Document:

Exhibit 4.2

 

 

 

OPTINOSE, INC.

 

 

 

SECOND AMENDED AND RESTATED 

REGISTRATION RIGHTS AGREEMENT

 

 

Dated as of March 24, 2017

 

 

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
Demand Registration
    	
3
    
	
 
    	
 
    	
 
    
	
3.
    	
Piggy-Back Registration
    	
5
    
	
 
    	
 
    	
 
    
	
4.
    	
Obligations of the   Company
    	
5
    
	
 
    	
 
    	
 
    
	
5.
    	
Furnish Information
    	
8
    
	
 
    	
 
    	
 
    
	
6.
    	
Expenses of Demand   Registration
    	
8
    
	
 
    	
 
    	
 
    
	
7.
    	
Expenses of Company   Registration
    	
9
    
	
 
    	
 
    	
 
    
	
8.
    	
Underwriting Requirements
    	
9
    
	
 
    	
 
    	
 
    
	
9.
    	
Indemnification
    	
9
    
	
 
    	
 
    	
 
    
	
10.
    	
Reports Under the   Exchange Act
    	
11
    
	
 
    	
 
    	
 
    
	
11.
    	
Assignment of   Registration Rights
    	
12
    
	
 
    	
 
    	
 
    
	
12.
    	
No Other Registration   Rights; Limitations on Subsequent Registration Rights
    	
12
    
	
 
    	
 
    	
 
    
	
13.
    	
“Market Stand-Off”   Agreement
    	
13
    
	
 
    	
 
    	
 
    
	
14.
    	
Amendment; Waiver
    	
13
    
	
 
    	
 
    	
 
    
	
15.
    	
Changes in Registrable   Securities
    	
13
    
	
 
    	
 
    	
 
    
	
16.
    	
Entire Agreement
    	
14
    
	
 
    	
 
    	
 
    
	
17.
    	
Governing Law
    	
14
    
	
 
    	
 
    	
 
    
	
18.
    	
Submission to   Jurisdiction
    	
14
    
	
 
    	
 
    	
 
    
	
19.
    	
WAIVER OF JURY TRIAL
    	
14
    
	
 
    	
 
    	
 
    
	
20.
    	
Successors and Assigns
    	
14
    
	
 
    	
 
    	
 
    
	
21.
    	
Notices
    	
14
    
	
 
    	
 
    	
 
    
	
22.
    	
Severability
    	
15
    
	
 
    	
 
    	
 
    
	
23.
    	
Descriptive Headings
    	
15
    
	
 
    	
 
    	
 
    
	
24.
    	
Delays or Omissions;   Remedies Cumulative
    	
15
    
	
 
    	
 
    	
 
    
	
25.
    	
Attorneys’ Fees
    	
15
    
	
 
    	
 
    	
 
    
	
26.
    	
Counterparts; Facsimile   Transmission
    	
15
    
	
 
    	
 
    	
 
    
	
SCHEDULE A
    	
20
    

 

i

 

SECOND AMENDED AND RESTATED 
 REGISTRATION RIGHTS AGREEMENT

 

This Second Amended and Restated Registration Rights Agreement (this “Agreement”) is made as of March 24, 2017, by and among OPTINOSE, INC., a Delaware corporation (the “Company”), and the holders of Series D Shares, Series C-2 Shares, Series C-1 Shares, Series C Shares and Series B Shares of the Company identified on the signature pages hereto (collectively, the “Investors”).

 

RECITALS:

 

A.            WHEREAS, the Company and certain of the Investors (the “Prior Holders”) are party to that certain Amended and Restated Registration Rights Agreement, dated July 22, 2014 (the “Prior Agreement”);

 

B.            WHEREAS, the Company and certain of the Investors are entering into a Series D Subscription Agreement, dated the date hereof and as amended from time to time (the “Subscription Agreement”) pursuant to which the Company shall issue to such Investors Series D Shares (as defined herein);

 

C.            WHEREAS, the Company and certain of the Investors are entering into a Note Conversion Agreement (the “Note Conversion Agreement”), dated the date hereof, pursuant to which the Company shall issue to such Investors Series C-2 Shares (as defined herein);

 

D.            WHEREAS, the initial closing and each subsequent closing of the transactions contemplated by the Subscription Agreement and such note conversion agreement are subject to certain conditions, including the conditions that the Company and certain of the Investors shall enter into this Agreement, amending and restating the Prior Agreement in its entirety; and

 

E.            WHEREAS, the Company and the Prior Holders, holding a sufficient number of and class(es) of shares of the Company’s capital stock to amend the Prior Agreement pursuant to its terms, desire to amend and restate, in its entirety, the Prior Agreement, and enter into this Agreement for the purpose of setting forth certain rights and obligations of the Investors.

 

Accordingly, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree to amend and restate the Prior Agreement and further agree as follows:

 

1.                                      Definitions.

 

(a)           “Affiliates” means, with respect to any Investor, any Person or entity that, directly or indirectly, controls, is controlled by or is under common control with such Investor, including, without limitation, any general partner, officer, director, nominee, member or manager of such Investor and any venture capital or private equity fund now or hereafter existing which is controlled by one or more general partners of or managing members of, or shares the same management company or nominee or a management company that, directly or indirectly, is under common control with such management company, including having a common general partner, officer, director or manager with such management company, as such Investor, and the

 

 

participants of any pooled investment fund organized, managed or directed by an Investor for the benefit of its partners, officers, members or employees or their dependents and in relation to any such Persons any trustee or nominee for, or a successor by reorganization of, a family trust or a qualified pension trust.

 

(b)           “Avista Entities” means Avista Capital Partners II, LP, Avista Capital Partners (Offshore) II, LP, And Avista Capital Partners (Offshore) II-A, LP.

 

(c)           “Charter” means the Third Amended and Restated Certificate of Incorporation of the Company dated as of March 24, 2017, as the same may be amended from time to time.

 

(d)           “Common Shares” means common shares of the Company, with par value $0.001 per share.

 

(e)           “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder.

 

(f)            “FINRA” means the Financial Industry Regulatory Authority, Inc. or any successor organization thereto.

 

(g)           “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 which permits inclusion or incorporation of substantial information by reference to other documents filed by a registrant with the SEC.

 

(h)           “Form S-3 Notice” shall have the meaning set forth in Section 3.

 

(i)            “Holder” means any Person owning or having the right to acquire Registrable Securities, or any assignee thereof in accordance with Section 12.

 

(j)            “Initial Closing” shall have the meaning set forth in the Subscription Agreement.

 

(k)           “Initial Public Offering” means the Company’s first underwritten public offering of its Common Shares under the Securities Act.

 

(l)            “Investor Request” shall have the meaning set forth in Section 2(a).

 

(m)          “Maximum Offering Size” shall have the meaning set forth in Section 2(b).

 

(n)           “Notice of Investor Request” means the notice set forth in Section 2(a).

 

(o)           “Permitted Transferee” shall have the meaning assigned to it in the Shareholders’ Agreement.

 

(p)           “Person” means any individual, partnership, limited liability company, joint venture, corporation, association, trust or any other entity or organization.

 

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(q)           “Preferred Shares” means collectively the Series A Shares, the Series B Shares, the Series C Shares, Series C-1 Shares, Series C-2 Shares and the Series D Shares of the Company.

 

(r)            “Register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document.

 

(s)            “Registrable Securities” means (1) any Common Shares that are directly or indirectly issuable or issued upon conversion of Preferred Shares outstanding on the date hereof or Preferred Shares purchased pursuant to the Subscription Agreement and held directly or indirectly by an Investor, (2) any Common Shares that become issuable or issued upon conversion of Preferred Shares outstanding after the date hereof and are held directly or indirectly by an Investor, (3) any Common Shares otherwise owned by an Investor, including any Common Shares issued or issuable upon the conversion, exchange or exercise of any warrant, right or other security or which are issued as a dividend or other distribution with respect to, or in exchange for or in replacement of, or upon conversion of, Preferred Shares or Common Shares or such warrants, rights or securities, and (4) any Common Shares directly or indirectly issued or issuable to the Investors with respect to the securities referred to in clauses (1), (2) or (3) above by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization; provided, however, that a Common Share shall cease to be a Registrable Security when (i) it has been effectively registered under the Securities Act and been sold pursuant to such registration; (ii) it is sold pursuant to Rule 144 or Rule 145 or Regulation S (or any similar provisions then in force) under the Securities Act; (iii) it has otherwise been transferred or assigned pursuant to Section 12 and/or a new certificate or other evidence of ownership for it not bearing or requiring a legend as set forth in the Shareholders’ Agreement (or other legend of similar import) and not subject to any stop transfer order has been delivered by or on behalf of the Company and no other restriction on transfer exists under the Securities Act; or (iv) the Investor holding such Common Share owns in the aggregate less than one percent (1%) of the issued and outstanding Common Shares of the Company (on an as-converted basis).

 

(t)            “Registration Expenses” shall have the meaning set forth in Section 7.

 

(u)           “Requesting Investor” shall have the meaning set forth in Section 2(a).

 

(v)           “Requesting Shareholders” shall have the meaning set forth in Section 2(a).

 

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

 

(x)           “Securities Act” means the U.S. Securities Act of 1933, as amended.

 

(y)           “Series A Shares” means shares of Series A Convertible Preferred Stock, par value $0.001 per share of the Company and having the rights, privileges, preferences and restrictions set forth in the Charter.

 

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(z)           “Series B Shares” means shares of Series B-1 Convertible Preferred Stock, par value $0.001 per share, of the Company and Series B-2 Convertible Preferred Stock, par value $0.001 per share, of the Company, each having the rights, privileges, preferences and restrictions set forth in the Charter.

 

(aa)         “Series C Shares” means shares of Series C Convertible Preferred Stock, par value $0.001 per share of the Company and having the rights, privileges, preferences and restrictions set forth in the Charter.

 

(bb)         “Series C-1 Shares” means shares of Series C-1 Convertible Preferred Stock, par value $0.001 per share of the Company and having the rights, privileges, preferences and restrictions set forth in the Charter.

 

(cc)         “Series C-2 Shares” means shares of Series C-2 Convertible Preferred Stock, par value $0.001 per share of the Company and having the rights, privileges, preferences and restrictions set forth in the Charter.

 

(dd)         “Series D Shares” means shares of Series D Convertible Preferred Stock, par value $0.001 per share of the Company and having the rights, privileges, preferences and restrictions set forth in the Charter.

 

(ee)         “Shareholders’ Agreement” means that certain Second Amended and Restated Shareholders’ Agreement, dated as of March 24, 2017, by and among the Investors, the Company and the other parties thereto, as the same may be amended from time to time.

 

(ff)          “Shareholder Request” shall have the meaning set forth in Section 2(a).

 

(gg)         “Subscription Agreement” shall have the meaning set forth in the recitals.

 

(hh)         “Violation” means any of the following statements, omissions or violations:  (i) any untrue statement or alleged untrue statement of a material fact contained in a registration statement filed under or referred to in this Agreement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto or any documents filed under state securities or “blue sky” laws in connection therewith, (ii) the 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 Company of the Securities Act, the Exchange Act, any applicable state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any applicable state securities law arising from, relating to or in connection with the offer and sale of Registrable Securities pursuant to this Agreement.

 

2.                                      Demand Registration.

 

(a)           If the Company shall receive a request (each such request, an “Investor Request” and each requesting Investor, the “Requesting Investor”) from either (i) the Holders of a majority of the Series D Shares, Series C-2 Shares, Series C-1 Shares and Series C Shares, together as a single class on an as-converted basis, at any time after the earlier of (x) 60 days

 

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after the Initial Closing and (y) 180 days after the completion of an Initial Public Offering, or (ii) the Holders of a majority of the Series B Shares, together as a single class on an as-converted basis, at least 180 days after the completion of an Investor Request initiated by the Holders referred to in (i), in each case, that the Company file a registration statement under the Securities Act with respect to the proposed sale by such Requesting Investor of all or part of the Registrable Securities owned by such Requesting Investor.  Promptly after receipt of the Investor Request, the Company shall, subject to Section 14, give written notice (the “Notice of Investor Request”) of such Investor Request to all Holders and, subject to the limitations of Section 2(c) below, shall file (as expeditiously as practicable and in any event within sixty (60) days of its receipt) and use its best efforts to effect, a registration statement under the Securities Act with respect to all Registrable Securities that the Holders request to be registered (such requesting Holders together with the Requesting Investors, the “Registering Shareholders”) within ten (10) business days of the receipt the applicable Holder of the Notice of Investor Request (delivered in accordance with Section 22) ; provided, however, that no Investor Request shall be effected from Holders referred to in clause (ii) above if the aggregate gross proceeds expected to be received from the sale of the Registrable Securities requested to be included by all Registering Shareholders in such Investor Request are less than $20,000,000 (unless such Registrable Securities identified in the Investor Request constitute all remaining Registrable Securities held by the Registering Shareholders).  All requests made pursuant to this Section 2(a) will specify the aggregate number of the Registrable Securities to be registered and will also specify the intended methods of disposition thereof.

 

(b)           If the Requesting Investors intend to distribute the Registrable Securities covered by their written request by means of an underwriting, they shall so advise the Company as a part of their Investor Request and the Company shall include such information in the Notice of Investor Request.  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.  The Holders of a majority in interest of the Registrable Securities participating in the underwriting, in consultation with the Company, shall select the managing underwriter or underwriters in such underwriting.  All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in Section 5(f)) enter into an underwriting agreement in customary form with the underwriter or underwriters so selected; provided, however, that (i) no Holder (or any of their assignees) shall be required to make any representations, warranties or indemnities except as they relate to such Holder’s ownership of shares and authority to enter into the underwriting agreement and to such Holder’s intended method of distribution, and the liability of such Holder shall be limited to an amount equal to the net proceeds from the offering received by such Holder, and (ii) each Holder shall be required to deliver all questionnaires, powers of attorney, escrow and custody agreements, legal opinions and other documents customarily required under the terms of such underwriting agreement.  Notwithstanding any other provision of this Section 2, if the underwriter advises the Company and the Requesting Investor that, in its view, the number of shares of Registrable Securities requested to be included in such registration (including any securities that the Company proposes to be included that are not Registrable Securities) exceeds the largest number of shares that can be sold without having an adverse effect on such offering, including the price at which such shares can be sold (the “Maximum Offering Size”), the

 

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Company shall include in such registration, in the priority order listed below, up to the Maximum Offering Size:

 

(i) first, all Registrable Securities requested to be registered by the Registering Shareholders (allocated, if necessary for the offering not to exceed the Maximum Offering Size, pro rata among the Registering Shareholders on the basis of the relative number of Registrable Securities so requested to be included in such registration by each); and

 

(ii) second, all Registrable Securities proposed to be registered by the Company.

 

(c)           The Company shall be obligated to effect only eight (8) registrations pursuant to an Investor Request under Section 2 (it being understood that the Holders of a majority of the Series D Shares, Series C-2 Shares, Series C-1 Shares and Series C Shares, together as a single class on an as-converted basis, shall be entitled to request six (6) such registrations and the Holders of a majority of the Series B Shares, together as a single class on an as-converted basis, shall be entitled to request two (2) such registrations); provided, however, that in each case the Company shall be obligated to effect as many registrations as may be requested by Holders of Registrable Securities pursuant to any Investor Request in the event and so long as registration pursuant to Form S-3 or any similar “short-form” registration statement is available.  The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 3 if the Company has effected two registrations pursuant to Section 3 within the twelve (12) month period immediately preceding the date of such request.

 

(d)           At any time prior to the effective date of the registration statement relating to an Investor Request, the Requesting Investor may revoke such request for a registration, without liability to any of the other Holders, by providing a notice to the Company revoking such request.

 

(e)           A registration under this Section 2 shall not be deemed to have occurred:

 

(i)            unless the registration statement relating thereto (A) has become effective under the Securities Act and (B) has remained effective for a period of at least 180 days (or such shorter period in which all Registrable Securities of the Holders included in such registration have actually been sold thereunder), provided that such registration statement shall not be considered a registration pursuant to an Investor Request if, after such registration statement becomes effective, (1) such registration statement is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court, or (2) less than sixty-six and two-thirds percent (662/3%) of the Registrable Securities included in such registration statement have been sold thereunder; or

 

(ii)           if the number of Registrable Securities of the Requesting Shareholders included in the registration statement is reduced in accordance with Section 2(b) such that less than sixty-six and two-thirds percent (662/3%) of the

 

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Registrable Securities of the Registering Shareholders sought to be included in such registration are included.

 

(f)            Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this Section 2 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 of not more than sixty (60) days after the request of the Requesting Investors is given; provided, however, that the Company may not invoke this right more than twice 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 period.

 

3.                                      Registrations on Form S-3.

 

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 twenty percent (20%) 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 of at least $20,000,000, then the Company shall (i) within ten (10) days after the date such request is given, give written notice (the “Form S-3 Notice”) of such request to all Holders other than the Requesting Investors; and (ii) as soon as practicable, and in any event within thirty (30) days after the date such request is given by the Requesting Investors, 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 Form S-3 Notice is given, and in each case, subject to the limitations of Section 2(b); provided that in the case of 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, once the registration statement relating thereto has remained effective under the Securities Act for a period of at least 180 days (or such shorter period in which all Registrable Securities of the Holders included in such registration have actually been sold thereunder), such 180 day period shall be extended to 180 days after the second anniversary of the date on which such Form S-3 becomes effective (or such shorter period in which all Registrable Securities of the Holders included in such registration have actually been sold thereunder).

 

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4.                                      Piggy-Back Registration.

 

If the Company proposes to register (including for this purpose a registration effected by the Company for shareholders other than the Investors under Section 2) any of the Registrable Securities under the Securities Act in connection with the public offering of such securities solely for cash (other than a registration on Form S-8 (or similar or successor form or other registration form that would not permit the registration of the Registrable Securities) relating solely to the sale of securities to participants in a Company stock plan or to other compensatory arrangements to the extent includable on Form S-8 (or similar or successor form or other registration form that would not permit the registration of the Registrable Securities)), the Company shall, at such time, promptly give each Holder written notice of such registration.  Upon the written request of each Holder given within thirty (30) days after mailing of such notice by the Company in accordance with Section 22, the Company shall, subject to the provisions of Section 9, use its best efforts to cause to be registered under the Securities Act all of the Registrable Securities that each such Holder has requested to be registered; provided, however, that no Holder shall be entitled to register any of its Registrable Securities pursuant to this Section 4 in an Initial Public Offering unless a Holder of Series D Shares, Series C-2 Shares, Series C-1 Shares or Series C Shares is participating as a seller of Registrable Securities in such Initial Public Offering.  The Company shall have no obligation under this Section 4 to make any offering of its securities, or to complete an offering of its securities that it proposes to make.

 

5.                                      Obligations of the Company.

 

Whenever required under this Agreement to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

 

(a)                                 prepare and file as promptly as possible with the SEC a registration statement on any form for which the Company then qualifies or that counsel for the Company shall deem appropriate and which form shall be available for the sale of the Registrable Securities to be registered thereunder in accordance with the intended method of distribution thereof and use its best efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities being registered thereunder, keep such registration statement effective for up to 180 days or until the Holders have completed the distribution referred to in such registration statement, whichever occurs first (but in any event for at least any period required under the Securities Act); provided that (A) before filing such registration statement or any amendments thereto, the Company shall furnish to the Holders copies of all such documents proposed to be filed; and (B) in the case of 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 180 day period shall be extended to 180 days after the second anniversary of the date on which such Form S-3 becomes effective;

 

(b)                                 prepare and file with the SEC such amendments (including post-effective amendments) and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement and make all required filings of such amendments or supplements as soon as reasonably practicable after being notified of the matters to be incorporated in such amendments

 

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or supplements; provided, that, before filing such amendments or supplements, the Company shall furnish to the Holders copies of all such documents proposed to be filed;

 

(c)                                  furnish to the Holders such number of copies of such registration statement and of each amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus, summary prospectus and prospectus supplement), in conformity with the requirements of the Securities Act, and such other documents as Holders may reasonably request in order to facilitate the disposition of Registrable Securities owned by them;

 

(d)                                 use its best efforts to register and qualify the securities covered by such registration statement for offer and sale under such other securities or “blue sky” laws of such states or jurisdictions as shall be reasonably requested by the Holders and to do and take all other actions that be necessary or advisable to enable the Holder to consummate the disposition of such Registrable Securities in such jurisdictions; provided, that, the Company shall not be required in connection therewith or as a condition thereto (i) to qualify to do business in any state or jurisdiction where it would not otherwise be required to qualify but for the requirements of this clause (d), or (ii) to file a general consent to service of process in any such state or jurisdiction;

 

(e)                                  use best efforts to cause all Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the Company’s business or operations to enable the seller or sellers thereof to consummate the disposition of such Registrable Securities;

 

(f)                                   in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form (including as to representations and warranties and indemnification), with the managing underwriter of such offering;

 

(g)                                  promptly notify each Holder of Registrable Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event of which it has knowledge as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing;

 

(h)                                 promptly notify each Holder of Registrable Securities covered by such registration statement and such Holder’s underwriters, if any, and confirm such advice in writing:  (i) when the registration statement has become effective, (ii) when any post-effective amendment to the registration statement becomes effective and (iii) of any request by the SEC for any amendment or supplement to the registration statement or prospectus or for additional information;

 

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(i)                                     promptly notify each Holder of Registrable Securities if at any time the SEC institutes or threatens to institute any proceedings for the purpose of issuing a stop order suspending the effectiveness of the registration statement, and the Company shall use its best efforts to prevent the issuance of any such stop order or to obtain the withdrawal thereof as soon as possible;

 

(j)                                    advise each Holder of Registrable Securities promptly of any order or communication of any public board or body addressed to the Company suspending or threatening to suspend the qualification of any Registrable Securities for sale in any jurisdiction;

 

(k)                                 furnish, at the request of the Holders of a majority of the Registrable Securities being included in any such registration of Registrable Securities pursuant to this Agreement and to the underwriter, if any, (i) on the date of the closing under the underwriting agreement, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, an opinion or opinions, dated such date, of the counsel representing the Company for the purposes of such registration, in form, scope and substance as is customarily given to such Holders or underwriters, as the case may be, addressed to the underwriters, if any, or to the Holders requesting registration of Registrable Securities and (ii) on the date of execution of the underwriting agreement, a “cold comfort” letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities, and, if such securities are being sold through underwriters, a bring down of such letter to the closing date under the underwriting agreement;

 

(l)                                     make available for inspection by the Holder, by any underwriter participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by the Holder or any such underwriters, such financial and other records, corporate documents and properties of the Company as are customarily made available in connection with a “due diligence” investigation for an underwritten secondary offering, provided, however, that the Holder and the underwriters shall have entered into a confidentiality agreement reasonably acceptable to the Company;

 

(m)                             cause all such Registrable Securities to be listed on any securities exchange or quotation system on which any of the Company Common Shares is then listed, if such Registrable Securities are not already so listed and if such listing is then permitted under the rules of such exchange or trading system;

 

(n)                                 cooperate with the Holder and the managing underwriter, underwriters or agents, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations and registered in such names as such managing underwriter, underwriters or agents may request at least two business days prior to the settlement date of any sale of Registrable Securities;

 

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

 

(p)                                 provide and cause to be maintained a transfer agent, depositary and registrar for all Registrable Securities covered by such registration statement from and after a date not later than the effective date of such registration statement;

 

(q)                                 as soon as practicable after the effective date of the registration statement, and in any event within sixteen (16) months thereafter, have “made generally available to its security holders” (within the meaning of Rule 158 under the Securities Act) an earnings statement (which need not be audited) covering a period of at least twelve (12) months beginning after the effective date of the registration statement and otherwise complying with Section 11(a) of the Securities Act and Rule 158 thereunder;

 

(r)                                    cause the senior executive officers of the Company to (i) prepare and make presentations at any “road shows” and before analysts and rating agencies, as the case may be, (ii) take other actions to obtain ratings for any Registrable Securities and (iii) otherwise use their reasonable best efforts to cooperate as reasonably requested by the underwriters in the offering, marketing or selling of the Registrable Securities;

 

(s)                                   make such representations and warranties to the Holders of Registrable Securities being registered, and the underwriters or agents, if any, in form, substance and scope as are customarily made by issuers in underwritten public offerings; and

 

(t)                                    enter into such customary agreements (including underwriting and indemnification agreements) and take all such other actions as the Investors or the managing underwriter or underwriters, if any, reasonably request in order to expedite or facilitate the registration and disposition of such Registrable Securities.

