merger Consideration Shares:

(i)Such Subject Seller shall not Transfer any Holdings Common Interests or
Holdings Management Units (in each case other than through the exercise or
conversion of any such securities pursuant to their terms or the terms of the
Merger Agreement) between the date hereof and the Closing, other than Transfers
to a Controlled Affiliate of such Person that agrees to be bound by the
provisions of this Agreement as if it were a Subject Seller hereunder (a
“Permitted Transferee”).

(ii)Neither such Subject Seller nor any of its Permitted Transferees shall
Transfer any of the Merger Consideration Shares, other than to a Permitted
Transferee, prior to the date that is thirty (30) days after the Closing Date
(the “Lockup Termination Date”).

(iii)In the event that following the date hereof and prior to the Lockup
Termination Date any Permitted Transferee ceases to be a Controlled Affiliate of
the applicable Transferring Seller, then any prior Transfer to such Person
pursuant to such exception in (i) or (ii) above shall become null and void and
ownership and title to any such securities so Transferred shall revert to such
applicable Transferring Seller. Such Subject Seller shall promptly, and in any
event no later than five (5) Business Days, notify Boron in writing following
any Transfer to a Permitted Transferee.

(iv)From and after the Lockup Termination Date, such Subject Seller shall not
Transfer any shares of Boron Common Stock received as part of the Merger
Consideration to any Person or Group who, to such Subject Seller’s Knowledge,
after giving effect to such Transfer, would beneficially own eight percent (8%)
or more of the outstanding shares of Boron Common Stock; provided that the
restriction shall not apply to Transfers effected through an Underwritten
Offering (as defined in Annex B hereto) pursuant to an exercise of the
registration rights provided for in Annex B hereto, to any Person or Persons
pursuant to Rule 144 (as defined in Annex B hereto) or to a Transfer to any
Person or Persons not Affiliated with such Subject Seller who are acquiring
majority control of Boron in a (i) merger or similar business combination
transaction or (ii) a tender offer approved or recommended by the Board of
Directors of Boron.

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(b)         Each Subject Seller shall not, directly or indirectly, without
Boron’s prior written consent:

(i)acquire beneficial ownership of any shares of Boron Common Stock if, after
such acquisition, the Subject Sellers in the aggregate would beneficially own a
number of shares of Boron Common Stock and Boron Non-Voting Common Stock equal
to ten percent (10%) or more of the number of outstanding shares of Boron Common
Stock (as reported in the most recent Boron Report publicly filed under the
Exchange Act);

(ii)make, or in any way participate, directly or indirectly, in any
“solicitation” of “proxies” to vote (as such terms are used in the rules of the
SEC), or seek to advise or influence any Person with respect to the voting of
any voting securities of Boron;

(iii)form, join or in any way participate in a Group (other than with an
Affiliate of such Subject Seller), with respect to any voting securities of
Boron; or

(iv)publicly disclose any intention, plan or arrangement prohibited by, or
inconsistent with, the foregoing;

provided that this Section ‎2(b) shall in no way limit (x) the activities of any
director of Boron taken in good faith solely in his or her capacity as a
director of Boron or (y) the right or ability of the Subject Seller to vote any
voting securities of Boron (including the Merger Consideration Shares) with
respect to any matter; provided, further, that such Subject Seller does not make
any public announcement or public communication with respect to the manner in
which such Subject Seller intends to vote such voting securities with respect to
any matter. Such Subject Seller further agrees that it shall not, without the
written consent of Boron, publicly request Boron to amend or waive any provision
of this Section ‎2(b) (including this sentence) or do so in a manner that would
require Boron to publicly disclose such request.

(c)          The foregoing restrictions on Transfer may be waived by Boron in
writing with respect to any specific Transfer. The provisions in this Section 2
shall terminate and be of no further force and effect with respect to the
Subject Sellers (and their Permitted Transferees) on the earlier of (i) the
first date when the Subject Sellers (and any such Permitted Transferees)
collectively beneficially own less than five percent (5%) of the outstanding
shares of Boron Common Stock and Boron Non-Voting Common Stock (as reported in
the most recent Boron Report publicly filed under the Exchange Act), excluding
the dilutive effect of any primary issuances of Boron Common Stock or Boron
Non-Voting Common Stock (or any other securities convertible into or
exchangeable for Boron Common Stock or and Boron Non-Voting Common Stock) by
Boron, and (ii) the breach, in any material respect, by Boron of any of its
obligations in this Agreement.

(d)         Any Transfer or attempted Transfer of Merger Consideration Shares in
violation of this Section ‎2 shall, to the fullest extent permitted by
applicable Law, be null and void ab initio,

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and Boron shall not, and shall instruct its transfer agent and other third
parties not to, record or recognize any such purported transaction on the share
register of Boron.

(e)          Any certificates for Merger Consideration Shares issued to a
Subject Seller or any Permitted Transferee pursuant to the Merger Agreement
shall bear a legend or legends (and appropriate comparable notations or other
arrangements will be made with respect to any uncertificated shares) in addition
to the legend contemplated by Section 2.2(b) of the Merger Agreement referencing
restrictions on transfer of such Merger Consideration Shares under this
Agreement which legend shall state in substance:

“The securities evidenced by this certificate are subject to restrictions on
transfer set forth in an Investor Letter Agreement, dated November 5, 2014,
among Boron and certain other parties thereto (a copy of which is on file with
the Secretary of Boron).”

(f)          Notwithstanding the foregoing, upon the request of a holder of
certificate(s) for Merger Consideration Shares, Boron agrees that it shall
cause, and take all actions necessary to ensure, the prompt removal of the
legend contemplated by Section 2.2(b) of the Merger Agreement and, if
applicable, the legend contemplated in Section 2(e) (together with the
elimination or termination of any notations or arrangements described therein)
from such holder’s Merger Consideration Shares (including executing and
delivering an opinion of counsel and instruction letter satisfactory to the
transfer agent of Boron Common Stock) and cause the deposit of such holder’s
Merger Consideration Shares in book-entry form with the appropriate unrestricted
CUSIP number to the account specified by such holder, provided, that the
restrictions described in such legends (or notations or arrangements) are no
longer applicable (including where the Subject Sellers and their Permitted
Tranferees no longer own or will own such Merger Consideration Shares).

(g)         Notwithstanding anything herein to the contrary, Goldman, Sachs &
Co. and its Affiliates, other than the Subject Sellers, may engage in brokerage,
investment advisory, financial advisory, anti-raid advisory, merger advisory,
financing, asset management, trading, market making, arbitrage, principal
investing and other similar activities conducted in the ordinary course of their
Affiliates’ business, other than with respect to the Boron capital stock
included in the Merger Consideration; provided that in connection with such
activities Goldman, Sachs & Co. and such other Affiliates implement and maintain
information barriers and other procedures reasonably designed to prevent the
individuals engaged in such activities from having access to confidential
information regarding Boron and its Subsidiaries that is available to the
Subject Sellers (and their representative on Boron’s Board of Directors) as a
result of its investment contemplated hereby.

3.                   Registration Rights. The Subject Sellers shall have the
registration and other rights on the terms set forth in Annex B hereto (the
“Registration Rights Annex”) and Boron and the Subject Sellers hereby agree to
such terms.

4.Board Representation

(a)          At any time from and after the Effective Time, at the written
request of the Subject Sellers, Boron shall cause one (1) representative
designated by the Subject Sellers to be elected

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or appointed to the Board of Directors of Boron, which representative shall (i)
be reasonably acceptable to the Board of Directors of Boron, (ii) not be a
person who is an officer or employee of Holdings or any of its Subsidiaries as
of the date hereof, (iii) satisfy all director qualifications reasonably
required by Boron and shall agree to comply with all policies of Boron
(including as to ethics, confidentiality and trading) in each case in effect
from time to time that apply to all nominees for the Board of Directors of Boron
and (iv) be eligible to serve on the Board of Directors of Boron under the
Depository Institution Management Interlocks Act, 12 U.S.C. 3201 et seq., and
the federal banking agencies’ implementing regulations thereunder, including the
Federal Reserve Board’s Regulation L, 12 C.F.R. Part 212, in each case as they
may be amended from time to time (a “Qualified Nominee”, and any such Qualified
Nominee to be appointed to the Board of Directors of Boron, a “Board
Representative”). Any Board Representative elected or appointed to the Board of
Directors of Boron shall, at the Subject Sellers’ election, also be appointed to
Boron Bank’s Board of Directors at the time of his or her appointment or
election to the Board of Directors of Boron. Boron Bank shall take all action
necessary to facilitate any such appointment to Boron Bank’s Board of Directors.

(b)         From and after the election or appointment of a Board Representative
pursuant to Section 4(a), (i) at each meeting of the shareholders of Boron at
which directors of Boron are to be elected (including any annual meeting of
shareholders) and at which the term of such Board Representative shall expire,
the Board of Directors of Boron shall nominate and recommend for election one
(1) Qualified Nominee designated by the Subject Sellers to serve as a Board
Representative and Boron shall use its reasonable best efforts to cause such
person to be elected to serve as a director on the Board of Directors of Boron
and shall solicit proxies for such person to the same extent as it does for any
of its other nominees to the Board of Directors (it being understood that such
Qualified Nominee shall not be in addition to the person designated by the
Subject Seller to be appointed to the Board of Directors of Boron at the
Effective Time pursuant to the prior paragraph and that the Subject Sellers’
right to designate a Qualified Nominee to serve on the Board of Directors of
Boron at any given time shall be limited to one (1) person), provided that such
efforts will not require Boron to postpone its annual meeting of shareholders or
take extraordinary solicitation efforts not taken with regard to the other
nominees to the Board of Directors of Boron, including that Boron shall not be
obligated to pay extraordinary costs with regard to the election of such
Qualified Nominee as director; provided, further, that, if at any time after his
appointment to the Board of Directors of Boron, the Board Representative ceases
to be a Qualified Nominee, such representative shall not continue to serve as
the Board Representative; and (ii) upon the death, disability, retirement,
resignation, removal or other vacancy of a director designated by the Subject
Sellers, the Board of Directors of Boron shall appoint as a director to fill the
vacancy so created a Qualified Nominee designated by the Subject Sellers to fill
such vacancy.

