exv4w2





Exhibit 4.2





Execution Version




GLORI ENERGY INC.




THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT




DATED AS OF DECEMBER 30, 2011









 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	1. Definitions
	 	 	2	 
	 
	 	 	 	 
	2. Registration Rights
	 	 	5	 
	2.1 Demand Registration
	 	 	5	 
	2.2 Company Registration
	 	 	7	 
	2.3 Underwriting Requirements
	 	 	7	 
	2.4 Obligations of the Company
	 	 	9	 
	2.5 Furnish Information
	 	 	10	 
	2.6 Expenses of Registration
	 	 	10	 
	2.7 Delay of Registration
	 	 	11	 
	2.8 Indemnification
	 	 	11	 
	2.9 Reports Under Exchange Act
	 	 	13	 
	2.10 Limitations on Subsequent Registration Rights
	 	 	14	 
	2.11 “Market Stand-off” Agreement
	 	 	14	 
	2.12 Restrictions on Transfer
	 	 	15	 
	2.13 Termination of Registration Rights
	 	 	16	 
	 
	 	 	 	 
	3. Information and Observer Rights
	 	 	16	 
	3.1 Delivery of Financial Statements
	 	 	16	 
	3.2 Inspection
	 	 	18	 
	3.3 Observer Rights
	 	 	18	 
	3.4 Termination of Information
	 	 	19	 
	3.5 Confidentiality
	 	 	19	 
	 
	 	 	 	 
	4. Rights to Future Stock Issuances
	 	 	20	 
	4.1 Right of First Offer
	 	 	20	 
	4.2 Termination
	 	 	21	 
	 
	 	 	 	 
	5. Additional Covenants
	 	 	21	 
	5.1 Insurance
	 	 	21	 
	5.2 Employee Agreements
	 	 	22	 
	5.3 Employee/Executive Compensation
	 	 	22	 
	5.4 Employee Vesting
	 	 	22	 
	5.5 Qualified Small Business Stock
	 	 	22	 
	5.6 Matters Requiring Investor Director Approval
	 	 	23	 
	5.7 Matters Requiring Approval of Lead Investors
	 	 	24	 
	5.8 Meetings of the Board of Directors
	 	 	24	 
	5.9 Successor Indemnification
	 	 	24	 
	5.10 Board Expenses
	 	 	24	 
	5.11 Intentionally Omitted
	 	 	24	 
	5.12 Further Registration Rights
	 	 	24	 
	5.13 Malaysian Business Development
	 	 	24	 






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	 	 	Page	 
	5.14 Termination of Covenants
	 	 	24	 
	 
	6. Miscellaneous
	 	 	25	 
	6.1 Successors and Assigns
	 	 	25	 
	6.2 Governing Law
	 	 	25	 
	6.3 Counterparts; Facsimile
	 	 	26	 
	6.4 Titles and Subtitles
	 	 	26	 
	6.5 Notices
	 	 	26	 
	6.6 Amendments and Waivers
	 	 	26	 
	6.7 Severability
	 	 	27	 
	6.8 Aggregation of Stock
	 	 	27	 
	6.9 Additional Investors
	 	 	27	 
	6.10 Entire Agreement
	 	 	28	 
	6.11 Dispute Resolution
	 	 	28	 
	6.12 Delays or Omissions
	 	 	28	 
	6.13 Acknowledgment
	 	 	28	 
	6.14 Use of Name
	 	 	29	 





Schedule A — Schedule of Investors









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THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT




     THIS THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (“Agreement”) is made as of the
30th day of December, 2011 by and among Glori Energy Inc., a Delaware corporation (the “Company”),
The Energy and Resources Institute (“TERI”) and each of the investors listed on Schedule A
hereto, each of which is referred to in this Agreement as an “Investor” and collectively as the
“Investors.”



RECITALS




     WHEREAS, the Company, TERI and certain of the Investors (the “Prior Investors”) have
previously entered into a Second Amended and Restated Investors’ Rights Agreement dated as of
October 15, 2009, as amended by that certain First Amendment thereto dated May 31, 2011 (the “Prior
Rights Agreement”), pursuant to which the Company granted certain of the Investors certain rights;



     WHEREAS, the Prior Investors hold shares of the Company’s Series A Preferred Stock, par value
$0.0001 per share (the “Series A Preferred Stock”) and Series B Preferred Stock, par value $0.0001
per share (the “Series B Preferred Stock”);



     WHEREAS, the Company and certain of the Investors are parties to a Series C Preferred Stock
Purchase Agreement, of even date herewith (the “Purchase Agreement”), pursuant to which the Company
agrees to sell to certain of the Investors and such Investors agree to purchase from the Company
shares of the Company’s Series C Preferred Stock, par value $0.0001 per share (the “Series C
Preferred Stock”); and



     WHEREAS, the Company, the Prior Investors and the holders of Common Stock desire to induce the
Investors party to the Purchase Agreement to purchase the Series C Preferred Stock by entering into
this Agreement pursuant to which the Prior Rights Agreement is hereby amended and restated in its
entirety as set forth herein.



     NOW, THEREFORE, the parties hereby agree as follows:



     A. Amendment of Prior Rights Agreement; Waiver of Right of First Offer. Effective and
contingent upon execution of this Agreement by (i) the Company, (ii) the holders of a majority of
the Registrable Securities outstanding and (iii) at least 66-2/3% of the holders of the outstanding
shares of Series B Preferred Stock, and upon closing of the transactions contemplated by the
Purchase Agreement, the Prior Rights Agreement is hereby amended and restated in its entirety to
read as set forth in this Agreement, and the Company and the Investors hereby agree to be bound by
the provisions hereof as the sole agreement of the Company and the Investors with respect to the
matters set forth herein. In accordance with the terms of the Prior Rights Agreement, if the
conditions of Section 6.6 of the Prior Rights Agreement are satisfied, this Agreement is
binding on all parties to the Prior Rights Agreement, whether or not they execute this Agreement.
The Prior Investors hereby waive the Right of First Offer, including the notice requirements, set
forth in the Prior Rights Agreement with respect to the issuance of shares of the Series C
Preferred Stock to the Investors pursuant to the Purchase Agreement.



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1. Definitions.




     For purposes of this Agreement:



     1.1 “Affiliate” means, with respect to any specified Person, any other Person who or which,
directly or indirectly, controls, is controlled by, or is under common control with such specified
Person, including without limitation any general partner, officer, director, or manager of such
Person and any venture capital fund now or hereafter existing that is controlled by one or more
general partners or managing members of, or shares the same management company with, such Person.



     1.2 “Certificate of Incorporation” means the Company’s Amended and Restated Certificate of
Incorporation, as filed as contemplated by the Purchase Agreement, and as amended from time to
time.



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



     1.4 “Damages” means any loss, claim, damage, or liability (joint or several) to which a party
hereto may become subject under the Securities Act, the Exchange Act, or other federal or state
law, insofar as such loss, claim, damage, or liability (or any action in respect thereof) arises
out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact
contained in any registration statement of the Company, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements thereto; (ii) an omission or
alleged omission to state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading; or (iii) any violation or alleged violation by the
indemnifying party (or any of its agents or Affiliates) of the Securities Act, the Exchange Act,
any state securities law, or any rule or regulation promulgated under the Securities Act, the
Exchange Act, or any state securities law.



     1.5 “Derivative Securities” means any securities or rights convertible into, or exercisable or
exchangeable for (in each case, directly or indirectly), Common Stock, including options and
warrants.



     1.6 “ETV” means Energy Technology Ventures, LLC.



     1.7 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.



     1.8 “Excluded Registration” means (i) a registration relating to the sale of securities to
employees of the Company or a subsidiary pursuant to a stock option, stock purchase, or similar
plan; (ii) a registration relating to an SEC Rule 145 transaction; (iii) a registration on any form
that does not include substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities; or (iv) a registration in
which the only Common Stock being registered is Common Stock issuable upon conversion of debt
securities that are also being registered.



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     1.9 “Form S-1” means such form under the Securities Act as in effect on the date hereof or any
successor registration form under the Securities Act subsequently adopted by the SEC.



     1.10 “Form S-3” means such form under the Securities Act as in effect on the date hereof or
any registration form under the Securities Act subsequently adopted by the SEC that permits
incorporation of substantial information by reference to other documents filed by the Company with
the SEC.



     1.11 “GAAP” means generally accepted accounting principles in the United States.



     1.12 “Holder” means any holder of Registrable Securities who is a party to this Agreement.



     1.13 “Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, of a natural person referred to
herein.



     1.14 “Initiating Holders” means, collectively, Holders who properly initiate a registration
request under this Agreement.



     1.15 “Qualified IPO” means a bona fide public offering of the Company’s Common Stock on either
The NASDAQ Global Market, the New York Stock Exchange or another major stock exchange that results
in gross proceeds to the Company of at least $50 million.



     1.16 “Key Employee” means any executive-level employee (including division director and vice
president-level positions) as well as any employee who, either alone or in concert with others,
develops, invents, programs, or designs any Company Intellectual Property (as defined in the
Purchase Agreement).



     1.17 “Major Investor” means (i) any Investor that, individually or together with such
Investor’s Affiliates, holds either (A) at least ten percent (10%) of the issued and outstanding
shares of the Series B Preferred Stock (as adjusted for any stock split, stock dividend,
combination, or other recapitalization or reclassification effected after the date hereof) or (B)
at least ten percent (10%) of the issued and outstanding shares of the Series C Preferred Stock (as
adjusted for any stock split, stock dividend, combination, or other recapitalization or
reclassification effected after the date hereof), (ii) GTI Glori Oil Fund I L.P. so long as it or
any of its Affiliates hold at least 2% of the Company’s issued and outstanding capital stock, (iii)
ETV so long as it or any of its Affiliates hold at least 1,000,000 shares of Common Stock
(including shares of Common Stock issuable upon conversion of the Series B Preferred Stock)
(subject to appropriate adjustment in the event of any stock dividend, stock split, combination or
similar recapitalization affecting such shares) and (iv) to the extent that, and only to the extent
that, a Qualified IPO has not occurred within thirteen (13) months after the date hereof,
Gentry-Glori Energy Investment LLC (“Gentry”) so long as it or any of its Affiliates hold at least
$3,000,000 of capital stock of the Company or 1,000,000 shares of Common Stock (including shares of
Common Stock issuable upon conversion of the Series C Preferred Stock) (subject to appropriate



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adjustment in the event of any stock dividend, stock split, combination or similar
recapitalization affecting such shares).