 

6.                                      Furnish Information.

 

It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder’s Registrable Securities.  If any registration statement or comparable statement under the Securities Act refers to an Investor or any of its Affiliates, by name or otherwise, as the holder of any securities of the Company then, unless counsel to the Company advises the Company that the Securities Act requires that such reference be included in any such statement, each such Holder shall have the right to require the deletion of such reference to itself and its Affiliates.

 

7.                                      Expenses of Demand Registration.

 

All expenses incident to the Company’s performance of or compliance with this Agreement shall be paid by the Company, including, without limitation, (i) all registration and

 

11

 

filing fees, and any other fees and expenses associated with filings required to be made with the SEC or FINRA, (ii) all fees and expenses in connection with compliance with any securities or “Blue Sky” laws, (iii) all printing, duplicating, word processing, messenger, telephone, facsimile and delivery expenses (including expenses of printing certificates for the Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing prospectuses), (iv) all fees and disbursements of counsel for the Company (including the expenses of any opinions provided to Holders or underwriters) and of all certified public accountants of the Company (including the expenses of any special audit and cold comfort letters required by or incident to such performance), (v) Securities Act liability insurance or similar insurance if the Company so desires or the underwriters so require in accordance with then-customary underwriting practice, (vi) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange or quotation of the Registrable Securities on any inter-dealer quotation system, (vii) all applicable rating agency fees with respect to the Registrable Securities, (viii) other than with respect to any revoked registration pursuant to Section 2(d), the fees and expenses of one counsel for the Holders of Registrable Securities designated by the Holder of a majority of Registrable Securities being registered, or proposed to be registered, in any offering pursuant to the terms hereof, and the fees and expenses of counsel for each of the Avista Entities and any other Holders participating in such registration solely relating to the preparation and delivery of legal opinions for the Avista Entities or such Holders, as the case may be, in any such offering, (ix) any reasonable fees and disbursements of underwriters customarily paid by issuers or sellers of securities, (x) all fees and expenses of any special experts or other persons retained by the Company in connection with any registration, and (xi) all of the Company’s internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties).  All such expenses are referred to herein as “Registration Expenses”.  The Company shall not be required to pay any fees and disbursements to underwriters not customarily paid by issuers of securities, including underwriting discounts and commissions and transfer taxes, if any, attributable to the sale of Registrable Securities.

 

8.                                      Expenses of Company Registration.

 

The Company shall bear and pay all reasonable and customary Registration Expenses incurred in connection with any registration, filing or qualification of Registrable Securities with respect to the registrations pursuant to Section 4 for each Holder, but excluding underwriting discounts and commissions and transfer taxes, if any, relating to Registrable Securities.

 

9.                                      Underwriting Requirements.

 

In connection with any offering initiated by the Company involving an underwriting of shares being issued by the Company, the Company shall not be required under Section 4 to include any Holder’s securities in such underwriting unless such Holder accepts the terms of the underwriting as agreed upon between the Company and the underwriters, and then only in such quantity as will not, in the opinion of the underwriters, exceed the Maximum Offering Size; provided, however, that no Holder participating in such underwriting shall be required to make any representations, warranties or indemnities except as they relate to such

 

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Holder’s ownership of shares and authority to enter into the underwriting agreement and to such Holder’s intended method of distribution, and the liability of such Holder shall be limited to an amount equal to the net proceeds from the offering received by such Holder.  If requested by the underwriters for any underwritten offering requested by Holders of Registrable Securities pursuant to a registration under Section 2, the Company shall enter into an underwriting agreement with such underwriters for such offering, such agreement to be reasonably satisfactory in substance and form to the Company, the Requesting Investors and the underwriters, and to contain such representations and warranties by the Company and such other terms as are generally prevailing in agreements of that type, including indemnities no less favorable to the recipient than those provided in Section 10.   Holders of Registrable Securities proposed to be distributed by such underwriters shall be parties to such underwriting agreement, which underwriting agreement shall contain such representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such Holders of Registrable Securities as are customarily made by issuers to selling stockholders in underwritten public offerings; provided, however, that (i) no Holder (or any of their assignees) shall be required to make any representations, warranties or indemnities except as they relate to such Holder’s ownership of shares and authority to enter into the underwriting agreement and to such Holder’s intended method of distribution, and the liability of such Holder shall be limited to an amount equal to the net proceeds from the offering received by such Holder, and (ii) each Holder shall be required to deliver all questionnaires, powers of attorney, escrow and custody agreements, legal opinions and other documents customarily required under the terms of such underwriting agreement.  If the total number of securities, including Registrable Securities, requested by shareholders to be included in such offering (or in any other offering in which Holders shall have the right to include Registrable Securities pursuant to Section 4) exceeds the Maximum Offering Size, then the Company shall include in such offering, in the priority listed below, up to the Maximum Offering Size:  (A) first, that number of shares sought to be registered by the Company, (B) second, among all Holders of Registrable Securities that have elected to participate in such underwritten offering, in proportion (as nearly as practicable) to the amount of Registrable Securities requested to be included by such Holders and (C) thereafter, to the extent additional securities may be included in such offering, to other selling shareholders, if any, pro rata according to the total number of securities entitled to be included therein owned by each such other selling shareholder or in such other proportions as shall mutually be agreed to by such other selling shareholders.

 

10.                               Indemnification.

 

In the event any Registrable Securities are included in a registration statement under this Agreement:

 

(a)                                 The Company will indemnify and hold harmless each Holder, its heirs, personal representatives and assigns, each of such Holder’s officers, directors, partners, members, managers, employees and affiliates, any underwriter (as defined in the Securities Act) for 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 losses, claims, damages or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect

 

13

 

thereof) arise out of or are based upon a Violation; and the Company will pay to each such indemnified party, as incurred, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this Section 10(a) shall not cause the Company to be liable in any such case to a particular indemnified party for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such indemnified party.

 

(b)                                 Each selling Holder will indemnify and hold harmless, severally and not jointly, the Company, 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, any underwriter, any other Holder selling securities in such registration statement and any controlling Person of any such underwriter or other Holder, against any losses, claims, damages or liabilities (joint or several) to which any of the foregoing Persons may become subject, under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will pay, as incurred, any legal or other expenses reasonably incurred by any Person intended to be indemnified pursuant to this Section 10(b), in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this Section 10(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent may be withheld in the sole and absolute discretion of the Holder; and provided further, that, in no event shall the liability of any Holder under this Section 10(b) exceed the net proceeds from the offering received by such Holder.

 

(c)                                  Promptly after receipt by an indemnified party under this Section 10 of notice of the commencement of any action (including any governmental action), such indemnified party shall, if a claim in respect thereof is to be made against any indemnifying party under this Section 10, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties, acting reasonably; provided, however, that an indemnified party shall have the right to retain its own 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 conflicts of interests between such indemnified party and any other party represented by such counsel in such proceeding.  The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the indemnified party under this Section 10 or of any liability that it may have to any indemnified party otherwise than under this Section 10 unless, and then solely to the extent that, the indemnifying party is prejudiced thereby.  An indemnifying party may settle any action or claim under this Section 10 at any time without the consent of the

 

14

 

indemnified party so long as such settlement involves no cost or liability to the indemnified party and includes an unconditional release of the indemnified party from all liability with respect to such claim or action.

 

(d)                                 The obligations of the Company and Holders under this Section 10 shall survive the completion of any offering of Registrable Securities in a registration statement under this Agreement, and otherwise.

 

(e)                                  Any indemnity agreements contained herein shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and shall remain operative and in full force and effect regardless of any investigation made or omitted by or on behalf of any indemnified party.  The Company shall also indemnify underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, their officers and directors and each person who controls such persons (within the meaning of the Securities Act and Exchange Act) to the same extent as provided above in Section 10(a) with respect to the indemnification of the indemnified parties or as otherwise reasonably requested by such persons.

 

(f)                                   If a court of competent jurisdiction holds that the foregoing indemnity is unavailable, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities or expenses (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other (taking into consideration, among other things, the fact that the provision of the registration rights and indemnification hereunder is a material inducement to the Investors to purchase Registrable Securities pursuant to the Subscription Agreement) or (ii) if the allocation provided by clause (i) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount hereinafter calculated, in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party as well as any other relevant equitable considerations.  The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by or on behalf of the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission.  No Person guilty of fraudulent misrepresentation (within the meaning of Section 12(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.  Notwithstanding anything to the contrary in this Section 10, no Holder shall be required, pursuant to this Section 10, to contribute any amount in excess of the net proceeds received by such indemnifying party from the sale of securities in the offering to which the losses, claims, damages, liabilities or expenses of the indemnified party relate.

 

11.                               Reports Under the Exchange Act.

 

With a view to making available to the Holders the benefits of Rule 144 under the Securities Act 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

 

15

 

on Form S-3, the Company agrees at all times after any registration statement covering a public offering of securities of the Company under the Securities Act shall have become effective, to:

 

(a)                                 make and keep available adequate current public information with respect to the Company, as those terms are understood and defined in Rule 144 under the Securities Act;

 

(b)                                 use its best efforts (without unreasonable expense) to comply with the SEC’s eligibility requirements for use of Form S-3;

 

(c)                                  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; and

 

(d)                                 furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) a written statement by the Company that it has complied with the adequate current public information requirements of Rule 144 under the Securities Act (at any time after the effective date of the first registration statement filed by the Company) and the Securities Act and Exchange Act (at any time after it 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 it 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 with the SEC, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form.

 

12.                               Assignment of Registration Rights.

 

(a)                                 Prior to an Initial Public Offering, any Holder may assign its rights hereunder in connection with a transfer shares to the extent permitted under the Shareholders’ Agreement.

 

(b)                                 Following an Initial Public Offering, any Holder may assign its rights hereunder to persons who acquire Registrable Securities (and the same remain Registrable Securities after such acquisition) from such Holder, provided that no such assignment shall be binding upon or obligate the Company or the Holders hereunder to any such assignee unless and until the Company shall have received notice of such assignment and a written agreement of the assignee to be bound by the provisions of this Agreement (it being understood that the Company shall deliver such notice and agreement to the other Holders hereunder).

 

13.                               No Other Registration Rights; Limitations on Subsequent Registration Rights.

 

The Company represents and warrants to each Investor that, upon the execution of this Agreement by all of the parties hereto, no “registration rights” relating to securities of the Company and granted by the Company exist on the date of this Agreement other than pursuant to this Agreement.  From and after the date of this Agreement, the Company shall not, without the prior written consent of Investors holding a majority of 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 (a) to include such securities in any registration filed under this Agreement, unless under the terms of such agreement, such

 

16

 

holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of such holder’s securities will not reduce the amount of the Registrable Securities of any Investor which is included therein or (b) to request a registration of such Holder’s securities.

 

14.                               “Market Stand-Off” Agreement.

 

Each of the Company and each Holder agrees that, during the period of ninety (90) days (or, in the case of an underwritten offering, such lesser period as the managing underwriters may permit, it being understood that the Company shall request for the benefit of the Holders that such managing underwriter act in good faith in determining whether to permit a shorter period) following the effective date of a registration statement of the Company filed under the Securities Act in connection with an underwritten offering (and, in the case of the initial public offering of the Company’s securities, one hundred eighty (180) days), which periods may be extended upon the request of the managing underwriter, to the extent required by any FINRA rules, 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 such lockup period (or, in the case of an underwritten offering, such lesser period as the managing underwriters may permit, it being understood that the Company shall request for the benefit of the Holders that such managing underwriter act in good faith in determining whether to permit a shorter period), it shall not, if requested by such underwriter, sell or otherwise transfer or dispose of (other than to donees, Affiliates, partners or members who agree to be similarly bound) any Common Shares or any securities of the Company convertible into Common Shares held by it except Registrable Securities included in such registration.  The foregoing provisions shall be applicable to the Series D Shares only if all officers, directors, and stockholders individually owning more than one percent (1%) of the Common Shares (after giving effect to conversion into Common Shares of all outstanding Preferred Shares) are subject to the same restrictions, and only with respect to the initial public offering of the Company’s securities, and only with respect to Series D Shares held immediately before the effective date of the registration statement for such initial public offering.  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 14 or that are necessary to give further effect thereto.  Any discretionary waiver or termination of the restrictions of any or all of such agreements by the Company or the underwriters shall apply pro rata to all Holders subject to such agreements, based on the number of shares subject to such agreements.

 

15.                               Amendment; Waiver.

 

Any provision of this Agreement may be amended, terminated or waived only with the written consent of the Company and the Holders holding a majority of the Registrable Securities then held by such Holders; provided, however, that no amendment to this Agreement that adversely affects the rights or obligations of any particular Holder but does not similarly affect the rights or obligations of the other Holders shall be effected without the consent of such affected Holder; and provided further that the provisions of Section 14 may not be amended, terminated or waived without the written consent of the holders of at least a majority of the Registrable Securities issued or issuable upon conversion of the Series D Shares only if such

 

17

 

amendment, termination or waiver is applicable to Series D Shares.  The observance of any provision 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 party to be charged; provided, that the Holders of a majority of the Registrable Securities then outstanding may act on behalf of all Holders of Registrable Securities so long as such waiver applies to all Holders in the same manner.  Any amendment or waiver effected in accordance with this Section 15 shall be binding upon (i) each Holder of Registrable Securities at the time outstanding, (ii) each future Holder of all such securities, and (iii) the Company.  Notwithstanding the foregoing, Schedule A hereto may be amended by the Company from time to time in accordance with Section 28 to add information regarding additional Investors without the consent of the other parties hereto.

 

16.                               Changes in Registrable Securities.

 

If, and as often as, there are any changes in the Registrable Securities by way of stock split, stock dividend, combination or reclassification, or through merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions of this Agreement, as may be required, so that the rights and privileges granted hereby shall continue with respect to the Registrable Securities as so changed.  Without limiting the generality of the foregoing, the Company shall require any successor by merger or consolidation to assume and agree to be bound by the terms of this Agreement, as a condition to any such merger or consolidation.

 

17.                               Entire Agreement.

 

This Agreement and the documents referred to herein constitute the entire agreement among the parties relating to the subject matter hereof, and supercede in their entirety any and all prior and/or contemporaneous agreements, understandings or representations relating to the subject matter hereof, whether written or oral.  No party shall be liable or bound to any other party in any manner by any warranties, representations, or covenants except as specifically set forth herein or therein.

 

18.                               Governing Law.

 

This Agreement and all claims or causes of action that may be based upon, arise out of or relate to this Agreement will be governed by, and construed under and in accordance with, the internal laws of the State of New York, without reference to rules relating to conflicts of laws.

 

19.                               Submission to Jurisdiction.

 

(a)                                 EACH OF THE PARTIES HERETO HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ALL STATE AND FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK, WITH RESPECT TO ANY CLAIMS MADE HEREUNDER, AS WELL AS TO THE JURISDICTION OF ALL COURTS TO WHICH AN APPEAL MAY BE TAKEN FROM SUCH COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

 

18

 

EACH PARTY HEREBY EXPRESSLY WAIVES ANY AND ALL RIGHTS TO BRING ANY SUIT, ACTION OR OTHER PROCEEDING IN OR BEFORE ANY COURT OR TRIBUNAL OTHER THAN THE COURTS DESCRIBED ABOVE AND COVENANTS THAT IT SHALL NOT SEEK IN ANY MANNER TO RESOLVE ANY DISPUTE OTHER THAN AS SET FORTH IN THIS SECTION 19 OR TO CHALLENGE OR SET ASIDE ANY DECISION, AWARD OR JUDGMENT OBTAINED IN ACCORDANCE WITH THE PROVISIONS HEREOF.

 

(b)                                 EACH OF THE PARTIES HERETO HEREBY EXPRESSLY WAIVES ANY AND ALL OBJECTIONS IT MAY HAVE TO VENUE, INCLUDING, WITHOUT LIMITATION, THE INCONVENIENCE OF SUCH FORUM, IN ANY OF SUCH COURTS.  IN ADDITION, EACH OF THE PARTIES FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO SUCH PARTY’S RESPECTIVE ADDRESS SET FORTH IN THIS AGREEMENT SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION IN NEW YORK WITH RESPECT TO ANY MATTERS TO WHICH IT HAS SUBMITTED TO JURISDICTION HEREUNDER.

 

20.                               WAIVER OF JURY TRIAL.

 

EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.  EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE SUCH WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) IT MAKES SUCH WAIVER VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 20.

 

21.                               Successors and Assigns.

 

The provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, permitted assigns (as provided in Section 12), heirs, executors and administrators of the parties hereto.

 

22.                               Notices.

 

Unless otherwise provided, all notices, requests, consents, demands and other communications under this Agreement shall be in writing and shall be sent by registered or certified mail, return receipt requested, postage prepaid or via a reputable nationwide overnight

 

19

 

courier service guaranteeing next business day delivery, and shall be deemed effectively given upon receipt by the party to be notified (including by facsimile, receipt confirmed) in each case to the intended recipient as follows: (a) if to a party other than the Company, at such party’s address set forth in Schedule A or at such other address as such party shall have furnished the Company in writing, or, until any such party so furnishes an address to the Company, then to and at the address of the last holder of the shares covered by this Agreement who has so furnished an address to the Company, or (b) if to the Company, at its address set forth in Schedule A, or at such other address as the Company shall have furnished to the parties in writing.

 

23.                               Severability.

 

If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement, and the balance of the Agreement shall be interpreted as if such provision were so excluded, and shall be enforceable in accordance with its terms.

 

24.                               Descriptive Headings.

 

The section headings contained in this Agreement are for convenience of reference only and shall not affect the meaning or interpretation of this Agreement.

 

25.                               Delays or Omissions; Remedies Cumulative.

 

It is agreed that no delay or omission to exercise any right, power or remedy accruing to the parties shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of 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.  Any waiver, consent or approval of any kind or character by a party of any breach or default under this Agreement, or any waiver by a party of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in writing and that all remedies, either under this Agreement, or by law or otherwise afforded to a party, shall be cumulative and not alternative.

 

26.                               Attorneys’ Fees.

 

If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, 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.

 

27.                               Counterparts; Facsimile Transmission.

 

This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement.  Each party to this Agreement agrees that its own facsimile signature will bind it and that it accepts the facsimile signature of each other party to this Agreement.

 

20

 

28.                               Additional Holders.

 

Persons or entities that, after the date hereof, purchase Series D Shares at a subsequent closing under the Subscription Agreement shall become parties to this Agreement by executing and delivering a joinder agreement substantially in the form and substance reasonably acceptable to the Company, whereupon they shall be deemed an “Investor” and “Holder” for all purposes of this Agreement.  The Company shall cause Schedule A to be updated to reflect the name of such new Investor promptly following such execution of the joinder agreement pursuant to this Section 28.

 

 

[Signature page follows.]

 

21

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	
 
    	
OPTINOSE, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Peter Miller
    
	
 
    	
 
    	
Name:
    	
Peter Miller
    
	
 
    	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
AVISTA CAPITAL PARTNERS II, LP
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Avista   Capital Partners GP II, LLC, as general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Ben Silbert
    
	
 
    	
 
    	
Name:
    	
Ben Silbert
    
	
 
    	
 
    	
Title:
    	
General Counsel
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
AVISTA CAPITAL PARTNERS   (OFFSHORE) II, LP
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Avista   Capital Partners GP II, LLC, as general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Ben Silbert
    
	
 
    	
 
    	
Name:
    	
Ben Silbert
    
	
 
    	
 
    	
Title:
    	
General Counsel
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
AVISTA CAPITAL PARTNERS   (OFFSHORE) II-A, LP
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Avista   Capital Partners GP II, LLC, as general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Ben Silbert
    
	
 
    	
 
    	
Name:
    	
Ben Silbert
    
	
 
    	
 
    	
Title:
    	
General Counsel
    

 

 

	
 
    	
TKWD VENTURES LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
WFD Ventures LLC, its   Manager
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ William F. Doyle
    
	
 
    	
 
    	
Name:
    	
William F. Doyle
    
	
 
    	
 
    	
Title:
    	
Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
WILLIAM F. DOYLE
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/ William F. Doyle
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
IKOS SUBSIDIARY AS
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Per Gisle   Djupesland
    
	
 
    	
 
    	
Name:
    	
Per Gisle Djupesland
    
	
 
    	
 
    	
Title:
    	
Chairman
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Helena Kyttari   Djupesland
    
	
 
    	
 
    	
Name:
    	
Helena Kyttari   Djupesland
    
	
 
    	
 
    	
Title:
    	
Board Member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
IKOS INVEST AS
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Per Gisle   Djupesland
    
	
 
    	
 
    	
Name:
    	
Per Gisle Djupesland
    
	
 
    	
 
    	
Title:
    	
Chairman
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Helena Kyttari   Djupesland
    
	
 
    	
 
    	
Name:
    	
Helena Kyttari   Djupesland
    
	
 
    	
 
    	
Title:
    	
Board Member
    
					

 

 

	
 
    	
ENTREPRENEURS’   FUND GENERAL PARTNER LIMITED,
    
	
 
    	
in its capacity as general partner of Entrepreneurs’ Fund LP
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Colin Dow
    
	
 
    	
 
    	
Name:
    	
Colin Dow
    
	
 
    	
 
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Paul Bradshaw
    
	
 
    	
 
    	
Name:
    	
Paul Bradshaw
    
	
 
    	
 
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
LARRY PICKERING
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/ Larry Pickering
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
PATRICK O’NEILL
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/ Patrick O’Neill
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
ROBERT JUNEJA
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/ Robert Juneja
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
GWYNETH M. KETTERER
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/ Gwyneth M. Ketterer
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
					

 

 

	
 
    	
RICHARD L. PERKAL
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/ Richard L. Perkal
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
TERRANCE TERIFAY
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/ Terrance Terifay
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CARTER GRIFFIN
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/ Carter Griffin
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
DAVID E. KING
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/ David E. King
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
PAUL STEVEN LATTANZIO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/ Paul Steven   Lattanzio
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
JOHN DAVID HOWARD
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/ John David Howard
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    

 

 

	
 
    	
BODIL M. ARLANDER
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/ Bodil M. Arlander
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
FRANK CLOSURDO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/ Frank Closurdo
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
PETER   MILLER
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/   Peter Miller
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
RAMY   MAHMOUD
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/   Ramy Mahmoud
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MICHELE   JANIS
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/   Michelle Janis
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ROBERT   USELLER
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/   Robert Useller
    

 

 

	
 
    	
JAMES   T. LENEHAN
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/   James T. Lenehan
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
FRANK   LEONARD
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signed:
    	
/s/   Frank Leonard
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
INSPIRE   AS
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jan-Olaf Willums
    
	
 
    	
Name: Jan Olaf Willums
    
	
 
    	
Title: CEO
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
INVICTUM   AS
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Trond Holland
    
	
 
    	
Name: Trond Holland
    
	
 
    	
Title: CEO
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
BAKELITTFABRIKKEN   HOLDING AS
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jan Otto Ringdal
    
	
 
    	
Name: Jan Otto Ringdal
    
	
 
    	
Title: Chairman
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
				

 

 

	
 
    	
HIBAS HOLDING AS
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Erik Ingeberg
    
	
 
    	
Name: Erik Ingeberg
    
	
 
    	
Title: Chairman
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
KIRKEVEIEN 98 I AS
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jan Otto Ringdal
    
	
 
    	
Name: Jan Otto Ringdal
    
	
 
    	
Title: Chairman
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    

 

 

	
 
    	
FIDELITY MT. VERNON STREET   TRUST: FIDELITY SERIES GROWTH COMPANY FUND
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jeffrey Christiann
    
	
 
    	
Name: Jeffrey Christian
    
	
 
    	
Title: Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
FIDELITY GROWTH COMPANY   COMMINGLED POOL
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Fidelity   Management & Trust Co.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jeffrey Christiann
    
	
 
    	
Name: Jeffrey Christian
    
	
 
    	
Title: Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
FIDELITY MT. VERNON STREET   TRUST: FIDELITY GROWTH COMPANY FUND
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jeffrey Christiann
    
	
 
    	
Name: Jeffrey Christian
    
	
 
    	
Title: Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
FIDELITY OTC COMMINGLED POOL
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Fidelity   Management & Trust Co.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jeffrey Christiann
    
	
 
    	
Name: Jeffrey Christian
    
	
 
    	
Title: Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
FIDELITY SECURITIES FUND:   FIDELITY OTC PORTFOLIO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jeffrey Christiann
    
	
 
    	
Name: Jeffrey Christian
    
	
 
    	
Title: Authorized   Signatory
    

 

 

SCHEDULE A

 

NOTICES

 

OPTINOSE, INC.

