Document:

ex10978k080510.htm

    
      
         

      

      
         

        
          

        

      

      
         

        
          CLIFFORD

          CHANCE

           

          

        

      

    

    

    

    DEED
OF PLEDGE OF REGISTERED SHARES

    

    

    On the
sixth day of August two thousand ten, appeared before me, Krishna van Zundert,
kandidaat-notaris,
hereinafter: “civil law notary”, deputising for dr. Thomas Pieter van Duuren,
civil law notary (notaris) in Amsterdam, The
Netherlands:

    Mr Albert
Willem Lok, in this matter with residence at the offices of Clifford Chance LLP,
Droogbak 1a, 1013 GE Amsterdam, The Netherlands, born in Zaanstad, The
Netherlands, on the fifteenth day of December nineteen hundred eighty-one, in
this respect acting as attorney-in-fact, duly authorised in writing,
of:

    
      	
              1.

            	
              FRONTIER EXPLORATION
      COMPANY, a company incorporated and existing under the laws of the
      State of Utah, United States of America, having its registered office at
      3006 Highland Drive, Suite 206, Salt Lake City, Utah 84106, United States
      of America and registered with the Secretary of State in Utah, United
      States of America under number 1023353-0142;
and

            

    

    FX DRILLING COMPANY, INC., a
company incorporated and existing under the laws of the State of Nevada, United
States of America, having its registered office at 311 South Division Street,
Carson City, Nevada 89703, United States of America and registered with the
Secretary of State in Nevada, United States of America under number C4629-1994,
jointly acting in their capacity of general partners (beherende vennoten)
of:

    FX ENERGY
NETHERLANDS PARTNERSHIP C.V., a limited partnership (commanditaire vennootschap),
organised under The laws of the Netherlands, having its registered office at
Locatellikade 1, 1076 AZ Amsterdam, The Netherlands and registered with the
Dutch Commercial Register (Handelsregister) under number
33298513 (Frontier Exploration Company and FX Drilling Company Inc. jointly in
the abovementioned capacity, the “Pledgor”);

    
      	
              2.

            	
              THE ROYAL BANK OF SCOTLAND
      PLC, a public limited company incorporated under the laws of
      Scotland, having its registered office at 36 Saint Andrew Square,
      Edinburgh, EH2 2YB, Scotland and registered under number SC090312 (the
      “Pledgee”);
      and

            

    

    
      	
              3.

            	
              FX ENERGY NETHERLANDS
      B.V., a private company with limited liability (besloten vennootschap met
      beperkte aansprakelijkheid) incorporated under the laws of The
      Netherlands, having its seat (statutaire zetel) in
      Utrecht, The Netherlands, having its registered office at Locatellikade 1,
      Parnassustoren, 1076 AZ Amsterdam, The Netherlands, and registered with
      the Dutch Commercial Register (Handelsregister) under number
      30132757 (the “Company”).

            

    

    
      
        
          
            	
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          CLIFFORD

           

          CHANCE

           

          

        

      

    

    The
authorisation of the person appearing before me appears from three (3) written
powers of attorney, (photocopies of) which shall be attached to this Deed (as
defined below) (Annex
1).

    The
person appearing, acting as stated, before me declared that:

    IT IS HEREBY AGREED AS
FOLLOWS:

    
      	
              1.  

            	
              DEFINITIONS
      AND INTERPRETATION

            

    

    
      	
              1.1  

            	
              Definitions

            

    

    
      	
              1.1.1  

            	
              Unless
      a contrary indication appears, capitalised terms not defined in this Deed
      (as defined below) shall have the same meaning given to such terms in the
      Facility Agreement (as defined
below).

            

    

    
      	
              1.1.2  

            	
              In
      addition the following terms shall have the following
    meaning:

            

    

    “Articles of Association” means
the articles of association (statuten) of the Company as
they currently stand and/or, as the case may be, as they may be amended from
time to time.

    “Deed” means this deed of
pledge.