     1.18 “New Securities” means, collectively, equity securities of the Company, whether or not
currently authorized, as well as rights, options, or warrants to purchase such equity securities,
or securities of any type whatsoever that are, or may become, convertible or exchangeable into or
exercisable for such equity securities.



     1.19 “Oxford” means Oxford Bioscience Partners.



     1.20 “Oxford Director” means the Series B Director designated by Oxford pursuant to the Voting
Agreement.



     1.21 “Person” means any individual, corporation, partnership, trust, limited liability
company, association or other entity.



     1.22 “Preferred Stock” means the Series A Preferred Stock, the Series B Preferred Stock and
the Series C Preferred Stock.



     1.23 “Rawoz” means Rawoz Technology Company Ltd.



     1.24 “Rawoz Director” means the Series B Director designated by Rawoz pursuant to the Voting
Agreement.



     1.25 “Registrable Securities” means (i) the Common Stock issuable or issued upon conversion of
the Preferred Stock; (ii) any Common Stock, or any Common Stock issued or issuable (directly or
indirectly) upon conversion and/or exercise of any other securities of the Company acquired by the
Investors before or after the date hereof, including without limitation any Series C Preferred
Stock acquired after the date hereof pursuant to the terms and conditions set forth in the Purchase
Agreement; and (iii) any Common Stock issued as (or issuable upon the conversion or exercise of any
warrant, right, or other security that is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, the shares referenced in clauses (i) and
(ii) above; excluding in all cases, however, any Registrable Securities sold by a Person in
a transaction in which the applicable rights under this Agreement are not assigned pursuant to
Section 6.1, and excluding for purposes of Section 2 any shares for which
registration rights have terminated pursuant to Section 2.13 of this Agreement.



     1.26 “Registrable Securities then outstanding” means the number of shares determined by adding
the number of shares of outstanding Common Stock that are Registrable Securities and the number of
shares of Common Stock issuable (directly or indirectly) pursuant to then exercisable and/or
convertible securities that are Registrable Securities.



     1.27 “Restricted Securities” means the securities of the Company required to bear the legend
set forth in Section 2.12(b) hereof.



     1.28 “SEC” means the Securities and Exchange Commission.



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     1.29 “SEC Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.



     1.30 “SEC Rule 145” means Rule 145 promulgated by the SEC under the Securities Act.



     1.31 “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.



     1.32 “Selling Expenses” means all underwriting discounts, selling commissions, and stock
transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of
counsel for any Holder, except for the fees and disbursements of the Selling Holder Counsel borne
and paid by the Company as provided in Section 2.6.



     1.33 “Series A Director” means any director of the Company that the holders of record of the
Series A Preferred Stock are entitled to elect pursuant to the Company’s Certificate of
Incorporation.



     1.34 “Series B Director” means any director of the Company that the holders of record of the
Series B Preferred Stock are entitled to elect pursuant to the Company’s Certificate of
Incorporation.



     1.35 “Voting Agreement” means the Third Amended and Restated Voting Agreement among the
Company and certain holders of its capital stock, dated of even date herewith.


2. Registration Rights.




     The Company covenants and agrees as follows:



     2.1 Demand Registration.



          (a) Form S-1 Demand. If at any time after the earlier of (i) four (4) years after the
date of this Agreement or (ii) one hundred eighty (180) days after the effective date of the
registration statement for the Qualified IPO, the Company receives a request from Holders of at
least thirty percent (30%) of the shares of the Series B Preferred Stock (or shares of Common
Stock or other Registrable Securities issuable upon conversion of the Series B Preferred Stock)
then outstanding that the Company file a Form S-1 registration statement with respect to at least
twenty percent (20%) of the shares of Common Stock into which the Series B Preferred Stock shall
convert into (having an anticipated aggregate offering price, net of Selling Expenses, in excess of
$10 million), then the Company shall (i) within ten (10) days after the date such request is given,
give notice thereof (the “Demand Notice”) to all Holders other than the Initiating Holders; and
(ii) as soon as practicable, and in any event within sixty (60) days after the date such request is
given by the Initiating Holders, file a Form S-1 registration statement under the Securities Act
covering all Registrable Securities that the Initiating Holders requested to be registered and any
additional Registrable Securities requested to be included in such registration by any other
Holders, as specified by notice given by each such Holder to the



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Company within twenty (20) days of the date the Demand Notice is given, and in each case,
subject to the limitations of Section 2.1(c), Section 2.1(d) and Section 2.3.





          (b) Form S-3 Demand. If at any time when it is eligible to use a Form S-3
registration statement, the Company receives a request from Holders of at least thirty percent
(30%) of the Registrable Securities then outstanding that the Company file a Form S-3 registration
statement with respect to outstanding Registrable Securities of such Holders having an anticipated
aggregate offering price, net of Selling Expenses, of at least $3 million, then the Company shall
(i) within ten (10) days after the date such request is given, give a Demand Notice to all Holders
other than the Initiating Holders; and (ii) as soon as practicable, and in any event within
forty-five (45) days after the date such request is given by the Initiating Holders, file a Form
S-3 registration statement under the Securities Act covering all Registrable Securities requested
to be included in such registration by any other Holders, as specified by notice given by each such
Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each
case, subject to the limitations of Section 2.1(c), Section 2.1(d) and Section
2.3.



          (c) Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting
a registration pursuant to this Section 2.1 a certificate signed by the Company’s chief
executive officer stating that in the good faith judgment of the Company’s Board of Directors it
would be materially detrimental to the Company and its stockholders for such registration statement
to either become effective or remain effective for as long as such registration statement otherwise
would be required to remain effective, because such action would (i) materially interfere with a
significant acquisition, corporate reorganization, or other similar transaction involving the
Company; (ii) require premature disclosure of material information that the Company has a bona fide
business purpose for preserving as confidential; or (iii) render the Company unable to comply with
requirements under the Securities Act or Exchange Act, then the Company shall have the right to
defer taking action with respect to such filing, and any time periods with respect to filing or
effectiveness thereof shall be tolled correspondingly, for a period, after the request of the
Initiating Holders is given, of not more than one hundred twenty (120) days with respect to
Section 2.1(a) and of not more than ninety (90) days with respect to Section
2.1(b); provided, however, that the Company may not invoke this right more than once in
any twelve (12) month period; and provided further that the Company shall not register any
securities for its own account or that of any other stockholder during such one hundred twenty
(120) day or ninety (90) day period, as the case may be, other than an Excluded Registration.



          (d) The Company shall not be obligated to effect, or to take any action to effect, any
registration pursuant to Section 2.1(a) (i) during the period that is sixty (60) days
before the Company’s good faith estimate of the date of filing of, and ending on a date that is one
hundred eighty (180) days after the effective date of, a Company-initiated registration,
provided, that the Company is actively employing in good faith commercially reasonable
efforts to cause such registration statement to become effective; (ii) after the Company has
effected two registrations pursuant to Section 2.1(a) and in accordance with its terms; or
(iii) if the Initiating Holders propose to dispose of shares of Registrable Securities that may be
immediately registered on Form S-3 pursuant to a request made pursuant to Section 2.1(b).
The Company shall not be obligated to effect, or to take any action to effect, any registration
pursuant to



6









 







Section 2.1(b) (i) during the period that is thirty (30) days before the Company’s
good faith estimate of the date of filing of, and ending on a date that is ninety (90) days after
the effective date of, a Company-initiated registration, provided, that the Company is actively
employing in good faith commercially reasonable efforts to cause such registration statement to
become effective; or (ii) if the Company has effected two registrations pursuant to Section
2.1(b) within the twelve (12) month period immediately preceding the date of such request. A
registration shall not be counted as “effected” for purposes of this Section 2.1(d) until
such time as the applicable registration statement has been declared effective by the SEC, unless
the Initiating Holders withdraw their request for such registration, elect not to pay the
registration expenses therefor, and forfeit their right to one demand registration statement
pursuant to Section 2.6, in which case such withdrawn registration statement shall be
counted as “effected” for purposes of this Section 2.1(d).




     2.2 Company Registration. If the Company proposes to register (including, for this
purpose, a registration effected by the Company for stockholders other than the Holders) (other
than registrations on Forms S-4 or S-8 or any successor forms or any other registration relating to
Common Stock issued or issuable in connection with mergers or acquisitions involving the Company)
any of its Common Stock under the Securities Act in connection with the public offering of such
securities solely for cash (other than in an Excluded Registration), the Company shall, at such
time, promptly give each Holder notice of such registration. Upon the request of each Holder given
within twenty (20) days after such notice is given by the Company, the Company shall, subject to
the provisions of Section 2.3, cause to be registered all of the Registrable Securities
that each such Holder has requested to be included in such registration. The Company shall have
the right to terminate or withdraw any registration initiated by it under this Section 2.2
before the effective date of such registration, whether or not any Holder has elected to include
Registrable Securities in such registration. The expenses (other than Selling Expenses) of such
withdrawn registration shall be borne by the Company in accordance with Section 2.6.



     2.3 Underwriting Requirements.



          (a) If, pursuant to Section 2.1, the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting, they shall so advise
the Company as a part of their request made pursuant to Section 2.1, and the Company shall
include such information in the Demand Notice. The underwriter(s) will be selected by the Company
and shall be reasonably acceptable to a majority in interest of the Initiating Holders. In such
event, the right of any Holder to include such Holder’s Registrable Securities in such registration
shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of
such Holder’s Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall (together with the
Company as provided in Section 2.4(e)) enter into an underwriting agreement in customary
form with the underwriter(s) selected for such underwriting. Notwithstanding any other provision
of this Section 2.3, if the managing underwriter(s) advise(s) the Initiating Holders in
writing that marketing factors require a limitation on the number of shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable
Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable
Securities that may be included in the underwriting shall be allocated among such Holders of
Registrable



7









 




Securities, including the Initiating Holders, in proportion (as nearly as practicable)
to the number of Registrable Securities owned by each Holder or in such other proportion as shall
mutually be agreed to by all such selling Holders; provided, however, that the number of
Registrable Securities held by the Holders to be included in such underwriting shall not be reduced
unless all other securities are first entirely excluded from the underwriting. To facilitate the
allocation of shares in accordance with the above provisions, the Company or the underwriters may
round the number of shares allocated to any Holder to the nearest 100 shares.