1020 Stony Hill Road, Ste 300

Yardley, PA 19067

Facsimile:  +1-267-395-2119

Attention:  Chief Executive Officer

 

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

 

Hogan Lovells US LLP
 555 Thirteenth Street, NW
 Washington DC 20004
 Facsimile:  +1 202 637 5910
 Attention:  Kevin C. Clayton, Esq.

 

and

 

Aabø Evenson & Co. Advocatfirma AS

P.O. Box 1789 Vika

Fridtjof Nanses plass 2

N-01220 Oslo

Norway

Facsimile:  + 47 2415 9001

Attention:  Nils Olav Årseth

 

 

Fidelity Investors

 

Fidelity Mt. Vernon Street Trust:  Fidelity Series Growth Company Fund

c/o State Street Bank & Trust

PO Box 5756

Boston, Massachusetts 02206

Attn: WAVELENGTH + CO Fidelity Mt. Vernon Street Trust: Fidelity Series Growth Company Fund

Email: SSBCORPACTIONS@StateStreet.com

Fax number: 617-988-9110

 

Fidelity Growth Company Commingled Pool

c/o Brown Brothers Harriman & Co.

Harborside Financial Center

1150 Plaza Five

Jersey City NJ 07311

Attn: Michael Lerman 15th Floor

Corporate Actions

Email: michael.lerman@bbh.com

Fax number: 617 772-2418

 

Fidelity Mt. Vernon Street Trust:  Fidelity Growth Company Fund

BNY Mellon

Attn: Stacey Wolfe

525 William Penn Place Rm 0400

Pittsburgh, PA 15259

Email: FidelityCorporateEvents@bnymellon.com

Fax number: 412-236-1012

 

Fidelity OTC Commingled Pool

c/o Brown Brothers Harriman & Co.

Harborside Financial Center

1150 Plaza Five

Jersey City NJ 07311

Attn: Michael Lerman 15th Floor

Corporate Actions

Email: michael.lerman@bbh.com

Fax number: 617 772-2418

 

 

Fidelity Securities Fund: Fidelity OTC Porfolio

c/o The Northern Trust Company

Attn: Trade Securities Processing, C-1N

801 South Canal Street

Chicago, IL 60607

Fidelity Securities Fund: Fidelity OTC Portfolio

Reference Account # F68304

Email: NTINQUIRY@NTRS.COM

Fax number: 312-557-5417

 

In each case with a copy (which shall not constitute notice) to:

 

Ropes & Gray LLP

Prudential Tower

800 Boylston Street

Boston, MA 02199

Facsimile:  617-235-0375

Attention:  Joel F. Freedman

 

TKWD VENTURES LLC

c/o WFD Ventures LLC

1500 Broadway 29th Floor
 New York, NY 10036
 Facsimile:  +1 212 767 7575
 Attention:  William F. Doyle

 

AVISTA CAPITAL PARTNERS

65 E. 55th Street, 18th Floor

New York, NY 10022

Facsimile:  + 1 212 593-6959

Attention:  David Burgstahler and Ben Silbert

 

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

 

Ropes & Gray LLP

Prudential Tower

800 Boylston Street

Boston, MA 02199

Attention:  David Blittner, Esq.

 

 

ENTREPRENEURS’ FUND GENERAL PARTNER LIMITED

2nd Floor

Windward House

La Route de la Liberation

St Helier, Jersey

The Channel Islands

Fax: +44 1534 754 510

 

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

 

Entrepreneurs’ Fund Legal Counsel

4th Floor, Eagle House

108-110 Jermyn Street

London SW1Y 6EE

United KingdomExhibit 4.3

 

OPTINOSE, INC.

 

SECOND AMENDED AND RESTATED

SHAREHOLDERS’ AGREEMENT

 

Dated as of March 24, 2017

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
GENERAL RESTRICTIONS ON   TRANSFER; PERMITTED TRANSFEREES
    	
16
    
	
 
    	
 
    	
 
    
	
2.
    	
RIGHT OF FIRST REFUSAL
    	
19
    
	
 
    	
 
    	
 
    
	
3.
    	
TAG-ALONG RIGHTS;   DRAG-ALONG RIGHTS; PREEMPTIVE RIGHTS; CALL RIGHTS
    	
24
    
	
 
    	
 
    	
 
    
	
4.
    	
BOARD OF DIRECTORS
    	
36
    
	
 
    	
 
    	
 
    
	
5.
    	
COVENANTS
    	
40
    
	
 
    	
 
    	
 
    
	
6.
    	
VOTING RIGHTS
    	
45
    
	
 
    	
 
    	
 
    
	
7.
    	
TERMINATION
    	
46
    
	
 
    	
 
    	
 
    
	
8.
    	
MISCELLANEOUS
    	
46
    

 

i

 

SECOND AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT

 

THIS SECOND AMENDED AND RESTATED SHAREHOLDERS’ AGREEMENT (the “Agreement”), dated as of March 24, 2017, by and among the following parties (each, a “Party” and collectively, the “Parties”):

 

(1)                                 OPTINOSE, INC., a Delaware corporation (the “Company”);

 

(2)                                 AVISTA CAPITAL PARTNERS II, LP, a Delaware limited partnership, AVISTA CAPITAL PARTNERS (OFFSHORE) II, LP, a Bermuda limited partnership and AVISTA CAPITAL PARTNERS (OFFSHORE) II-A, LP, a Bermuda limited partnership (hereinafter collectively, the “Avista Investors”);

 

(3)                                 Fidelity Mt. Vernon Street Trust: Fidelity Series Growth Company Fund, Fidelity Growth Company Commingled Pool, Fidelity Mt. Vernon Street Trust: Fidelity Growth Company Fund, Fidelity OTC Commingled Pool, and Fidelity Securities Fund:  Fidelity OTC Portfolio (hereinafter collectively, the “Fidelity Investors”);

 

(4)                                 Each of the investors listed on Exhibit A hereto, as such schedule may be updated from time to time pursuant to the provisions hereof (hereinafter collectively, the “Other Investors” and together with the Avista Investors and Fidelity Investors, the “Investors”);

 

(5)                                 Each of the existing shareholders of the Company listed on Exhibit B hereto, as such schedule may be updated from time to time pursuant to the provisions hereof (the “Existing Shareholders”); and

 

(6)                                 The employees or consultants of the Company or its Subsidiary listed on Exhibit C hereto, as such schedule may be updated from time to time pursuant to the provisions hereof (each, a “Management Shareholder” and, collectively, the “Management Shareholders”).

 

The Investors, the Existing Shareholders, the Management Shareholders and the parties who from time to time execute and deliver a Joinder Agreement, are hereinafter referred to each as a “Shareholder” and, collectively, as the “Shareholders”.

 

The current shareholdings as of the date of this Agreement are set forth on Exhibit D hereto.

 

RECITALS

 

(A)                               WHEREAS, the Company and certain of the Shareholders entered into that certain Shareholders’ Agreement, dated June 7, 2010, as amended by

 

1

 

that certain Amendment No. 1 to the Shareholders’ Agreement, dated November 18, 2012;

 

(B)                               WHEREAS, the Company and certain of the Shareholders (the “Prior Holders”) entered into that certain Amended and Restated Shareholders’ Agreement, dated July 22, 2014, by and among the Company and such Prior Holders (the “Prior Agreement”);

 

(C)                               WHEREAS, the Company and the Investors are entering into a Series D Subscription Agreement, dated the date hereof and as amended from time to time (the “Subscription Agreement”) pursuant to which the Company shall issue to the Investors Series D Shares (as defined herein);

 

(D)                               WHEREAS, on September 30, 2015 the Company entered into that certain $30,000,000 Senior Secured Convertible Note Purchase Agreement by and among the Company, the Guarantors (as defined therein), the Purchasers (as defined therein) and the Purchaser Representative (as defined therein) (the “Note Purchase Agreement”);

 

(E)                                WHEREAS, pursuant to the terms of that certain Note Conversion Agreement (the “Note Conversion Agreement”), dated as of the date hereof, by and among the Note Parties and the Majority Purchasers (each as defined in the Note Conversion Agreement), and simultaneously with the Initial Closing of the Subscription Agreement, the Notes (as defined in the Note Purchase Agreement) shall be converted into Series C-2 Shares (as defined herein);

 

(F)                                 WHEREAS, the initial closing and the subsequent closing(s) of the transactions contemplated by the Subscription Agreement are subject to certain conditions, including the conditions that the Company and the Shareholders shall enter into this Agreement, amending and restating the Prior Agreement in its entirety; and

 

(G)                               WHEREAS, the Company and certain of the Prior Holders, holding a sufficient number of Shares to amend the Prior Agreement pursuant to its terms desire to amend and restate, in its entirety, the Prior Agreement, and enter into this Agreement for the purpose of setting forth certain rights and obligations of the Shareholders.

 

NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, the Parties hereby amend and restate the Prior Agreement and further agree as follows:

 

2

 

DEFINITIONS AND REFERENCES

 

For purposes of this Agreement:

 

	
“Affiliate”
    	
 
    	
means,   with respect to any Person, any other Person who, directly or indirectly,   controls such first Person or is controlled by said Person or is under common   control with said Person, including without limitation any general partner,   officer, director or manager of such Person, and any venture capital or   private equity fund now or hereafter existing which is controlled by one or   more general partners or managing members of, or is managed by the same   management company or a management company that, directly or indirectly, is   under common control with such management company as, such Person, including   having a common general partner, officer, director or manager with such   management company, where “control” means power and ability to direct,   directly or indirectly, or share equally in or cause the direction of, the   management and/or policies of a Person, whether through ownership of voting   shares or other equivalent interests of the controlled Person, by contract   (including proxy) or otherwise;
    
	
 
    	
 
    	
 
    
	
“Annual   Financial Statements”
    	
 
    	
shall   have the meaning set forth in Section 5.1(d);
    
	
 
    	
 
    	
 
    
	
“Avista   Investors”
    	
 
    	
shall   have the meaning set forth in the Preamble;
    
	
 
    	
 
    	
 
    
	
“Beneficial   Owner”
    	
 
    	
shall   have the meaning set forth in Section 4.11(a)(1);
    
	
 
    	
 
    	
 
    
	
“Board”
    	
 
    	
the   board of directors of the Company from time to time;
    
	
 
    	
 
    	
 
    
	
“Business   Day”
    	
 
    	
a   day other than a Saturday or Sunday on which banks are open for business in   New York, NY;
    
	
 
    	
 
    	
 
    
	
“Bylaws”
    	
 
    	
means   the Bylaws of the Company as in effect from time to time;
    
	
 
    	
 
    	
 
    
	
“Call   Notice Date”
    	
 
    	
shall   have the meaning set forth in Section 3.5(b);
    

 

3

 

	
“Call   Period”
    	
 
    	
means,   with respect to the application of the provisions of Section 3.5 to a   Terminated Management Shareholder:

 

(i)   with respect to Incentive Securities, the period from such Termination Date   to the later of (A) the date that is 210 days after the date of purchase of   such Incentive Securities in connection with the exercise of Incentive   Securities (the “Exercise Date”),   and (B) the date that is 180 days after the Termination Date;

 

(ii)   with respect to Incentive Securities that are exercised after the Termination   Date, the period from the Exercise Date of such Incentive Securities to the   date that is 210 days after the Exercise Date; or

 

(iii)   with respect to Purchased Securities, the period that is 90 days after the Termination   Date;
    
	
 
    	
 
    	
 
    
	
“Call   Right”
    	
 
    	
shall   have the meaning set forth in Section 3.5(a);
    
	
 
    	
 
    	
 
    
	
“Cause”
    	
 
    	
means,   with respect to any Management Shareholder, “Cause” as defined in the   employment agreement, if any, by and between the Company or any of its Subsidiaries   and such Management Shareholder or, if not so defined:

 

(i)   the Management Shareholder’s breach of any fiduciary duty or legal or   contractual obligation to the Company or any of its Affiliates, or to the   Company’s direct or indirect equity holders;

 

(ii)   the Management Shareholder’s failure to follow the reasonable instructions of   the Board or such Management Shareholder’s direct supervisor, which breach,   if curable, is not cured within 10 Business Days after notice to such   Management Shareholder or, if cured, recurs within 180 days;

 

(iii)   the Management Shareholder’s gross negligence, willful misconduct, fraud, 
    

 

4

 

	
 
    	
 
    	
insubordination,   acts of dishonesty or conflict of interest relating to the Company or any of   its Affiliates; or

 

(iv)   the Management Shareholder’s commission of any misdemeanor relating to the   affairs of the Company or any of its Affiliates or any felony;
    
	
 
    	
 
    	
 
    
	
“Charter”
    	
 
    	
means   the Third Amended and Restated Certificate of Incorporation of the Company as   in effect from time to time;
    
	
 
    	
 
    	
 
    
	
“CEO   Director”
    	
 
    	
shall   have the meaning set forth in Section 4.1(b);
    
	
 
    	
 
    	
 
    
	
“Change   of Control”
    	
 
    	
means   (a) any transaction or series of related transactions, whether or not the   Company is a party thereto, in which, after giving effect to such transaction   or transactions, Company Securities representing in excess of fifty percent   (50%) of the voting power of the Company are owned, directly or indirectly,   through one or more entities, by any “person” or “group” (as such terms are   used in Section 13(d) of the Exchange Act) of Persons, other than the   Shareholders and their Permitted Transferees, or (b) a sale, lease or other   disposition of all or substantially all of the assets of the Company and its   Subsidiaries on a consolidated basis (including securities of the Company’s   directly or indirectly owned Subsidiaries);
    
	
 
    	
 
    	
 
    
	
“Common   Shares”
    	
 
    	
means   shares of the Company’s common stock, par value $0.001 per share;
    
	
 
    	
 
    	
 
    
	
“Company”
    	
 
    	
shall   have the meaning set forth in the Preamble;
    
	
 
    	
 
    	
 
    
	
“Company   Competitor”
    	
 
    	
means   (a) any Person that is reasonably determined by the Board to be a competitor   of the Company or any of its Subsidiaries in any material respect and (b) any   Affiliate of any such Person specified in clause (a), but excluding any   person or entity that is an institutional financial investor.  For purposes hereof, without limiting the   foregoing, any Person with, or whose Affiliate has, directly or indirectly, 
    

 

5

 

	
 
    	
 
    	
substantial   operations in research, developing, manufacturing, marketing, sale or   licensing pharmaceutical, medical device or specialty pharmaceutical products   or products in the healthcare sector shall be deemed to be a Company   Competitor unless otherwise determined by the Board; 
    
	
 
    	
 
    	
 
    
	
“Company   Securities”
    	
 
    	
means,   without duplication, (i) the Common Shares, (ii) any preferred shares and   (iii) any other securities convertible into or exchangeable or exercisable   for, or options, warrants or other rights to acquire, Common Shares,   preferred shares or any other equity or equity-linked security issued by the   Company;
    
	
 
    	
 
    	
 
    
	
“Confidential   Affiliates”
    	
 
    	
shall   have the meaning set forth in Section 5.4(a);
    
	
 
    	
 
    	
 
    
	
“Confidential   Information”
    	
 
    	
shall   have the meaning set forth in Section 5.4(a);
    
	
 
    	
 
    	
 
    
	
“Cost”
    	
 
    	
means,   (a) with respect to any Purchased Securities, the amount paid by such   Management Shareholder on a per Share basis and (b) with respect to (i) any   Incentive Securities issued on exercise of an option, the exercise price of   that option, or (ii) with respect to any other Incentive Security, (A) if   such Incentive Security was initially purchased from the Company by such   Management Shareholder, the price paid by such Management Shareholder to   purchase such Incentive Security, or (B) if such Incentive Security was   granted to such Management Shareholder by the Company, the amount of any   taxes paid by the Management Shareholder if such Management Shareholder made   an election under Section 83(b) of the Internal Revenue Code of 1986, as   amended, to have such Incentive Security taxed at the time such Management   Shareholder received the Common Shares in connection with such grant or of   any taxes paid by the Management Shareholder upon the vesting of such   Incentive Security;
    
	
 
    	
 
    	
 
    
	
“Determination   Time”
    	
 
    	
shall   have the meaning set forth in Section 1.1(f);
    

 

6

 

	
“Director”
    	
 
    	
means   any of the Founder Director, the CEO Director, the Series A Director, the   Series B Director, the Series C Directors, and the Series C-1 Directors; 
    
	
 
    	
 
    	
 
    
	
“Disability”
    	
 
    	
means,   with respect to any Management Shareholder, “Disability” as defined in the employment   agreement, if any, by and between the Company or any of its Subsidiaries and   such Management Shareholder or, if not so defined, any physical or mental   illness, injury or infirmity which prevents and/or is reasonably likely to   prevent the Management Shareholder from performing the Management   Shareholder’s essential job functions for a period of (i) 90 consecutive   calendar days or (ii) an aggregate of 120 calendar days out of any   consecutive 12 month period;
    
	
 
    	
 
    	
 
    
	
“Disqualification   Event”
    	
 
    	
shall   have the meaning set forth in Section 4.11(a)(1);
    
	
 
    	
 
    	
 
    
	
“DGCL”
    	
 
    	
shall   mean the General Corporation Law of the State of Delaware, as amended;
    
	
 
    	
 
    	
 
    
	
“Drag-Along   Notice”
    	
 
    	
shall   have the meaning set forth in Section 3.2(f);
    
	
 
    	
 
    	
 
    
	
“Drag-Along   Notice Period”
    	
 
    	
shall   have the meaning set forth in Section 3.2(g);
    
	
 
    	
 
    	
 
    
	
“Drag-Along   Right”
    	
 
    	
shall   have the meaning set forth in Section 3.2(a);
    
	
 
    	
 
    	
 
    
	
“Drag-Along   Sale”
    	
 
    	
shall   have the meaning set forth in Section 3.2(a);
    
	
 
    	
 
    	
 
    
	
“Drag-Along   Seller”
    	
 
    	
shall   have the meaning set forth in Section 3.2(a);
    
	
 
    	
 
    	
 
    
	
“Entrepreneurs’   Fund”
    	
 
    	
means   Entrepreneurs’ Fund General Partner Limited, a Jersey (Channel Islands)   entity;
    
	
 
    	
 
    	
 
    
	
“Estate”
    	
 
    	
means   and includes the executors or administrators of a deceased Shareholder, and   any and all Persons who may claim any interest in his property under such   deceased Shareholder’s will or by virtue of any laws of descent and   distribution;
    
	
 
    	
 
    	
 
    
	
“Exchange   Act”
    	
 
    	
means   the Securities Exchange Act of 1934, as amended, and the rules and   regulations promulgated 
    

 

7

 

	
 
    	
 
    	
thereunder;
    
	
 
    	
 
    	
 
    
	
“Exchange   Agreement”
    	
 
    	
shall   have the meaning set forth in the Recitals;
    
	
 
    	
 
    	
 
    
	
“Exercise   Date”
    	
 
    	
shall   have the meaning set forth in the definition of “Call Period”;
    
	
 
    	
 
    	
 
    
	
“Existing   Shareholders”
    	
 
    	
shall   have the meaning set forth in the Preamble;
    
	
 
    	
 
    	
 
    
	
“Fair   Market Value”
    	
 
    	
means   with respect to the Purchased Securities and the Incentive Securities as of   any date of determination, (i) in the event that the Common Shares are listed   on an established U.S. exchange or through The NASDAQ Global Market or any   established over-the-counter trading system, the average of the closing   prices of the Common Shares on such exchange if listed or, if not so listed,   the average bid and asked price of the Common Shares reported on The NASDAQ   Global Market or any established over-the-counter trading system on which   prices for the Common Shares are quoted, in each case, for a period of 20   trading days prior to such date of determination, or (ii) if the Common   Shares are not publicly traded, a good faith determination by the Board   through a reasonable application of a reasonable valuation method.  Such determination shall be conclusive and   binding on all persons;
    
	
 
    	
 
    	
 
    
	
“Fidelity   Investors”
    	
 
    	
shall   have the meaning set forth in the Preamble;
    
	
 
    	
 
    	
 
    
	
“Final   Offer Notice”
    	
 
    	
shall   have the meaning set forth in Section 2.7;
    
	
 
    	
 
    	
 
    
	
“Final   Offer Period”
    	
 
    	
shall   have the meaning set forth in Section 2.7;
    
	
 
    	
 
    	
 
    
	
“Final   Round Offerees”
    	
 
    	
shall   have the meaning set forth in Section 2.7;
    
	
 
    	
 
    	
 
    
	
“First   Offer Notice”
    	
 
    	
shall   have the meaning set forth in Section 2.4;
    
	
 
    	
 
    	
 
    
	
“First   Offer Period”
    	
 
    	
shall   have the meaning set forth in Section 2.5;
    
	
 
    	
 
    	
 
    
	
“First   Purchase Notice”
    	
 
    	
shall   have the meaning set forth in Section 2.5;
    
	
 
    	
 
    	
 
    
	
“First   Round Offerees”
    	
 
    	
shall   have the meaning set forth in Section 2.5;
    

 

8

 

	
“FMV   Calculation Date”
    	
 
    	
means,   with respect to the application of the provisions of Section 3.5 to a   Terminated Management Shareholder:

 

(i)   with respect to Incentive Securities that were purchased from the Company on   an Exercise Date more than six months before the Termination Date, the   Termination Date with respect to such Management Shareholder; or

 

(ii)   with respect to Incentive Securities that were purchased on an Exercise Date   either less than six months before the Termination Date or after the   Termination Date, the Call Notice Date with respect to such Termination   Securities;
    
	
 
    	
 
    	
 
    
	
“Founder   Director”
    	
 
    	
shall   have the meaning set forth in Section 4.1(a);
    
	
 
    	
 
    	
 
    
	
“Founder”
    	
 
    	
means   Ikos;
    
	
 
    	
 
    	
 
    
	
“Fund   Associates”
    	
 
    	
shall   have the meaning set forth in the definition of “Permitted Transferees”;
    
	
 
    	
 
    	
 
    
	
“Fund   Affiliates”
    	
 
    	
shall   have the meaning set forth in the definition of “Permitted Transferees”;
    
	
 
    	
 
    	
 
    
	
“Fund   Partner”
    	
 
    	
shall   have the meaning set forth in the definition of “Permitted Transferees”;
    
	
 
    	
 
    	
 
    
	
“GAAP”
    	
 
    	
means   United States generally accepted accounting principles set forth in the   opinions and pronouncements of the Accounting Principles Board of the   American Institute of Certified Public Accountants and statements and   pronouncements of the Financial Accounting Standards Board or in such other   statements by such other entity as have been approved by a significant   segment of the accounting profession that are in effect from time to time;
    
	
 
    	
 
    	
 
    
	
“Good   Reason”
    	
 
    	
means,   with respect to any Management Shareholder, “Good Reason” as defined in the   employment agreement, if any, by and between the Company or any of its   Subsidiaries and such Management Shareholder or, if not so defined, (i) 
    

 

9

 

	
 
    	
 
    	
the   failure of the Company to pay or cause to be paid grantee’s base salary or   annual bonus, when due, (ii) such grantee is required to permanently relocate   to a Company office, which will result in grantee’s commute being more than   40 additional miles from the commute from grantee’s home to the Company’s   current office location, each as of the date hereof or (iii) a material   decrease in the grantee’s base salary; provided,   that such event shall constitute Good Reason only if the Company or its   Subsidiary, as applicable, fails to cure such event within 30 days of receipt   from Management Shareholder of written notice of the event which such   Management Shareholder believes constitutes Good Reason; provided,   further, that “Good Reason” shall cease to exist for an event on   the thirtieth (30th) day following the later of its occurrence   or such person’s knowledge thereof, unless such person has given the Company   or its Subsidiary, as applicable, written notice thereof prior to such date;
    