    “Depository Receipts” means
depository receipts of shares in the capital of the Company issued with the
co-operation of the Company (met medewerking van de Vennootschap
uitgegeven certificaten van aandelen).

    “Dividends” means cash
dividends, distribution of reserves, repayments of capital and all other
distributions and payments in any form which at any time during the existence of
the right of pledge created hereby, become payable in respect of any one of the
Shares.

    “Enforcement Event” means any
Event of Default which is continuing and unwaived and which also constitutes a
default (verzuim) in
the payment of any amount due under the Secured Obligations.

    “Event of Default” has the
meaning given thereto in the Facility Agreement.

    “Facility Agreement” means
fifty-five million dollar (USD 55,000,000.00) Senior Reserve Base Lending
Facility Agreement dated the fifth day of August two thousand ten between FX
Energy Poland sp. z o.o as Borrower and (amongst others) the Pledgee as
Lender.

    “Finance Documents” has the
meaning given thereto in the Facility Agreement.

    “Finance Parties” has the
meaning given thereto in the Facility Agreement.

    “Future Shares” means all
shares in the capital of the Company acquired by the Pledgor after the date of
this Deed.

    “Intercreditor Agreement” means
the intercreditor agreement dated 5th day of August two thousand ten between,
amongst others, FX Energy Poland sp. z o.o as Borrower and (amongst others) the
Pledgee as Agent and Security Trustee.

    “Obligor” has the meaning given
thereto in the Facility Agreement.

    
      
        
          
            	
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          CLIFFORD

          CHANCE

           

          

        

      

    

    “Original Deed of Pledge” means
a notarial deed of pledge, executed before D. ter Braak, civil law notary
(notaris) in Amsterdam, The Netherlands, on the eighteenth day of December two
thousand six.

    “Original Pledge” means a first
ranking right of pledge created over the Shares (as defined in the Original Deed
of Pledge) by means of the Original Deed of Pledge.

    “Parallel Debt” has the meaning
given thereto in Sub-Clause 14.2 (Parallel Debt (Covenant to pay the Security
Trustee)) of the Intercreditor Agreement.

    “Present Shares” means all of
the shares issued and paid-up in the capital of the Company and registered in
the name of the Pledgor, being thirty-five (35) registered ordinary shares,
numbered 1 up to and including 35, with a par value (nominale waarde) of one
thousand Dutch guilders (NLG 1,000.00) each.

    “Principal Obligations” means
all present and future obligations owed by any Obligor(s) to any of the Finance
Parties under or in connection with the Finance Documents, other than the
obligations pursuant to the Parallel Debt.

    “Related Rights” means the
Dividends, all present and future rights of the Pledgor to acquire shares in the
capital of the Company and all other present and future rights arising out of or
in connection with the Shares, other than the Voting Rights.

    “Secured Obligations” means all
present and future obligations owed by the Obligors to the Pledgee pursuant to
the Parallel Debt and all Principal Obligations that are secured obligations
pursuant to paragraph 3.1.3.

    “Security Assets” means the
Shares and the Related Rights.

    “Shares” means the Present
Shares and the Future Shares.

    “Voting Rights” means the
voting rights in respect of any of the Shares.

    
      	
              1.2  

            	
              Interpretation

            

    

    Subject
to any contrary indication, any reference in this Deed to a “Clause”, “Sub-clause” or “paragraph” shall be
interpreted as a reference to a clause, sub-clause or paragraph
hereof.