          (b) In connection with any offering involving an underwriting of shares of the Company’s
capital stock pursuant to Section 2.2, the Company shall not be required to include any of
the Holders’ Registrable Securities in such underwriting unless the Holders accept the terms of the
underwriting as agreed upon between the Company and its underwriters, and then only in such
quantity as the underwriters in their sole discretion determine will not jeopardize the success of
the offering by the Company. If the total number of securities, including Registrable Securities,
requested by stockholders to be included in such offering exceeds the number of securities to be
sold (other than by the Company) that the underwriters in their reasonable discretion determine is
compatible with the success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities, which the
underwriters and the Company in their sole discretion determine will not jeopardize the success of
the offering. If the underwriters determine that less than all of the Registrable Securities
requested to be registered can be included in such offering, then the Registrable Securities that
are included in such offering shall be allocated among the selling Holders in proportion (as nearly
as practicable to) the number of Registrable Securities owned by each selling Holder or in such
other proportions as shall mutually be agreed to by all such selling Holders. To facilitate the
allocation of shares in accordance with the above provisions, the Company or the underwriters may
round the number of shares allocated to any Holder to the nearest 100 shares. Notwithstanding the
foregoing, in no event shall (i) the number of Registrable Securities included in the offering be
reduced unless all other securities (other than securities to be sold by the Company) are first
entirely excluded from the offering or (ii) the number of Registrable Securities included in the
offering be reduced below twenty percent (20%) of the total number of securities included in such
offering, unless such offering is the Qualified IPO, in which case the selling Holders may be
excluded further if the underwriters make the determination described above and no other
stockholder’s securities are included in such offering. For purposes of the provision in this
Section 2.3(b) concerning apportionment, for any selling Holder that is a partnership,
limited liability company, or corporation, the partners, members, retired partners, retired
members, stockholders, and Affiliates of such Holder, or the estates and Immediate Family Members
of any such partners, retired partners, members, and retired members and any trusts for the benefit
of any of the foregoing Persons, shall be deemed to be a single “selling Holder,” and any pro rata
reduction with respect to such “selling Holder” shall be based upon the aggregate number of
Registrable Securities owned by all Persons included in such “selling Holder,” as defined in this
sentence.



          (c) For purposes of Section 2.1, a registration shall not be counted as “effected” if,
as a result of an exercise of the underwriter’s cutback provisions in Section 2.3(a), fewer than fifty percent (50%) of the total number of Registrable Securities that Holders have
requested to be included in such registration statement are actually included.



8









 





     2.4 Obligations of the Company. Whenever required under this Section 2 to effect the
registration of any Registrable Securities, the Company shall, as expeditiously as reasonably
possible:



          (a) prepare and file with the SEC a registration statement with respect to such Registrable
Securities and use its commercially reasonable efforts to cause such registration statement to
become effective and, upon the request of the Holders of 66-2/3% of the Registrable Securities
registered thereunder, keep such registration statement effective for a period of up to one hundred
twenty (120) days or, if earlier, until the distribution contemplated in the registration statement
has been completed; provided, however, that (i) such one hundred twenty (120) day period
shall be extended for a period of time equal to the period the Holder refrains, at the request of
an underwriter of Common Stock (or other securities) of the Company, from selling any securities
included in such registration, and (ii) in the case of any registration of Registrable Securities
on Form S-3 that are intended to be offered on a continuous or delayed basis, subject to compliance
with applicable SEC rules, such one hundred twenty (120) day period shall be extended for up to one
hundred eighty (180) days, if necessary, to keep the registration statement effective until all
such Registrable Securities are sold;



          (b) prepare and file with the SEC such amendments and supplements to such registration
statement, and the prospectus used in connection with such registration statement, as may be
necessary to comply with the Securities Act in order to enable the disposition of all securities
covered by such registration statement;



          (c) furnish to the selling Holders such numbers of copies of a prospectus, including a
preliminary prospectus, as required by the Securities Act, and such other documents as the Holders
may reasonably request in order to facilitate their disposition of their Registrable Securities;



          (d) use its commercially reasonable efforts to register and qualify the securities covered by
such registration statement under such other securities or blue-sky laws of such jurisdictions as
shall be reasonably requested by the selling Holders; provided that the Company shall not
be required to qualify to do business or to file a general consent to service of process in any
such states or jurisdictions, unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act;



          (e) in the event of any underwritten public offering, enter into and perform its obligations
under an underwriting agreement, in usual and customary form, with the underwriter(s) of such
offering;



          (f) use its commercially reasonable efforts to cause all such Registrable Securities covered
by such registration statement to be listed on a national securities exchange or trading system and
each securities exchange and trading system (if any) on which similar securities issued by the
Company are then listed;



          (g) provide a transfer agent and registrar for all Registrable Securities registered pursuant
to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not
later than the effective date of such registration;



9









 





          (h) promptly make available for inspection by the selling Holders, any managing underwriter(s)
participating in any disposition pursuant to such registration statement, and any attorney or
accountant or other agent retained by any such underwriter or selected by the selling Holders, all
financial and other records, pertinent corporate documents, and properties of the Company, and
cause the Company’s officers, directors, employees, and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney, accountant, or agent,
in each case, as necessary or advisable to verify the accuracy of the information in such
registration statement and to conduct appropriate due diligence in connection therewith;



          (i) notify each selling Holder, promptly after the Company receives notice thereof, of the
time when such registration statement has been declared effective or a supplement to any prospectus
forming a part of such registration statement has been filed; and



          (j) after such registration statement becomes effective, notify each selling Holder of any
request by the SEC that the Company amend or supplement such registration statement or prospectus.



     2.5 Furnish Information. It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 2 with respect to the Registrable
Securities of any selling Holder that such Holder shall furnish to the Company such information
regarding itself, the Registrable Securities held by it, and the intended method of disposition of
such securities as is reasonably required to effect the registration of such Holder’s Registrable
Securities.



     2.6 Expenses of Registration. All expenses (other than Selling Expenses) incurred in
connection with registrations, filings, or qualifications pursuant to Section 2, including
all registration, filing, and qualification fees; printers’ and accounting fees; fees and
disbursements of counsel for the Company; and the reasonable fees and disbursements, not to exceed
$50,000, of one counsel for the selling Holders (“Selling Holder Counsel”), shall be borne and paid
by the Company; provided, however, that the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to Section 2.1 if the registration
request is subsequently withdrawn at the request of the Holders of 66-2/3% the Registrable
Securities to be registered (in which case all selling Holders shall bear such expenses pro rata
based upon the number of Registrable Securities that were to be included in the withdrawn
registration), unless the Holders of 66-2/3% of the Registrable Securities agree to forfeit their
right to one registration pursuant to Section 2.1(a) or Section 2.1(b), as the case
may be; provided further that if, at the time of such withdrawal, the Holders have learned
of a material adverse change in the condition, business, or prospects of the Company from that
known to the Holders at the time of their request and have withdrawn the request with reasonable
promptness after learning of such information, then the Holders shall not be required to pay any of such expenses and shall not forfeit their right to one registration
pursuant to Section 2.1(a) or Section 2.1(b). All Selling Expenses relating to
Registrable Securities registered pursuant to this Section 2 shall be borne and paid by the
Holders pro rata on the basis of the number of Registrable Securities registered on their behalf.



10









 





     2.7 Delay of Registration. No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any registration pursuant to this Agreement as the
result of any controversy that might arise with respect to the interpretation or implementation of
this Section 2.



     2.8 Indemnification. If any Registrable Securities are included in a registration
statement under this Section 2:



          (a) To the extent permitted by law, the Company will indemnify and hold harmless each selling
Holder, and the partners, members, officers, directors, and stockholders of each such Holder; legal
counsel and accountants for each such Holder; any underwriter (as defined in the Securities Act)
for each such Holder; and each Person, if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to
each such Holder, underwriter, controlling Person, or other aforementioned Person any legal or
other expenses reasonably incurred thereby in connection with investigating or defending any claim
or proceeding from which Damages may result, as such expenses are incurred; provided,
however, that the indemnity agreement contained in this Section 2.8(a) shall not apply
to amounts paid in settlement of any such claim or proceeding if such settlement is effected
without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the
Company be liable for any Damages to the extent that they arise out of or are based upon actions or
omissions made in reliance upon and in conformity with written information furnished by or on
behalf of any such Holder, underwriter, controlling Person, or other aforementioned Person
expressly for use in connection with such registration.



          (b) To the extent permitted by law, each selling Holder, severally and not jointly, will
indemnify and hold harmless the Company, and each of its directors, each of its officers who has
signed the registration statement, each Person (if any), who controls the Company within the
meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter (as
defined in the Securities Act), any other Holder selling securities in such registration statement,
and any controlling Person of any such underwriter or other Holder, against any Damages, in each
case only to the extent that such Damages arise out of or are based upon actions or omissions made
in reliance upon and in conformity with written information furnished by or on behalf of such
selling Holder expressly for use in connection with such registration; and each such selling Holder
will pay to the Company and each other aforementioned Person any legal or other expenses reasonably
incurred thereby in connection with investigating or defending any claim or proceeding from which
Damages may result, as such expenses are incurred; provided, however, that the indemnity
agreement contained in this Section 2.8(b) shall not apply to amounts paid in settlement of
any such claim or proceeding if such settlement is effected without the consent of the Holder, which consent shall not be
unreasonably withheld; and provided further that in no event shall any indemnity under this
Section 2.8(b) exceed the proceeds from the offering received by such Holder (net of any
Selling Expenses paid by such Holder), except in the case of fraud or willful misconduct by such
Holder.