	
 
    	
 
    	
 
    
	
“Governmental   Authority”
    	
 
    	
means   any federal, state, local or foreign governmental authority, department,   commission, board, bureau, agency, court, instrumentality or judicial or   regulatory body or entity;
    
	
 
    	
 
    	
 
    
	
“Ikos”
    	
 
    	
means   IKOS Invest AS, a Norwegian private limited company with registration number   988 736 740, and IKOS Subsidiary AS, a Norwegian private limited company with   registration number 918 529 136;
    
	
 
    	
 
    	
 
    
	
“Incentive   Plan”
    	
 
    	
means   the Company’s 2010 Equity Incentive Plan, as the same may be amended,   modified or supplemented, and any other equity incentive plan adopted by the   Board from time to time; 
    
	
 
    	
 
    	
 
    
	
“Incentive   Securities”
    	
 
    	
means   Company Securities purchased or acquired by, or issued to, a Management   Shareholder or its Permitted Transferees pursuant to the exercise of options   (including any options for common shares) or other rights to acquire Common   Shares, restricted stock or any other equity or equity-linked security issued   by the Company, pursuant to the Incentive 
    

 

10

 

	
 
    	
 
    	
Plan;
    
	
 
    	
 
    	
 
    
	
“Initial   Closing”
    	
 
    	
shall   have the meaning set forth in the Subscription Agreement;
    
	
 
    	
 
    	
 
    
	
“Initial   Public Offering”
    	
 
    	
means   a successfully completed firm commitment underwritten initial public offering   of Common Shares pursuant to an effective registration statement under the   Securities Act for the account of the Company;
    
	
 
    	
 
    	
 
    
	
“Investors”
    	
 
    	
shall   have the meaning set forth in the Preamble;
    
	
 
    	
 
    	
 
    
	
“Joinder   Agreement”
    	
 
    	
means   the agreement substantially in the form of Exhibit E hereto;
    
	
 
    	
 
    	
 
    
	
“Liquidity   Event”
    	
 
    	
shall   have the meaning set forth in the Charter;
    
	
 
    	
 
    	
 
    
	
“Lock-Up   Period”
    	
 
    	
shall   have the meaning set forth in Section 1.1(d);
    
	
 
    	
 
    	
 
    
	
“Management   Shareholder”
    	
 
    	
shall   have the meaning set forth in the Preamble;
    
	
 
    	
 
    	
 
    
	
“Note   Purchase Agreement”
    	
 
    	
shall   have the meaning set forth in the Recitals;
    
	
 
    	
 
    	
 
    
	
“Offered   Shares”
    	
 
    	
shall   have the meaning set forth in Section 2.4;
    
	
 
    	
 
    	
 
    
	
“Other   Investors”
    	
 
    	
shall   have the meaning set forth in the Preamble;
    
	
 
    	
 
    	
 
    
	
“Other   Shareholders”
    	
 
    	
shall   have the meaning set forth in Section 3.2(a);
    
	
 
    	
 
    	
 
    
	
“Participating   Seller”
    	
 
    	
shall   have the meaning set forth in Section 3.1(b);
    
	
 
    	
 
    	
 
    
	
“Permitted   Transferee” 
    	
 
    	
means:   (a) in respect of each of the Avista Investors, TKWD, Entrepreneurs’ Fund and   Fidelity Investors, (i) any other Avista Investor (with respect to each   Avista Investor), (ii) any other Fidelity Investors (with respect to each   Fidelity Investor), (iii) any general or limited partner of such entity (a “Fund Partner”), and any corporation, partnership or other   entity that is an Affiliate of any Fund Partner (collectively, “Fund Affiliates”), (iv) any managing director, general   partner, director, limited partner, officer or employee of any such entity or   any Fund Affiliate, or any spouse, lineal descendant, sibling, parent, heir,   executor, administrator, testamentary 
    

 

11

 

	
 
    	
 
    	
trustee,   legatee or beneficiary of any of the foregoing persons described in this   clause (iv) (collectively, “Fund Associates”),   (v) any trust the beneficiaries of which, or any corporation, limited   liability company or partnership the shareholders, members or general or   limited partners of which, include only such entity, Fund Affiliates, Fund   Associates, their spouses or their lineal descendants and (v) a voting   trustee for such entity, one or more Fund Affiliates or Fund Associates; (b)   in respect of each Shareholder (other than the Avista Investors, TKWD,   Entrepreneurs’ Fund and Fidelity Investors) that is an entity, any such   Shareholder’s Affiliates so long as they remain Affiliates of such   Shareholder; and (c) in respect of each Shareholder who is a natural person,   (i) such Shareholder’s Estate and heirs, (ii) such other Persons who may be   so designated by the Board, (iii) any estate planning trust of a Shareholder   provided that the grantor Shareholder is trustee of such trust, or (iv) such   other personal estate or tax planning vehicle or device of which the grantor   Shareholder is a controlling Person with respect to the voting and the   disposition of the Company Securities held thereby;
    
	
 
    	
 
    	
 
    
	
“Person”   
    	
 
    	
includes   an individual and any association, business, company, concern, enterprise,   firm, partnership, joint venture, trust, undertaking or other similar entity,   including a Governmental Authority;
    
	
 
    	
 
    	
 
    
	
“Proposed   Transferee”
    	
 
    	
shall   have the meaning set forth in Section 3.2(a);
    
	
 
    	
 
    	
 
    
	
“Purchased   Securities”
    	
 
    	
means   any Company Securities purchased by a Management Shareholder from the Company   pursuant to any subscription or stock purchase agreement, but excluding any   Incentive Securities and any Common Shares purchased by a Management   Shareholder after the Initial Public Offering in any open market transaction   or otherwise from a Third Party;
    
	
 
    	
 
    	
 
    
	
“Relative Ownership Percentage”
    	
 
    	
means   with respect to a Shareholder, a fraction (expressed as a percentage), (A)   the numerator of which is the aggregate ownership of Common 
    

 

12

 

	
 
    	
 
    	
Shares   owned by such Shareholder immediately following the Determination Time and   (B) the denominator of which is the aggregate ownership of Common Shares   owned by such Shareholder immediately following the Initial Public Offering;   provided that with respect to each Management Shareholder, the number of   Common Shares to be included in said numerator and denominator shall include   any Common Shares that may be acquired by such Management Shareholder by   exercising any vested options held by such Management Shareholder;
    
	
 
    	
 
    	
 
    
	
“Second   Offer Notice”
    	
 
    	
shall   have the meaning set forth in Section 2.6;
    
	
 
    	
 
    	
 
    
	
“Second   Offer Period”
    	
 
    	
shall   have the meaning set forth in Section 2.6;
    
	
 
    	
 
    	
 
    
	
“Second   Purchase Notice”
    	
 
    	
shall   have the meaning set forth in Section 2.6;
    
	
 
    	
 
    	
 
    
	
“Second   Round Offerees”
    	
 
    	
shall   have the meaning set forth in Section 2.6;
    
	
 
    	
 
    	
 
    
	
“Securities   Act”
    	
 
    	
means   the Securities Act of 1933, as amended, and the rules and regulations   promulgated thereunder;
    
	
 
    	
 
    	
 
    
	
“Selling   Series C/D Shareholder”
    	
 
    	
shall   have the meaning set forth in Section 2.1;
    
	
 
    	
 
    	
 
    
	
“Selling   Shareholder”
    	
 
    	
shall   have the meaning set forth in Section 2.4;
    
	
 
    	
 
    	
 
    
	
“Series   A Director”
    	
 
    	
shall   have meaning in Section 4.1(c);
    
	
 
    	
 
    	
 
    
	
“Series   B Director”
    	
 
    	
shall   have meaning in Section 4.1(d);
    
	
 
    	
 
    	
 
    
	
“Series   C Director”
    	
 
    	
shall   have meaning in Section 4.1(e);
    
	
 
    	
 
    	
 
    
	
“Series   C-1 Director”
    	
 
    	
shall   have meaning in Section 4.1(f);
    
	
 
    	
 
    	
 
    
	
“Series   C/D Offer Notice”
    	
 
    	
shall   have meaning in Section 2.1;
    
	
 
    	
 
    	
 
    
	
“Series   C/D Offer Period”
    	
 
    	
shall   have meaning in Section 2.2;
    
	
 
    	
 
    	
 
    
	
“Series   C/D Offered Shares”
    	
 
    	
shall   have the meaning in Section 2.1;
    
	
 
    	
 
    	
 
    
	
“Series   C/D Offerees”
    	
 
    	
shall   have meaning in Section 2.2;
    

 

13

 

	
“Series   C/D Purchase Notice”
    	
 
    	
shall   have meaning in Section 2.2;
    
	
 
    	
 
    	
 
    
	
“Series   A Shares”
    	
 
    	
means   shares of the Company’s series A convertible preferred stock, par value   $0.001 per share;
    
	
 
    	
 
    	
 
    
	
“Series   B Shares”
    	
 
    	
means   shares of the Company’s series B-1 convertible preferred stock, par value   $0.001 per share, and series B-2 convertible preferred stock, par value   $0.001 per share;
    
	
 
    	
 
    	
 
    
	
“Series   C Shares”
    	
 
    	
means   shares of the Company’s series C convertible preferred stock, par value   $0.001 per share;
    
	
 
    	
 
    	
 
    
	
“Series   C-1 Shares”
    	
 
    	
means   shares of the Company’s series C-1 convertible preferred stock, par value   $0.001 per share;
    
	
 
    	
 
    	
 
    
	
“Series   C-2 Shares”
    	
 
    	
means   shares of the Company’s series C-2 convertible preferred stock, par value   $0.001 per share;
    
	
 
    	
 
    	
 
    
	
“Series   D Shares”
    	
 
    	
means   shares of the Company’s series D convertible preferred stock, par value   $0.001 per share;
    
	
 
    	
 
    	
 
    
	
“Shares”
    	
 
    	
shares   in the capital of the Company from time to time (of whatever class) and   include any and all shares and shall include any such shares now owned or   subsequently acquired by a Shareholder, however acquired, including, without   limitation, share splits and share dividends; 
    
	
 
    	
 
    	
 
    
	
“Shareholders”
    	
 
    	
shall   have the meaning set forth in the Preamble; 
    
	
 
    	
 
    	
 
    
	
“Subscription   Agreement”
    	
 
    	
shall   have the meaning set forth in the Recitals;
    
	
 
    	
 
    	
 
    
	
“Subsidiary”
    	
 
    	
means,   with respect to any specified Person, any other Person in which such   specified Person, directly or indirectly through one or more Affiliates or   otherwise, beneficially owns at least fifty percent (50%) of either the   ownership interest (determined by equity or economic interests) in, or the   voting control of, such other Person;
    
	
 
    	
 
    	
 
    
	
“Tag-Along   Notice”
    	
 
    	
shall   have the meaning set forth in Section 3.1(a);
    

 

14

 

	
“Tag-Along   Notice Period”
    	
 
    	
shall   have the meaning set forth in Section 3.1(b);
    
	
 
    	
 
    	
 
    
	
“Tag-Along   Offer”
    	
 
    	
shall   have the meaning set forth in Section 3.1(a);
    
	
 
    	
 
    	
 
    
	
“Tag-Along   Offerees”
    	
 
    	
shall   have the meaning set forth in Section 3.1(a);
    
	
 
    	
 
    	
 
    
	
“Tag-Along   Response Notice”
    	
 
    	
shall   have the meaning set forth in Section 3.1(b);
    
	
 
    	
 
    	
 
    
	
“Tag-Along   Sale”
    	
 
    	
shall   have the meaning set forth in Section 3.1(a);
    
	
 
    	
 
    	
 
    
	
“Tag-Along   Seller”
    	
 
    	
shall   have the meaning set forth in Section 3.1(a);
    
	
 
    	
 
    	
 
    
	
“Termination Date”
    	
 
    	
shall   have the meaning set forth in Section 3.5(a);
    
	
 
    	
 
    	
 
    
	
“Termination Event”
    	
 
    	
shall   have the meaning set forth in Section 3.5(a);
    
	
 
    	
 
    	
 
    
	
“Terminated Shareholder”
    	
 
    	
shall   have the meaning set forth in Section 3.5(a);
    
	
 
    	
 
    	
 
    
	
“Termination Price”
    	
 
    	
shall   have the meaning set forth in Section 3.5(d);
    
	
 
    	
 
    	
 
    
	
“Termination Securities”
    	
 
    	
shall   have the meaning set forth in Section 3.5(a);
    
	
 
    	
 
    	
 
    
	
“Third Party”
    	
 
    	
means   a prospective purchaser (other than a Permitted Transferee of the prospective   selling Shareholder) of Company Securities in a bona fide arm’s length   transaction;
    
	
 
    	
 
    	
 
    
	
“TKWD”
    	
 
    	
means   TKWD Ventures LLC, a Delaware limited liability company with its principal   address c/o WFD Ventures LLC, 1500 Broadway, 29th Floor, New York, NY 10036; and
    
	
 
    	
 
    	
 
    
	
“Transfer”
    	
 
    	
means,   with respect to any Company Securities, (i) when used as a verb, to sell,   assign, dispose of, exchange, pledge, encumber, hypothecate or otherwise   transfer such Company Securities or any participation or interest therein,   whether directly or indirectly, or agree or commit to do any of the   foregoing, and (ii) when used as a noun, a direct or indirect sale,   assignment, disposition, exchange, pledge, encumbrance, hypothecation, or   other transfer of such Company Securities or any participation or interest   therein or any agreement or 
    

 

15

 

	
 
    	
 
    	
commitment   to do any of the foregoing.
    

 

Other Definitional and Interpretive Matters.  Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:

 

Calculation of Time.  When calculating the period before which, within which or after which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded.  If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.

 

Dollars.  Any reference in this Agreement to “$” means U.S. dollars.

 

Annexes/Exhibits/Schedules.  The Annexes, Exhibits and Schedules to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement.  Any capitalized terms used in any Annex, Exhibit or Schedule but not otherwise defined therein shall be defined as set forth in this Agreement.

 

Gender and Number.  Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.

 

Headings.  The provision of a Table of Contents, the division of this Agreement into Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement.  All references in this Agreement to any “Article” or “Section” are to the corresponding Article or Section of this Agreement unless otherwise specified.

 

Herein.  The words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires.

 

1.                                      GENERAL RESTRICTIONS ON TRANSFER; PERMITTED TRANSFEREES

 

1.1                               General Restrictions on Transfer.

 

(a)                                 Each Shareholder understands and agrees that the Company Securities held by it on the date hereof have not been registered under the Securities Act and are restricted securities under the Securities Act.  No Shareholder shall Transfer any Company Securities (or solicit any offers in respect of any Transfer of any Company Securities), except in compliance with the Securities Act, any other applicable securities or “blue sky” laws and any restrictions on Transfer contained in this Agreement or any other provisions set forth in any other agreements or instruments pursuant to which such Company Securities were issued.  No Shareholder shall Transfer any Company Securities

 

16

 

if such Transfer would cause any class of Company Securities to be required to become subject to registration under the Exchange Act.

 

(b)                                 Each Shareholder hereby agrees that such Shareholder shall not Transfer any of its Company Securities at any time other than pursuant to a Transfer in accordance with Section 1, Section 2 and Section 3.  Any Transfer of Company Securities, other than according to the terms of this Agreement, shall be void and transfer no right, title or interest in or to any of such Company Securities to the purported transferee. The parties hereto acknowledge that the transfer restrictions contained herein are reasonable and in the best interests of the Company.

 

(c)                                  Except in connection with a Drag-Along Sale or a transaction that would constitute a Liquidity Event, no Shareholder shall Transfer any Company Securities to a Company Competitor.

 

(d)                                 Until the third anniversary of the date of this Agreement (the “Lock-Up Period”), each Existing Shareholder hereby agrees that such Existing Shareholder shall not Transfer any of its Company Securities (other than any Series C Shares, Series C-1 Shares, Series C-2 Shares and Series D Shares, except Series C Shares, Series C-1 Shares, Series C-2 Shares and Series D Shares held by Management Shareholders) at any time other than Transfers (i) to the Investors or Permitted Transferees, (ii) as a Participating Seller in a Tag-Along Sale, (iii) in a Drag-Along Sale, (iv) a transaction that would constitute a Liquidity Event.  Following the Lock-Up Period, a Shareholder may not transfer its Company Securities, except in accordance and compliance with this Section 1, Section 2 and Section 3.

 

(e)                                  Notwithstanding anything to the contrary herein (including in Section 1.1(d) and Section 2), Management Shareholders may only Transfer their Company Securities (i) to Permitted Transferees, (ii) as a Participating Seller in a Tag-Along Sale, (iii) in Drag-Along Sale, (iv) in a transaction that would constitute a Liquidity Event or (v) as provided in Section 1.1(f).

 

(f)                                   Following the Initial Public Offering, subject to Section 1.1(a) and applicable laws (including applicable securities laws), each Management Shareholder may Transfer Common Shares, but only to the extent that such Transfer would not result in the Relative Ownership Percentage of the Common Shares of such Management Shareholder immediately following the effective time of such Transfer (the “Determination Time”) being less than the Relative Ownership Percentage of the Common Shares owned by the Avista Investors immediately following the Determination Time.

 

(g)                                  Each Existing Shareholder agrees that, during the period of ninety (90) days (or, in the case of an underwritten offering, such lesser period as the managing underwriters may permit, it being understood that the Company shall request for the

 

17

 

benefit of the Existing Shareholders that such managing underwriter act in good faith in determining whether to permit a shorter period) following the effective date of a registration statement of the Company filed under the Securities Act in connection with an underwritten offering (and, in the case of the initial public offering of the Company’s securities, one hundred eighty (180) days), which periods may be extended upon the request of the managing underwriter, to the extent required by any rules of the Financial Industry Regulatory Authority, Inc. or any successor organization thereto, 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 such lockup period (or, in the case of an underwritten offering, such lesser period as the managing underwriters may permit, it being understood that the Company shall request for the benefit of the Existing Shareholders that such managing underwriter act in good faith in determining whether to permit a shorter period), it shall not, if requested by such underwriter, sell or otherwise transfer or dispose of (other than to donees, Affiliates, partners or members who agree to be similarly bound) any Common Shares or any securities of the Company convertible into Common Shares held by it except Registrable Securities (as defined in that certain Second Amended and Restated Registration Rights Agreement dated as of March 24, 2017) included in such registration.  Each Shareholder 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 1.1(g) or that are necessary to give further effect thereto.

 

1.2                               Permitted Transferees.  Subject to Section 1.1, Transfers of Company Securities by any Shareholder to a Permitted Transferee shall be permitted and shall not be subject to the transfer restrictions in Section 2 (Right of First Refusal) or Section 3.1 (Tag-Along Rights), to the extent applicable, so long as such Permitted Transferee signs the Joinder Agreement or similar agreement whereby such transferee shall be subject to the terms and conditions of this Shareholders Agreement.  Each Shareholder must give prior written notice to the Company of any proposed Transfer to such Permitted Transferee, including the identity of such Permitted Transferee and such other documentation reasonably requested by the Company to ensure compliance with the terms of this Agreement.

 

1.3                               Legend.  At all times prior to an Initial Public Offering, in addition to any other legend that may be required, each certificate for Company Securities issued to any Shareholder shall bear a legend in substantially the following form with such changes as the Company determines advisable or necessary to qualify for notice, registration and other exemptions under “blue sky” laws:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION

 

18

 

UNDER THE SECURITIES ACT OR STATE SECURITIES LAWS OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO THE TERMS AND CONDITIONS OF A SHAREHOLDERS AGREEMENT BY AND AMONG THE COMPANY AND THE HOLDERS SPECIFIED THEREIN, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.  THE SALE, TRANSFER OR OTHER DISPOSITION OF THE SECURITIES IS SUBJECT TO THE TERMS OF SUCH AGREEMENT AND THE SECURITIES ARE TRANSFERABLE ONLY UPON PROOF OF COMPLIANCE THEREWITH.

 

2.                                      RIGHT OF FIRST REFUSAL

 

2.1                               Selling Series C/D Shareholder and Notice.  Subject to Section 1.1, if any holder of Series C Shares, Series C-1 Shares, Series C-2 Shares or Series D Shares desires to Transfer any of his Series C Shares, Series C-1 Shares, Series C-2 Shares or Series D Shares or any interest in such Shares to a Third Party, in any transaction other than pursuant to Section 1.2 or Section 3.2 of this Agreement, such holder (the “Selling Series C/D Shareholder”), shall first deliver written notice of his desire to sell such Series C Shares, Series C-1 Shares, Series C-2 Shares and/or such Series D Shares (the “Series C/D Offer Notice”), to the Company and each of the holders of Series C Shares, Series C-1 Shares, Series C-2 Shares or Series D Shares in the manner prescribed in Section 8.9 of this Agreement.  Each Series C/D Offer Notice must specify:  (i) the name and address of the Third Party to which the Selling Series C/D Shareholder proposes to sell or otherwise dispose of the Shares or an interest in the Shares, (ii) the number of Series C Shares, Series C-1 Shares, Series C-2 Shares or Series D Shares (the “Series C/D Offered Shares”) the Selling Shareholder proposes to sell or otherwise dispose of, (iii) the consideration per Share to be delivered to the Selling Series C/D Shareholder for the proposed Transfer, (iv) the proposed date of the Transfer, and (v) all agreements related to and other material terms and conditions of the proposed transaction.

 

2.2                               Series C/D Offer Period.  Each holder of Series C Shares, Series C-1 Shares, Series C-2 Shares and/or Series D Shares (the “Series C/D Offerees”) shall have the right, exercisable for a period of ten (10) Business Days from the date of delivery of the Series C/D Offer Notice (the “Series C/D Offer Period”) to purchase, pro rata based on the number of Series C Shares, Series C-1 Shares, Series C-2 Shares and Series D Shares then owned by such Series C/D Offerees of all of the outstanding Series C Shares,

 

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Series C-1 Shares, Series C-2 Shares and Series D Shares, the Series C/D Offered Shares for the consideration per share and on the terms and conditions set forth in the applicable Series C/D Offer Notice, provided, that the Avista Investors and Fidelity Investors shall each have the pro rata right (based on their respective ownership on an as-converted basis of Shares) to purchase any Series C/D Offered Shares that an Other Investor would be entitled to purchase but elects not to purchase pursuant to this Section 2.2 (and the Avista Investors and Fidelity Investors shall each have an oversubscription right for any such shares not purchased by the other party).  Such right shall be exercised by delivery by such Series C/D Offerees of an irrevocable notice, prior to the expiration of the Series C/D Offer Period to the Company, with a copy to the Selling Series C/D Shareholder (the “Series C/D Purchase Notice”).  The failure of any Series C/D Offeree to deliver a Series C/D Purchase Notice by the end of the Series C/D Offer Period shall be deemed to be a waiver solely with respect to its right to participate in the purchase of the Series C/D Offered Shares then being sold pursuant to this Section 2.2 (and not with respect to any subsequent sales).

 

2.3                               Completion of First Refusal Sale of Series C/D Shares.

 

(a)                                 Subject to the requirement in Section 2.3(b) that all the Series C/D Offered Shares have been elected to be purchased, immediately after the final determination of the number of the Series C/D Offered Shares to be purchased by each of the holders of Series C Shares, Series C-1 Shares, Series C-2 Shares and Series D Shares pursuant to Section 2.1 through 2.2, the Company shall immediately notify all of such purchasing Shareholders of such determination.  The closing of the purchase of the Series C/D Offered Shares shall take place at the offices of the Company no later than thirty (30) days after the date of such notice by the Company (provided, that, if any such Transfer is subject to regulatory approval, such 30-day period shall be extended until the expiration of five Business Days after all such approvals have been received, but in no event later than 120 days following the expiration of the Series C/D Offer Period), or at such other time and place as the parties to the transaction may agree.  At such closing, the Selling Series C/D Shareholder shall deliver the certificate and other applicable instruments representing the Series C/D Offered Shares, and wire transfer instructions for payment of the consideration therefor, along with one or more assignment agreements transferring the Series C/D Offered Shares to the relevant purchasing Shareholders.  In connection with the Transfer of the Series C/D Offered Shares, the Selling Series C/D Shareholder shall only be required to represent and warrant that the Series C/D Offered Shares to be transferred shall be free and clear of any liens, claims or encumbrances (other than restrictions imposed by this Agreement and pursuant to applicable federal, state and foreign securities laws), that it is the record and beneficial owner of such Series C/D Offered Shares that it has all necessary power and authorization to consummate the Transfer, and that it has obtained or made all necessary consents, approvals, filings and notices from governmental authorities or third parties to consummate the Transfer.  The holders of Shareholders purchasing the Series C/D Offered Shares shall deliver at such

 

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closing by certified or official bank check or by wire transfer of immediately available funds, payment in full for such Series C/D Offered Shares.