(c)          Each Board Representative shall be entitled to the same
compensation and same indemnification and insurance coverage in connection with
his or her role as a director as the other members of the Board of Directors of
Boron, and shall be entitled to reimbursement for documented, reasonable
out-of-pocket expenses incurred in attending meetings of the Board of Directors
of Boron or any committees thereof, to the same extent as the other members of
the Board of Directors of Boron. Boron shall notify each Board Representative of
all regular and special meetings of the Board of Directors of Boron and shall
notify each Board Representative of all regular and special meetings of any
committee of the Board of Directors of Boron of which

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such Board Representative is a member. Boron shall provide each Board
Representative with copies of all notices, minutes, consents and other materials
provided to all other members of the Board of Directors of Boron concurrently as
such materials are provided to the other members.

(d)         Boron’s obligations under this Section 4 shall terminate and be of
no further force or effect on the earlier of (i) such time as the Subject
Sellers (and any Permitted Transferees) collectively beneficially own less than
five percent (5%) of the outstanding shares of Boron Common Stock and Boron
Non-Voting Common Stock (as reported in the most recent Boron Report publicly
filed under the Exchange Act), excluding the dilutive effect of any primary
issuances of Boron Common Stock or Boron Non-Voting Common Stock (or any other
securities convertible into or exchangeable for Boron Common Stock or and Boron
Non-Voting Common Stock) by Boron, and (ii) the breach, in any material respect,
by the Subject Sellers of any of its obligations in this Agreement.

5.                     Representations and Warranties of the Subject Sellers.
Each Subject Seller represents and warrants to Boron as of the date hereof that:

(a)          The Subject Sellers collectively are the sole record and beneficial
owner of the Holdings Common Interests or Holdings Management Units, as
applicable, set forth on Annex C and such securities constitute all of the
securities of Holdings collectively owned of record or beneficially owned by
such Subject Sellers.

(b)         Such Subject Seller is duly organized, is validly existing and in
good standing under the Laws of its jurisdiction of organization. Such Subject
Seller has full power and authority to execute and deliver this Agreement, to
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby.

(c)          Neither the execution and delivery of this Agreement by such
Subject Seller, nor the consummation of the transactions contemplated hereby,
nor compliance by such Subject Seller with any of the terms or provisions hereof
will (i) violate any provision of such Subject Seller’s organizational documents
or (ii) assuming the consents and approvals referred to in Section 3.4 of the
Merger Agreement are duly obtained, conflict with, violate any provision of, or
require the consent or approval of any Person under applicable Law or any
contract or agreement to which such Subject Seller is a party.

(d)         The execution, delivery and performance of this Agreement by such
Subject Seller has been duly authorized by all necessary action on the part of
such Subject Seller. This Agreement has been duly executed and delivered by such
Subject Seller and, assuming the due authorization, execution and delivery by
each of the other parties hereto, constitutes a valid and binding obligation of
such Subject Seller, enforceable against such Subject Seller in accordance with
its terms, except as may be limited by the Enforceability Exceptions.

(e)          Such Subject Seller: (i) is acquiring the Merger Consideration
Shares for its own account, solely for investment and not with a view toward, or
for sale in connection with, any distribution thereof in violation of any
federal or state securities or “blue sky” laws, or with any present intention of
distributing or selling the Merger Consideration Shares in violation of any such
laws, (ii) has such knowledge and experience in financial and business matters
and in

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investments of this type that it is capable of evaluating the merits and risks
of its investment in the Merger Consideration Shares and of making an informed
investment decision and (iii) is an “accredited investor” within the meaning of
Rule 501(a) under the Securities Act. Such Subject Seller has requested,
received, reviewed and considered all information that such Subject Seller deems
relevant in making an informed decision to invest in the Merger Consideration
Shares, has had an opportunity to discuss Boron’s business, management and
financial affairs with its management and also had an opportunity to ask
questions of officers of Boron that were answered to such Subject Seller’s
satisfaction and has received and reviewed a copy of this Agreement and the
Merger Agreement. Such Subject Seller understands that Boron is relying on the
statements contained herein to establish an exemption from registration under
the Securities Act and under state securities laws and acknowledges that the
Merger Consideration Shares are not registered under the Securities Act or any
other applicable Law and that the Merger Consideration Shares may not be
Transferred except pursuant to the registration provisions of the Securities Act
or pursuant to an applicable exemption therefrom.

(f)          Such Subject Seller hereby irrevocably consents to, and irrevocably
waives, any rights it may have to object to or dissent from (whether under the
Holdings LLC Agreement, applicable Law or otherwise), Holdings and Silicon’s
execution and delivery of the Merger Agreement and the consummation of the
transactions contemplated thereby (including the Merger and the Bank Merger) in
accordance with the terms and subject to the conditions of the Merger Agreement.

(g)         Such Subject Seller is not relying on Holdings, Silicon, Boron, or
any of their respective agents, representatives or Affiliates for its decision
to execute and deliver this Agreement and to invest in the Merger Consideration
Shares.

6.                     Representations and Warranties of Boron. Boron represents
and warrants to the Subject Sellers as of the date hereof that:

(a)          Boron is a corporation duly organized, validly existing and in good
standing under the Laws of its jurisdiction of organization. Boron has full
corporate power and authority to execute and deliver this Agreement, to perform
its obligations under this Agreement and to consummate the transactions
contemplated hereby.

(b)         Neither the execution and delivery of this Agreement by Boron, nor
the consummation of the transactions contemplated hereby, nor compliance by
Boron with any of the terms or provisions hereof will (i) violate any provision
of the Articles of Incorporation of Boron or Bylaws or (ii) assuming the
consents and approvals referred to in Section 4.4 of the Merger Agreement are
duly obtained, conflict with, violate any provision of, or require the consent
or approval of any Person under applicable Law or any contract or agreement to
which Boron is a party.

(c)          The execution, delivery and performance of this Agreement by Boron
has been duly authorized by all necessary corporate action on the part of Boron.
This Agreement has been duly executed and delivered by Boron and, assuming the
due authorization, execution and delivery by each of the other parties hereto,
constitutes a valid and binding obligation of Boron, enforceable

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against Boron in accordance with its terms, except as may be limited by the
Enforceability Exceptions.

7.                     Definitions. Capitalized terms used but not otherwise
defined in this Agreement shall have the meanings ascribed to such terms in the
Merger Agreement. As used in and for purposes of this Agreement, the following
terms have the following meanings:

“Agreement” shall have the meaning set forth in the Preamble.

“Affiliate” means, with respect to a specified Person, any Person that directly
or indirectly controls, is controlled by, or is under common control with, such
specified Person; provided, however, that other than for purposes of
Section ‎2(b), no portfolio company of any investment fund, vehicle or account
advised, managed or sponsored by any Silicon Holder or its Affiliates shall be
deemed an Affiliate of Silicon, any of its Subsidiaries or any Silicon Holder
for purposes of this Agreement.

“beneficial owner” and words of similar import have the meaning assigned to such
terms in Rule 13d-3 promulgated under the Exchange Act as in effect on the date
of this Agreement; provided, however, that for purposes of this Agreement, a
Person shall be deemed to be the beneficial owner of (i) any securities which
may be acquired by such Person upon the exercise of any rights (irrespective of
whether the right to acquire such securities is exercisable immediately or only
after the passage of time, including the passage of time in excess of sixty (60)
days, the satisfaction of any condition, the occurrence of any event or any
combination of the foregoing) and (ii) any securities which are the subject of
any Derivatives Contract (without regard to any short or similar position under
the same or any other Derivatives Contract) to which such Person is a Receiving
Party. The term “beneficially own” has a meaning correlative to the foregoing.

“Board Representative” shall have the meaning set forth in Section ‎4(a).

“Boron” shall have the meaning set forth in the Preamble.

“Controlled Affiliate” means any Affiliate of the specified Person that is,
directly or indirectly, controlled by or under common control with the specified
Person.

“Derivatives Contract” means a contract between two parties (the “Receiving
Party” and the “Counterparty”) that is designed to produce economic benefits and
risks to the Receiving Party and/or voting rights that correspond substantially
to the ownership by the Receiving Party of a number of securities specified or
referenced in such contract, regardless of whether obligations under such
contract are required or permitted to be settled through delivery of cash,
securities or other property.

“Group” has the meaning assigned to such term in Section 13(d)(3) of the
Exchange Act.

“Holdings” shall have the meaning set forth in the Preamble.

“Subject Seller’s Knowledge” means, as to a Subject Seller, the actual knowledge
of such Subject Seller; provided that, as to such Subject Seller, in respect of
any Transfer of shares of Boron Common Stock, (i) in no event shall (x) the
knowledge of such Subject Seller’s broker

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(including any Affiliate) be imputed to such Subject Seller or (y) such Subject
Seller have any obligation to make any inquiry or investigation as to the
identity of the purchaser party such Transfer, and (ii) if such Subject Seller
has actual knowledge of the identity of the purchaser party to such Transfer,
such Subject Seller shall only be required to search the SEC’s Edgar system to
establish whether or not such purchaser beneficially owns five percent (5%) or
more of the outstanding shares of Boron Common Stock.

“Lockup Termination Date” shall have the meaning set forth in Section ‎2(a)(ii).

“Merger Consideration Shares” shall have the meaning set forth in the Recitals.

“Permitted Transferee” shall have the meaning set forth in Section ‎2(a)(i).

“Qualified Nominee” shall have the meaning set forth in Section ‎4(a).

“Silicon” shall have the meaning set forth in the Preamble.