          (c) Promptly
after receipt by an indemnified party under this Section 2.8 of notice of
the commencement of any action (including any governmental action) for which a party may be
entitled to indemnification hereunder, such indemnified party will, if a claim in respect



11









 





thereof is to be made against any indemnifying party under this Section 2.8, give the indemnifying
party notice of the commencement thereof. The indemnifying party shall have the right to
participate in such action and, to the extent the indemnifying party so desires, participate
jointly with any other indemnifying party to which notice has been given, and to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however, that an
indemnified party (together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel, with the fees and
expenses to be paid by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party represented by such counsel
in such action. The failure to give notice to the indemnifying party within a reasonable time of
the commencement of any such action shall relieve such indemnifying party of any liability to the
indemnified party under this Section 2.8, to the extent that such failure materially
prejudices the indemnifying party’s ability to defend such action. The failure to give notice to
the indemnifying party will not relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 2.8.




          (d) Notwithstanding anything else herein to the contrary, the foregoing indemnity agreements
of the Company and the selling Holders are subject to the condition that, insofar as they relate to
any Damages arising from any untrue statement or alleged untrue statement of a material fact
contained in, or omission or alleged omission of a material fact from, a preliminary prospectus (or
necessary to make the statements therein not misleading) that has been corrected in the form of
prospectus included in the registration statement at the time it becomes effective, or any
amendment or supplement thereto filed with the SEC pursuant to Rule 424(b) under the Securities Act
(the “Final Prospectus”), such indemnity agreement shall not inure to the benefit of any Person if
a copy of the Final Prospectus was furnished to the indemnified party and such indemnified party
failed to deliver, at or before the confirmation of the sale of the shares registered in such
offering, a copy of the Final Prospectus to the Person asserting the loss, liability, claim, or
damage in any case in which such delivery was required by the Securities Act.



          (e) To provide for just and equitable contribution to joint liability under the Securities Act
in any case in which either (i) any party otherwise entitled to indemnification hereunder makes a
claim for indemnification pursuant to this Section 2.8 but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such indemnification may not be
enforced in such case, notwithstanding the fact that this Section 2.8 provides for
indemnification in such case, or (ii) contribution under the Securities Act may be required on the
part of any party hereto for which indemnification is provided under this Section 2.8,
then, and in each such case, such parties will contribute to the aggregate losses, claims, damages,
liabilities, or expenses to which they may be subject (after contribution from others) in such
proportion as is appropriate to reflect the relative fault of each of the indemnifying party and
the indemnified party in connection with the statements, omissions, or other actions that resulted
in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant
equitable considerations. The relative fault of the indemnifying party and of the indemnified
party shall be determined by reference to, among other things, whether the untrue or allegedly
untrue statement of a material fact, or the omission or alleged omission of a material fact,
relates to information



12









 




supplied by the indemnifying party or by the indemnified party and the
parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission; provided, however, that, in any such case, (x) no Holder will
be required to contribute any amount in excess of the public offering price of all such Registrable
Securities offered and sold by such Holder pursuant to such registration statement, and (y) 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; and provided further that in no event shall a Holder’s
liability pursuant to this Section 2.8(e), when combined with the amounts paid or payable
by such Holder pursuant to Section 2.8(b), exceed the proceeds from the offering received
by such Holder (net of any Selling Expenses paid by such Holder), except in the case of willful
misconduct or fraud by such Holder.




          (f) Notwithstanding the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection with the
underwritten public offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.



          (g) Unless otherwise superseded by an underwriting agreement entered into in connection with
the underwritten public offering, the obligations of the Company and Holders under this Section
2.8 shall survive the completion of any offering of Registrable Securities in a registration
under this Section 2, and otherwise shall survive the termination of this Agreement.



     2.9 Reports Under Exchange Act. With a view to making available to the Holders the
benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration or pursuant to a
registration on Form S-3, the Company shall:



          (a) make and keep available adequate current public information, as those terms are understood
and defined in SEC Rule 144, at all times after the effective date of the registration statement
filed by the Company for the Qualified IPO;



          (b) use commercially reasonable efforts to file with the SEC in a timely manner all reports
and other documents required of the Company under the Securities Act and the Exchange Act (at any
time after the Company has become subject to such reporting requirements); and



          (c) furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith
upon request (i) to the extent accurate, a written statement by the Company that it has complied
with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the
effective date of the registration statement filed by the Company for the Qualified IPO), the
Securities Act, and the Exchange Act (at any time after the Company has become subject to such
reporting requirements), or that it qualifies as a registrant whose securities may be resold
pursuant to Form S-3 (at any time after the Company so qualifies); (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents so filed by the
Company; and (iii) such other information as may be reasonably requested in availing any Holder of
any rule or regulation of the SEC that permits the selling of



13









 




any such securities without registration (at any time after the Company has become subject to the reporting requirements under
the Exchange Act) or pursuant to Form S-3 (at any time after the Company so qualifies to use such
form).




     2.10 Limitations on Subsequent Registration Rights. From and after the date of this
Agreement, the Company shall not, without the prior written consent of the Holders of 66-2/3% the
Registrable Securities then outstanding, enter into any agreement with any holder or prospective
holder of any securities of the Company that would allow such holder or prospective holder (i) to
include such securities in any registration unless, under the terms of such agreement, such holder
or prospective holder may include such securities in any such registration only to the extent that
the inclusion of such securities will not reduce the number of the Registrable Securities of the
Holders that are included or (ii) to demand registration of any securities held by such holder or
prospective holder; provided that this limitation shall not apply to any additional
Investor who becomes a party to this Agreement in accordance with Section 6.9.



     2.11 “Market Stand-off” Agreement. TERI and each Holder hereby agrees that it will
not, without the prior written consent of the managing underwriter, during the period commencing on
the date of the final prospectus relating to the Qualified IPO or other registration by the Company
of shares of its Common Stock or any other equity securities under the Securities Act on a
registration statement on Form S-1 or Form S-3, and ending on the date specified by the Company and
the managing underwriter (such period not to exceed (x) one hundred eighty (180) days in the case
of the Qualified IPO, which period may be extended upon the request of the managing underwriter for
an additional period of up to fifteen (15) days if the Company issues or proposes to issue an
earnings or other public release within fifteen (15) days of the expiration of the 180-day lockup
period, or (y) ninety (90) days in the case of any registration other than the Qualified IPO, which
period may be extended upon the request of the managing underwriter for an additional period of up
to fifteen (15) days if the Company issues or proposes to issue an earnings or other public release
within fifteen (15) days of the expiration of the 90-day lockup period), (i) lend; offer; pledge;
sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to
sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable (directly or indirectly) for Common Stock held immediately before the
effective date of the registration statement for such offering or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of such securities, whether any such transaction described in clause (i)
or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or
otherwise. The foregoing provisions of this Section 2.11 shall not apply to the sale of
any shares to an underwriter pursuant to an underwriting agreement, and shall be applicable to TERI
and the Holders only if all officers, directors, and stockholders individually owning more than one
percent (1%) of the Company’s outstanding Common Stock (after giving effect to conversion into
Common Stock of all outstanding Preferred Stock) are subject to the same restrictions. The
underwriters in connection with such registration are intended third-party beneficiaries of this
Section 2.11 and shall have the right, power, and authority to enforce the provisions
hereof as though they were a party hereto. TERI and each Holder further agrees to execute such
agreements as may be reasonably requested by the underwriters in connection with such registration
that are consistent with this Section 2.11 or that are necessary to give further effect
thereto. Any discretionary waiver or termination of the



14









 




restrictions of any or all of such
agreements by the Company or the underwriters shall apply pro rata to TERI and all Holders subject
to such agreements, based on the number of shares subject to such agreements, except that,
notwithstanding the foregoing, the Company and the underwriters may, in their sole discretion,
waive or terminate these restrictions with respect to up to 5,000 shares of the Common Stock.




     2.12 Restrictions on Transfer.



          (a) The Preferred Stock, the Registrable Securities and any shares of capital stock held by
TERI shall not be sold, pledged, or otherwise transferred, and the Company shall not recognize any
such sale, pledge, or transfer, except upon the conditions specified in this Agreement, which
conditions are intended to ensure compliance with the provisions of the Securities Act. A
transferring Holder or TERI, as the case may be, will cause any proposed purchaser, pledgee, or
transferee of the Preferred Stock, the Registrable Securities and/or such capital stock held by
such Holder or TERI, as the case may be, to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Agreement.



          (b) Each certificate or instrument representing (i) the Preferred Stock, (ii) the Registrable
Securities, (iii) representing shares of capital stock held by TERI and (iv) any other securities
issued in respect of the securities referenced in clauses (i), (ii) and (iii), upon any stock
split, stock dividend, recapitalization, merger, consolidation, or similar event, shall (unless
otherwise permitted by the provisions of Section 2.12(c)) be stamped or otherwise imprinted
with a legend substantially in the following form:




THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH
SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR A VALID EXEMPTION FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.




THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND
THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY.


The Holders and TERI consent to the Company making a notation in its records and giving
instructions to any transfer agent of the Restricted Securities in order to implement the
restrictions on transfer set forth in this Section 2.12.




          (c) The holder of each certificate representing Restricted Securities, by acceptance thereof,
agrees to comply in all respects with the provisions of this Section 2. Before any
proposed sale, pledge, or transfer of any Restricted Securities, unless there is in effect a
registration statement under the Securities Act covering the proposed transaction, the holder



15









 




thereof shall give notice to the Company of such holder’s intention to effect such sale, pledge, or
transfer. Each such notice shall describe the manner and circumstances of the proposed sale,
pledge, or transfer in sufficient detail and, if reasonably requested by the Company, shall be
accompanied at such holder’s expense by either (i) a written opinion of legal counsel who shall,
and whose legal opinion shall, be reasonably satisfactory to the Company, addressed to the Company,
to the effect that the proposed transaction may be effected without registration under the
Securities Act; (ii) a “no action” letter from the SEC to the effect that the proposed sale,
pledge, or transfer of such Restricted Securities without registration will not result in a
recommendation by the staff of the SEC that action be taken with respect thereto; or (iii) any
other evidence reasonably satisfactory to counsel to the Company to the effect that the proposed
sale, pledge, or transfer of the Restricted Securities may be effected without registration under
the Securities Act, whereupon the holder of such Restricted Securities shall be entitled to sell,
pledge, or transfer such Restricted Securities in accordance with the terms of the notice given by
the holder to the Company. The Company will not require such a legal opinion or “no action” letter
(x) in any transaction in compliance with SEC Rule 144 or (y) in any transaction in which such
holder distributes Restricted Securities to an Affiliate of such holder for no consideration;
provided that each transferee agrees in writing to be subject to the terms of this Section
2.12. Each certificate or instrument evidencing the Restricted Securities transferred as above
provided shall bear, except if such transfer is made pursuant to SEC Rule 144, the appropriate
restrictive legend set forth in Section 2.12(b), except that such certificate shall not
bear such restrictive legend if, in the opinion of counsel for such holder and the Company, such
legend is not required in order to establish compliance with any provisions of the Securities Act.