 

(b)                                 If the Shareholders do not, in the aggregate, elect to purchase all of the Series C/D Offered Shares pursuant to Sections 2.1 through 2.2, then the applicable Selling Series C/D Shareholder shall be permitted, subject to the provisions of Section 3.1, for a period of (90) days from the date of the expiration of the Series C/D Offer Period (provided, in each case that, if such Transfer is subject to regulatory approval, such 90-day period shall be extended until the expiration of five Business Days after all such approvals have been received, but in no event later than 120 days following the expiration of the Series C/D Offer Period) to enter into definitive agreements to Transfer all of such Series C/D Offered Shares to the bona fide purchaser referred to in the Series C/D Offer Notice at a price not less than the said share price and on the same terms and conditions; provided, that the Selling Series C/D Shareholder shall not Transfer the Series C/D Offered Shares to the bona fide purchaser unless such bona fide purchaser contemporaneously with the sale signs the Joinder Agreement agreeing to be bound by the terms of this Agreement.  After the expiration of the said ninety (90) days (or such longer period referred to above), no sale shall be made without an offer being again made in respect of the Series C/D Offered Shares not previously disposed of pursuant to the foregoing provisions of Sections 2.1 through 2.3.

 

2.4                               Selling Shareholder and Notice.  Subject to Section 1.1, if any Shareholder desires to Transfer any of his Shares (other than any Series C Shares, Series C-1 Shares, Series C-2 Shares or Series D Shares, except Series C Shares, Series C-1 Shares, Series C-2 Shares or Series D Shares held by Management Shareholders), or any interest in such Shares to a Third Party, in any transaction other than pursuant to Section 1.2 or Section 3.2 of this Agreement, such Shareholder (the “Selling Shareholder”) shall first deliver written notice of his desire to do so (the “First Offer Notice”) to the Company and each of the holders of Series C Shares, Series C-1 Shares, Series C-2 Shares and Series D Shares in the manner prescribed in Section 8.9 of this Agreement.  The First Offer Notice must specify:  (i) the name and address of the Third Party to which the Selling Shareholder proposes to sell or otherwise dispose of the Shares or an interest in the Shares, (ii) the number of Shares the Selling Shareholder proposes to sell or otherwise dispose of (the “Offered Shares”), (iii) the consideration per Share to be delivered to the Selling Shareholder for the proposed Transfer, (iv) the proposed date of the Transfer, and (v) all agreements related to and other material terms and conditions of the proposed transaction.

 

2.5                               First Offer Period.  Each holder of Series C Shares, Series C-1 Shares, Series C-2 Shares and Series D Shares (the “First Round Offerees”) shall have the right, exercisable for a period of ten (10) Business Days from the date of delivery of the First Offer Notice (the “First Offer Period”), to purchase, pro rata based on the number of Series C Shares, Series C-1 Shares, Series C-2 Shares and Series D Shares then owned by such First Round Offeree of all of the outstanding Series C Shares, Series C-1 Shares,

 

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Series C-2 Shares and Series D Shares the Offered Shares for the consideration per share and on the terms and conditions set forth in the First Offer Notice, provided, that the Avista Investors and Fidelity Investors shall each have the pro rata right (based on their respective ownership on an as-converted basis of Shares) to purchase any Offered Shares that an Other Investor would be entitled to purchase but elects not to purchase pursuant to this Section 2.5 (and the Avista Investors and Fidelity Investors shall each have an oversubscription right for any such shares not purchased by the other party).  Such right shall be exercised by delivery by such First Round Offeree of an irrevocable notice, prior to the expiration of the First Offer Period, to the Company, with a copy to the Selling Shareholder (the “First Purchase Notice”).  The failure of any First Round Offeree to deliver a First Purchase Notice by the end of the First Offer Period shall be deemed to be a waiver solely with respect to its right to participate in the purchase of the Offered Shares then being sold pursuant to this Section 2.5 (and not with respect to any subsequent sales).

 

2.6                               Second Offer Period.  In the event that not all of the Offered Shares have been elected to be purchased by the First Round Offerees pursuant to Section 2.5, the Company shall deliver written notice (the “Second Offer Notice”) of this to all holders of Series A Shares and Series B Shares (the “Second Round Offerees”) (such notice to be given in the manner prescribed in Section 8.9).  Each Second Round Offeree shall have the right, exercisable for a period of ten (10) Business Days from the date of delivery of the Second Offer Notice (the “Second Offer Period”), to purchase, pro rata based on the total number of Series A Shares and Series B Shares owned by such Second Round Offeree of the outstanding Series A Shares and Series B Shares owned by all of the Second Round Offerees, the balance of such Offered Shares on the terms and conditions set forth in the First Offer Notice.  Such right shall be exercised by delivery of an irrevocable notice, prior to the expiration of the Second Offer Period, to the Company, with a copy to the Selling Shareholder, specifying the number of Offered Shares that such Second Round Offeree wishes to purchase (the “Second Purchase Notice”).  The failure of any of the Second Round Offerees to deliver a Second Purchase Notice by the end of the Second Offer Period shall be deemed to be a waiver solely with respect to its right to participate in the purchase of the Offered Shares then being sold pursuant to this Section 2.6 (and not with respect to any subsequent sales).

 

2.7                               Final Offer Period.  In the event that all Offered Shares have not been elected to be purchased by the First Round Offerees or the Second Round Offerees pursuant to Section 2.5 and Section 2.6 respectively, the Company shall deliver written notice (the “Final Offer Notice”) of this to the First Round Offerees and Second Round Offerees that irrevocably elected to purchase their full pro rata portion of the Offered Shares pursuant to Section 2.5 and Section 2.6 (the “Final Round Offerees”) (such notice to be given in the manner prescribed in Section 8.9).  For a period of five (5) days after receipt of the Final Offer Notice (the “Final Offer Period”), each Final Round Offeree shall have the right, which right may be exercised by delivering written notice (a “Final Purchase Notice”) to the Company, with a copy to the Selling Shareholder, prior

 

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to the expiration of the Final Offer Period, to irrevocably elect to purchase all, but not less than all, of the remaining Offered Shares. If more than one Final Round Offeree timely delivers a Final Purchase Notice, then each such Final Round Offeree shall be entitled to purchase, pro rata based on the number of Shares owned by such Final Round Offeree of all such outstanding Shares (in each case on an as-converted basis) owned by the Final Round Offerees irrevocably electing to purchase the balance of the Offered Shares, on the terms and conditions set forth in the First Offer Notice.  The failure of any Final Round Offeree to irrevocably elect to purchase all but not less than all of the remaining Offered Shares pursuant to this Section 2.7 prior to the expiration of the Final Offer Period shall be deemed to be a waiver solely with respect to its right to participate in the purchase of the Offered Shares pursuant to this Section 2.7.

 

2.8                               Completion of First Refusal Sale.

 

(a)                                 Subject to the requirement in Section 2.8(b) that all the Offered Shares have been elected to be purchased, immediately after the final determination of the number of Offered Shares to be purchased by each of the Shareholders pursuant to Sections 2.4 through 2.7, the Company shall immediately notify all of such purchasing Shareholders of such determination.  The closing of the purchase of the Offered Shares shall take place at the offices of the Company no later than thirty (30) days after the date of such notice by the Company (provided, that, if any such Transfer is subject to regulatory approval, such 30-day period shall be extended until the expiration of five Business Days after all such approvals have been received, but in no event later than 120 days following the expiration of the First Offer Period), or at such other time and place as the parties to the transaction may agree.  At such closing, the Selling Shareholder shall deliver the certificate and other applicable instruments representing the Offered Shares and wire transfer instructions for payment of the consideration therefor, along with one or more assignment agreements transferring the Offered Shares to the relevant purchasing Shareholders.  In connection with the Transfer of the Offered Shares, the Selling Shareholder shall only be required to represent and warrant that the Offered Shares to be transferred shall be free and clear of any liens, claims or encumbrances (other than restrictions imposed by this Agreement and pursuant to applicable federal, state and foreign securities laws), that it is the record and beneficial owner of such Offered Shares, that it has all necessary power and authorization to consummate the Transfer, and that it has obtained or made all necessary consents, approvals, filings and notices from governmental authorities or third parties to consummate the Transfer.  The holders of Shareholders purchasing the Offered Shares shall deliver at such closing by certified or official bank check or by wire transfer of immediately available funds, payment in full for such Offered Shares.

 

(b)                                 If the Shareholders do not, in the aggregate, elect to purchase all of the Offered Shares pursuant to Sections 2.4 through 2.7, then the applicable Selling Shareholder shall be permitted, subject to the provisions of Section 3.1, for a period of (90) days from the date of the First Offer Notice (provided, that, if such Transfer is

 

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subject to regulatory approval, such 90-day period shall be extended until the expiration of five Business Days after all such approvals have been received, but in no event later than 120 days following the expiration of the First Offer Period) to enter into definitive agreements to Transfer all of such the Offered Shares to the bona fide purchaser referred to in the First Offer Notice at a price not less than the said share price and on the same terms and conditions; provided, that the Selling Shareholder shall not Transfer the Offered Shares to the bona fide purchaser unless such bona fide purchaser contemporaneously with the sale signs the Joinder Agreement agreeing to be bound by the terms of this Agreement.  After the expiration of the said ninety (90) days (or such longer period referred to above), no sale shall be made without an offer being again made in respect of the Shares not previously disposed of pursuant to the foregoing provisions of Sections 2.4 through 2.8.

 

3.                                      TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS; PREEMPTIVE RIGHTS; CALL RIGHTS

 

3.1                               Tag-Along Rights.

 

(a)                                 Subject to Section 1.1, if a Shareholder (the “Tag-Along Seller”) desires to Transfer (a “Tag-Along Sale”) all or a part of his Shares (other than Fidelity Investors) to any Third Party in a single transaction or in a series of related transactions and such Offered Shares, as applicable, have been offered to, but not purchased by, the Shareholders in accordance with Section 2, the Tag-Along Seller shall first, by written notice to the Company, which shall provide the other Shareholders (the “Tag-Along Offerees”) with a copy of such notice (“Tag-Along Notice”), offer the Tag-Along Offerees (“Tag-Along Offer”) the opportunity to participate in such Transfer on an as converted basis in accordance with this Section 3.1 and Section 3.3.  The Tag-Along Notice must specify:  (i) the name and address of the party to which the Tag-Along Seller proposes to sell or otherwise dispose of the Shares or an interest in the Shares, (ii) the number of Offered Shares the Tag-Along Seller proposes to sell or otherwise dispose of pursuant to this Section 3.1(a), (iii) the consideration per Share to be delivered to the Tag-Along Seller for the proposed Transfer, (iv) the proposed date of the Transfer, and (v) all other material terms and conditions of the proposed transaction.

 

(b)                                 Upon receipt of the Tag-Along Notice, each Tag-Along Offeree shall have a fifteen (15) Business Day period after receipt of such notice (the “Tag-Along Notice Period”) in which to elect to sell Shares in the transaction by sending a notice (“Tag-Along Response Notice”) in writing to the Company (each such electing Tag-Along Offeree, a “Participating Seller”).  The Company shall promptly, on expiration of the Tag-Along Notice Period, notify the Tag-Along Seller of the aggregate number of Shares the Participating Sellers wish to sell.  Each Participating Seller shall have the right to sell an amount of Shares equal to the Shares the Third Party proposes to purchase multiplied by a fraction, the numerator of which shall be the number of Shares held by such Participating Seller, and the denominator of which shall be the aggregate number of

 

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Shares held by the Tag-Along Seller and each Participating Seller, in each case on an as-converted basis.  For the purposes of this Section 3.1(b), Shares of a Management Shareholder shall exclude any Incentive Securities underlying any options for Common Shares, whether or not such options are vested, unless such options are exercised prior to the end of the Tag-Along Notice Period (as defined below).  The pricing of the Shares to be sold in a Tag-Along Sale shall be as set forth in Section 3.3(a).

 

(c)                                  The Tag-Along Response Notice shall include wire transfer instructions for payment of the purchase price for the Offered Shares to be sold by the Participating Seller in the Tag-Along Sale.  The Participating Sellers shall, upon request, deliver to the Tag-Along Seller, with the Tag-Along Response Notice, the certificate or certificates representing the Shares of such Participating Seller to be included in the Tag-Along Sale, together with a limited power-of-attorney authorizing the Tag-Along Seller to Transfer such Shares on the terms set forth in the Tag-Along Notice.  Delivery of the Tag-Along Response Notice with such certificate or certificates and limited power-of-attorney shall constitute an irrevocable acceptance of the Tag-Along Offer by the Participating Sellers.  In order to participate in a Tag-Along Sale, subject to Section 3.3(b), the Participating Sellers must agree to enter into and execute substantially identical agreements and documents as the Tag-Along Seller enters into and executes in connection with the Tag-Along Sale.

 

(d)                                 If, at the end of a 90-day period after the date of receipt of the Tag-Along Notice (provided that if such Tag-Along Sale is subject to regulatory approval, such 90-day period shall be extended until the expiration of five (5) Business Days after all such approvals have been received, but in no event later than 120 days after the date of receipt of the Tag-Along Notice), the Tag-Along Seller has not completed the Transfer of all of the Offered Shares to be sold pursuant to this Section 3.1 on substantially the same terms and conditions set forth in the Tag-Along Notice (but as to price, the terms shall be exactly the same), the Tag-Along Seller shall (i) promptly return to the Participating Sellers the limited power-of-attorney (and all copies thereof) together with all certificates representing the Offered Shares that such Participating Sellers delivered for Transfer pursuant to Section 3.1(c) and any other documents in the possession of the Tag-Along Seller executed by the Participating Sellers in connection with the proposed Tag-Along Sale, and (ii) not conduct any Transfer of such shares of the specified class of Offered Shares without again complying with this Section 3.1.

 

(e)                                  Concurrently with the consummation of the Tag-Along Sale, the Tag-Along Seller shall (i) notify the Participating Sellers thereof, (ii) remit or cause to be remitted to the Participating Sellers the total consideration to be paid at the closing of the Tag-Along Sale for the Shares of the Participating Sellers Transferred pursuant thereto, with the cash portion of the purchase price paid by wire transfer of immediately available funds in accordance with the wire transfer instructions in the Tag-Along Response Notice, and (iii) promptly after the consummation of such Tag-Along Sale, furnish such

 

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other evidence of the completion and the date of completion of such Transfer and the terms thereof as may be reasonably requested by the Participating Sellers.

 

(f)                                   If at the termination of the Tag-Along Notice Period, any Tag-Along Offeree has not elected to participate in the Tag-Along Sale, such Tag-Along Offeree shall be deemed to have waived its rights under Section 3.1(a) with respect to, and only with respect to, the Transfer of its Shares pursuant to such Tag-Along Sale.

 

(g)                                  This Section 3.1 shall not apply to any Transfer of Company Securities (i) to the Investors, (ii) in a Drag-Along Sale, or (iii) that are Series D Shares.

 

3.2                               Drag-Along Rights

 

(a)                                 Subject to the approval rights of the holders of Series C Shares, Series C-1 Shares, Series C-2 Shares and Series D Shares as set forth in the Charter, in the event that holders representing more than fifty percent (50%) of the then issued Shares on an as converted basis (the “Drag-Along Seller”) wish to Transfer in a bona fide arm’s length transaction or series of transactions all of the Shares then owned by the Drag-Along Seller to any Person who is not an Affiliate of any Shareholders (the “Proposed Transferee”), the Drag-Along Seller shall have the right (the “Drag-Along Right”) to require all of the other Shareholders (the “Other Shareholders”) to sell to the Proposed Transferee all, and not only part, of the Shares then owned by such Shareholders (such transaction referred to in this Agreement as a “Drag-Along Sale”) on the same terms and conditions as the Drag-Along Sale, except as provided in Section 3.3(a).

 

(b)                                 As part of a Drag-Along Sale, the Drag-Along Seller shall also have the right to require that all of the Other Shareholders that hold warrants, options or other Company Securities that are convertible into or exchangeable or exercisable for Shares shall be exercised, exchanged or converted into Shares immediately prior to the consummation of the Drag-Along Sale and the Shares issued upon such exercise, exchange or conversion shall be included in the Drag-Along Sale.  Management Shareholders that hold options or warrants the exercise price per share of which is greater than the per share price at which the Shares are to be Transferred in connection with the Drag-Along Sale, if required by the Drag-Along Seller to exercise such options, may, in place of such exercise, submit to irrevocable cancellation thereof without any liability for payment of any exercise price with respect thereto.  If the Drag-Along Sale is not consummated with respect to any Shares acquired upon exercise of such options or warrants, such options or warrants shall be deemed not to have been exercised or canceled, as applicable.

 

(c)                                  The pricing of the Shares to be sold in a Drag-Along Sale shall be as set forth in Section 3.3(a).

 

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(d)                                 Each Other Shareholder agrees with respect to all Company Securities that it holds or over which such Shareholder otherwise exercises dispositive power:

 

(1)                                 in the event such Drag-Along Sale requires the approval of shareholders (including in the case of a merger or sale or exclusive license of all or substantially of the all of the assets of the Company) and the matter is to be brought to a vote at a shareholder meeting, to be present, in person or by proxy, as a holder of Company Securities, at all such meetings and be counted for the purposes of determining the presence of a quorum at such meetings; and to vote or cause to be voted (or execute and deliver any written consents in lieu thereof) all Company Securities in favor of such Drag-Along Sale and in opposition of any and all other proposals that could reasonably be expected to delay or impair the ability of the Company to consummate such Drag-Along Sale if so requested by the Drag-Along Seller;

 

(2)                                 in the event that the Drag-Along Sale is to be effected by the sale of Shares held by the Drag-Along Seller without the need for shareholder approval, each Other Shareholder agrees to sell all Company Securities of the Company held by such Other Shareholder to the Proposed Transferee, for per-share consideration determined in accordance with the provisions of Section 3.3(a) and otherwise on the same terms and conditions as the Drag-Along Seller;

 

(3)                                 to the extent permitted by applicable law, to refrain from exercising any dissenters’ rights or rights of appraisal under applicable law at any time with respect to such Drag-Along Sale, provided it is conducted in accordance with this Section 3.2;

 

(4)                                 subject to Section 3.3(b), to execute and deliver all related documentation and take such other action in support of the Drag-Along Sale as shall be reasonably requested by the Company or the Drag-Along Seller and is required of all other Shareholders; and

 

(5)                                 not to deposit, and to cause their Affiliates not to deposit, any voting securities owned by such party in a voting trust or subject any such voting securities to any arrangement or agreement with respect to the voting of such shares of capital stock, unless specifically requested to do so by the acquiror in connection with a Drag-Along Sale.

 

(e)                                  If an Other Shareholder (other than any Fidelity Investor and their respective Affiliates) fails or refuses to vote or sell his, her or its Company Securities as required by, or votes his, her or its Company Securities in contravention of this Section 3.2, then such Other Shareholder (other than any Fidelity Investor and their respective Affiliates) hereby grants to the Drag-Along Seller a proxy coupled with an interest to vote such Shares in accordance with this Section 3.2, and hereby appoints the Drag-

 

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Along Seller as his, her or its attorney in fact, to execute and deliver in the name and on behalf of such Other Shareholder all such agreements, instruments and other documentation (including any written consents of shareholders) as are required to Transfer the Company Securities held by such Other Shareholder to the Proposed Transferee in accordance with the terms of this Section 3.2.

 

(f)                                   To exercise a Drag-Along Right, the Drag-Along Seller shall give each Other Shareholder a written notice, whether before or after the consummation of the Drag-Along Sale and/or the approval of the Drag-Along Sale of the requisite stockholders of the Company (the “Drag-Along Notice”).  If the Drag-Along Notice is provided after the execution of definitive agreements with respect to the Drag-Along Sale and/or the approval of the Drag-Along Sale of the requisite stockholders of the Company, each Other Shareholder shall nonetheless comply with the provisions of this Section 3.2 and Section 3.3. The Drag-Along Notice shall identify (i) the name and address of the Proposed Transferee, and (ii) the proposed purchase price, terms of payment and other material terms and conditions of the Proposed Transferee’s offer.  Each Other Shareholder shall thereafter be obligated to sell its Company Securities subject to such Drag-Along Notice.

 

(g)                                  Not later than five (5) days after receipt of the Drag-Along Notice (the “Drag-Along Notice Period”), each of the Other Shareholders shall deliver to a representative of the Drag-Along Seller designated in the Drag-Along Notice the certificate and other applicable instruments representing the Company Securities of such Other Shareholder to be included in the Drag-Along Sale, together with wire transfer instructions for payment of the cash portion of the consideration to be received in such Drag-Along Sale, or, if such delivery is not permitted by applicable law, an unconditional agreement to deliver such Company Securities pursuant to this Section 3.2(g) at the closing for such Drag-Along Sale against delivery to such Other Shareholder of the consideration therefor.  If an Other Shareholder should fail to deliver such certificates to the representative of the Drag-Along Seller and the Drag-Along Sale is consummated, the Company shall cause the books and records of the Company to reflect that such Company Securities are bound by the provisions of this Section 3.2 and that such Company Securities shall be Transferred to the Proposed Transferee immediately upon surrender for Transfer by the holder thereof.

 

(h)                                 The Drag-Along Seller shall have a period of 120 days from the date of the Drag-Along Notice to consummate the Drag-Along Sale on the terms and conditions set forth in such Drag-Along Notice; provided, that if such Drag-Along Sale is subject to regulatory approval, such 120-day period shall be extended until the expiration of five (5) Business Days after all such approvals have been received, but in no event later than 180 days after the date of receipt of the Drag-Along Notice.  If the Drag-Along Sale shall not have been consummated during such period, the Drag-Along Seller shall promptly return to each of the Other Shareholders all certificates and other applicable instruments representing Company Securities that such Other Shareholders delivered for

 

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Transfer pursuant hereto, together with any other documents in the possession of the Drag-Along Seller executed by the Other Shareholders in connection with such proposed Transfer, and all the restrictions on Transfer contained in this Agreement or otherwise applicable at such time with respect to such Company Securities owned by the Other Shareholders shall again be in effect.

 

(i)                                     Concurrently with the consummation of the Drag-Along Sale, the Drag-Along Seller shall give notice thereof to the Other Shareholders, shall remit or cause to be remitted to each of the Other Shareholders that has surrendered its certificates and other applicable instruments the total consideration to be paid at the closing of the Drag-Along Sale (the cash portion of which is to be paid by wire transfer of immediately available funds in accordance with such Other Shareholder’s wire transfer instructions) for the Company Securities Transferred by such Other Shareholder pursuant hereto, and shall furnish such other evidence of the completion and time of completion of such Transfer and the terms thereof as may be reasonably requested by such Other Shareholders.

 

(j)                                    Notwithstanding anything contained in this Section 3.2, there shall be no liability on the part of the Drag-Along Seller to the Other Shareholders (other than the obligation to return the certificates and other applicable instruments representing Company Securities received by the Drag-Along Seller) if the Transfer of Company Securities pursuant to this Section 3.2 is not consummated for whatever reason, regardless of whether the Drag-Along Seller has delivered a Drag-Along Notice.  The decision to effect a Transfer of Company Securities pursuant to this Section 3.2 by the Drag-Along Seller is in the sole and absolute discretion of the Drag-Along Seller.