“Subject Seller” shall have the meaning set forth in the Recitals.

“Subject Seller Group” shall have the meaning set forth in Section ‎1.

“Transfer” means (i) any direct or indirect sale, assignment, disposition or
other transfer, either voluntary or involuntary, of any capital stock or
interest in any capital stock or (ii) in respect of any capital stock or
interest in any capital stock, to enter into any swap or any other agreement,
transaction or series of transactions that hedges or transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of such
capital stock or interest in capital stock, whether any such transaction, swap
or series of transactions is to be settled by delivery of securities, in cash or
otherwise.

“Transferring Seller” means a Subject Seller that Transferred any of its Merger
Consideration Shares in accordance with Section ‎2(b) or Transferred any of its
Holdings Common Interests or Holdings Management Units in accordance with
Section ‎2(a).

8.                     Miscellaneous

(a)          This Agreement shall become effective immediately upon execution by
each of the parties hereto and shall automatically terminate (without any
further obligation or liability of any party hereto) on any termination of the
Merger Agreement prior to the Effective Time.

(b)         This Agreement and all of the agreements contained herein and the
rights, interests or obligations hereunder shall bind and inure to the benefit
of the respective successors and assigns of the parties hereto.

(c)          The parties have participated jointly in negotiating and drafting
this Agreement. In the event that an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement. When a reference is made in this Agreement to Articles, Sections,
Annexes, Exhibits or

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Schedules, such reference shall be to an Article or Section of or Annexes,
Exhibit or Schedule to this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Any reference herein
to this “Agreement” shall include any Annexes, Exhibits and Schedules hereto.

(d)         The words “hereof,” “herein” and “hereunder” and words of like
import used in this Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement. Any singular term in this
Agreement shall be deemed to include the plural, and any plural term the
singular. Whenever the words “include,” “includes” or “including” are used in
this Agreement, they shall be deemed to be followed by the words “without
limitation,” whether or not they are in fact followed by those words or words of
like import. “Writing,” “written” and comparable terms refer to printing, typing
and other means of reproducing words (including electronic media) in a visible
form. References to any agreement or contract are to that agreement or contract
as amended, modified or supplemented from time to time in accordance with the
terms hereof and thereof. References to any Person include the successors and
permitted assigns of that Person. References from or through any date mean,
unless otherwise specified, from and including or through and including,
respectively. References to “Law,” “Laws” or to a particular statute or Law
shall mean such Law or statute as amended, modified or supplemented from time to
time and shall be deemed also to include any and all rules and regulation
promulgated thereunder.

(e)          This Agreement shall be governed and construed in accordance with
the Laws of the State of Washington, without regard to any applicable conflicts
of Law.

(f)          Each party agrees that it will bring any Proceeding in respect of
any claim arising out of or related to this Agreement or the transactions
contemplated hereby exclusively in the Washington Courts, and, solely in
connection with claims arising under this Agreement or the transactions that are
the subject of this Agreement, (i) irrevocably submits to the exclusive
jurisdiction of the Washington Courts, (ii) waives any objection to laying venue
in any such Proceeding in the Washington Courts, (iii) waives any objection that
the Washington Courts are an inconvenient forum or do not have jurisdiction over
any party and (iv) agrees that service of process upon such party in any such
Proceeding will be effective if notice is given in accordance with the terms of
Section 9.4 of the Merger Agreement to the addresses (A) in the case of the
Subject Sellers, set forth in Annex D hereto, and (B) in the case of Boron, set
forth in Section 9.4 of the Merger Agreement. Each party acknowledges and agrees
that any controversy which may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore each such party hereby
irrevocably and unconditionally waives, to the extent permitted by applicable
Law at the time of institution of the applicable litigation, any right such
party may have to a trial by jury in respect of any litigation directly or
indirectly arising out of or relating to this Agreement or the transactions
contemplated by this Agreement. Each party certifies and acknowledges that: (i)
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; (ii) each party understands
and has considered the implications of this waiver; (iii) each party makes this
waiver voluntarily; and (iv) each party has been induced to enter into this
Agreement by, among other things, the mutual waivers and certifications in this
Paragraph.

(g)         Each party hereto agrees that irreparable damage would occur if any
provision of this

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Agreement were not performed in accordance with its specific terms or were
otherwise breached or threatened to be breached. It is accordingly agreed that
each party hereto shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the performance of the
terms and provisions hereof in the Washington Courts, without bond or other
security being required, this being in addition to any other right, remedy or
cause of action to which such party is entitled at law or in equity.

(h)         This Agreement may be executed in counterparts, all of which shall
be considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.

(i)           This Agreement may only be enforced against the named parties
hereto. All 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 be made only against the entities that are expressly identified as
parties hereto or that are subject to the terms hereof, and no past, present or
future director, officer, employee, incorporator, member, manager, partner,
stockholder, Affiliate, agent, attorney or representative of the Subject Sellers
or any other party hereto (including any person negotiating or executing this
Agreement on behalf of a party hereto) shall have any liability or obligation
with respect to this Agreement or with respect to any claim or cause of action,
whether in tort, contract or otherwise, that may arise out of or relate to this
Agreement, or the negotiation, execution or performance of this Agreement and
the transactions contemplated hereby and by the Merger Agreement.

* * * * * * *

 

-11-

 

Please confirm that the above correctly reflects our understanding and agreement
with respect to the foregoing matters by signing the enclosed copy of this
Agreement and returning such copy to us.

 

 

Very truly yours,

 

 

GS CAPITAL PARTNERS VI FUND, L.P.

 

 

By: GSCP VI Advisors, L.L.C.

Its: General Partner

 

By: /s/ Gil Klemann                                           

      Name: Gil Klemann

      Title:   Vice President

 

GS CAPITAL PARTNERS VI GmBH &
Co. KG

 

By: GSCP  Advisors, L.L.C.

Its: General Partner 

 

By: /s/ Gil Klemann                                           

      Name: Gil Klemann

      Title:   Vice President

GS CAPITAL PARTNERS VI OFFSHORE FUND, L.P. 

 

By: GSCP VI Offshore Advisors, L.L.C.

Its: General Partner

 

By: /s/ Gil Klemann                                            

      Name: Gil Klemann

      Title:   Vice President

 

GS CAPITAL PARTNERS VI PARALLEL, L.P.

 

By: GSCP Advisors VI , L.L.C.

Its: General Partner

 

By: /s/ Gil Klemann                                            

      Name: Gil Klemann

      Title:   Vice President

 

 

 

 

 

 

 

 

 

 

 

 

 

Agreed and accepted:

 

 

  BANNER CORPORATION   By:   /s/ Mark J. Grescovich   Name: Mark J. Grescovich  
Title:   President and CEO

 

 

 

 

Annex A

 

Form of Passivity Commitments

 

 

 

Annex B

 

Registration Rights

 

 

 

TABLE OF CONTENTS

 

Article I

DEFINITIONS Section 1.01.   Definitions 1 Article II

REGISTRATION RIGHTS Section 2.01.   Shelf Registration 4 Section 2.02.   Demand
Registration. 6 Section 2.03.   Piggyback Registration 7 Section
2.04.   Withdrawal of Request for Underwritten Offering or Demand Registration 8
Section 2.05.   Reduction of Size of Underwritten Offering 8 Section
2.06.   Registration Procedures 9 Section 2.07.   Conditions to Offerings 13
Section 2.08.   Suspension Period 15 Section 2.09.   Registration Expenses 16
Section 2.10.   Rules 144 and 144A and Regulation S 16 Section
2.11.   Indemnification; Contribution 16 Section 2.12.   Termination 18 Section
2.13.   Participating Shareholder 18 Section 2.14.   No Waiver 19 Section
2.15.   Limitations on Subsequent Registration Rights 19 Section
2.16.   Recapitalizations, Exchanges Affecting the Registrable Securities 19

 

 

Article I

DEFINITIONS

Section 1.01.                        Definitions. Capitalized terms used but not
defined herein shall have the meanings set forth in the Merger Agreement. As
used in and for purposes of this Agreement, the following terms have the
following meanings:“415 Shelf Registration Statement” means a Form S-3 providing
for an offering to be made on a continuous basis pursuant to Rule 415 under the
Securities Act.

“Affiliate” means, with respect to a specified Person, any Person that directly
or indirectly controls, is controlled by, or is under common control with, such
specified Person; provided, however, that no portfolio company of any investment
fund, vehicle or account advised, managed or sponsored by any Silicon Holder or
its Affiliates shall be deemed an Affiliate of Silicon, any of its Subsidiaries
or any Silicon Holder for purposes of this Agreement.

“Agreement” has the meaning set forth in the Preamble.

“Automatic Shelf Registration Statement” means an “automatic shelf registration
statement” as defined in Rule 405 promulgated under the Securities Act.

“beneficial owner” and words of similar import have the meaning assigned to such
terms in Rule 13d-3 promulgated under the Exchange Act as in effect on the date
of this Agreement; provided, however, that for purposes of this Agreement, a
Person shall be deemed to be the beneficial owner of (i) any securities which
may be acquired by such Person upon the exercise of any rights (irrespective of
whether the right to acquire such securities is exercisable immediately or only
after the passage of time, including the passage of time in excess of sixty (60)
days, the satisfaction of any condition, the occurrence of any event or any
combination of the foregoing) and (ii) any securities which are the subject of
any Derivatives Contract (without regard to any short or similar position under
the same or any other Derivatives Contract) to which such Person is a Receiving
Party. The term “beneficially own” has a meaning correlative to the foregoing.

“Controlled Affiliate” means any Affiliate of the specified Person that is,
directly or indirectly, controlled by or under common control with the specified
Person.

“Demand Notice” has the meaning set forth in ‎Section 2.02(a).

“Demand Registration” has the meaning set forth in ‎Section 2.02(a).

“Demand Shareholders” has the meaning set forth in ‎Section 2.02(a).