     2.13 Termination of Registration Rights. The right of any Holder to request
registration or inclusion of Registrable Securities in any registration pursuant to Section
2.1 or Section 2.2 shall terminate upon the earliest to occur of:



          (a) the closing of a Deemed Liquidation Event, as such term is defined in the Company’s
Certificate of Incorporation;



          (b) when all of such Holder’s Registrable Securities total less than 1% of the outstanding
capital stock of the Company and all of such Holder’s shares could be sold in any three month
period without restriction under SEC Rule 144; and



          (c) the fifth anniversary of the Qualified IPO.



3. Information and Observer Rights.




     3.1 Delivery of Financial Statements. The Company shall deliver to TERI and each
Major Investor, provided that the Board of Directors has not reasonably determined that
such Major Investor or TERI is or has become a competitor of the Company:



          (a) as soon as practicable, but in any event within one hundred fifty (150) days after the end
of each fiscal year of the Company, (i) a balance sheet as of the end of such year, (ii) statements
of income and of cash flows for such year, and a comparison between (x) the actual amounts as of
and for such fiscal year and (y) the comparable amounts for the prior year and as included in the
Budget (as defined in Section 3.1(e)) for such year, with an explanation of



16









 




any material differences between such amounts and a schedule as to the sources and applications of funds for
such year, and (iii) a statement of stockholders’ equity as of the end of such year, all such
financial statements audited and certified by independent public accountants of nationally
recognized standing selected by the Company;




          (b) as soon as practicable, but in any event within forty-five (45) days after the end of each
of the first three (3) quarters of each fiscal year of the Company, unaudited statements of income
and of cash flows for such fiscal quarter, and an unaudited balance sheet as of the end of such
fiscal quarter, all prepared in accordance with GAAP (except that such financial statements may (i)
be subject to normal year-end audit adjustments and (ii) not contain all notes thereto that may be
required in accordance with GAAP);



          (c) as soon as practicable, but in any event within forty-five (45) days after the end of each
of the first three (3) quarters of each fiscal year of the Company, a statement showing the number
of shares of each class and series of capital stock and securities convertible into or exercisable
for shares of capital stock outstanding at the end of the period, the Common Stock issuable upon
conversion or exercise of any outstanding securities convertible or exercisable for Common Stock
and the exchange ratio or exercise price applicable thereto, and the number of shares of issued
stock options and stock options not yet issued but reserved for issuance, if any, all in sufficient
detail as to permit the Major Investors to calculate their respective percentage equity ownership
in the Company, and certified by the chief financial officer or chief executive officer of the
Company as being true, complete, and correct;



          (d) as soon as practicable, but in any event within thirty (30) days prior to the beginning of
each fiscal year, a budget and business plan for the fiscal year (collectively, the
“Budget”), approved by the Board of Directors and prepared on a monthly basis, including
balance sheets, income statements, and statements of cash flow for such months and, promptly after
prepared, any other budgets or revised budgets prepared by the Company;



          (e) with respect to the financial statements called for in Section 3.1(a), Section
3.1(b) and Section 3.1(d), an instrument executed by the chief financial officer and
chief executive officer of the Company certifying that such financial statements were prepared in
accordance with GAAP consistently applied with prior practice for earlier periods (except as
otherwise set forth in Section 3.1(b) and Section 3.1(d) and fairly present the
financial condition of the Company and its results of operation for the periods specified therein;
and



          (f) such other information relating to the financial condition, business, prospects, or
corporate affairs of the Company as TERI or any Major Investor may from time to time reasonably
request; provided, however, that the Company shall not be obligated under this Section
3.1 to provide information (i) that the Company reasonably determines in good faith to be a
trade secret or confidential information (unless covered by an enforceable confidentiality
agreement, in form acceptable to the Company) or (ii) the disclosure of which would adversely
affect the attorney-client privilege between the Company and its counsel.


If, for any period, the Company has any subsidiary whose accounts are consolidated with those of
the Company, then in respect of such period the financial statements delivered pursuant to the




17









 







foregoing sections shall be the consolidated and consolidating financial statements of the Company
and all such consolidated subsidiaries.



Notwithstanding anything else in this Section 3.1 to the contrary, the Company may cease
providing the information set forth in this Section 3.1 during the period starting with the
date thirty (30) days before the Company’s good-faith estimate of the date of filing of a
registration statement if it reasonably concludes it must do so to comply with the SEC rules
applicable to such registration statement and related offering; provided that the Company’s
covenants under this Section 3.1 shall be reinstated at such time as the Company is no
longer actively employing its commercially reasonable efforts to cause such registration statement
to become effective.




     3.2 Inspection. The Company shall permit TERI and each Major Investor (provided that
the Board of Directors has not reasonably determined that such Major Investor or TERI is or has
become a competitor of the Company), at such Major Investor’s expense, to visit and inspect the
Company’s properties; examine its books of account and records; and discuss the Company’s affairs,
finances, and accounts with its officers, during normal business hours of the Company and with
reasonable advance notice; provided, however, that the Company shall not be obligated
pursuant to this Section 3.2 to provide access to any information that it reasonably
considers to be a trade secret or confidential information (unless covered by an enforceable
confidentiality agreement, in form acceptable to the Company) or the disclosure of which would
adversely affect the attorney-client privilege between the Company and its counsel.


3.3 Observer Rights. As long as (x) Rawoz own not less than fifteen percent (15%) of the shares of the Series B
Preferred Stock originally purchased by it under the Purchase Agreement (or an equivalent amount of
Common Stock issued upon conversion thereof) and/or (y) TERI owns at least 83,787 shares of Common
Stock (including shares of Common Stock issuable upon conversion of the Series A Preferred Stock)
and/or (z) ETV or any of its Affiliates own at least 1,000,000 shares of Common Stock (including
shares of Common Stock issuable upon conversion of the Series B Preferred Stock) (subject to
appropriate adjustment in the event of any stock dividend, stock split, combination or similar
recapitalization affecting such shares), the Company shall invite (A) a representative of Rawoz who
shall initially be Rajiv Dhar, (B) the Director General of TERI who shall initially be R.K.
Pachauri and (C) a representative of ETV, who shall initially be Kevin Skillem to attend all
meetings of its Board of Directors in a nonvoting observer capacity and, in this respect, shall
give such representatives copies of all notices, minutes, consents, and other materials that it
provides to its directors at the same time and in the same manner as provided to such directors;
provided, however, that such representative shall agree to hold in confidence and trust and
to act in a fiduciary manner with respect to all information so provided; and provided
further, that the Company reserves the right to withhold any information and to exclude such
representative from any meeting or portion thereof if access to such information or attendance at
such meeting could adversely affect the attorney-client privilege between the Company and its
counsel or result in disclosure of trade secrets or a conflict of interest, or if such Investor or
its representative is a competitor of the Company. In the event that a Qualified IPO has not
occurred within thirteen (13) months after the date hereof, Gentry shall be entitled to designate a
single Board of Directors observer (the “Gentry Observer”) acceptable to the Company. Subject to
(i) the Gentry Observer signing a non-disclosure agreement with the Company in form and substance
reasonably satisfactory to the Company and (i) the provisos contained in this Section 3.3 regarding
board observers, the Gentry





18









 







Observer shall be entitled to the same rights as other board observers
described in this Section 3.3.




     3.4 Termination of Information.



          (a) Subject to Section 3.4(b), the covenants set forth in Section 3.1,
Section 3.2 and Section 3.3 shall terminate and be of no further force or effect as
they apply to the Major Investors and TERI on the earliest to occur of (i) immediately before the
consummation of the Qualified IPO, (ii) on the terms and conditions set forth within such sections
or (iii) when the Company first becomes subject to the periodic reporting requirements of Section
12(g) or 15(d) of the Exchange Act, whichever event occurs first.



          (b) In addition, the covenants set forth in Section 3.1 and Section 3.2 shall
terminate and be of no further force or effect as they apply to TERI on the earliest to occur of
(i) the merger, acquisition or consolidation of TERI into or with any other entity or entities
which results in the exchange of outstanding voting securities of TERI for securities or other
consideration issued or paid or caused to be issued or paid by any such entity or affiliate thereof
pursuant to which the equity owners of TERI immediately prior to the transaction do not own a
majority of the outstanding voting securities of the surviving corporation immediately after the
transaction, or any sale, lease, license (on an exclusive basis) or transfer by TERI of all or
substantially all its assets, (ii) TERI has breached and/or is in default under that certain
Amended and Restated Engineering Services Agreement dated as of October 13, 2006, as amended, by and
among TERI, GTI Ventures LLC, a Delaware limited liability company, and the Company (as successor
to Glori Oil LLC, a Delaware limited liability company) and such breach and/or default has not been
cured within the applicable cure period, if any, (iii) TERI institutes or has instituted against it
bankruptcy or insolvency proceedings, or TERI is liquidated, dissolved or ceases business
operations, or (iv) TERI transfers any Shares to a person or entity other than an Affiliate.



     3.5 Confidentiality. TERI and each Investor agrees that it will keep confidential and
will not disclose, divulge, or use for any purpose (other than to monitor its investment in the
Company) any confidential information obtained from the Company pursuant to the terms of this
Agreement (including notice of the Company’s intention to file a registration statement), unless
such confidential information (a) is known or becomes known to the public in general (other than as
a result of a breach of this Section 3.5), (b) is or has been independently developed or conceived
by TERI or the Investor, as applicable, without use of the Company’s confidential information, or
(c) is or has been made known or disclosed to TERI or the Investor, as applicable, by a third party
without a breach of any obligation of confidentiality such third party may have to the Company;
provided, however, that TERI and each Investor may disclose confidential information (i) to its
attorneys, accountants, consultants, and other professionals to the extent necessary to obtain
their services in connection with monitoring its investment in the Company; (ii) to any prospective
purchaser of any Registrable Securities from such Investor, if such prospective purchaser agrees to
be bound by the provisions of this Section 3.4, provided that the Board of Directors has not
reasonably determined that such prospective purchaser is a competitor of the Company; (iii) to any
existing or prospective Affiliate, partner, member, stockholder, or wholly owned subsidiary of TERI
or such Investor, as applicable, in the ordinary course of business, provided that TERI or
the Investor, as applicable, informs such Person that



19









 




such information is confidential and directs
such Person to maintain the confidentiality of such information; or (iv) as may otherwise be
required by law, provided that TERI or the Investor, as applicable, promptly notifies the Company
of such disclosure and takes reasonable steps to minimize the extent of any such required
disclosure.