 

3.3                               Additional Provisions Related to Tag-Along Sales and Drag-Along Sales.

 

Notwithstanding anything contained in Section 3.1 or Section 3.2 to the contrary, in connection with a Tag-Along Sale or a Drag-Along Sale:

 

(a)                                 Upon the consummation of such Tag-Along Sale or Drag-Along Sale, all Shareholders of the same series of Company Securities participating therein will receive the same form and amount of consideration per share, or, if any Shareholder of a specified series of Company Securities is given an option as to the form and amount of consideration to be received, all Shareholders of such specified series of Company Securities participating therein will be given the same option, and all holders of the Series C Preferred Stock, Series C-1 Preferred Stock, Series C-2 Preferred Stock and Series D Preferred Stock (or, in each case, Common Stock received upon conversion thereof) will receive the same form of consideration with respect to such Series C Preferred Stock, Series C-1 Preferred Stock, Series C-2 Preferred Stock and Series D Preferred Stock (or, in each case, Common Stock received upon conversion thereof); provided, however, that, in the case of a Drag-Along Sale or a Tag-Along Sale that constitutes a Liquidity Event,

 

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the proceeds shall be allocated among the classes and series of Shares in accordance with the Charter.  If different classes or series of Shares are to be sold in a Tag-Along Sale and such sale does not constitute a Liquidity Event, the purchase price to be received by the Tag-Along Seller and the Participating Sellers shall be allocated after taking into account the relative value of the securities being transferred by each such Shareholder. The Board shall determine in good faith such relative value of each series and class of Shares to be sold in the Tag-Along Sale. For the avoidance of doubt, any fees paid to Avista Capital Holdings, LP or its affiliated investment funds in connection with any transaction constituting a Tag-Along Sale or Drag-Along Sale shall be considered in determining the amount of consideration per share referred to in the first sentence of this Section 3.3(a);

 

(b)                                 Each Shareholder shall (i) make such representations, warranties and covenants and enter into such definitive agreements as are customary for transactions of the nature of the proposed Transfer related to authority, ownership and the ability to convey title to such Company Securities, (ii) benefit from and be subject to all of the same provisions of the definitive agreements as are applicable to the Tag-Along Seller or Drag-Along Seller, as the case may be, (iii) subject to the provisions of the Company’s Certificate of Incorporation, be required to bear its proportionate share of any escrows, holdbacks or adjustments in respect of the purchase price or indemnification obligations; provided, that no Shareholder shall be obligated (A) to indemnify, other than severally indemnify, any Person in connection with such Tag-Along Sale or Drag-Along Sale, as the case may be, or (B) to incur liability to any Person in connection with such Tag-Along Sale or Drag-Along Sale, as the case may be, including, without limitation, under any indemnity, in excess of the lesser of (1) its pro rata share of such liability and (2) the proceeds realized by such Shareholder in such sale, and (iv) (other than any Fidelity Investor and their respective Affiliates) cooperate in obtaining all governmental and third-party consents and approvals reasonably necessary or desirable to consummate such Tag-Along Sale or Drag-Along Sale;

 

(c)                                  In the event the consideration to be paid in exchange for Shares in a Tag-Along Sale or a Drag-Along Sale includes any securities, and the receipt thereof by a Shareholder would require under applicable law (a) the registration or qualification of such securities or of any Person as a broker or dealer or agent with respect to such securities where such registration or qualification is not otherwise required for the Tag-Along Sale or a Drag-Along Sale or (b) the provision to any Tag-Along Seller or Drag-Along Seller of any specified information regarding such securities or the issuer thereof that is not otherwise required to be provided for the Tag-Along Sale or Drag-Along Sale, then such Shareholder may be paid cash in lieu of such securities in such proposed Tag-Along Sale or Drag-Along Sale.  In such event, the Tag-Along Seller or Drag-Along Seller, as the case may be, shall (i) in the case of a Tag-Along Sale, have the right, but not the obligation, and (ii) in the case of a Drag-Along Sale, have the obligation, to cause to be paid to such Shareholder in lieu thereof, against surrender of the Shares which would have otherwise been Transferred by such Shareholder to the prospective purchaser in the proposed Tag-Along Sale or a Drag-Along Sale, an amount in cash equal to the fair

 

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market value (determined by the Board in good faith through a reasonable application of a reasonable valuation method) of such Shares as of the date such securities would have been issued in exchange for such Shares;

 

(d)                                 In connection with a Drag-Along Sale, if requested by a majority of the members of the Board, the Company will promptly engage, on customary terms (including customary indemnification from the Company), a nationally recognized investment banking firm selected by the Drag-Along Seller and reasonably acceptable to the Board to provide financial advisory services to the Company, the Drag-Along Seller and the Other Shareholders, and the Company shall pay the fees and expenses of such investment banking firm;

 

(e)                                  In connection with a Drag-Along Sale, the Company will, if applicable, enter into a definitive agreement with the proposed transferee(s) providing for such Transfer and make and agree to representations, warranties, covenants and indemnities and other similar agreements that are reasonable and customary for negotiated transactions of the type contemplated by such Transfer;

 

(f)                                   The Company agrees to cooperate with any Shareholder and any proposed transferee (other than a Company Competitor in the case of a Tag-Along Sale), and their respective advisors, to facilitate and effect any Tag-Along Sale or Drag-Along Sale and, upon the request of any Shareholder that proposes to make a Tag-Along Sale or Drag-Along Sale, subject to any proposed transferee (other than a Company Competitor in the case of a Tag-Along Sale) executing a reasonably satisfactory confidentiality agreement with the Company, the Company will, and will cause its and its Subsidiaries’ employees and personnel to, use its and their reasonable best efforts to facilitate and support any due diligence process being undertaken in connection with such proposed Tag-Along Sale or Drag-Along Sale;

 

(g)                                  The Company and the Shareholders (other than any Fidelity Investor and their respective Affiliates) will cooperate in the obtaining of all governmental and third-party approvals and consents reasonably necessary or desirable to consummate such Transfer;

 

(h)                                 All reasonable costs and expenses incurred by the Shareholders or the Company in connection with any proposed Drag-Along Sale (whether or not consummated), including all attorneys fees and charges, all accounting fees and charges and all finders, brokerage or investment banking fees, charges or commissions, shall be paid by the Company.  The Drag-Along Seller may retain, and the Company will pay the reasonable fees and expenses of, a single legal counsel (and such local counsel as may be appropriate) in connection with any proposed Drag-Along Sale (whether or not consummated). All reasonable costs and expenses incurred by the Shareholders in connection with any proposed Tag-Along Sale (whether or not consummated), including all attorneys fees and charges, all accounting fees and charges and all finders, brokerage

 

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or investment banking fees, charges or commissions, shall be borne by each transferor of Shares;

 

(i)                                     No Fidelity Investor shall be bound by any restrictive covenant (such as any non-compete or other business limitation); and

 

(j)                                    All notices to be issued as part of the procedures relating to a Tag-Along Sale and a Drag-Along Sale set forth in Section 3.1 and Section 3.2 shall, as applicable, be made pursuant to Section 8.9.

 

3.4                               Preemptive Rights

 

(a)                                 Prior to the consummation of an Initial Public Offering, the Company shall give each of the Shareholders that is (i) an “accredited investor” (as such term is defined in Rule 501(a) of the Securities Act) or (ii) located outside the United States and is not a “U.S. Person” as such term is defined in Regulation S under the Securities Act (“Regulation S”) and that such Shareholder is obtaining the Company Securities in an “offshore transaction” (as such term is defined in Regulation S under the Securities Act) outside of the United States, each as of the time of any proposed issuance by the Company of shares of a specified class of Company Securities, written notice pursuant to Section 8.9 (an “Issuance Notice”) of such proposed issuance at least ten (10) days prior to the proposed issuance date.  The Issuance Notice shall specify the number of shares of the specified class of Company Securities and the price at which such Company Securities are proposed to be issued and the other material terms and conditions of the issuance, including, without limitation, the proposed closing date.  Subject to Section 3.4(f), each Shareholder shall be entitled to purchase, at the price and on the other terms and conditions specified in the Issuance Notice, its pro rata amount of such newly issued Company Securities equal to (x) the number of shares of the specified class of Company Securities proposed to be issued by the Company multiplied by (y) a fraction, the numerator of which is the aggregate number of Shares owned by such Shareholder and the denominator of which is the aggregate number of Shares owned by all Shareholders, in each case on an as-converted basis.

 

(b)                                 Each Shareholder may exercise its rights under this Section 3.4 by delivering written notice to the Company of its election to purchase such Company Securities within ten (10) days after receipt of the Issuance Notice.  A delivery of such notice (which notice shall specify the number of shares of the specified class of Company Securities requested to be purchased by the Shareholder submitting such notice) by such Shareholder shall constitute a binding agreement of such Shareholder to purchase, at the price and on the terms and conditions specified in the Issuance Notice, the number of shares of the specified class of Company Securities specified in such Shareholder’s notice.  If, at the termination of such 10-day period, any Shareholder has not exercised its right to purchase any of its pro rata share of such Company Securities, such Shareholder shall be deemed to have waived all of its rights under this Section 3.4 with respect to, and

 

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only with respect to, the purchase of such Company Securities specified in the Issuance Notice.

 

(c)                                  The Company shall have 120 days after the date of the Issuance Notice to consummate the proposed issuance of any or all of such Company Securities that the Shareholders have elected not to purchase at the price and upon terms and conditions that are not materially less favorable to the Company than those specified in the Issuance Notice; provided, that if such issuance is subject to regulatory approval, such 120-day period shall be extended until the expiration of five (5) Business Days after all such approvals have been received, but in no event later than 180 days after the date of the Issuance Notice.  At the consummation of such issuance, the Company shall issue certificates representing the Company Securities to be purchased by each Shareholder exercising preemptive rights pursuant to this Section 3.4 registered in the name of such Shareholder, against payment by such Shareholder of the purchase price for such Company Securities.  If the Company proposes to issue any class of Company Securities after such 120-day period or on other terms materially less favorable to the issuer, it shall again comply with the procedures set forth in this Section 3.4.

 

(d)                                 The closing of any issuance of Company Securities to the Shareholders pursuant to this Section 3.4, shall take place at the time and in the manner provided in the Issuance Notice.  The Company shall be under no obligation to consummate any proposed issuance of Company Securities, nor shall there be any liability on the part of such entity to any Shareholder, if the Company has not consummated any proposed issuance of Company Securities pursuant to this Section 3.4 for whatever reason, regardless of whether it shall have delivered an Issuance Notice in respect of such proposed issuance.

 

(e)                                  Notwithstanding the requirements of this Section 3.4, the Company may offer and sell shares of a specified class of Company Securities without first offering such Company Securities to each of the other Shareholders or complying with the procedures of this Section 3.4, so long as (i) each of the other Shareholders receives prompt written notice of the consummation of such sales, (ii) either the Company or the initial purchaser of such Company Securities commits (at the time of such initial sale) to make available for sale to such Shareholders a number of shares of the specified class of Company Securities equal to (x) the number of shares of the specified class of Company Securities issued by the Company (including all shares of the specified class of Company Securities issued or sold to Shareholders with respect to this provision) multiplied by (y) a fraction, the numerator of which is the aggregate number of Shares owned by such Shareholder and the denominator of which is the aggregate number of Shares owned by all Shareholders, each determined on an as-converted basis, within 45 days after the close of such sale on the same terms and conditions as such prior sale, and (iii) the price per share of such specified class of Company Securities shall be identical to the price per share paid in such prior sale.

 

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(f)                                   The preemptive rights under this Section 3.4 shall not apply to (i) issuances or sales of Company Securities to employees, officers, directors, consultants, customers or suppliers (including in connection with bona fide licensing, commercial or other strategic arrangements) of the Company or any Subsidiary pursuant to employee benefit, incentive or similar plans or agreements or arrangements of the Company, (ii) issuances or sales of Company Securities upon exercise, conversion or exchange of Company Securities outstanding as of the date hereof, (iii) Common Shares issued pursuant to conversion of preferred shares pursuant to Section 4.7 of the Charter, securities issued in connection with a stock split or stock dividend of the Company, (iv) the issuance of Company Securities to banks, equipment lessors or other financial institutions, or to real property lessors, pursuant to a debt financing, equipment leasing or real property leasing transaction, (v) the issuance of Company Securities contemplated by the Subscription Agreement (including any Series D Shares issued pursuant to Sections 1.2 through 1.3 of the Subscription Agreement), (vi) issuances or sales in an Initial Public Offering, or as consideration for a merger of the Company with or into another Person or an acquisition by the Company of another Person or substantially all the assets of another Person, (vii) issuances as consideration for sponsored research, collaboration, technology license, development, OEM, marketing or other similar agreements or strategic partnerships approved or (viii) any Series C-2 Shares issued pursuant to the Note Conversion Agreement, in each case of (i) — (vii) as approved in accordance with the Charter.

 

3.5                               Call Right.

 

(a)                                 Upon any Management Shareholder ceasing to be employed by, or providing services to, the Company or one of its Subsidiaries (a “Terminated Shareholder”) for any reason (a “Termination Event”), subject to the provisions of this Section 3.5, the Company shall have the option to purchase (the “Call Right”), and if such option is exercised, such Terminated Shareholder shall sell, and shall cause any Permitted Transferees of such Terminated Shareholder to sell, to the Company all or any portion of the Company Securities (A) that are Purchased Securities acquired, prior to and as of the date of the occurrence of such Termination Event (the “Termination Date”), or (B) that are Incentive Securities acquired prior to and as of the Termination Date, or acquired after such Termination Date pursuant to the exercise of Common Shares options in accordance with the terms of such Common Shares options (together with all Purchased Securities, the “Termination Securities”), at a price per Termination Security equal to the applicable Termination Price (as determined pursuant to Section 3.5(d) below) of the Termination Securities. The Company may assign all or a portion of the Call Right to the Avista Investors or Fidelity Investors on a pro rata basis (based on their respective ownership on an as-converted basis of Shares).  If the Call Right is assigned, the Avista Investors and Fidelity Investors shall have the rights and benefits granted to the Company in this Section 3.5.

 

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(b)                                 With respect to each Termination Security, the Company shall notify a Terminated Shareholder in writing, within the Call Period with respect to such Termination Security, whether the Company will exercise its right to purchase such Termination Security (the date on which a Terminated Shareholder is so notified, the “Call Notice Date”).

 

(c)                                  The closing of the purchase by the Company of Termination Securities pursuant to this Section 3.5 shall take place at the principal office of the Company on the date chosen by the Company, which date shall, except as may be reasonably necessary to determine the Termination Price, in no event be more than forty-five (45) days after the Call Notice Date.  At such closing, (i) the Company shall pay the Terminated Shareholder and/or such Terminated Shareholder’s Permitted Transferees, as applicable, against delivery of duly endorsed certificates described below representing such Termination Securities, the aggregate Termination Price by wire transfer of immediately available federal funds and (ii) the Terminated Shareholder and/or such Terminated Shareholder’s Permitted Transferees, as applicable, shall deliver to the Company a certificate or certificates representing the Termination Securities to be purchased by the Company duly endorsed, or with stock powers duly endorsed, for transfer with signature guaranteed, free and clear of any lien or encumbrance, with any necessary stock transfer tax stamps affixed.  The delivery of a certificate or certificates for the Termination Securities by any Person selling such Termination Securities pursuant to this Section 3.5 shall be deemed a representation and warranty by such Person that: (A) such Person has full right, title and interest in and to such Termination Securities; (B) such Person has all necessary power and authority and has taken all necessary action to sell such Termination Securities as contemplated; (C) such Termination Securities are free and clear of any and all liens or encumbrances; and (D) there is no adverse claim with respect to such Termination Securities.

 

(d)                                 Termination Price.  For purposes of this Section 3.5, if the employment or other service arrangement of a Management Shareholder is terminated, the “Termination Price” per Termination Security purchased by the Company pursuant to the Call Right shall equal the value as set forth below:

 

	
Employment
   Termination
    	
 
    	
Purchased Securities
    	
 
    	
Incentive Securities
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By the Company or any Subsidiary thereof without   Cause or by the Management Shareholder for Good Reason
    	
 
    	
Fair Market Value
    	
 
    	
Fair Market Value
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By the Company or any 
    	
 
    	
Lower of Cost or Fair 
    	
 
    	
Lower of Cost or Fair 
    

 

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Employment
   Termination
    	
 
    	
Purchased Securities
    	
 
    	
Incentive Securities
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Subsidiary thereof with Cause
    	
 
    	
Market Value
    	
 
    	
Market Value
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By the Management Shareholder without Good Reason
    	
 
    	
Fair Market Value
    	
 
    	
Lower of Cost or Fair Market Value
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Death or Disability
    	
 
    	
Fair Market Value
    	
 
    	
Fair Market Value
    

 

For purposes of this Section 3.5(d), “Fair Market Value” shall be the Fair Market Value on the FMV Calculation Date.

 

(e)                                  Payment.  The Company shall pay the Termination Price in cash, by wire transfer of immediately available federal funds.

 

(f)                                   Termination of Call Right.  The Call Rights under this Section 3.5 shall terminate one (1) year after the consummation of the Initial Public Offering.

 

4.                                      BOARD OF DIRECTORS

 

4.1                               Election of Directors.  Each Shareholder agrees to vote all Company Securities (or executing and delivering any written consents in lieu thereof), whether now owned or hereafter acquired or which such Shareholder may be empowered to vote, at a general meeting of the shareholders or otherwise from time to time and at all times, in whatever manner shall be necessary to ensure that the Board shall be designed as follows:

 

(a)                                 One individual designated by the Founder (the “Founder Director”).  The Founder Director initially shall be Per Djupesland.

 

(b)                                 The Company’s Chief Executive Officer (the “CEO Director”), provided that if for any reason the CEO leaves the Company, then the CEO Director shall be deemed to have resigned from the Board upon ceasing to be Chief Executive Officer and each of the Shareholders shall promptly vote their respective Shares to elect the replacement CEO as the new CEO Director.  The CEO Director initially shall be Peter Miller.

 

(c)                                  One (1) individual to be designated by holders of a majority of the Series A Shares (the “Series A Director”). The Series A Director initially shall be Klaas de Boer.

 

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(d)                                 One (1) individual to be designated by holders of a majority of the Series B Shares (the “Series B Director”). The Series B Director initially shall be William F. Doyle.

 

(e)                                  Four (4) individuals to be designated by holders of a majority of the Series C Shares (each, a “Series C Director”), two of whom shall be designated independently by Avista Capital Partners II, LP.  The directors appointed by the Series C Shares initially shall be Larry Pickering, Patrick O’Neill, Sriram Venkataraman, and Joshua Tamaroff. Larry Pickering shall serve as the chairman of the Board.

 

(f)                                   Two (2) individuals to be designated by holders of a majority of the Series C-1 Shares (each, a “Series C-1 Director”). The Series C-1 Director seats shall initially be vacant.

 

4.2                               Removal of Directors.  The Shareholders agree that each party who has the right to designate member(s) of the Board pursuant to Section 4.1 shall also have the right to remove such designee from the Board at any time.  Each of the Shareholders agrees to take whatever action is necessary to effect any removal requested by such party.  No Shareholder shall, at any time it is then entitled to vote for the removal of directors from the Board, vote any of its Company Securities in favor of the removal of any director designated pursuant to Section 4.1, unless the designating party shall have requested such removal in writing.

 

4.3                               Replacement Directors.  If any director is unable to serve, or is removed or withdraws from the Board, such withdrawing director’s replacement will be designated by the party which designated such director in accordance with Section 4.1 and each Shareholder then entitled to vote for the election of directors to the Board shall vote all of its Company Securities that are entitled to vote or execute proxies or written consents, as the case may be, in order to ensure that the such replacement designee is elected to the Board (or to take whatever action is necessary to effect any replacement requested by such party).  If such designating party is no longer a Shareholder, or is no longer entitled to designate a replacement director, the withdrawing director’s replacement will be elected by the then-current shareholders by majority vote of all Shares on an as-converted basis.

 

4.4                               Unfilled Vacancy.  Any parties entitled to appoint director(s) in accordance with Section 4.1 may, in their sole discretion, decide not to elect one or more such directors, and during any period when there is a vacancy on the Board as a result of such decision not to appoint one or more directors, the Board shall not be deemed unduly constituted solely as a result of such vacancy.

 

4.5                               Observers.  Observers may participate in board meetings from time to time subject to Board approval; provided, however, that as long as the Fidelity Investors collectively own not less than twenty-five percent (25%) of the Series D Shares they are

 

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purchasing under the Subscription Agreement (or an equivalent amount of Common Shares issued upon conversion thereof), in the aggregate, the Company shall invite a representative of the Fidelity Investors to attend all meetings of its Board of Directors and any committees thereof in a nonvoting observer capacity and, in this respect, shall give such representative (and the Fidelity Investors) 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. Observers are not entitled to vote; provided, however, that the Fidelity Investors shall cause such observer to hold in confidence and trust all information so provided to the extent required by Section 5.4; and provided further, that the Company reserves the right to withhold any information and to exclude such observer 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 representative is associated with a Company Competitor (but not solely by virtue of any investments that any Fidelity Investor may have in a Competitor).

 

4.6                               Actions by the Board of Directors.  Except as otherwise set forth herein or required by law, all decisions of the Board shall require the affirmative vote of a majority of its members.

 

4.7                               Quorum.  A quorum of the Board shall consist of a majority of the members of the Board being present in person or by telephone, which majority shall include at least two Series C Directors, provided, however, that if all Series C Directors have failed to attend three consecutive Board meetings (in person or telephonic) without a bona fide reason and after notice has been duly provided in accordance with the Bylaws, a Series C Director shall not be required for a quorum at the next such Board meeting.

 

4.8                               Committees.  In addition to any committees formed by the Board in accordance with its Charter and Bylaws from time to time, the Board shall establish a compensation committee and an audit committee which shall at all times include at least one Series C Director.

 

4.9                               Subsidiaries.  The board of directors (and any committees thereof) of all Subsidiaries of the Company will consist of such persons as the Company shall direct; provided, that the holders of Series C Shares shall have the right to appoint members to such board of directors (or committees) in the same proportions as set forth in Section 4.1.

 

4.10                        Expenses.  The Company shall reimburse the members of the Board and the representative designated pursuant to Section 4.5 for all reasonable out-of-pocket travel expenses and attendant costs related to attending Board meetings and otherwise providing services on behalf of the Company or its Subsidiaries in their capacity as directors.

 

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4.11                        No “Bad Actor” Disqualification.

 

(a)                                 Each Shareholder that (collectively with its Affiliates) is a beneficial owner of 20% or more of the Company or has the right to designate a director of the Company pursuant to the provisions of Section 4.1 hereby represents and warrants that:

 

(1)                                 neither it nor any related party described in Rule 506(d)(1) of the Securities Act (“Beneficial Owner”) is subject to any of the “bad actor” disqualifications described in Rule 506(d)(1)(i) through (viii) under the Securities Act (“Disqualification Events”), included as Schedule 4.11(a) attached hereto, except for Disqualification Events covered by Rule 506(d)(2)(ii) or (iii) or (d)(3) under the Securities Act and disclosed in writing in reasonable detail to the Company and the other Shareholders;

 

(2)                                 it has exercised reasonable care to determine whether any Director designated by it under Section 4.1 is subject to any Disqualification Event;

 

(3)                                 it has provided the Company and the other Shareholders with any and all information reasonably requested by the Company or otherwise necessary for the Company to determine, in the exercise of reasonable care, whether any such Director is subject to any Disqualification Event;

 

(4)                                 any information furnished to the Company or the other Shareholders with respect to the potential applicability of Disqualification Events to any such Director is true, correct and complete; and

 

(5)                                 no Director designated by it under Section 4.1 is subject to a Disqualification Event, except for Disqualification Events covered by Rule 506(d)(2)(ii) or (iii) or (d)(3) under the Securities Act and disclosed in writing in reasonable detail to the Company and the other Shareholders.