“Derivatives Contract” means a contract between two parties (the “Receiving
Party” and the “Counterparty”) that is designed to produce economic benefits and
risks to the Receiving Party and/or voting rights that correspond substantially
to the ownership by the Receiving Party of a number of securities specified or
referenced in such contract, regardless of whether obligations under such
contract are required or permitted to be settled through delivery of cash,
securities or other property.

B-1

 

“Equity Interests” means the shares of Boron Common Stock or other equity
interests, as the case may be, of Boron, and any securities into which such
shares of Boron Common Stock or other equity interests shall have been changed
or any securities resulting from any reclassification or recapitalization of
such shares of Boron Common Stock or other equity interests.

“FINRA” means the Financial Industry Regulatory Authority.

“Indemnified Party” has the meaning set forth in ‎Section 2.11(c).

“Indemnified Persons” has the meaning set forth in ‎‎Section 2.11(a).

“Indemnifying Party” has the meaning set forth in ‎Section 2.11(c).

“Inspectors” has the meaning set forth in ‎Section 2.06(a)(ix).

“Lockup Termination Date” means the date that is thirty (30) days after the
Closing Date.

“Marketed Underwritten Offering” means an Underwritten Offering that involves
(i) one-on-one meetings or calls between investors and management of Boron,
other than any Underwritten Offering in the form of a “block trade” which
requires not more than three (3) one-on-one calls between investors and
management of Boron, (ii) a customary roadshow or other marketing activity that
requires members of the management of Boron to be out of the office for two (2)
business days or more or group meetings or calls between investors and
management of Boron or (iii) any other substantial marketing effort by the
underwriters over a period of at least forty-eight (48) hours.

“Opting-Out Shareholder” has the meaning set forth in ‎Section 2.13.

“Permitted Transferee” means, with respect to any Person, a Controlled Affiliate
of such Person that agrees to be bound by the provisions of this Annex as if it
were the Shareholder hereunder.

“Piggyback Registration” has the meaning set forth in ‎Section 2.03.

“Prospectus” means the prospectus (including any preliminary prospectus and any
final prospectus) included in any Registration Statement, as amended or
supplemented by any free writing prospectus, whether or not required to be filed
with the SEC, prospectus supplement with respect to the terms of the offering of
any portion of the Registrable Securities covered by the Registration Statement
and by all other amendments and supplements to the prospectus, and all material
incorporated by reference in such prospectus.

“Records” has the meaning set forth in ‎Section 2.06(a)(ix).

“Registrable Securities” means (i) all Shares that are beneficially owned by a
Shareholder at any time in accordance with the terms and conditions of the
Merger Agreement and (ii) all Equity Interests issued or issuable directly or
indirectly with respect to the securities

B-2

 

referred to in the foregoing clause (i) by way of share dividend or share split
or in connection with a consolidation or other reorganization; provided,
however, that any such Share or Equity Interest shall cease to be a Registrable
Security if and when (x) it has been effectively registered under the Securities
Act and disposed of in accordance with an effective Registration Statement
covering it or (y) in the case of Shares or Equity Interests held by a
Shareholder who is not an affiliate (as such term is defined in Rule 12b-2 under
the Exchange Act) of Boron, it may immediately be sold under Rule 144 without
any volume or manner of sale restrictions.

“Registration Statement” means any registration statement of Boron that covers
Registrable Securities pursuant to the provisions of this Agreement, including
the Prospectus, amendments and supplements to such registration statement,
including pre- and post-effective amendments, and all exhibits and all material
incorporated by reference in such registration statement.

“Rule 144” means Rule 144 promulgated under the Securities Act or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
effect as such rule.

“SEC” means the U.S. Securities and Exchange Commission.

“Section 2.13 Opt-Out” has the meaning set forth in ‎Section 2.13.

“Shares” means, with respect to each Shareholder, the shares of Boron Common
Stock received as a result of (a) the Distribution in accordance with the terms
and conditions of the Merger Agreement, (b) the conversion of Boron Non-Voting
Common Stock received as a result of the Distribution into Common Stock in
accordance with the terms of such Boron Non-Voting Common Stock, or (c) any
Transfer to a Permitted Transferee.

“Shareholder” means (a) any Silicon Holder who has received Shares or any shares
of Boron Non-Voting Common Stock that have not yet been converted into Boron
Common Stock and (i) as of the date of the Merger Agreement, has executed an
Investor Letter Agreement or (ii) prior to the Closing, has agreed to be bound
the terms set forth herein as set forth in Section 6.15 of the Merger Agreement,
in each case for so long as such Silicon Holder beneficially owns any Shares or
any shares of Boron Non-Voting Common Stock that have not yet been converted
into Boron Common Stock and (b) any Permitted Transferee to whom such Silicon
Holder has Transferred any Shares, for so long as (i) such Permitted Transferee
beneficially owns any such Shares and (ii) such Permitted Transferee continues
to be a Controlled Affiliate of the Transferring Silicon Holder.

“Shelf Registration Statement” means an Automatic Shelf Registration Statement
or a 415 Shelf Registration Statement.

“Suspension Period” has the meaning set forth in ‎Section 2.08(a).

“Transfer” means (i) any direct or indirect sale, assignment, disposition or
other transfer, either voluntary or involuntary, of any capital stock or
interest in any capital stock or (ii) in respect of any capital stock or
interest in any capital stock, to enter into any swap or any other agreement,
transaction or series of transactions that hedges or transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of such
capital stock or interest in

B-3

 

capital stock, whether any such transaction, swap or series of transactions is
to be settled by delivery of securities, in cash or otherwise.

“Underwriter” means, with respect to any Underwritten Offering, a securities
dealer who purchases any Registrable Securities as a principal in connection
with a distribution of such Registrable Securities.

“Underwriter’s Lockup” has the meaning set forth in ‎Section 2.07(c).

“Underwritten Offering” means a public offering of securities registered under
the Securities Act in which an Underwriter participates in the distribution of
such securities.

“Underwritten Offering Limitations” has the meaning set forth in
‎Section 2.01(d).

Article II

REGISTRATION RIGHTS

Section 2.01.                        Shelf Registration.

(a)                Filing. Subject to ‎Section 2.08,

(i)                 if on the Lockup Termination Date, Boron is a well-known
seasoned issuer (as defined in Rule 405 of the Securities Act), Boron will file,
as promptly as practicable on or after the Lockup Termination Date (but in any
event within fifteen (15) Business Days thereafter), an Automatic Shelf
Registration Statement useable for the resale of Registrable Securities under
the Securities Act from and after the Lockup Termination Date in accordance with
the methods of distribution elected by the Shareholders. Such Automatic Shelf
Registration Statement shall contain any intended methods of distribution of the
Shares specified in writing by any Shareholder and contemplated hereby.

(ii)               if on the Lockup Termination Date, Boron is not a well-known
seasoned issuer but is eligible to file a 415 Shelf Registration Statement,
Boron will file, as promptly as practicable on or after the Lockup Termination
Date (but in any event within fifteen (15) Business Days thereafter), a 415
Shelf Registration Statement useable for the resale of Registrable Securities
under the Securities Act from and after the Lockup Termination Date, in
accordance with the methods of distribution elected by such Shareholders and
shall use its reasonable best efforts to cause such 415 Shelf Registration
Statement to become effective under the Securities Act not later than the Lockup
Termination Date. Such 415 Shelf Registration Statement shall contain any
intended methods of distribution of the Shares specified in writing by any
Shareholder and contemplated hereby.

(b)               Continued Effectiveness. Until the earlier of (i) such time as
all Registrable Securities cease to be Registrable Securities or (ii) Boron is
no longer eligible to maintain a Shelf Registration Statement, Boron will keep
current and effective any Shelf Registration Statement filed pursuant to
‎Section 2.01(a), and file such supplements or

B-4

 

amendments to such Shelf Registration Statement as may be necessary or
appropriate in order to keep such Shelf Registration Statement continuously
effective and useable for the resale of Registrable Securities under the
Securities Act. In the event that Boron is no longer eligible to maintain a
Shelf Registration Statement, Boron shall provide written notice to the
Shareholders of such ineligibility within two (2) Business Days of the date on
which Boron becomes aware of such ineligibility. Boron shall use reasonable best
efforts to cause the Registrable Securities to, on or prior to the Lockup
Termination Date, be qualified for trading on any securities exchange on which
the Boron Common Stock is listed or quoted.

(c)                Use of Shelf Registration Statement. Following the Lockup
Termination Date, each Shareholder shall have the right to use any Shelf
Registration Statement then effective to Transfer all or a portion of its
Registrable Securities (i) in an unrestricted number of brokered transactions
and (ii) Underwritten Offerings in accordance with ‎Section 2.01(d).

(d)               Underwritten Offerings pursuant to Shelf Registration
Statement. Upon the receipt by Boron of a written request from (i) any Major
Silicon Member that desires to sell Registrable Securities in an Underwritten
Offering that is not a Marketed Underwritten Offering or (ii) a majority of the
Registrable Securities then held by the Major Silicon Members with respect to a
Marketed Underwritten Offering, in each case pursuant to a Shelf Registration
Statement, Boron will give written notice of such request to all other
Shareholders, which notice shall be given in any event within three (3) Business
Days of the date on which Boron received the initial request. Any other
Shareholders that desire to sell Registrable Securities in such Underwritten
Offering shall give written notice to Boron within ten (10) Business Days after
the date Boron gave such other Shareholders notice of the such initial request
specifying the number of Registrable Securities proposed by such Shareholder to
be included in such Underwritten Offering. A Shareholder may change the number
of Registrable Securities proposed to be offered in any such Underwritten
Offering at any time prior to commencement of such offering so long as such
change would not materially adversely affect the timing or success of such
Underwritten Offering; provided, however, that Boron shall be entitled to
reasonably delay an Underwritten Offering to the extent resulting from such
change. Boron will cooperate with such Shareholders and any Underwriter in
effecting an Underwritten Offering pursuant to the Shelf Registration Statement
as promptly as reasonably practicable with respect to all such Registrable
Securities, subject to the limitations and conditions with respect to
Underwritten Offerings (the “Underwritten Offering Limitations”):

(i)                 Boron shall not be required to effect more than eight (8)
Underwritten Offerings in the aggregate, of which no more than three (3) may be
Marketed Underwritten Offerings.