4. Rights to Future Stock Issuances. 




     4.1 Right of First Offer. Subject to the terms and conditions of this Section
4.1 and applicable securities laws, if the Company proposes to offer or sell any New
Securities, the Company shall first offer such New Securities to each Investor and TERI. TERI and
each Investor shall be entitled to apportion the right of first offer hereby granted to it among
itself and its Affiliates in such proportions as it deems appropriate.



          (a) The Company shall give notice (the “Offer Notice”) to TERI and each Investor, stating (i)
its bona fide intention to offer such New Securities, (ii) the number of such New Securities to be
offered, and (iii) the price and terms, if any, upon which it proposes to offer such New
Securities.



          (b) By notification to the Company within twenty (20) days after the Offer Notice is given,
TERI and each Investor may elect to purchase or otherwise acquire, at the price and on the terms
specified in the Offer Notice, up to that portion of such New Securities which equals the
proportion that the Common Stock issued and held, or issuable (directly or indirectly) upon
conversion and/or exercise, as applicable, of the Preferred Stock and any other Derivative
Securities then held, by TERI or such Investor, as applicable, bears to the total Common Stock of
the Company then outstanding (assuming full conversion and/or exercise, as applicable, of all
Preferred Stock and other Derivative Securities). At the expiration of such twenty (20) day
period, the Company shall promptly notify each Investor that elects to purchase or acquire all the
shares available to it (each, a “Fully Exercising Investor”) and, if TERI elects to purchase or
acquire all the shares available to it, TERI, of any Investor’s or TERI’s failure to do likewise.
During the ten (10) day period commencing after the Company has given such notice, each Fully
Exercising Investor and, if applicable, TERI, may, by giving notice to the Company, elect to
purchase or acquire, in addition to the number of shares specified above, up to that portion of the
New Securities for which TERI or the Investors were entitled to subscribe but that were not
subscribed for, which is equal to the proportion that the Common Stock issued and held, or issuable
upon conversion and/or exercise, as applicable, of Preferred Stock and any other Derivative
Securities then held, by such Fully Exercising Investor or TERI, as applicable, bears to the Common
Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as
applicable, of the Preferred Stock and any other Derivative Securities then held, by all Fully
Exercising Investors and, if applicable, TERI, who wish to purchase such unsubscribed shares. The
closing of any sale pursuant to this Section 4.1(b) shall occur within the later of one
hundred twenty (120) days of the date that the Offer Notice is given and the date of initial sale
of New Securities pursuant to Section 4.1(c).



          (c) If all New Securities referred to in the Offer Notice are not elected to be purchased or
acquired as provided in Section 4.1(b), the Company may, during the ninety (90) day period
following the expiration of the periods provided in Section 4.1(b), offer and sell the
remaining unsubscribed portion of such New Securities to any Person or Persons at a price not



20









 




less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice.
If the Company does not enter into an agreement for the sale of the New Securities within such
period, or if such agreement is not consummated within thirty (30) days of the execution thereof,
the right provided hereunder shall be deemed to be revived and such New Securities shall not be
offered unless first reoffered to the Investors in accordance with this Section 4.1.




          (d) The right of first offer in this Section 4.1 shall not be applicable to (i)
Exempted Securities (as defined in the Company’s Certificate of Incorporation); (ii) shares of
Common Stock issued in the Qualified IPO; (iii) securities issued in connection with an acquisition
by the Company that is not a Deemed Liquidation Event pursuant to Section 2.3.1 of the Company’s
Certificate of Incorporation and (iv) the issuance of shares of Series C Preferred Stock pursuant
to Section 1.2 of the Purchase Agreement.



          (e) The right of first offer set forth in this Section 4.1 shall terminate with
respect to TERI and any Investor who fails to purchase, in any transaction subject to this
Section 4.1, all of its pro rata amount of the New Securities allocated to it pursuant to
this Section 4.1. Following any such termination, this Section 4.1 shall not apply to TERI or such
Investor, as applicable.



     4.2 Termination.



          (a) Subject to Section 4.2(b), the covenants set forth in Section 4.1 shall terminate
and be of no further force or effect as they apply to Investors and TERI on the earliest to occur
of (i) immediately before the consummation of the Qualified IPO, (ii) when the Company first
becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange
Act, or (iii) upon a Deemed Liquidation Event, as such term is defined in the Company’s Certificate
of Incorporation, whichever event occurs first.



          (b) In addition, the covenants set forth in Section 4.1 shall terminate and be of no
further force or effect as they apply to TERI on the earliest to occur of any of the events
specified in Section 3.4(b)(i), (ii), (iii) and/or (iv).



5. Additional Covenants. 




     5.1 Insurance. The Company shall (i) maintain its Directors and Officers Errors and
Omissions insurance on the terms and in the amounts reasonably requested by the holders of a
majority of the shares of the Series B Preferred Stock and Series C Preferred Stock, voting
together as a single class, but such amount not to exceed $1,000,000 unless approved by the
Company’s Board of Directors and (ii) within ninety (90) days of the request of the Board of
Directors, obtain from financially sound and reputable insurers term “key-person” insurance on such
persons specified by the Board of Directors, each in an amount satisfactory to the Board of
Directors, and will use commercially reasonable efforts to cause such insurance policies to be
maintained until such time as the Board of Directors determines that such insurance should be
discontinued. The key-person policy shall name the Company as loss payee, and neither policy shall
be cancelable by the Company without prior approval of the Board of Directors including the Series
B Directors.




21











 





     5.2 Employee Agreements. The Company will cause (i) each person now or hereafter
employed by it or by any subsidiary (or engaged by the Company or any subsidiary as a
consultant/independent contractor) with access to confidential information and/or trade secrets to
enter into a nondisclosure and proprietary rights assignment agreement and (ii) each Key Employee
to enter into a one (1) year noncompetition and nonsolicitation agreement, each substantially in
the form approved by the Board of Directors including the Series B Directors. In addition, the
Company shall not amend, modify, terminate, waive, or otherwise alter, in whole or in part, any of
the above-referenced agreements or any restricted stock agreement between the Company and any
employee, without the unanimous consent of the Series A Directors and the Series B Directors.



     5.3 Employee/Executive Compensation. The Company shall establish a Compensation Committee
of the Board of Directors, which shall include one Series A Director and each of the Series B
Directors. All compensation matters, other than annual compensation for rank and file employees
and matters delegated to the officers, shall be approved by or recommended to the Board for
approval by the Compensation Committee.



     5.4 Employee Vesting. Unless otherwise approved by the Board of Directors, including
the Series B Directors, all future employees and consultants of the Company who purchase, receive
options to purchase, or receive awards of shares of the Company’s capital stock after the date
hereof shall be required to execute restricted stock or option agreements, as applicable, providing
for (i) vesting of shares over a four (4) year period, with the first twenty-five percent (25%) of
such shares vesting following twelve (12) months of continued employment or service, and the
remaining shares vesting in equal monthly installments over the following thirty-six (36) months,
and (ii) a market stand-off provision substantially similar to that in Section 2.11. In
addition, unless otherwise approved by the Board of Directors, including the Series B Directors,
the Company shall retain a “right of first refusal” on employee transfers until the Company’s
Qualified IPO and shall have the right to repurchase unvested shares at cost upon termination of
employment of a holder of restricted stock.



     5.5 Qualified Small Business Stock. The Company shall use commercially reasonable
efforts to cause the shares of the Preferred Stock issued pursuant to the Purchase Agreement, as
well as any shares into which such shares are converted, within the meaning of Section 1202(f) of
the Internal Revenue Code (the “Code”), to constitute “qualified small business stock” as defined
in Section 1202(c) of the Code; provided, however, that such requirement shall not be
applicable if the Board of Directors of the Company determines, in its good-faith business
judgment, that such qualification is inconsistent with the best interests of the Company. The
Company shall submit to its stockholders (including the Investors) and to the Internal Revenue
Service any reports that may be required under Section 1202(d)(1)(C) of the Code and the
regulations promulgated thereunder. In addition, within twenty (20) business days after any
Investor’s written request therefor, the Company shall, at its option, either (i) deliver to such
Investor a written statement indicating whether (and what portion of) such Investor’s interest in
the Company constitutes “qualified small business stock” as defined in Section 1202(c) of the Code
or (ii) deliver to such Investor such factual information in the Company’s possession as is
reasonably necessary to enable such Investor to determine whether (and what portion of) such
Investor’s interest in the Company constitutes “qualified small business stock” as defined in
Section 1202(c) of the Code.