 

(b)                                 Each Shareholder that (collectively with its Affiliates) is a beneficial owner of 20% or more of the Company or has the right to designate a director of the Company pursuant to the provisions of Section 4.1 agrees to exercise reasonable care to determine whether any of its designated or potential Directors or any Beneficial Owner is subject to any Disqualification Event, and shall promptly provide the Company and the other Shareholders to this Agreement with any and all information reasonably requested by the Company or otherwise necessary for the Company to determine, in the exercise of reasonable care, whether any designated or potential Director or Beneficial Owner is subject to any Disqualification Event.  Each Shareholder that has the right to designate a director of the Company pursuant to the provisions of Section 4.1 agrees that it will not designate a Director that is subject to any Disqualification Event, except for Disqualification Events covered by Rule 506(d)(2)(ii) or (iii) or (d)(3) under the

 

39

 

Securities Act. With respect to any such Disqualification Event covered by Rule 506(d)(2)(ii) or (iii) or (d)(3), the relevant Shareholder will promptly disclose in writing to the Company and the other Shareholders any and all information necessary for the Company to determine whether Rule 506(d)(2)(ii) or (iii) or (d)(3) applies.  Each Shareholder that (collectively with its Affiliates) is a beneficial owner of 20% or more of the Company or has the right to designate a director of the Company pursuant to the provisions of Section 4.1 will promptly notify the Company and each other Shareholder in writing if it, any Beneficial Owner or, to its knowledge, any of its designated or potential Directors is subject to any Disqualification Event.

 

(c)                                  Notwithstanding any other provision in this Agreement to the contrary, no Shareholder shall be required to vote to elect (or maintain in office) any person that is subject to a Disqualification Event, except for Disqualification Events covered by Rule 506(d)(2)(ii) or (iii) or (d)(3) under the Securities Act.

 

(d)                                 From time to time during the term of this Agreement, any Shareholder may request the removal of a director that is subject to any Disqualification Event, except for Disqualification Events covered by Rule 506(d)(2)(ii) or (iii) or (d)(3) under the Securities Act, by written notice to the Company and the other Shareholders specifying, in reasonable detail, the Disqualification Event.  If the Company reasonably determines that a Director is subject to a Disqualification Event, except for Disqualification Events covered by Rule 506(d)(2)(ii) or (iii) or (d)(3) under the Securities Act:

 

(1)                                 the Company shall promptly notify each Shareholder to this Agreement and take such reasonable actions as are necessary to facilitate such removal, including, without limitation, soliciting the votes of the appropriate shareholders; and

 

(2)                                 the Shareholders shall vote their Company Securities to cause the removal from the Company’s Board of the Director.

 

5.                                      COVENANTS

 

5.1                               Delivery of Financial and Other Information.

 

(a)                                 The Company shall provide the following information to both (a) Ikos, for so long as Ikos owns three percent (3%) of the issued and outstanding capital stock of the Company (as determined on a fully diluted as-converted basis), and (b) the Investors, TKWD and Entrepreneurs’ Fund, in each case for as long as such Shareholder continues to hold at least twenty-five percent (25%) of the Shares (on an as-converted basis) as they hold on the date of this Agreement:

 

(1)                                 within twenty (20) days following the end of each month, unaudited consolidated balance sheet of the Company and its Subsidiaries as of the end of

 

40

 

such prior month, and consolidated statements of income and cash flows of the Company and its Subsidiaries for the period then ended;

 

(2)                                 within forty-five (45) days following the end of each fiscal quarter, (i) a fully diluted capitalization table of the Company and (ii) unaudited consolidated balance sheet of the Company and its Subsidiaries as of the end of such period, and consolidated statements of income and cash flows of the Company and its Subsidiaries for the period then ended;

 

(3)                                 not later than thirty (30) days before the commencement of the next fiscal year of the Company, a budget and cash flow projection and operating plan for the next three fiscal years (broken down into periods of one calendar month for the first year and calendar quarter for the two subsequent years); and

 

(4)                                 with respect to each fiscal year of the Company after 2013, a consolidated balance sheet of the Company and its subsidiaries as of the end of such year, and consolidated and consolidating statements of income and cash flows of the Company and its Subsidiaries for the year then ended (which have been audited by an accounting firm of international repute), prepared in accordance with GAAP (the “Annual Financial Statements”), together with any management letters in respect of them, promptly upon the same becoming available and, in any event, not later than (x) forty-five (45) days for unaudited Annual Financial Statements and (y) 120 days for audited Annual Financial Statements following the end of the financial period to which they relate or, in each case, such longer period as is approved by the Board.

 

(b)                                 For so long as Invictum AS owns at least two percent (2%) of the issued and outstanding capital stock of the Company (as determined on a fully diluted as-converted basis), the Company shall provide copies of the financial statements described in Sections 5.1(a)(2) and 5.1(a)(4) above to Invictum AS at the address set forth on Schedule A hereto within five (5) Business Days of providing such financial statements to the Investors and certain other Shareholders pursuant to Sections 5.1(a)(2) and 5.1(a)(4) above, as applicable.  This Section 5(b) may not be amended without the written consent of Invictum AS but, for the avoidance of doubt, to the extent that the timing of delivery of or nature of the financial statements delivered to the Investors and certain other Shareholders are amended, including pursuant to amendments to Sections 5.1(a)(2) and/or 5.1(a)(4), such amendments shall apply with respect to any financial statements delivered pursuant to this Section 5.1(b) and shall not require the consent of Invictum AS so long as, if Invictum AS continues to satisfy the two percent (2%) ownership threshold provided above, Invictum AS continues to receive any quarterly and annual financial statements delivered to such Investors and other Shareholders.

 

(c)                                  The Company shall promptly and accurately respond, and shall use its best efforts to cause its transfer agent to promptly respond, to requests for information made on behalf of any Fidelity Investor relating to (x) accounting or securities law

 

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matters required in connection with its audit or (y) the actual holdings of the Fidelity Investors, including in relation to the total outstanding shares; provided, however, that the Company shall not be obligated to provide any such information that could reasonably result in a violation of applicable law or conflict with the Company’s insider trading policy or a confidentiality obligation of the Company.  The rights of the Fidelity Investors under this Section shall expire once no Fidelity Investor or Affiliate thereof holds any securities of the Company that are restricted under the Securities Act.

 

5.2                               Inspection.  The Company shall permit each of the Investors, TKWD and Entrepreneurs’ Fund to visit and inspect the properties of the Company and its Subsidiaries, to examine the books of account and records and to discuss their respective affairs, finances and accounts with its officers, upon at least three (3) days advance notice and at such reasonable times as may be requested by the Investor; provided further, however, that the Company shall not be obligated pursuant to this Section 5.2 to provide access to any information that it reasonably considers to be a trade secret.

 

5.3                               Employment Conditions.  The Company undertakes to require each employee hired by the Company following the date hereof to execute, or cause to be executed in the case of its subsidiaries, an employment and non-competition contract in a form reasonably acceptable to the Investors, and each employee and each consultant hired by the Company or subsidiary following the date hereof to execute a non-disclosure and inventions assignment agreement in a form reasonably acceptable to the Investors.

 

5.4                               Confidentiality.

 

(a)                                 Each Shareholder agrees that it shall (and shall cause its Affiliates (other than Affiliates that are a Company Competitor) and its and their officers, directors, employees, partners, legal counsel, agents and representatives to) (collectively, the “Confidentiality Affiliates”) (i) hold confidential and not disclose (other than by a Shareholder to its Confidentiality Affiliates having a reasonable need to know in connection with the permitted purposes hereunder), without the prior written consent of the Board, all confidential or proprietary written, recorded or oral information or data (including research, developmental, engineering, manufacturing, technical, marketing, sales, financial, operating, performance, cost, business and process information or data, know-how and computer programming and other software techniques) provided or developed by the Company, another Shareholder or its Confidentiality Affiliates in connection with the business of the Company or its Subsidiaries, whether such confidentiality or proprietary status is indicated orally or in writing or in a context in which the Company or the disclosing Shareholder or its Confidentiality Affiliates reasonably communicated, or the receiving Shareholder or its Confidentiality Affiliates should reasonably have understood, that the information should be treated as confidential, whether or not the specific words “confidential” or “proprietary” are used (“Confidential Information”) and (ii) use such Confidential Information only for the purposes of performing its obligations hereunder to which it is a party and carrying on the business of

 

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the Company and monitoring its investment in the Company; provided, however, that Shareholders may disclose any such Confidential Information on a confidential basis to current and prospective lenders in connection with a loan or prospective loan to a Shareholder and to prospective purchasers of Company Securities from a Shareholder (including disclosure to a potential purchaser in Drag-Along Sale), as well as to their legal counsel, auditors, agents and representatives.  Notwithstanding the foregoing, Shareholders may disclose any such Confidential Information on a confidential basis to limited partners or prospective limited partners or investors of a Shareholder or its Confidentiality Affiliates.

 

(b)                                 The obligations contained in Section 5.4(a) shall not apply, or shall cease to apply, to Confidential Information if or when, and to the extent that, such Confidential Information (i) was, or becomes through no breach of the receiving Shareholder’s obligations hereunder, known to the public, (ii) becomes known to the receiving Shareholder or its Confidentiality Affiliates from other sources under circumstances not involving any breach of any confidentiality obligation between such source and the disclosing Shareholder’s or discloser’s Confidentiality Affiliates or a third party, (iii) is independently developed by the receiving Shareholder or its Confidentiality Affiliates, or (iv) is required to be disclosed by law, governmental regulation or applicable legal process.

 

5.5                               Press Releases. The Company shall not issue any press release regarding the Company without the Investors’ prior written consent; provided, however, that, notwithstanding the foregoing, the Company may advise customers or potential customers or strategic partners that such party is an investor in the Company’s securities and no press release may be issued that includes the name of or refers to Entrepreneurs’ Fund without its prior written consent.  Holders of the Series C Shares, Series C-1 Shares, Series C-2 Shares and Series D Shares shall each be entitled (but not obligated) to be mentioned as investors in the Company and to include its or their company description in the Company’s press releases.

 

5.6                               Directors’ and Officers’ Insurance.  The Company shall maintain for such periods as the Board shall in good faith determine, at its expense, insurance in an amount determined in good faith by the Board to be appropriate, on behalf of any person who after the date of this Agreement is or was a director or officer of the Company or any Subsidiary, or is or was serving at the request of the Company or any Subsidiary as a director, officer, employee or agent of another limited company, corporation, partnership, joint venture, trust or other enterprise, including any Subsidiary of the Company, against any expense, liability or loss asserted against such Person and incurred by such Person in any such capacity, or arising out of such Person’s status as such, subject to customary exclusions.

 

5.7                               No Exclusive Duty to Company. In recognition that certain of the Shareholders currently have, and will in the future have or will consider acquiring,

 

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investments in numerous companies with respect to which such Shareholder may serve as an advisor, a director or in some other capacity, and in recognition that such Shareholder may have a myriad of duties to various investors and partners, and in anticipation that the Company, on the one hand, and such Shareholder (or one or more Affiliates, associated investment funds or portfolio companies), on the other hand, may engage in the same or similar activities or lines of business and have an interest in the same areas of corporate opportunities, and in recognition of the benefits to be derived by the Company hereunder and in recognition of the difficulties which may confront any Shareholder who desires and endeavors fully to satisfy such Shareholder’s duties, in determining the full scope of such duties in any particular situation, the provisions of this Section 5.7 are set forth to regulate, define and guide the conduct of certain affairs of the Company as they may involve such Shareholder.

 

(a)                                 Such Shareholder shall have the right:

 

(1)                                 to directly or indirectly engage in or invest in any business (including, without limitation, any business activities or lines of business that are the same as or similar to those pursued by, or competitive with, the Company and its Subsidiaries),

 

(2)                                 to directly or indirectly do business with any client or customer of the Company and its Subsidiaries,

 

(3)                                 to take any other action that such Shareholder believes in good faith is necessary to or appropriate to fulfill its duties and obligations as described in the first sentence of this Section 5.7, and

 

(4)                                 not to present potential transactions, matters or business opportunities to the Company or any of its Subsidiaries, and to pursue, directly or indirectly, any such opportunity for itself, and to direct any such opportunity to another person.

 

(b)                                 Such Shareholder and its Affiliates shall have no duty (contractual or otherwise) to communicate or present any corporate opportunities to the Company or any of its Affiliates or to refrain from any actions specified in Section 5.7(a), and the Company, on its own behalf and on behalf of its Affiliates, hereby renounce and waive any right to require such Shareholder or its Affiliates to act in a manner inconsistent with the provisions of this Section 5.7(a).

 

(c)                                  Such Shareholder and its Affiliates shall not be liable to the Company or any of its Affiliates for breach of any duty (contractual or otherwise) by reason of any activities or omissions of the types referred to in this Section 5.7 or such Shareholder’s or its Affiliates’ participation therein.

 

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5.8                               Conflicting Agreements.  Each Shareholder represents and agrees that it shall not (i) grant any proxy or enter into or agree to be bound by any voting trust or agreement with respect to the Company Securities, except as expressly contemplated by this Agreement, (ii) enter into any agreement or arrangement of any kind with any Person with respect to its Company Securities inconsistent with the provisions of this Agreement or for the purpose or with the effect of denying or reducing the rights of any other Shareholder under this Agreement, including agreements or arrangements with respect to the Transfer or voting of its Company Securities or (iii) act, for any reason, as a member of a group or in concert with any other Person in connection with the Transfer or voting of its Company Securities in any manner that is inconsistent with this Agreement.

 

6.                                      VOTING RIGHTS

 

6.1                               Series A Voting Rights.  In addition to any other vote required by the first sentence of Section 242(b)(2) of the DGCL, or any similar provision hereafter enacted, the Company shall not amend the Charter or take any other action so as to amend, alter or repeal the powers, preferences or special rights of the Series A Shares in a manner that affects them adversely and disproportionately (determined after considering and taking into account the relative rights and preferences of each of the classes and series of Company Securities as compared to each other), without having first obtained the affirmative vote or written consent of a majority of the Series A Shares, consenting or voting (as the case may be) separately as a class; it being understood and acknowledged that an increase in the authorized capital stock of the Company (including the authorization of a security that is senior to a class or series of existing preferred stock) shall not be deemed to be and adverse or disproportionate amendment or alteration within the meaning of this Section 6.1.

 

6.2                               Series B Voting Rights. In addition to any other vote required by the first sentence of Section 242(b)(2) of the DGCL, or any similar provision hereafter enacted, the Company shall not amend the Charter or take any other action so as to amend, alter or repeal the powers, preferences or special rights of the Series B Shares in a manner that affects them adversely and disproportionately (determined after considering and taking into account the relative rights and preferences of each of the classes and series of Company Securities as compared to each other), without having first obtained the affirmative vote or written consent of a majority of the Series B Shares, consenting or voting (as the case may be) separately as a class; it being understood and acknowledged that an increase in the authorized capital stock of the Company (including the authorization of a security that is senior to a class or series of existing preferred stock) shall not be deemed to be and adverse or disproportionate amendment or alteration within the meaning of this Section 6.2.

 

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7.                                      TERMINATION

 

7.1                               Termination.  This Agreement shall continue in force until the earlier of (a) the consummation of a merger in which the Company is not the surviving entity or any other transaction resulting in a Change of Control of the Company and (b) the effective date of an Initial Public Offering of the Company (it being understood that this Agreement shall terminate on such effective date); provided, however, the provisions of Section 1.1(f), Section 1.1(g), Section 5.4, Section 5.6, Section 5.7, Section 8.2, Section 8.3, Section 8.4, Section 8.5, Section 8.6, Section 8.9, Section 8.11 and Section 8.13 shall survive an Initial Public Offering.

 

8.                                      MISCELLANEOUS

 

8.1                               Shareholder Undertakings.

 

(a)                                 The Shareholders (other than any Fidelity Investor and their respective Affiliates) undertake to cause the Company to take such action that is within its power at all times after the Initial Closing to cause the Company to issue such number of duly authorized shares as shall be sufficient to effect the issuance of the Series D Shares and otherwise as contemplated by the Subscription Agreement.  The Company shall and the Shareholders (other than any Fidelity Investor and their respective Affiliates) shall cause the Company to obtain any authorization, consent, approval or other action by or make any filing with any court or administrative body that may be required under applicable laws in connection with the issuance of shares according to the Subscription Agreement and the Shareholders (other than any Fidelity Investor and their respective Affiliates) shall support and agree to such action and shall execute any document necessary to obtain or effect the foregoing.

 

(b)                                 The Investors may from time to time reach agreement with Existing Shareholders to purchase shares owned by such Existing Shareholders in the Company.  Each other Existing Shareholder hereby agrees to reasonably cooperate with any such purchase, including, without limitation, by cooperating with any regulatory filings that need to be made or regulatory consent obtained in connection with such transfers or by providing required consents or waivers of redemption, right of first refusal, preemptive or other rights that the Existing Shareholders may have in connection with such transfers.

 

(c)                                  Each Shareholder (other than any Fidelity Investor and their respective Affiliates) shall vote all of its Company Securities that are entitled to vote or execute proxies or written consents, as the case may be, and take all other actions necessary, to ensure that the Company’s Bylaws (i) facilitate, and do not at any time conflict with, any provision of this Agreement and (ii) permit each Shareholder to receive the benefits to which such Shareholder is entitled under this Agreement.

 

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8.2                               Successors and Assigns.  Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any Shareholder permitted hereunder).  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. Any Shareholder that ceases to beneficially own any Company Securities shall cease to be bound by the terms hereof (other than as expressly set forth herein or with respect to Section 5.5 or Article 8).

 

8.3                               Governing Law.  This Agreement and all claims or causes of action that may be based upon, arise out of or relate to this Agreement will be governed by, and construed under and in accordance with, the internal laws of the State of New York, without reference to rules relating to conflicts of laws.

 

8.4                               Consent to Jurisdiction.

 

(a)                                 EACH OF THE PARTIES HERETO HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ALL STATE AND FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK, WITH RESPECT TO ANY CLAIMS MADE HEREUNDER, AS WELL AS TO THE JURISDICTION OF ALL COURTS TO WHICH AN APPEAL MAY BE TAKEN FROM SUCH COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH PARTY HEREBY EXPRESSLY WAIVES ANY AND ALL RIGHTS TO BRING ANY SUIT, ACTION OR OTHER PROCEEDING IN OR BEFORE ANY COURT OR TRIBUNAL OTHER THAN THE COURTS DESCRIBED ABOVE AND COVENANTS THAT IT SHALL NOT SEEK IN ANY MANNER TO RESOLVE ANY DISPUTE OTHER THAN AS SET FORTH IN THIS SECTION 8.4 OR TO CHALLENGE OR SET ASIDE ANY DECISION, AWARD OR JUDGMENT OBTAINED IN ACCORDANCE WITH THE PROVISIONS HEREOF.

 

(b)                                 EACH OF THE PARTIES HERETO HEREBY EXPRESSLY WAIVES ANY AND ALL OBJECTIONS IT MAY HAVE TO VENUE, INCLUDING, WITHOUT LIMITATION, THE INCONVENIENCE OF SUCH FORUM, IN ANY OF SUCH COURTS.  IN ADDITION, EACH OF THE PARTIES FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO SUCH PARTY’S RESPECTIVE ADDRESS SET FORTH IN THIS AGREEMENT SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION IN NEW YORK WITH RESPECT TO ANY MATTERS TO WHICH IT HAS SUBMITTED TO JURISDICTION HEREUNDER.

 

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8.5                               Waiver of Jury Trial.

 

EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.  EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE SUCH WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) IT MAKES SUCH WAIVER VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.5.

 

8.6                               Non-Recourse.  Notwithstanding anything that may be expressed or implied in this Agreement, the Company and each Shareholder covenant, agree and acknowledge that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement shall be had against any current or future director, officer, employee, general or limited partner or member of any Shareholder or of any Affiliate or assignee thereof, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any current or future officer, agent or employee of any Shareholder or any current or future member of any Shareholder or any current or future director, officer, employee, partner or member of any Shareholder or of any Affiliate or assignee thereof, as such for any obligation of any Shareholder under this Agreement or any documents or instruments delivered in connection with this Agreement for any claim based on, in respect of or by reason of such obligations or their creation.

 

8.7                               Counterparts; Facsimile Signatures.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement.  Each Party to this Agreement agrees that its own facsimile signature will bind it and that it accepts the facsimile signature of each other Party to this Agreement.

 

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

 

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8.9                               Notices.  All notices, requests, consents, demands and other communications under this Agreement shall be in writing and shall be sent by registered or certified mail, return receipt requested, postage prepaid or via a reputable nationwide overnight courier service guaranteeing next business day delivery, in each case to the intended recipient as set forth below:

 

If to the Company at the address set forth below the Company’s signature to this Agreement, Attention:  Chief Executive Officer, or at such other address as may have been furnished in writing by the Company to the other parties hereto with copies to Hogan Lovells LLP, 555 13th Street, NW, Washington, DC 20004, attention: Kevin C. Clayton, Esq., TKWD Ventures LLC, at the address set forth on Exhibit B, Ikos, at the address set forth on Exhibit B, and Entrepreneurs’ Fund at the address set forth on Exhibit B; or

 

If to the Investors at the address set forth below the Investors’ signatures to this Agreement, or at such other address as may have been furnished in writing by such Investors to the Company or the other parties hereto.

 

If to a Founder, at the address set forth below such Founder’s signature to this Agreement, or at such other address as may have been furnished in writing by such Founder to the Company or the other parties hereto.

 

If to an Existing Shareholder, at the address set forth below such party’s signature to this Agreement, or at such other address as may have been furnished in writing by such party to the Company or the other parties hereto.  Any party may change the address to which notices, requests, consents or other communications hereunder are to be delivered by giving the other parties notice in the manner set forth in this section.

 

8.10                        Further Assurances.  Each Party (other than any Fidelity Investor and their respective Affiliates) shall cooperate and take such action as may be reasonably requested by another party in order to carry out the provisions and purposes of this Agreement and the transactions contemplated hereby.

 

8.11                        Specific Performance.  Each Party hereto acknowledges that the remedies at law of the other parties for a breach or threatened breach of this Agreement would be inadequate and, in recognition of this fact, any Party to this Agreement, without posting any bond, and in addition to all other remedies that may be available, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy that may then be available.

 

8.12                        Expenses.  If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable

 

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attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

 

8.13                        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 Shareholders holding in excess of fifty percent (50%) of the Shares of the Company (on an as-converted basis) and in excess of fifty percent (50%) of the Series C Shares, Series C-1 Shares, Series C-2 Shares and Series D Shares (collectively on an as-converted basis).  Notwithstanding the foregoing, (i) no provision may be waived or amended if such amendment would adversely, and disproportionately affect (determined after considering and taking into account the relative rights, obligations and preferences of each of the classes and series of Company Securities as compared to each other) the rights or obligations of the holders of the Common Shares, Series A Shares, Series B Shares or Series D Shares without the written consent of the holders of at least a majority of the Common Shares, Series A Shares, Series B Shares or Series D Shares, as the case may be (it being understood that and acknowledged that an increase in the authorized capital stock of the Company (including the authorization and issuance securities senior to existing preferred stock) shall not in and of itself be deemed to be and adverse or disproportionate amendment or alteration within the meaning of this Section 8.13), (ii) Sections 3.1, 3.2, 3.3, 4.5, 5.1, 8.1, and 8.10 may not be amended or waived with respect to the Fidelity Investors without the prior written consent of the Fidelity Investors, (iii) Section 3.4 cannot be waived with respect to the rights of the holders of Series D Shares without the consent of the Shareholders holding in excess of fifty percent (50%) of the Series D Shares unless the holders of the Series D Shares are nonetheless permitted to purchase their relative portion of the applicable issuance of Company Securities; and (iv) Exhibits A, B and C hereto may be amended by the Company from time to time in accordance with Section 8.14 to add information regarding additional Investors, Existing Shareholders and/or Management Shareholders, as applicable, without the consent of the other parties hereto.

 

8.14                        Additional Shareholders.  Persons or entities that, after the date hereof, (i) purchase Shares at a subsequent closing under the Subscription Agreement, (ii) otherwise acquire Shares of the Company or (iii) are transferred Shares from a Shareholder after the date hereof in accordance with this Agreement, the Charter and the Bylaws of the Company, shall become parties to this Agreement by executing and delivering a Joinder Agreement substantially in the form of Exhibit E hereto, whereupon they shall be deemed (x) an “Investor” if they purchased Shares at a subsequent closing under the Subscription Agreement or (y) an “Existing Shareholder”, except in the case of persons who are employees or members of management of the Company (or any other Persons that acquire Shares pursuant to grants made under the Incentive Plan), who shall be deemed “Management Shareholders”, in each case, for all purposes of this Agreement, and such Investors, Existing Shareholders and Management Shareholders agree that delivery of such executed signature page by such transferee shall be a condition of such

 

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transfer.  The Company shall cause Exhibit A, Exhibit B or Exhibit C, as the case may be, to be updated to reflect the name of such Investor, Existing Shareholder or Management Shareholder promptly following such execution of the Joinder Agreement pursuant to this Section 8.14.