(ii)               Boron shall not be required to effect (A) any Marketed
Underwritten Offering within one hundred and eighty (180) days after another
Marketed Underwritten Offering, and (B) any Underwritten Offering within ninety
(90) days after another Underwritten Offering.

(iii)             Boron shall not be required to effect any Underwritten
Offering unless the aggregate gross proceeds expected to be received from the
sale of Registrable Securities in such offering is at least $50 million.

B-5

 

(iv)             With respect to a Marketed Underwritten Offering only, the
relevant Major Silicon Members, on the one hand, and, Boron, on the other hand,
shall each be entitled to select one nationally recognized investment banking
firm to serve as a lead Underwriter, with each of the two such lead Underwriters
to be treated substantially the same in all respects (including underwriting
discounts, fees and commissions) in respect of such Marketed Underwritten
Offering, and the relevant Major Silicon Members shall have the right to select
any additional Underwriters in connection with the Marketed Underwritten
Offering; provided that any such additional Underwriter must be reasonably
acceptable to Boron.

(v)               With respect to an Underwritten Offering that is not a
Marketed Underwritten Offering, the relevant Major Silicon Members shall be
entitled to select the nationally recognized investment banking firm to serve as
a lead Underwriter and, if applicable, any additional Underwriters.

(e)                Effect on Demand Registration Obligations. The provisions of
‎Section 2.02 shall not apply at any time Boron is eligible to file and maintain
the effectiveness of a Shelf Registration Statement and so maintains the
effectiveness of such Shelf Registration Statement.

Section 2.02.                        Demand Registration.

(a)                Demand by Shareholders. If at any time after the Lockup
Termination Date and prior to Boron effecting eight (8) Underwritten Offerings
pursuant to ‎Section 2.01(d), Boron is no longer eligible to use a Shelf
Registration Statement, within ninety (90) days after the written request of
Shareholders holding a majority of the Registrable Securities then held by the
Shareholders to register the resale of a specified amount of the Registrable
Securities under the Securities Act pursuant to an Underwritten Offering (a
“Demand Notice”), Boron will (i) give written notice of such request to all
other Shareholders (which notice shall be given in any event within three (3)
Business Days of the date on which Boron received the applicable Demand Notice)
and will use its reasonable best efforts to register, in accordance with the
provisions of this Agreement, all Registrable Securities that have been
requested to be registered in the Demand Notice or by any other Shareholders by
written notice to Boron given within ten (10) Business Days after the date Boron
gave such other Shareholders notice of the Demand Notice (collectively, the
“Demand Shareholders”) and (ii) will file a Registration Statement, on an
appropriate form which Boron is then eligible to use, to register the resale of
such Registrable Securities in an Underwritten Offering (each such registration,
a “Demand Registration”). Each Demand Notice will specify the number of
Registrable Securities proposed to be offered for sale. The Demand Shareholders
may change the number of Registrable Securities proposed to be offered pursuant
to any Demand Registration at any time prior to commencement of the offering so
long as such change would not materially adversely affect the timing or success
of the offering. Subject to ‎Section 2.05 and with the written consent of
Shareholders holding a majority of the Registrable Securities included in the
Demand Registration (such consent not to be unreasonably withheld), Boron may
include in any registration effected pursuant this ‎Section 2.02 any securities
for its own account or for the account of holders of Boron Common Stock (other
than the Shareholders).

B-6

 

(b)               Effective Registration. Boron will use its reasonable best
efforts to (i) cause any Registration Statement filed in connection with a
Demand Registration to be declared effective (unless it becomes effective
automatically upon filing) as promptly as practicable after the filing thereof
with the SEC and (ii) keep such Registration Statement current and effective for
a period of not less than ninety (90) days or such longer period as, based upon
the opinion of counsel for the underwriters, a prospectus is required by law to
be delivered in connection with the sale of Registrable Securities by an
underwriter or dealer. Boron further agrees to supplement or make amendments to
each such Registration Statement as may be necessary to keep such Registration
Statement effective for the period referred to in clause (ii) above, including
(A) to respond to the comments of the SEC, if any, (B) as may be required by the
registration form utilized by Boron for such Registration Statement or by the
instructions to such registration form, (C) as may be required by the Securities
Act or (D) as may be reasonably requested in writing by the Demand Shareholders
or any Underwriter and reasonably acceptable to Boron.

(c)                Limitations. Boron’s obligations in this Section 2.02 shall
be subject to the Underwritten Offering Limitations.

Section 2.03.                        Piggyback Registration. If at any time
after the Lockup Termination Date and in addition to the Shareholders’ rights in
‎Section 2.01 and ‎Section 2.02, Boron proposes to file a registration statement
under the Securities Act or consummate an Underwritten Offering with respect to
an offering of Equity Interests for (a) Boron’s own account (other than a
Registration Statement on Form S-4 or S-8 (or any substitute form that may be
adopted by the SEC)) or (b) the account of any holder of Boron Common Stock
(other than a Shareholder), then Boron shall give written notice of such
proposed filing or Underwritten Offering to the Shareholders as soon as
practicable (but in no event less than ten (10) Business Days before the
anticipated filing date). Upon a written request given by any Shareholders to
Boron within five (5) Business Days after delivery of any such notice by Boron,
to include Registrable Securities in such registration or Underwritten Offering,
as applicable (which request shall specify the number of Registrable Securities
proposed to be included in such registration or Underwritten Offering, as
applicable), Boron shall, subject to the following proviso, include all such
requested Registrable Securities in such registration or Underwritten Offering,
as applicable, on the same terms and conditions as applicable to Boron’s or such
holder’s shares of Boron Common Stock (a “Piggyback Registration”); provided,
however, that if at any time after giving written notice of such proposed filing
or Underwritten Offering, as applicable, and prior to the effective date of the
Registration Statement filed in connection with such registration, or the
consummation of such Underwritten Offering, as applicable, Boron shall determine
for any reason not to proceed with the proposed registration or disposition, as
applicable, of the Equity Interests, then Boron may, at its election, give
written notice of such determination to such Shareholders and, thereupon, will
be relieved of its obligation to register any Registrable Securities in
connection with such registration, or dispose of any Registrable Securities in
connection with such Underwritten Offering, as applicable. Such Shareholders
shall, subject to ‎Section 2.06(b), enter into a customary underwriting
agreement with the Underwriter or Underwriters selected by Boron with respect to
any Registrable Securities sold by such Shareholders pursuant to this
‎Section 2.03. No registration of Registrable Securities effected pursuant to a
request under this ‎Section 2.03 shall relieve Boron of its obligations under
‎Section 2.01 or ‎Section 2.02.

                       

B-7

 

    Section 2.04.          Withdrawal of Request for Underwritten Offering or
Demand Registration. A requesting Major Silicon Member or, as applicable,
requesting Shareholders holding a majority of the Registrable Securities then
held by the Shareholders will be permitted to rescind a request for an
Underwritten Offering pursuant to a Shelf Registration Statement or a request
for a Demand Registration without having to reimburse Boron for any expenses;
provided that should a requesting Major Silicon Member or, as applicable,
requesting Shareholders holding a majority of the Registrable Securities that
previously made such request rescind such request in writing (for the avoidance
of doubt, a delay in the timing of an Underwritten Offering or a reduction in
the number of Registrable Securities proposed to be offered shall not be deemed
a rescission), each such rescinding Major Silicon Member or Shareholder shall
promptly reimburse Boron for the reasonable out of pocket expenses incurred by
Boron in connection with such request on a pro rata basis in accordance with the
number of Registrable Securities that each such Major Silicon Member or
Shareholder originally intended to be offered, and following such reimbursement
and such request will not count as a request for an Underwritten Offering or
Demand Registration for purposes of determining when future Underwritten
Offerings or Demand Registrations may be requested by Major Silicon Members or
Shareholders pursuant to ‎Section 2.01 or ‎Section 2.02.

Section 2.05.                        Reduction of Size of Underwritten Offering.
Notwithstanding anything to the contrary contained herein, if the lead
Underwriter(s) of an Underwritten Offering advises Boron in writing that, in its
reasonable opinion the number of shares of Boron Common Stock (including any
Registrable Securities) that Boron, Shareholders and any other Persons intend to
include in any Registration Statement or dispose of pursuant to any Underwritten
Offering exceeds the number that can be sold without materially and adversely
affecting the price at which the securities can be sold, then the number of
shares of Boron Common Stock to be included in the Registration Statement, or
disposed of pursuant to such Underwritten Offering, as applicable, for the
account of Boron, Shareholders and any other Persons will be reduced to the
extent necessary to reduce the total number of securities to be included in any
such Registration Statement or disposed of pursuant to such Underwritten
Offering, as applicable, to the number recommended by such lead Underwriter(s);
provided, however, that such reduction shall be made in accordance with the
following priorities:

(a)                priority in the case of an Underwritten Offering pursuant to
‎Section 2.01 or a Demand Registration pursuant to ‎Section 2.02 will be (i)
first, all Registrable Securities requested to be included in the Registration
Statement, or disposed of pursuant to the Underwritten Offering or the Demand
Registration, as applicable, for the account of the participating Major Silicon
Members pursuant to ‎Section 2.01 or ‎Section 2.02, pro rata on the basis of the
aggregate number of Registrable Securities sought to be registered or disposed
of by such Major Silicon Members, (ii) second, all Registrable Securities
requested to be included in the Registration Statement, or disposed of pursuant
to the Underwritten Offering or the Demand Registration, as applicable, for the
account of the other participating Shareholders pursuant to ‎Section 2.01 or
‎Section 2.02, pro rata on the basis of the aggregate number of Registrable
Securities sought to be registered or disposed of by such Shareholders,
(iii) third, any Boron Common Stock proposed to be offered by Boron for its own
account and (iv) fourth, pro rata among any other holders of shares of Boron
Common Stock requested to be registered, or disposed of, as applicable, so that
the total number of shares of Common Stock to be included in