22









 





     5.6 Matters Requiring Investor Director Approval. So long as at least 20% of the
Series B Preferred Stock issued pursuant to the Purchase Agreement remains outstanding, the Company
hereby covenants and agrees with each of the Investors that it shall not, without approval of the
Board of Directors (including a majority
of the Series B Directors):



          (a) make, or permit any subsidiary to make, any loan or advance to, or own any stock or other
securities of, any subsidiary or other corporation, partnership, or other entity unless it is
wholly owned by the Company;




          (b) make, or permit any subsidiary to make, any loan or advance to any Person, including,
without limitation, any employee or director of the Company or any subsidiary, except advances and
similar expenditures in the ordinary course of business or under the terms of an employee stock or
option plan approved by the Board of Directors;




          (c) guarantee, directly or indirectly, or permit any subsidiary to guarantee, directly or
indirectly, any indebtedness except for trade accounts of the Company or any subsidiary arising in
the ordinary course of business;




          (d) make any investment other than investments in prime commercial paper, money market funds,
certificates of deposit in any United States bank having a net worth in excess of $100,000,000 or
obligations issued or guaranteed by the United States of America, in each case having a maturity
not in excess of two years;




          (e) incur any aggregate indebtedness in excess of $10,000 that is not already included in a
budget approved by the Board of Directors, other than trade credit incurred in the ordinary course
of business;




          (f) otherwise enter into or be a party to any transaction with any director, officer, or
employee of the Company or any “associate” (as defined in Rule 12b-2 promulgated under the Exchange
Act) of any such Person, except for transactions contemplated by this Agreement, the Purchase
Agreement or transactions made in the ordinary course of business and pursuant to reasonable
requirements of the Company’s business and upon fair and reasonable terms that are approved by a
majority of the Board of Directors;




          (g) hire, terminate, or change the compensation of any employee holding the title of director
or above, including approving any option grants or stock awards to any such employee;




          (h) change the principal business of the Company, enter new lines of business, or exit the
current line of business;




          (i) sell, assign, license, pledge, or encumber material technology or intellectual property,
other than licenses granted in the ordinary course of business; or




          (j) enter into any corporate strategic relationship involving the payment, contribution, or
assignment by the Company or to the Company of money or assets greater than $100,000.




23









 








     5.7 Matters Requiring Approval of Lead Investors. So long as 20% of (i) the Series B
Preferred Stock issued as of October 15, 2009 and (ii)
the Series C Preferred Stock issued as of the date of the Initial Closing (as defined in the
Purchase Agreement) remains outstanding, the Company will not take any action contemplated by
paragraph 3.3 of Section B of Article Fourth of the Company’s Certificate of Incorporation (titled
“Series B Preferred Stock and Series C Preferred Stock Protective Provisions”) without the approval
of at least 66-2/3% of the Series B Preferred Stock and Series C Preferred Stock, voting together
as a single class.



     5.8 Meetings of the Board of Directors. Unless otherwise determined by the vote of a
majority of the directors then in office, the Board of Directors shall meet at least quarterly in
accordance with an agreed-upon schedule.



     5.9 Successor Indemnification. If the Company or any of its successors or assignees
consolidates with or merges into any other Person and is not the continuing or surviving
corporation or entity of such consolidation or merger, then to the extent necessary, proper
provision shall be made so that the successors and assignees of the Company assume the obligations
of the Company with respect to indemnification of members of the Board of Directors as in effect
immediately before such transaction, whether such obligations are contained in the Company’s
Bylaws, its Certificate of Incorporation, or elsewhere, as the case may be.



     5.10 Board Expenses. The Company shall reimburse the nonemployee directors and board
observers entitled to attend meetings of the Board of Directors pursuant to Section 3.3(d)
above for all reasonable out-of-pocket travel expenses incurred (consistent with the Company’s
travel policy and excluding first class airfare) in connection with attending the meetings of the
Board of Directors (such reimbursement only to be available for one board meeting each quarter).



     5.11 Intentionally Omitted.



     5.12 Further Registration Rights. Without the prior written consent of the majority
of holders of Registrable Securities, the Company shall not grant any registration rights to any
other holder, or prospective holder of securities of the Company except as described in Section 6.9
below.



     5.13 Malaysian Business Development. The Company shall use good faith efforts to
expand its Microbial Enhanced Oil Recovery business to Malaysia on a commercially reasonable
timetable.



     5.14 Termination of Covenants. The covenants set forth in this Section 5,
except for Section 5.7, shall terminate and be of no further force or effect (i)
immediately before the consummation of the Qualified IPO, (ii) when the Company first becomes subject
to the periodic reporting requirements of Section 12(g)
or 15(d) of the Exchange Act, or (iii) upon a Deemed Liquidation Event, as such term is defined in
the Company’s Certificate of Incorporation, whichever event occurs first.



24









 






	6.	 	Miscellaneous. 





     6.1 Successors and Assigns.



          (a) The rights under this Agreement may be assigned (but only with all related obligations) by
a Holder to a transferee of Registrable Securities that (i) is an Affiliate, partner, member,
limited partner, retired partner, retired member, or stockholder of a Holder, (ii) is a Holder’s
Immediate Family Member or trust for the benefit of an individual Holder or one or more of such
Holder’s Immediate Family Members or (iii) after such transfer, holds at least 5% of the shares of
Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends,
combinations, and other recapitalizations); provided, however, that (x) the Company is, within a
reasonable time after such transfer, furnished with written notice of the name and address of such
transferee and the Registrable Securities with respect to which such rights are being transferred
and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and
subject to the terms and conditions of this Agreement (including the provisions of Section 2.11)
and the other Transaction Agreements (as defined in the Purchase Agreement). For the purposes of
determining the number of shares of Registrable Securities held by a transferee, the holdings of a
transferee (1) that is an Affiliate, limited partner, retired partner, member, retired member, or
stockholder of a Holder; (2) who is a Holder’s Immediate Family Member; or (3) that is a trust for
the benefit of an individual Holder or such Holder’s Immediate Family Member shall be aggregated
together and with those of the transferring Holder; provided further that all transferees who would
not qualify individually for assignment of rights shall have a single attorney-in-fact for the
purpose of exercising any rights, receiving notices, or taking any action under this Agreement.




          (b) TERI’s rights under this Agreement may be assigned (but only with all related obligations)
by TERI to a transferee of all capital stock then-owned by TERI that is an Affiliate of TERI;
provided, however, that (x) the Company is, within a reasonable time after such transfer, furnished
with written notice of the name and address of such transferee and the capital stock with respect
to which such rights are being transferred and (y) such transferee agrees in a written instrument
delivered to the Company to be bound by and subject to the terms and conditions of this Agreement,
including without limitation the provisions of Sections 2.11 and 2.12. Upon any
other transfer by TERI of the capital stock held by it, the rights granted hereunder to TERI,
including without limitation pursuant to Sections 3, 4 and 6, shall
terminate as they apply to any transferee and be of no further force and effect, provided,
however, that the obligations in this Agreement applicable to TERI shall remain in full
force and effect and be binding on such transferee.




          (c) The terms and conditions of this Agreement inure to the benefit of and are binding upon
the respective successors and permitted assignees of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties hereto or
their respective successors and permitted assignees any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided herein.




     6.2 Governing Law. This Agreement and any controversy arising out of or relating to
this Agreement shall be governed by and construed in accordance with the General Corporation Law of
the State of Delaware as to matters within the scope thereof, and as to all other matters



25









 




shall be
governed by and construed in accordance with the internal laws of the State of New York, without
regard to conflict of law principles that would result in the application of any law other than the
law of the State of New York.




     6.3 Counterparts; Facsimile. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement may also be executed and delivered by facsimile
signature and in two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.



     6.4 Titles and Subtitles. The titles and subtitles used in this Agreement are for
convenience only and are not to be considered in construing or interpreting this Agreement.



     6.5 Notices. All notices, requests, and other communications given or made pursuant
to this Agreement shall be in writing and shall be deemed effectively given, delivered and received
(i) upon personal delivery to the party to be notified; (ii) when sent by confirmed electronic mail
or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then
on the next business day; (iii) five (5) days after having been sent by registered or certified
mail, return receipt requested, postage prepaid; or (iv) one (1) business day after the business
day of deposit with a nationally recognized overnight courier, specifying next-day delivery, with
written verification of receipt. All communications shall be sent to the respective parties at
their addresses as set forth on Schedule A hereto, or to the principal office of the
Company and to the attention of the Chief Executive Officer, in the case of the Company, or to such
email address, facsimile number, or address as subsequently modified by written notice given in
accordance with this Section 6.5. Notices to TERI shall be sent to Darbari Seth Block I H
C Complex, Ledhi Road, New Delhi 110 003, India. If notice is given to the Company, a copy shall
also be sent to Fulbright & Jaworski L.L.P., Fulbright Tower, 1301 McKinney, Suite 5100, Houston,
Texas, 77010-3095, Attn: Charles D. Powell. If notice is given to the Investors, a copy shall also
be given to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston,
Massachusetts, Attn: Lewis Geffen. In the case of Rawoz, a copy of the notice shall also be sent
to Mr. K S Cheema, Executive Director (Legal & Projects), Omar Zawawi Establishment LLC at Post Box
879, Postal Code 100, Muscat, Oman, e-mail k.s.cheema@omzest.com / Fax No. 00968-24738454.



     6.6 Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a particular
instance, and either retroactively or prospectively) only with the written consent of the Company
and the holders of a majority of the Registrable Securities then outstanding; provided that
the Company may in its sole discretion waive compliance with Section 2.12(c) (and the
Company’s failure to object promptly in writing after notification of a proposed assignment
allegedly in violation of Section 2.12(c) shall be deemed to be a waiver); and provided
further that any provision hereof may be waived by any waiving party on such party’s own behalf,
without the consent of any other party; provided, however, that Sections 3,
4 and, to the extent applicable to Sections 3 and 4, Section 6 of
this Agreement as they are applicable to TERI shall not be amended, modified or terminated, and the
observance of any term thereunder may not be waived with respect to TERI, without TERI’s written
consent unless such amendment, modification, termination or waiver applies in the same fashion to
TERI and all Investors to which such section



26









 




applies; provided, further, that
Section 2.1(a), Section 3.3, Section 5.6 and Section 5.7 shall not
be amended, modified or terminated without the written consent of at least 66-2/3% of the holders
of the then outstanding shares of the Series B Preferred Stock and Series C Preferred Stock;
provided that, that any amendment or waiver that affects the holders of Series C Preferred Stock
that do not hold Series B Preferred Stock in a different manner than the holders of Series C
Preferred Stock or the Affiliates of holders of Series C Preferred Stock that also hold Series B
Preferred Stock, then the consent of a majority of the shares held by the holders of Series C
Preferred Stock not holding Series B Preferred Stock or not Affiliates of holders of Series B
Preferred Stock will be required. Notwithstanding the foregoing, this Agreement may not be amended
or terminated and the observance of any term hereof may not be waived with respect to any Investor
without the written consent of such Investor, unless such amendment, termination, or waiver applies
to all Investors in the same fashion (it being agreed that a waiver of the provisions of
Section 4 with respect to a particular transaction shall be deemed to apply to all
Investors in the same fashion if such waiver does so by its terms, notwithstanding the fact that
certain Investors may nonetheless, by agreement with the Company, purchase securities in such
transaction). The Company shall give prompt notice of any amendment or termination hereof or waiver
hereunder to any party hereto that did not consent in writing to such amendment, termination, or
waiver. Any amendment, termination, or waiver effected in accordance with this Section 6.6
shall be binding on all parties hereto, regardless of whether any such party has consented thereto.
No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or
more instances, shall be deemed to be or construed as a further or continuing waiver of any such
term, condition, or provision. Notwithstanding anything herein to the contrary, Sections
1.17 and 3.3 and this Article 6, as they are applicable to ETV, shall not be
amended, modified or terminated, and the observance of any term thereunder may not be waived with
respect to ETV, without ETV’s written consent. Further, Sections 1.17 and 3.3 and
this Article 6, as they are applicable to Gentry, shall not be amended, modified or
terminated, and the observance of any term thereunder may not be waived with respect to Gentry,
without Gentry written consent.