 

8.15                        Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement, and the balance of the Agreement shall be interpreted as if such provision were so excluded, and shall be enforceable in accordance with its terms.

 

8.16                        Consent of Spouse.  If any individual Shareholder is married on the date of this Agreement and is a resident of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin, or the Commonwealth of Puerto Rico, such Shareholder’s spouse shall execute and deliver to the Company a consent of spouse in the form of Exhibit F hereto (“Consent of Spouse”), effective on the date hereof.  Notwithstanding the execution and delivery thereof, such consent shall not be deemed to confer or convey to the spouse any rights in such Shareholder’s Company Securities that do not otherwise exist by operation of law or the agreement of the parties.  If any Shareholder should marry or remarry subsequent to the date of this Agreement, such Shareholder shall within thirty (30) days thereafter obtain his/her new spouse’s acknowledgement of and consent to the existence and binding effect of all restrictions contained in this Agreement by causing such spouse to execute and deliver a Consent of Spouse acknowledging the restrictions and obligations contained in this Agreement and agreeing and consenting to the same.

 

8.17                        Entire Agreement.  This Agreement and the documents referred to herein constitute the entire agreement among the Parties relating to the subject matter hereof, and supercede in their entirety any and all prior and/or contemporaneous agreements, understandings or representations relating to the subject matter hereof, whether written or oral.  No Party shall be liable or bound to any other Party in any manner by any warranties, representations, or covenants except as specifically set forth herein or therein.

 

*  *  *

 

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

 

	
 
    	
OPTINOSE,   INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Peter Miller
    
	
 
    	
Name:   Peter Miller
    
	
 
    	
Title:   Chief Executive Officer
    

 

 

SHAREHOLDERS’ SIGNATURE PAGE

 

TO SHAREHOLDERS’ AGREEMENT OF OPTINOSE, INC.

 

 

	
 
    	
INVICTUM   AS
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Trond Holland
    
	
 
    	
Name:   Trond Holland
    
	
 
    	
Title:   CEO
    
	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
INSPIRE   AS
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jan-Olaf Willums
    
	
 
    	
Name:   Jan-Olaf Willums
    
	
 
    	
Title:   CEO
    
	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ENTREPRENEURS’   FUND GENERAL PARTNER LIMITED,
    
	
 
    	
in   its capacity as general partner of Entrepreneurs’ Fund LP
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Colin Dow
    
	
 
    	
Name:   Colin Dow
    
	
 
    	
Title:   Director
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Paul Bradshaw
    
	
 
    	
Name:   Paul Bradshaw
    
	
 
    	
Title:   Director
    
	
 
    	
 
    	
Address:
    
				

 

 

	
 
    	
AVISTA   CAPITAL PARTNERS II, LP
    
	
 
    	
 
    
	
 
    	
By:
    	
Avista   Capital Partners GP II, LLC, as general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Ben Silbert
    
	
 
    	
 
    	
 
    	
Name:   Ben Silbert
    
	
 
    	
 
    	
 
    	
Title:   General Counsel
    
	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
AVISTA   CAPITAL PARTNERS (OFFSHORE) II, LP
    
	
 
    	
 
    
	
 
    	
By:
    	
Avista   Capital Partners GP II, LLC, as general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Ben Silbert
    
	
 
    	
 
    	
 
    	
Name:   Ben Silbert
    
	
 
    	
 
    	
 
    	
Title:   General Counsel
    
	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
AVISTA   CAPITAL PARTNERS (OFFSHORE) II-A, LP
    
	
 
    	
 
    
	
 
    	
By:
    	
Avista   Capital Partners GP II, LLC, as general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Ben Silbert
    
	
 
    	
 
    	
 
    	
Name:   Ben Silbert
    
	
 
    	
 
    	
 
    	
Title:   General Counsel
    
	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
LARRY   PICKERING
    
	
 
    	
 
    
	
 
    	
 
    
					

 

	
 
    	
 
    	
Signed:
    	
/s/   Larry Pickering
    

 

	
 
    	
 
    	
Address:
    

 

 

	
 
    	
PATRICK   O’NEILL
    
	
 
    	
 
    
	
 
    	
 
    

 

	
 
    	
 
    	
Signed:
    	
/s/   Patrick O’Neill
    

 

	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TKWD   VENTURES LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
WFD   Ventures LLC, its Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   William F. Doyle
    
	
 
    	
 
    	
 
    	
Name:   William F. Doyle
    
	
 
    	
 
    	
 
    	
Title:   Manager
    
	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
WILLIAM   F. DOYLE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   William F. Doyle
    
	
 
    	
 
    	
 
    	
Name:   William F. Doyle
    
	
 
    	
 
    	
 
    	
Title:   Manager
    
	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ROBERT   JUNEJA
    
	
 
    	
 
    
	
 
    	
 
    
					

 

	
 
    	
 
    	
Signed:
    	
/s/   Robert Juneja
    

 

	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
GWYNETH   M. KETTERER
    
	
 
    	
 
    
	
 
    	
 
    

 

	
 
    	
 
    	
Signed:
    	
/s/   Gwyneth M. Ketterer
    

 

	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
RICHARD   L. PERKAL
    
	
 
    	
 
    
	
 
    	
 
    

 

	
 
    	
 
    	
Signed:
    	
/s/   Richard L. Perkal
    

 

	
 
    	
 
    	
Address:
    

 

 

	
 
    	
DAVID   E. KING
    
	
 
    	
 
    
	
 
    	
 
    

 

	
 
    	
 
    	
Signed:
    	
/s/   David E. King
    

 

	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
PAUL   STEVEN LATTANZIO
    
	
 
    	
 
    
	
 
    	
 
    

 

	
 
    	
 
    	
Signed:
    	
/s/   Paul Steven Lattanzio
    

 

	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
JOHN   DAVID HOWARD
    
	
 
    	
 
    
	
 
    	
 
    

 

	
 
    	
 
    	
Signed:
    	
/s/   John David Howard
    

 

	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
BODIL   M. ARLANDER
    
	
 
    	
 
    
	
 
    	
 
    

 

	
 
    	
 
    	
Signed:
    	
/s/   Bodil M. Arlander
    

 

	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PETER   MILLER
    
	
 
    	
 
    
	
 
    	
 
    

 

	
 
    	
 
    	
Signed:
    	
/s/   Peter Miller
    

 

	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
RAMY   MAHMOUD
    
	
 
    	
 
    
	
 
    	
 
    

 

	
 
    	
 
    	
Signed:
    	
/s/   Ramy Mahmoud
    

 

	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
FRANK   CLOSURDO
    
	
 
    	
 
    
	
 
    	
 
    

 

	
 
    	
 
    	
Signed:
    	
/s/   Frank Closurdo
    

 

	
 
    	
 
    	
Address:
    

 

 

	
 
    	
CARTER GRIFFIN
    
	
 
    	
 
    
	
 
    	
 
    

 

	
 
    	
 
    	
Signed:
    	
/s/ Carter Griffin
    

 

	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MICHELE   JANIS
    
	
 
    	
 
    
	
 
    	
 
    

 

	
 
    	
 
    	
Signed:
    	
/s/   Michele Janis
    

 

	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ROBERT   USELLER
    
	
 
    	
 
    
	
 
    	
 
    

 

	
 
    	
 
    	
Signed:
    	
/s/   Robert Useller
    

 

	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
JAMES   T. LENEHAN
    
	
 
    	
 
    
	
 
    	
 
    

 

	
 
    	
 
    	
Signed:
    	
/s/   James T. Lenehan
    

 

	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
FRANK   LEONARD
    
	
 
    	
 
    
	
 
    	
 
    

 

	
 
    	
 
    	
Signed:
    	
/s/   Frank Leonard
    

 

	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
TERRANCE   TERIFAY
    
	
 
    	
 
    
	
 
    	
 
    

 

	
 
    	
 
    	
Signed:
    	
/s/   Terrance Terifay
    

 

	
 
    	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    	
BAKELITTFABRIKKEN   HOLDING AS
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Jan Otto Ringdal
    
	
 
    	
 
    	
Name:   Jan Otto Ringdal
    
	
 
    	
 
    	
Title:   Chairman
    
	
 
    	
 
    	
 
    	
Address:
    
						

 

 

	
 
    	
 
    	
HIBAS HOLDING AS
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Erik Ingeberg
    
	
 
    	
 
    	
Name:   Erik Ingeberg
    
	
 
    	
 
    	
Title:   Chairman
    
	
 
    	
 
    	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
IKOS INVEST AS
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Per Gisle   Djupesland
    
	
 
    	
 
    	
Name: Per Gisle   Djupesland
    
	
 
    	
 
    	
Title: Chairman
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Helena Kyttari   Djupesland
    
	
 
    	
 
    	
Name: Helena Kyttari   Djupesland
    
	
 
    	
 
    	
Title: Board Member
    
	
 
    	
 
    	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
IKOS SUBSIDIARY AS
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Per Gisle   Djupesland
    
	
 
    	
 
    	
Name: Per Gisle   Djupesland
    
	
 
    	
 
    	
Title: Chairman
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Helena Kyttari   Djupesland
    
	
 
    	
 
    	
Name: Helena Kyttari   Djupesland
    
	
 
    	
 
    	
Title: Board Member
    
	
 
    	
 
    	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
KIRKEVEIEN 98 I AS
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Jan Otto Ringdal
    
	
 
    	
 
    	
Name:   Jan Otto Ringdal
    
	
 
    	
 
    	
Title:   Chairman
    
	
 
    	
 
    	
 
    	
Address:
    
					

 

 

	
 
    	
 
    	
FIDELITY MT. VERNON STREET   TRUST: FIDELITY SERIES GROWTH COMPANY FUND
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Jeffrey Christian
    
	
 
    	
 
    	
Name: Jeffrey Christian
    
	
 
    	
 
    	
Title: Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
FIDELITY GROWTH COMPANY   COMMINGLED POOL
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
Fidelity Management   & Trust Co.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Jeffrey Christian
    
	
 
    	
 
    	
Name: Jeffrey Christian
    
	
 
    	
 
    	
Title: Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
FIDELITY MT. VERNON STREET   TRUST: FIDELITY GROWTH COMPANY FUND
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Jeffrey Christian
    
	
 
    	
 
    	
Name: Jeffrey Christian
    
	
 
    	
 
    	
Title: Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
FIDELITY OTC COMMINGLED POOL
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
Fidelity Management   & Trust Co.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Jeffrey Christian
    
	
 
    	
 
    	
Name: Jeffrey Christian
    
	
 
    	
 
    	
Title: Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
FIDELITY SECURITIES FUND:   FIDELITY OTC PORTFOLIO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Jeffrey Christian
    
	
 
    	
 
    	
Name: Jeffrey Christian
    
	
 
    	
 
    	
Title: Authorized   Signatory
    

 

 

Exhibit A

 

Fidelity Investors

 

	
Investors
    	
 
    	
Address
    
	
Fidelity Mt. Vernon   Street Trust: Fidelity Series Growth Company Fund
    	
 
    	
State Street   Bank & Trust

PO Box 5756

Boston, Massachusetts 02206

Attn: WAVELENGTH + CO   Fidelity Mt.
   Vernon Street Trust: Fidelity Series Growth Company Fund

Email:   SSBCORPACTIONS@StateStreet.com

Fax number:   617-988-9110
    
	
 
    	
 
    	
 
    
	
Fidelity Growth Company   Commingled Pool
    	
 
    	
Brown   Brothers Harriman & Co.

Harborside   Financial Center

1150   Plaza Five

Jersey   City NJ 07311

Attn:   Michael Lerman 15th Floor

Corporate   Actions

Email:   michael.lerman@bbh.com

Fax   number: 617 772-2418
    
	
 
    	
 
    	
 
    
	
Fidelity Mt. Vernon   Street Trust: Fidelity Growth Company Fund
    	
 
    	
BNY   Mellon

Attn:   Stacey Wolfe

525   William Penn Place Rm 0400

Pittsburgh,   PA 15259

Email:   FidelityCorporateEvents@bnymellon.com

Fax   number: 412-236-1012
    
	
 
    	
 
    	
 
    
	
Fidelity OTC Commingled   Pool
    	
 
    	
Brown   Brothers Harriman & Co.

Harborside   Financial Center

1150   Plaza Five

Jersey   City NJ 07311

Attn:   Michael Lerman 15th Floor

Corporate   Actions

Email:   michael.lerman@bbh.com

Fax   number: 617 772-2418
    

 

 

	
Fidelity Securities   Fund:  Fidelity OTC Portfolio
    	
 
    	
The   Northern Trust Company

Attn:   Trade Securities Processing, C-1N

801   South Canal Street

Chicago, IL   60607

Fidelity   Securities Fund: Fidelity OTC Portfolio

Reference   Account # F68304

Email:   NTINQUIRY@NTRS.COM

Fax   number: 312-557-5417
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
With   a copy (which shall not constitute notice) to:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Ropes & Gray LLP

Prudential Tower

800 Boylston Street

Boston, MA 02199

Attention:  Joel F. Freedman

Facsimile:  617-235-0375
    

 

Avista Investors

 

	
Investors
    	
 
    	
Address
    
	
Avista   Capital Partners II, LP
    	
 
    	
Avista   Capital Holdings, LP
   65 E. 55th Street, 18th Floor
   New York, NY 10022
    
	
 
    	
 
    	
 
    
	
Avista   Capital Partners (Offshore) II, LP
    	
 
    	
Avista   Capital Holdings, LP
   65 E. 55th Street, 18th Floor
   New York, NY 10022
    
	
 
    	
 
    	
 
    
	
Avista   Capital Partners (Offshore) II-A, LP
    	
 
    	
Avista   Capital Holdings, LP
   65 E. 55th Street, 18th Floor
   New York, NY 10022
    

 

Other Investors

 

	
Investors
    	
 
    	
Address
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

 

Exhibit B

 

Existing Shareholders

 

	
Investors
    	
 
    	
Address
    
	
INSPIRE   AS
    	
 
    	
Postbox   301

1323   Høvik, Norway
    
	
 
    	
 
    	
 
    
	
IKOS   SUBSIDIARY AS
    	
 
    	
Lybekkveien   5 C

0772   Oslo, Norway
    
	
 
    	
 
    	
 
    
	
IKOS   INVEST AS
    	
 
    	
Lybekkveien   5 C

0772   Oslo, Norway
    
	
 
    	
 
    	
 
    
	
INVICTUM   AS
    	
 
    	
Suhms Gate 28, N-0362, 
   Oslo, Norway
    
	
 
    	
 
    	
 
    
	
SCATEC   AS
    	
 
    	
Sommerrogaten   13-15

0255   Oslo, Norway
    
	
 
    	
 
    	
 
    
	
BAKELITTFABRIKKEN   HOLDING AS
    	
 
    	
Skogryggveien 5, 0781,

Oslo, Norway
    
	
 
    	
 
    	
 
    
	
KIRKEVEIEN   98 I AS
    	
 
    	
Skogryggveien 5, 0781,

Oslo, Norway
    
	
 
    	
 
    	
 
    
	
HIBAS   HOLDING AS
    	
 
    	
Vøyenenga, 1313, Norway
    
	
 
    	
 
    	
 
    
	
REBELIJO   INVEST AS
    	
 
    	
C/O   Reidar Langmo, Gyssestadkollen 65

1341   Slependen, Norway
    

 

 

	
ENTREPRENEURS’   FUND GENERAL PARTNER LIMITED
    	
 
    	
2nd Floor

Windward House

La Route de la Liberation

St Helier, Jersey

The   Channel Islands

Fax:   +44 1534 754 510

 

with   a copy to:

 

Entrepreneurs’ Fund Legal Counsel

4th Floor, Eagle House

108-110 Jermyn Street

London SW1Y 6EE

United Kingdom
    
	
 
    	
 
    	
 
    
	
TKWD   VENTURES LLC 
    	
 
    	
WFD   Ventures LLC
    1500 Broadway, 29th Floor,
   New York, NY 10036
   Facsimile:  (212) 767-7575
   Attention:  William F. Doyle
    

 

 

Exhibit C

 

Management Shareholders

 

PETER MILLER

 

RAMY MAHMOUD

 

MICHELE JANIS

 

ROBERT USELLER

 

 

Exhibit D

 

Shareholdings

 

See attached.

 

 

Exhibit E

 

Joinder Agreement

 

This Joinder Agreement (“Joinder Agreement”) is executed by the undersigned (the “Transferee”) pursuant to the terms of that certain Second Amended and Restated Shareholders’ Agreement dated as of March 24, 2017 (the “Agreement”) by and among OPTINOSE, INC. (the “Company”) and the parties named therein.  Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Agreement.  By the execution of this Joinder Agreement, the Transferee agrees as follows:

 

(a)                                 Acknowledgment.  Transferee acknowledges that Transferee is subject to the terms and conditions of the Agreement.

 

(b)                                 Agreement.  Transferee (i) agrees that any shares of the Company acquired by Transferee shall be bound by and subject to the terms of the Agreement, and (ii) hereby adopts the Agreement as an Existing Shareholder, or, if the Transferee is a member of management of the Company, as a Management Shareholder, with the same force and effect as if Transferee were originally a party thereto.

 

(c)                                  Notice.  Any notice required or permitted by the Agreement shall be given to Transferee at the address listed beside Transferee’s signature below.

 

EXECUTED AND DATED this                                        day of                                                                  , 20    

 

	
 
    	
 
    	
TRANSFEREE:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
[Name]
    
	
 
    	
 
    	
[Title]
    
	
 
    	
 
    	
Address:
    

 

 

Exhibit F

 

CONSENT OF SPOUSE

 

I, [                    ], spouse of [              ], acknowledge that I have read the Second Amended and Restated Shareholders’ Agreement, dated as of March 24, 2017, to which this Consent is attached as Exhibit F (the “Agreement”), and that I know the contents of the Agreement.  I am aware that the Agreement contains provisions regarding certain rights to certain other holders of Company Securities of the Company upon a proposed Transfer of Company Securities which my spouse may own including any interest I might have therein.

 

I hereby agree that my interest, if any, in any Company Securities subject to the Agreement shall be irrevocably bound by the Agreement and further understand and agree that any community property interest I may have in such Company Securities shall be similarly bound by the Agreement.

 

I am aware that the legal, financial and related matters contained in the Agreement are complex and that I am free to seek independent professional guidance or counsel with respect to this Consent.  I have either sought such guidance or counsel or determined after reviewing the Agreement carefully that I will waive such right.

 

Dated as of the [  ] day of [                   , 20          ].

 

	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Print Name
    

 

 

SCHEDULE 4.11(a)

 

Rule 506(d)

 

(d)     “Bad Actor” disqualification. (1) No exemption under this section shall be available for a sale of securities if the issuer; any predecessor of the issuer; any affiliated issuer; any director, executive officer, other officer participating in the offering, general partner or managing member of the issuer; any beneficial owner of 20% or more of the issuer’s outstanding voting equity securities, calculated on the basis of voting power; any promoter connected with the issuer in any capacity at the time of such sale; any investment manager of an issuer that is a pooled investment fund; any person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with such sale of securities; any general partner or managing member of any such investment manager or solicitor; or any director, executive officer or other officer participating in the offering of any such investment manager or solicitor or general partner or managing member of such investment manager or solicitor:

 

(i) Has been convicted, within ten years before such sale (or five years, in the case of issuers, their predecessors and affiliated issuers), of any felony or misdemeanor:

 

(A)                  In connection with the purchase or sale of any security;

 

(B)                  Involving the making of any false filing with the Securities and Exchange Commission (the “Commission”); or

 

 

(C)                  Arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser or paid solicitor of purchasers of securities;

 

(ii) Is subject to any order, judgment or decree of any court of competent jurisdiction, entered within five years before such sale, that, at the time of such sale, restrains or enjoins such person from engaging or continuing to engage in any conduct or practice:

 

(A)                  In connection with the purchase or sale of any security;

 

(B)                  Involving the making of any false filing with the Commission; or

 

(C)                  Arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser or paid solicitor of purchasers of securities;

 

(iii) Is subject to a final order of a state securities commission (or an agency or officer of a state performing like functions); a state authority that supervises or examines banks, savings associations, or credit unions; a state insurance commission (or an agency or officer of a state performing like functions); an appropriate federal banking agency; the U.S. Commodity Futures Trading Commission; or the National Credit Union Administration that:

 

(A) At the time of such sale, bars the person from:

 

(1)                   Association with an entity regulated by such commission, authority, agency, or officer;

 

 

(2)                   Engaging in the business of securities, insurance or banking; or

 

(3)                   Engaging in savings association or credit union activities; or

 

(B) Constitutes a final order based on a violation of any law or regulation that prohibits fraudulent, manipulative, or deceptive conduct entered within ten years before such sale;

 

(iv) Is subject to an order of the Commission entered pursuant to section 15(b) or 15B(c) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b) or 78o-4(c)) or section 203(e) or (f) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3(e) or (f)) that, at the time of such sale:

 

(A)    Suspends or revokes such person’s registration as a broker, dealer, municipal securities dealer or investment adviser;

 

(B)    Places limitations on the activities, functions or operations of such person; or

 

(C)    Bars such person from being associated with any entity or from participating in the offering of any penny stock;

 

(v) Is subject to any order of the Commission entered within five years before such sale that, at the time of such sale, orders the person to cease and desist from committing or causing a violation or future violation of:

 

(A)    Any scienter-based anti-fraud provision of the federal securities laws, including without limitation section 17(a)(1) of the Securities Act of 1933 (15 U.S.C. 77q(a)(1)), section 10(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78j(b)) and 17 CFR 240.10b-5, section 15(c)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(c)(1)) and section 206(1) of the

 

 

Investment Advisers Act of 1940 (15 U.S.C. 80b-6(1)), or any other rule or regulation thereunder; or

 

(B)    Section 5 of the Securities Act of 1933 (15 U.S.C. 77e).

 

(vi) Is suspended or expelled from membership in, or suspended or barred from association with a member of, a registered national securities exchange or a registered national or affiliated securities association for any act or omission to act constituting conduct inconsistent with just and equitable principles of trade;

 

(vii)    Has filed (as a registrant or issuer), or was or was named as an underwriter in, any registration statement or Regulation A offering statement filed with the Commission that, within five years before such sale, was the subject of a refusal order, stop order, or order suspending the Regulation A exemption, or is, at the time of such sale, the subject of an investigation or proceeding to determine whether a stop order or suspension order should be issued; or

 

(viii)   Is subject to a United States Postal Service false representation order entered within five years before such sale, or is, at the time of such sale, subject to a temporary restraining order or preliminary injunction with respect to conduct alleged by the United States Postal Service to constitute a scheme or device for obtaining money or property through the mail by means of false representations.

 

(2) Paragraph (d)(1) of this section shall not apply:

 

(i)   With respect to any conviction, order, judgment, decree, suspension, expulsion or bar that occurred or was issued before September 23, 2013;

 

 

(ii)  Upon a showing of good cause and without prejudice to any other action by the Commission, if the Commission determines that it is not necessary under the circumstances that an exemption be denied;

 

(iii)      If, before the relevant sale, the court or regulatory authority that entered the relevant order, judgment or decree advises in writing (whether contained in the relevant judgment, order or decree or separately to the Commission or its staff) that disqualification under paragraph (d)(1) of this section should not arise as a consequence of such order, judgment or decree; or

 

(iv)     If the issuer establishes that it did not know and, in the exercise of reasonable care, could not have known that a disqualification existed under paragraph (d)(1) of this section.

 

Instruction to paragraph (d)(2)(iv). An issuer will not be able to establish that it has exercised reasonable care unless it has made, in light of the circumstances, factual inquiry into whether any disqualifications exist. The nature and scope of the factual inquiry will vary based on the facts and circumstances concerning, among other things, the issuer and the other offering participants.

 

(3) For purposes of paragraph (d)(1) of this section, events relating to any affiliated issuer that occurred before the affiliation arose will be not considered disqualifying if the affiliated entity is not:

 

(i)            In control of the issuer; or

 

(ii)           Under common control with the issuer by a third party that was in control of the affiliated entity at the time of such events.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00274-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00274-of-00352.parquet"}]]