B-8

 

 

any such offering for the account of all such Persons will not exceed the number
recommended by such lead Underwriter;

(b)               priority in the case of a registration statement or
Underwritten Offering initiated by Boron for its own account which gives rise to
a Piggyback Registration pursuant to ‎Section 2.03 will be (i) first, Boron
Common Stock proposed to be offered by Boron for its own account, (ii) second,
the Registrable Securities requested to be included in the Registration
Statement, or disposed of pursuant to the Underwritten Offering, as applicable,
for the account of the Shareholders pursuant to their registration rights under
‎Section 2.03, pro rata on the basis of the aggregate number of Registrable
Securities sought to be registered or disposed of by such Shareholders, and
(iii) third, pro rata among any other holders of shares of Boron Common Stock
requested to be registered, or disposed of, as applicable, so that the total
number of shares of Boron Common Stock to be included in any such offering for
the account of all such Persons will not exceed the number recommended by such
lead Underwriter; and

(c)                priority in the case of a registration statement or
Underwritten Offering initiated by Boron for the account of holders of Boron
Common Stock other than the Shareholders pursuant to registration rights
afforded to such holders pursuant to a contractual right with Boron which gives
rise to a Piggyback Registration pursuant to ‎Section 2.03 will be (i) first,
pro rata among the holders of shares of Boron Common Stock requesting the
offering pursuant to such contractual right, (ii) second, Registrable Securities
requested to be included in the Registration Statement, or disposed of, pursuant
to the Underwritten Offering, as applicable, for the account of the Shareholders
pursuant to their registration rights under ‎Section 2.03, pro rata on the basis
of the aggregate number of Registrable Securities sought to be registered or
disposed of by such Shareholders, (iii) third, Boron Common Stock or other
Equity Interests offered by Boron for its own account and (iv) fourth, pro rata
among any other holders of shares of Boron Common Stock requested to be
registered, or disposed of, as applicable, so that the total number of Boron
Common Stock to be included in any such offering for the account of all such
Persons will not exceed the number recommended by such lead Underwriter.

Section 2.06.                        Registration Procedures. (a) In connection
with the registration of the sale of Registrable Securities pursuant hereto,
Boron will as promptly as reasonably practicable:

(i)                 but no less than five (5) Business Days prior to the initial
filing of a Registration Statement, furnish to the relevant Shareholders, prior
to the filing of a Registration Statement, copies of such Registration Statement
as it is proposed to be filed, and thereafter such copies of such Registration
Statement, each amendment and supplement thereto (in each case including all
exhibits thereto, including each preliminary Prospectus), copies of any and all
transmittal letters or other correspondence with the SEC relating to such
Registration Statement, any agreement with Underwriters related to such offering
and such other documents in such quantities as such Shareholders may reasonably
request from time to time in order to facilitate the disposition of such
Registrable Securities (including in connection with any Underwritten Offering),
and give such Shareholders and their Representatives a reasonable opportunity to
review and comment on the same prior to filing any such documents, it being
understood that Boron shall not file any such Registration Statement containing
any statements with respect to

B-9

 

the Shareholders or the “Plan of Distribution” to which the Shareholders shall
reasonably object in writing;

(ii)               cause Boron’s Representatives to supply all information
reasonably requested by the relevant Shareholders, any Underwriter or their
respective Representatives in connection with the Registration Statement or
Underwritten Offering that is customarily provided by issuers and their
Representatives in connection with a registration statement or Underwritten
Offering;

(iii)             use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or “blue sky” laws of such
jurisdictions as the relevant Shareholders reasonably request; provided,
however, that Boron shall in no event be required to (w) qualify generally to do
business in any jurisdiction where it is not then so qualified, (x) subject
itself to taxation in any jurisdiction where it is not otherwise then so
subject, (y) take any action that would subject it to service of process in
suits other than those arising out of the offer and sale of the securities
covered by the Registration Statement or (z) consent to general service of
process in any jurisdiction where it is not then so subject;

(iv)             notify the relevant Shareholders at any time when a Prospectus
relating to Registrable Securities is required to be delivered under the
Securities Act, of the happening of any event as a result of which Boron becomes
aware that the Prospectus included in a Registration Statement or the
Registration Statement or amendment or supplement relating to such Registrable
Securities contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and Boron will promptly prepare and file with the SEC a supplement
or amendment to such Prospectus and Registration Statement so that, as
thereafter delivered to the purchasers of the Registrable Securities, such
Prospectus and Registration Statement will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;

(v)               advise the Underwriter(s), if any, and the relevant
Shareholders promptly and, if requested by such Persons, confirm such advice in
writing, of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement under the Securities Act or of the
suspension by any state securities commission of the qualification of the
Registrable Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes. If at any time
the SEC shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from
qualification of the Registrable Securities under state securities or “blue sky”
laws, Boron shall use its reasonable best efforts to obtain the withdrawal or
lifting of such order as promptly as practicable and shall promptly notify the
Shareholders in writing of any such withdrawal or lifting of such order;

B-10

 

(vi)             use its reasonable best efforts to cause such Registrable
Securities to be registered with or approved by such other Governmental Entities
as may be necessary by virtue of the business and operations of Boron to enable
the relevant Shareholders to consummate the disposition of such Registrable
Securities; provided, however, that Boron shall in no event be required to (w)
qualify generally to do business in any jurisdiction where it is not then so
qualified, (x) subject itself to taxation in any jurisdiction where it is not
otherwise then so subject, (y) take any action that would subject it to service
of process in suits other than those arising out of the offer and sale of the
securities covered by the Registration Statement or (z) consent to general
service of process in any jurisdiction where it is not then so subject;

(vii)           enter into customary agreements (including underwriting
agreements) and use reasonable best efforts to take such other actions as are
reasonably requested by the relevant Shareholders in order to expedite or
facilitate the disposition of such Registrable Securities, including, subject to
the provisions of ‎Section 2.01(d) with respect to Underwritten Offerings,
preparing for and participating in a road show and other customary selling
efforts as the Underwriters, if any, or such Shareholders reasonably request in
order to expedite or facilitate such disposition;

(viii)         if requested by the relevant Shareholders or the Underwriter(s),
if any, promptly include in any Registration Statement or Prospectus, pursuant
to a supplement or post-effective amendment if necessary, such information as
such Shareholders and such Underwriter(s), if any, may reasonably request to
have included therein, including information relating to the “Plan of
Distribution” of the Registrable Securities, information with respect to the
number of Registrable Securities being sold to such Underwriter(s), the purchase
price being paid therefor and any other terms of the offering of the Registrable
Securities to be sold in such offering, and make all required filings of such
Prospectus supplement or post-effective amendment as promptly as practicable
after Boron is notified of the matters to be included in such Prospectus
supplement or post-effective amendment;

(ix)             except to the extent prohibited by applicable Law and subject
to entry into a customary confidentiality agreement or arrangement, make
available, after reasonable advance notice, for inspection by the relevant
Shareholders, any Underwriter participating in any disposition of such
Registrable Securities and any Representative for such Shareholders and/or such
Underwriter (collectively, the “Inspectors”), during business hours at the
offices where such information is normally kept, any financial and other records
and corporate documents of Boron (collectively, the “Records”) as will be
reasonably necessary to enable them to conduct reasonable and customary due
diligence with respect to Boron and the related Registration Statement and
Prospectus and request the Representatives of Boron and its Subsidiaries to
supply all information reasonably requested by any such Inspector; provided,
however, that Records and information obtained hereunder will be used by such
Inspectors only for purposes of conducting such due diligence;

(x)               use its reasonable best efforts to obtain and deliver to each
Underwriter and each such Shareholder a comfort letter from the independent
registered

B-11

 

public accounting firm for Boron (and additional comfort letters from the
independent registered public accounting firm for any company acquired by Boron
whose financial statements are included or incorporated by reference in the
Registration Statement) in customary form and covering such matters as are
customarily covered by comfort letters as such Underwriter and such Shareholders
may reasonably request; provided, however, that if Boron fails to obtain such
comfort letter and the relevant offering is abandoned, then such Underwritten
Offering or Demand Registration will not count as an Underwritten Offering or
Demand Registration, as applicable, for purposes of determining when future
Underwritten Offerings or Demand Registrations may be requested by Shareholders
pursuant to ‎Section 2.01 or ‎Section 2.02;

(xi)             use its reasonable best efforts to obtain and deliver to each
Underwriter and each such Shareholder a 10b-5 statement and legal opinion from
Boron’s external counsel in customary form and covering such matters as are
customarily covered by 10b-5 statements and legal opinions delivered to
Underwriters in Underwritten Offerings as such Underwriter and/or such
Shareholders may reasonably request; provided, however, that if Boron fails to
obtain such statement or opinion and the relevant offering is abandoned, then
such Underwritten Offering or Demand Registration will not count as an
Underwritten Offering or Demand Registration, as applicable, for purposes of
determining when future Underwritten Offerings or Demand Registrations may be
requested by Shareholders pursuant to ‎Section 2.01 or ‎Section 2.02;

(xii)           otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC and make generally available to its
security holders, within the required time period, an earnings statement
covering a period of twelve (12) months, beginning with the first fiscal quarter
after the effective date of the Registration Statement relating to such
Registrable Securities (as the term “effective date” is defined in Rule 158(c)
under the Securities Act), which earnings statement will satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder or any successor
provisions thereto;