     6.7 Severability. In case any one or more of the provisions contained in this
Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid,
illegal, or unenforceable provision shall be reformed and construed so that it will be valid,
legal, and enforceable to the maximum extent permitted by law.



     6.8 Aggregation of Stock. All shares of Registrable Securities held or acquired by
Affiliates shall be aggregated together for the purpose of determining the availability of any
rights under this Agreement.



     6.9 Additional Investors. Notwithstanding anything to the contrary contained herein,
if the Company issues additional shares of the Company’s Series C Preferred Stock after the date
hereof, whether pursuant to the Purchase Agreement or otherwise, any purchaser of such shares of
the Series C Preferred Stock may become a party to this Agreement by executing and delivering an
additional counterpart signature page to this Agreement, and thereafter shall be deemed an
“Investor” for all purposes hereunder. No action or consent by the Investors shall be required for
such joinder to this Agreement by such additional Investor, so long as such



27









 




additional Investor has
agreed in writing to be bound by all of the obligations as an “Investor” hereunder.




     6.10 Entire Agreement. This Agreement (including any Schedules and Exhibits hereto)
constitutes the full and entire understanding and agreement among the parties with respect to the
subject matter hereof, and any other written or oral agreement relating to the subject matter
hereof existing between the parties is expressly canceled.



     6.11 Dispute Resolution. Any unresolved controversy or claim arising out of or
relating to this Agreement, except (i) as otherwise provided in this Agreement, or (ii) for any
such controversies or claims arising out of either party’s intellectual property rights for which a
provisional remedy or equitable relief is sought, shall be submitted to arbitration by one
arbitrator mutually agreed upon by the parties, and if no agreement can be reached within thirty
(30) days, then by one arbitrator having reasonable experience in corporate finance transactions of
the type provided for in this Agreement and who is chosen by the American Arbitration Association
(the “AAA”). The arbitration shall take place in Houston, Texas (unless otherwise agreed to in
writing by the parties to the arbitration), in accordance with the AAA rules then in effect, and
judgment upon any award rendered in such arbitration will be binding and may be entered in any
court having jurisdiction thereof. There shall be limited discovery prior to the arbitration
hearing as follows: (a) exchange of witness lists and copies of documentary evidence and documents
relating to or arising out of the issues to be arbitrated, (b) depositions of all party witnesses
and (c) such other depositions as may be allowed by the arbitrators upon a showing of good cause.
Depositions shall be conducted in accordance with the New York Code of Civil Procedure, the
arbitrator shall be required to provide in writing to the parties the basis for the award or order
of such arbitrator, and a court reporter shall record all hearings, with such record constituting
the official transcript of such proceedings. The prevailing party shall be entitled to reasonable
attorney’s fees, costs, and necessary disbursements in addition to any other relief to which such
party may be entitled.



     6.12 Delays or Omissions. No delay or omission to exercise any right, power, or
remedy accruing to any party under this Agreement, upon any breach or default of any other party
under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or
nondefaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach
or default, or to any similar breach or default thereafter occurring, nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. All remedies, whether under this Agreement or by law or otherwise afforded
to any party, shall be cumulative and not alternative.



     6.13 Acknowledgment. The Company acknowledges that the Investors are in the business
of venture capital investing and therefore review the business plans and related proprietary
information of many enterprises, including enterprises which may have products or services which
compete directly or indirectly with those of the Company. Nothing in this Agreement shall preclude
or in any way restrict the Investors from investing or participating in any particular enterprise
whether or not such enterprise has products or services which compete with those of the Company.



28









 





     6.14 Use of Name. None of the Company, TERI or any Investor shall use ETV’s name,
logo or mark, or the name, logo or mark of any of ETV’s members, in any manner, context or format
(including without limitation reference on or links to websites, press release, etc.) without the
prior written approval of ETV.



[Signature Page Follows]




29









 





     IN WITNESS WHEREOF, the parties have executed this Third Amended and Restated Investors’
Rights Agreement as of the date first written above.



	 	 	 	 	 

	 	 	GLORI ENERGY INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Stuart Page
	 

	 	 	 	 
	 

	 	 	 	Stuart Page, President and Chief Executive
Officer
	 
	 	 	 	 
	 

	 	Address:
	 	4315 South Drive
	 

	 	 	 	Houston, TX 77053
	 
	 	 	 	 
	 	 	THE ENERGY AND RESOURCES INSTITUTE
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Dr. R. K.Pachauri
	 

	 	 	 	 
	 

	 	Name:
	 	Dr. R. K.Pachauri
	 

	 	Title:
	 	Director General, TERI






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THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]







 









 








	 	 	 	 	 

	 	 	GENTRY-GLORI ENERGY INVESTMENT LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Larry Aschebrook
	 

	 	 	 	 
	 

	 	Name:
	 	Larry Aschebrook
	 

	 	Title:
	 	Managing Member






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THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]




 









 






	 	 	 	 	 

	 	 	ENERGY TECHNOLOGY VENTURES, LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Kevin Skillern
	 

	 	Name:
	 	Kevin Skillern
	 

	 	Title:
	 	Managing Director
	 
	 	 	 	 
	 

	 	Address:
	 	c/o GE Capital, Equity
	 

	 	 	 	Attn: Account Manager, Equity
	 

	 	 	 	201 Merritt 7
	 

	 	 	 	Norwalk, CT 06851






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THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]




 









 









	 	 	 	 	 

	 	 	GTI GLORI OIL FUND I L.P.
	 
	 	 	 	 
	 

	 	By:

By:

By:
	 	GTI Co-Investment L.P., its General Partner 

GTI Ventures LLC, its General Partner 

GTI Holdings LLC, its sole Member
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jonathan Schulhof
	 

	 	 	 	 
	 

	 	 	 	Jonathan Schulhof, President
	 
	 	 	 	 
	 

	 	Address:
	 	 150 East 58th Street
	 

	 	 	 	24th Floor
	 

	 	 	 	New York, NY 10155
	 
	 	 	 	 
	 	 	GTI VENTURES, LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jonathan Schulhof
	 

	 	 	 	 
	 

	 	 	 	Jonathan Schulhof, President
	 
	 	 	 	 
	 

	 	Address:
	 	 150 East 58th Street
	 

	 	 	 	24th Floor
	 

	 	 	 	New York, NY 10155






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THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]






 









 








	 	 	 	 	 
	 	KPCB HOLDINGS, INC., AS NOMINEE

 	 
	 	By:  	/s/ Eric Keller
 	 
	 	 	Name:  	Eric Keller 	 
	 	 	Title:  	President 	 
	 



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AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]






 









 








	 	 	 	 	 

	 	 	OXFORD BIOSCIENCE PARTNERS V L.P. 

By: OBP Management V L.P.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Matthew A. Gibbs
	 

	 	 	 	Matthew A. Gibbs – General Partner
	 
	 	 	 	 
	 	 	mRNA FUND V L.P. 

By: OBP Management V L.P.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Matthew A. Gibbs
	 

	 	 	 	 
	 

	 	 	 	Matthew A. Gibbs – General Partner






[SIGNATURE PAGE TO GLORI ENERGY INC.

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]







 









 








	 	 	 	 	 

	 	 	MALAYSIAN LIFE SCIENCES CAPITAL FUND LTD.
	 
	 	 	 	 
	 

	 	By:
	 	Malaysian Life Sciences Capital Fund
	 

	 	 	 	Management Company Ltd, its Manager
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Dr. Roger Earl Wyse
	 

	 	 	 	 
	 

	 	 	 	Dr. Roger Earl Wyse, Co-Chairman






[SIGNATURE PAGE TO GLORI ENERGY INC.

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SCHEDULE A

Investors




Oxford Bioscience Partners V L.P.

222 Berkeley St, Suite 1960

Boston, MA 02116




mRNA Fund V L.P.

222 Berkeley St, Suite 1960

Boston, MA 02116




Rawoz Technology Company Ltd.

(RAWOZ)

c/o H&J Corporate Services Ltd.

Ocean Centre, Montagu Foreshore

East Bay Street

PO Box SS 19084

Nassau, Bahamas



With a copy to:

Mr. K S Cheema

Omar Zawawi Establishment LLC

PO Box 879, PC 100

Muscat, Oman




Malaysian Life Sciences Capital Fund Ltd.

c/o Burrill & Company

One Embarcadero Center, Suite 2700

San Francisco, CA 94111




GTI Glori Oil Fund I L.P.

540 Madison Avenue, 28th Floor

New York, NY 10022




GTI Ventures, LLC

540 Madison Avenue, 28th Floor

New York, NY 10022




KPCB Holdings, Inc.

2750 Sand Hill Road

Menlo Park, CA 94025




Gentry-Glori Energy Investment LLC

c/o Gentry Financial Partners




 









 





205 N. Michigan Ave., Suite 3770

Chicago, IL 60601

Attn: Thomas B. Raterman




Energy Technology Ventures, LLC




c/o GE Capital, Equity

Attn: Account Manager, Equity

201 Merritt 7

Norwalk, CT 06851

Fax: (203) 956-4005



With a copy to (which shall not constitute notice):



c/o GE Energy Financial Services

Attn: Portfolio Manager, VC

800 Long Ridge Road

Stamford, CT 06927

Fax: (203) 585-0758