(xiii)         provide and cause to be maintained a transfer agent and registrar
for all Registrable Securities covered by such Registration Statement not later
than the effective date of such Registration Statement;

(xiv)         cooperate with such Shareholders and the lead Underwriter or
Underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing the Registrable Securities to be sold under the
Registration Statement in a form eligible for deposit with The Depository Trust
Company not bearing any restrictive legends and not subject to any stop transfer
order with any transfer agent, and cause such Registrable Securities to be
issued in such denominations and registered in such names as the lead
Underwriter or Underwriters, if any, may request in writing or, if not an
Underwritten Offering, in accordance with the instructions of such Shareholders,
in each case in connection with the closing of any sale of Registrable
Securities;

(xv)           not later than the effective date of the applicable Registration
Statement, provide a CUSIP number for all Registrable Securities;

B-12

 

(xvi)         furnish to each such Shareholder and each Underwriter, if any,
without charge, as many conformed copies as such Shareholder or Underwriter may
reasonably request of the applicable Registration Statement and any amendment or
post-effective amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits (including
those incorporated by reference);

(xvii)       make representations and warranties to such Shareholders and the
Underwriters or agents, if any, in form, substance and scope as are customarily
made by issuers in secondary offerings;

(xviii)     use reasonable best efforts to cooperate with each such Shareholder
and each Underwriter, if any, participating in the disposition of such
Registrable Securities and their respective counsel in connection with any
filings required to be made with FINRA;

(xix)         use its reasonable best efforts to cause such Registrable
Securities to be listed or quoted on NASDAQ or, if Boron Common Stock is not
then listed on NASDAQ, then on such other securities exchange or national
quotation system on which the Boron Common Stock is then listed or quoted; and

(xx)           take all such other commercially reasonable actions as are
necessary or advisable in order to expedite or facilitate the disposition of
such Registrable Securities in accordance with the terms hereof.

(b)               In connection with the Registration Statement relating to such
Registrable Securities covering an Underwritten Offering, Boron and the relevant
Shareholders agree to enter into a written agreement with the Underwriters
selected in the manner herein provided in such form and containing such
provisions as are customary in the securities business for such an arrangement.
In the event an Underwritten Offering is not consummated because any condition
to the obligations under any related written agreement with such Underwriters is
not met or waived, and such failure to be met or waived is not attributable to
the fault of the Shareholders, such Underwritten Offering will not count for
purposes of determining when future Underwritten Offerings may be requested by
Shareholders pursuant to ‎Section 2.01 or ‎Section 2.02.

Section 2.07.                        Conditions to Offerings. (a) The
obligations of Boron to take the actions contemplated by ‎Section 2.01,
‎Section 2.02, ‎Section 2.03 and ‎Section 2.06 with respect to an offering of
Registrable Securities will be subject to the following conditions:

(i)                 Boron may require the relevant Shareholders to furnish to
Boron such information regarding such Shareholders, the Registrable Securities
or the distribution of such Registrable Securities as Boron may from time to
time reasonably request in writing, in each case to the extent required by the
Securities Act and the rules and regulations promulgated thereunder, or under
state securities or “blue sky” laws; and

(ii)               in any Underwritten Offering, the relevant Shareholders
together with Boron and any other holders of Boron’s securities proposing to
include securities in any Underwritten Offering, will enter into a customary
underwriting agreement in

B-13

 

accordance with ‎Section 2.06(b) with the Underwriter or Underwriters selected
for such underwriting, as well as such other documents customary in similar
offerings.

(b)               The Shareholders agrees that, upon receipt of any notice from
Boron of the happening of any event of the kind described in
‎Section 2.06(a)(iv) or ‎2.06(a)(v) or a condition described in
‎Section 2.08(a), the Shareholders will forthwith discontinue disposition of
such Registrable Securities pursuant to the Registration Statement covering the
sale of such Registrable Securities until the Shareholder’s receipt of the
copies of the supplemented or amended Prospectus contemplated by
‎Section 2.06(a)(iv) or notice from Boron of the termination of the stop order
or Suspension Period. In the event Boron gives any such notice, the applicable
time period mentioned in Section 2.02(b) during which a Registration Statement
is to remain effective will be extended by the number of days during the period
from and including the date of the giving of such notice pursuant to this
Section 2.07(b) to and including the date when the Shareholders will have
received the copies of the supplemented or amended prospectus contemplated by
Section 2.06(a)(iv) or notice from Boron of the termination of the stop order or
Suspension Period.

(c)                Each Shareholder agrees that to the extent timely notified in
writing by the Underwriters managing any Underwritten Offering by Boron of
shares of Boron Common Stock or any securities convertible into or exchangeable
or exercisable for shares of Boron Common Stock, each such Shareholder that is
participating in such Underwritten Offering shall agree (the “Underwriter’s
Lockup”) not to Transfer any Shares without the prior written consent of Boron
or such Underwriters during the period beginning seven (7) days before and
ending one hundred twenty (120) days (or, in either case, such lesser period as
may be permitted for all Shareholders by Boron or such managing Underwriter or
Underwriters) after the pricing date of such Underwritten Offering, subject to
any exceptions permitted by such managing Underwriter or Underwriters; provided
that any Underwriter’s Lockup shall contain customary exceptions providing that
such Shareholder and its Affiliates, other than such Shareholder, may engage in
brokerage, investment advisory, financial advisory, anti-raid advisory, merger
advisory, financing, asset management, trading, market making, arbitrage,
principal investing and other similar activities conducted in the ordinary
course of their Affiliates’ business, other than with respect to the Shares
owned by such Shareholder. The Underwriter’s Lockup shall provide that if all or
a portion of the Shares of any Shareholder is released from an Underwriter’s
Lockup or all or a portion of the Shares of any other party who entered into a
substantially similar agreement with the Underwriters in connection with such
Underwritten Offering is released from such agreement, then the same percentage
of the shares of each Shareholder shall be released from the Underwriter’s
Lockup.

Section 2.08.                        Suspension Period.

(a)                Notwithstanding anything to the contrary contained in this
Agreement, if the filing, initial effectiveness or continued use of (i) any
Shelf Registration Statement for resales of Registrable Securities pursuant to
‎Section 2.01 or ‎Section 2.03 or (ii) any Registration Statement for resales of
Registrable Securities pursuant to ‎Section 2.02 or ‎Section 2.03 at any time
would, (A) in the good faith judgment of the Board of Directors of Boron, (i)
require the disclosure of material non-public information by Boron, the
premature disclosure of which at such time would be materially detrimental to
Boron, or (ii) require the disclosure in any such

B-14

 

Shelf Registration Statement or Registration Statement of a contemplated bona
fide material financing, acquisition, corporate reorganization or other similar
material transaction or other material event or circumstance affecting Boron,
the premature disclosure of which at such time would be materially detrimental
to Boron or the holders of Boron Common Stock; or (B) require the inclusion, at
that time, in such Shelf Registration Statement or Registration Statement, as
applicable, of financial statements of a business to be acquired, or pro forma
financial statements reflecting the acquisition of such business, where the
business combination has occurred, or is probable, and such financial statements
are not then available to Boron for reasons beyond Boron’s control; provided, in
the case of this clause (B), that Boron shall use its reasonable best efforts to
obtain such financial statements as promptly as practicable, Boron shall be
entitled, from time to time, by delivering a certificate signed by the chief
executive officer or the chief financial officer of Boron to the Shareholders
certifying to the determination of the board of directors of Boron described
above, to require the Shareholders to suspend the use of the Prospectus included
in any Shelf Registration Statement or to postpone the filing or suspend the use
of any Registration Statement for a reasonable period of time not to exceed
sixty (60) days in succession (or a longer period of time with the prior written
consent of a majority of the Shareholders, which consent shall not be
unreasonably withheld), one hundred and twenty (120) days in the aggregate in
any one-year period or three (3) times in any one-year period (a “Suspension
Period”); provided that Boron shall not register any securities for sale for its
own account or that of any other shareholder during any Suspension Period. In
the event of any such suspension pursuant to this ‎Section 2.08(a), Boron shall
furnish to the Shareholders a written notice setting forth the estimated length
of the anticipated delay. Boron will use reasonable best efforts to limit the
length of any Suspension Period and shall notify the Shareholders promptly upon
the termination of the Suspension Period. Notice of the commencement of a
Suspension Period shall simply specify such commencement and shall not contain
any facts or circumstances relating to such commencement or any material
non-public information. Boron shall respond promptly to reasonable inquiry by a
Shareholder as to such facts and circumstances. Upon notice by Boron to the
Shareholders of any determination to commence a Suspension Period, the
Shareholders shall keep the fact of any such Suspension Period strictly
confidential, and during any Suspension Period, promptly halt any offer, sale,
trading or transfer of any Boron Common Stock pursuant to such Prospectus for
the duration of the Suspension Period until (x) the Suspension Period has
expired or, if earlier (y) Boron has provided notice that the Suspension Period
has been terminated.

(b)               After the expiration of any Suspension Period and without any
further request from a Shareholder, Boron shall as promptly as reasonably
practicable prepare a Registration Statement or post-effective amendment or
supplement to the applicable shelf Registration Statement or Prospectus, or any
document incorporated therein by reference, or file any other required document
so that, as thereafter delivered to purchasers of the Registrable Securities
included therein, if necessary so that the Prospectus will not include a
material misstatement or omission or be not effective and useable for resale of
Registrable Securities.

Section 2.09.                        Registration Expenses. Subject to
‎Section 2.04, all fees and expenses incurred by Boron in effecting any
registration pursuant to this ‎Article II, including all fees and expenses
incurred in complying with securities or “blue sky” laws, printing expenses, any
registration or filing fees payable under any federal or state securities or
“blue sky” laws, the fees and expenses incurred in connection with any listing
or quoting of the securities to be

B-15

 

registered on any national securities exchange or automated quotation system,
fees of FINRA, fees and disbursements of counsel for Boron, fees and
disbursements of one counsel for the holders of Registrable Securities whose
shares are included in a Registration Statement or Underwritten Offering, which
counsel shall be selected by the holders of a majority of the Registrable
Securities being sold pursuant to such Registration Statement or Underwritten
Offering, and fees and expenses of Boron’s independent registered certified
public accounting firm, will be borne by Boron; provided, however, that the
Shareholders will bear and pay any underwriting discounts, fees and commissions
of any Underwriters and transfer taxes and any expenses required by applicable
Law to be paid by a selling shareholder, in each case with respect to
Registrable Securities offered for the Shareholders’ account pursuant to any
Registration Statement.

     Section 2.10.                        Rules 144 and 144A and Regulation S.
Boron covenants that it will use reasonable best efforts to file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder and it will use reasonable
best efforts to take any such further action promptly as reasonably requested,
all to the extent required from time to time to enable the Shareholders to sell
Registrable Securities without registration under the Securities Act pursuant to
(i) Rules 144, 144A or Regulation S under the Securities Act, as such provisions
may be amended from time to time, or (ii) any similar rule or regulation
hereafter adopted by the SEC. Upon the reasonable request of a Shareholder,
Boron will deliver to such Shareholder a written statement as to whether it has
complied with such requirements and, if not, the specifics thereof.

     Section 2.11.                        Indemnification; Contribution. (a) In
connection with any registration of Registrable Securities or Underwritten
Offering pursuant to ‎Section 2.01, ‎Section 2.02 or ‎Section 2.03, Boron will
indemnify, defend and hold harmless each Shareholder, its Affiliates, directors,
officers, shareholders and employees and each Person who controls such
Shareholders within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (collectively, the “Indemnified Persons”) from
and against any and all Losses caused by any untrue or alleged untrue statement
of material fact contained or incorporated by reference in any part of any
Registration Statement or any Prospectus, including any amendment or supplement
thereto, used in connection with the Registrable Securities, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of a Prospectus, in the
light of the circumstances under which they were made) not misleading; provided,
however, that Boron will not be required to indemnify any Indemnified Person for
any such Loss arising out of or with respect to sales pursuant to the
Registration Statement or Prospectus based upon information in the Registration
Statement or Prospectus that was represented by Silicon or Silicon Holdings as
true and correct in the Merger Agreement, and with respect to which Boron would
not have been reasonably expected to discover the failure of such information to
be true and correct prior to the date of such sales.

   (b)               In connection with any Registration Statement or
Prospectus, the Shareholders who sell Registrable Securities pursuant to such
Registration Statement or Prospectus will severally but not jointly indemnify,
defend and hold harmless Boron, its directors, its officers, its employees and
each Person, if any, who controls Boron (within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act) to the same extent as
the foregoing indemnity from Boron to the Shareholders, but only with respect to
information arising out of or based upon information furnished in writing by
such Shareholder or on such Shareholder’s behalf (in each case, in its capacity
as a Shareholder), in either case expressly for use in any Registration
Statement or any Prospectus, including any amendment or supplement thereto.

B-16

 

(c)                In case any claim, action or proceeding (including any
governmental investigation) is instituted involving any Person in respect of
which indemnity may be sought pursuant to Section 2.11(a) or ‎Section 2.11(b),
such Person (the “Indemnified Party”) will promptly notify the Person against
whom such indemnity may be sought (the “Indemnifying Party”) in writing and the
Indemnifying Party shall be entitled to participate therein and, to the extent
it shall wish, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party and will pay the fees and disbursements of
such counsel related to such proceeding; provided, however, that the failure or
delay to give such notice shall not relieve the Indemnifying Party of its
obligations pursuant to this Agreement except to the extent that it shall be
determined by a court of competent jurisdiction that such Indemnifying Party has
been prejudiced by such failure or delay. In any such claim, action or
proceeding, the Indemnified Party shall have the right, but not the obligation,
to participate in any such defense and to retain its own counsel, but the fees
and expenses of such counsel will be at the expense of such Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Party have mutually agreed
to the retention of such counsel, (ii) the Indemnifying Party fails to assume
the defense of the claim, action or proceeding within fifteen (15) Business Days
following receipt of notice from the Indemnified Party or (iii) the Indemnified
Party and the Indemnifying Party are both actual or potential defendants in, or
targets of, any such action and the Indemnified Party has been advised by
counsel that representation of both parties by the same counsel would be
inappropriate due to actual or potential conflicting interests between them. It
is understood that the Indemnifying Party will not, in connection with any
claim, action or proceeding or related claims, actions or proceedings in the
same jurisdiction, be liable for the reasonable fees and expenses of more than
one (1) separate firm of attorneys (in addition to any local counsel) at any
time for all such Indemnified Parties and that all such reasonable fees and
expenses will be reimbursed as they are incurred. In the case of the retention
of any such separate firm for the Indemnified Parties, such firm will be
designated in writing by the Indemnified Parties. The Indemnifying Party will
not be liable for any settlement of any claim, action or proceeding effected
without its written consent (which consent shall not be unreasonably withheld,
conditioned or delayed), but if such claim, action or proceeding is settled with
such consent or if there has been a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the Indemnified Party from and against
any Loss by reason of such settlement or judgment. No Indemnifying Party will,
without the prior written consent of the Indemnified Party, settle, compromise
or offer to settle or compromise any pending or threatened proceeding in respect
of which any Indemnified Party is seeking indemnity hereunder, unless such
settlement includes (i) an unconditional release of such Indemnified Party from
all liability in connection with such proceeding, (ii) no finding or admission
of any violation of Law or any violation of the rights of any Person by the
Indemnified Party or any of its Affiliates can be made as the result of such
action and (iii) the sole relief (if any) provided is monetary damages that are
reimbursed in full by the Indemnifying Party.

(d)               If the indemnification provided for in this ‎Section 2.11 from
the Indemnifying Party is unavailable to an Indemnified Party hereunder or is
insufficient in respect of any Losses referred to in this ‎Section 2.11, then
the Indemnifying Party, in lieu of indemnifying such Indemnified Party, will
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses (i) in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions that resulted in such Losses, as well as any other relevant equitable
considerations, or (ii) if the

B-17

 

allocation provided by clause (i) is not permitted by applicable Law, in such
proportion as is appropriate to reflect not only the relative fault referred to
in clause (i) but also the relative benefit of Boron, on the one hand, and such
Shareholder, on the other, in connection with the statements or omissions that
resulted in such Losses, as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party will be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been taken 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, statement or omission. The amount paid or
payable by a party as a result of the Losses referred to above will be deemed to
include, subject to the limitations set forth in ‎Section 2.11(c), any
reasonable legal or other out of pocket fees or expenses reasonably incurred by
such party in connection with any investigation or proceeding.

(e)                The parties agree that it would not be just and equitable if
contribution pursuant to ‎Section 2.11(d) were determined by pro rata allocation
or by any other method of allocation that does not take into account the
equitable considerations referred to in ‎Section 2.11(d). No Person guilty of
“fraudulent misrepresentation” (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. In no event shall any Shareholder
be obligated to provide indemnification or contribution in excess of the net
aggregate proceeds received from the sale of Registrable Securities pursuant to
the applicable Registration Statement or Prospectus.

Section 2.12.                        Termination. The provisions in this
‎Article II shall terminate with respect to each individual Shareholder on the
first date when such Shareholder no longer holds any Registrable Securities.

Section 2.13.                        Participating Shareholder. By written
notice delivered to Boron, any Shareholder (an “Opting-Out Shareholder”) may
elect to waive its right to participate in Underwritten Offerings and to be a
Piggyback Shareholder and participate in a Piggyback Registration (“Section 2.13
Opt-Out”), until such time as the written notice is rescinded in writing. During
such time as a Section 2.13 Opt-Out is in effect: (a) the Opting-Out Shareholder
shall not receive notices of any proposed Underwritten Offering or Piggyback
Registration, (b) shall not be entitled to participate in any such Underwritten
Offering pursuant to ‎Section 2.01(d) or ‎Section 2.02(a), or Piggyback
Registration pursuant to ‎Section 2.03, and (c) shall not be subject to
Section 2.07(c).

Section 2.14.                        No Waiver. Notwithstanding anything to the
contrary contained herein, nothing in this Annex B shall be deemed a waiver by
Boron of any restrictions on the Transfer of any Registrable Securities.

Section 2.15.                        Limitations on Subsequent Registration
Rights. From and after the date of this Agreement, Boron shall not, without the
prior written consent of Shareholders holding a majority of the Registrable
Securities then held by the Shareholders, enter into any agreement with any
holder or prospective holder of any Equity Interests that is inconsistent with
the terms of this Agreement, including an agreement that would provide to such
holder the right to include Equity Interests in any registration on other than
(a) a pro rata basis with respect to the Registrable Securities or (b) on a
subordinate basis after all applicable Shareholders have had the opportunity to
include in the registration and offering all shares of Registrable Securities
that they wish to so include. Boron is not a party to any agreement or
arrangement providing registration rights to any other Person as of the date
hereof.

B-18

 

Section 2.16.                        Recapitalizations, Exchanges Affecting the
Registrable Securities. The provisions of this Agreement shall apply, to the
full extent set forth herein, with respect to the Registrable Securities, to any
and all shares of stock of Boron or any successor or assign of Boron (whether by
merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in exchange for, or in substitution of the Registrable Securities,
by reason of a stock dividend, stock split, stock issuance, reverse stock split,
combination, recapitalization, reclassification, merger, consolidation or
otherwise. Upon the occurrence of any of such events, amounts hereunder shall be
appropriately adjusted.

 

B-19

 

Annex C

 

Subject Seller Ownership of Holdings Units

 

 

 

 

Annex D

 

Subject Sellers; Subject Seller Notice Information