    
      	
              1.3  

            	
              Continuing
      security

            

    

    Any
reference made in this Deed to any Finance Document or to any agreement or
document (under whatever name), where applicable, shall be deemed to be a
reference to such Finance Document or such other agreement or document as the
same may have been, or at any time may be, extended, prolonged, amended,
restated, supplemented, renewed or novated, as persons may accede thereto as a
party or withdraw therefrom as a party in part or in whole or be released
thereunder in part or in whole, and/or as facilities and/or financial services
are or at any time may be granted, extended, prolonged, increased, reduced,
cancelled, withdrawn, amended, restated, supplemented, renewed or novated
thereunder including, without limitation,

     

    
      
        
          
            
              	
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            CLIFFORD

            CHANCE

             

            

          

        

      

    

    
       

      
        	
                (a)  

              	 

      

      
        	
                (i)  

              	
                any
      increase or reduction in any amount available thereunder or any alteration
      of or addition to the purpose for which any such amount, or increased or
      reduced amount may be used,

              

      

      
        	
                (ii)  

              	
                any
      facility provided in substitution of, or in addition to, the facilities
      originally made available
thereunder,

              

      

      
        	
                (iii)  

              	
                any
      rescheduling of the indebtedness incurred thereunder whether in isolation
      or in connection with any of the foregoing,
and

              

      

      
        	
                (iv)  

              	
                any
      combination of the foregoing,
and/or

              

      

      
        	
                (b)  

              	
                any
      document designated as a Finance Document by the
  Agent.

              

      

      
        	
                1.4  

              	
                Unlawful
      financial assistance

              

      

      No
obligations shall be included in the definition of “Secured Obligations” to the
extent that, if they were included, the security interest granted pursuant to
this Deed or any part thereof would be void as a result of violation of the
prohibition on financial assistance contained in Section 2:207c Dutch Civil
Code or any other applicable financial assistance rules under any relevant
jurisdiction (the “Prohibition”) and all
provisions hereof will be interpreted accordingly. For the avoidance of doubt,
this Deed will continue to secure those obligations which, if included in the
definition of “Secured Obligations”, will not constitute a violation of the
Prohibition.

      
        	
                2.  

              	
                UNDERTAKING
      TO PLEDGE AND PARALLEL DEBT

              

      

      
        	
                2.1  

              	
                Undertaking
      to pledge

              

      

      The
Pledgor has agreed, or, as the case may be, hereby agrees with the Pledgee that
the Pledgor shall grant to the Pledgee a right of pledge over the Security
Assets, ranking second to the Original Pledge only, as security for the payment
of the Secured Obligations.  To the extent required, the Pledgee, in
its capacity as pledgee under the Original Pledge, hereby approves and gives its
consent to such second ranking right of pledge over the Security
Assets.

      
        	
                2.2  

              	
                Parallel
      Debt

              

      

      Pursuant
to the Parallel Debt the Pledgee has its own claim in respect of the payment
obligations of the Obligors to the Finance Parties. In connection with the
creation of the rights of pledge pursuant hereto the Pledgor and the Pledgee
acknowledge that with respect to this claim the Pledgee acts in its own name and
not as representative (vertegenwoordiger) of the
Finance Parties or any of them and consequently the Pledgee is the sole pledgee
under this Deed.

    

     

     

    
      
        
          
            	
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          CLIFFORD

          CHANCE

           

          

        

      

    

    
      	
              3.  

            	
              PLEDGE

            

    

    
      	
              3.1  

            	
              Pledge
      of Security Assets

            

    

    
      	
              3.1.1  

            	
              To
      secure the payment of the Secured Obligations the Pledgor hereby grants to
      the Pledgee a right of pledge over the Present Shares and the Related
      Rights pertaining thereto and grants in advance (bij voorbaat) to the
      Pledgee a right of pledge over the Future Shares and the Related Rights
      pertaining thereto, ranking second to the Original Pledge only, which
      rights of pledge are hereby accepted by the
  Pledgee.

            

    

    
      	
              3.1.2  

            	
              To
      the extent that the pledge in advance referred to in paragraph 3.1.1 is
      not effective under Dutch law the Pledgor will forthwith grant a
      supplemental right of pledge by executing, before a Dutch civil law
      notary, a deed of pledge substantially in the form of this Deed or such
      other form as the Pledgee may reasonably require in order to perfect the
      pledge over such Future Shares and the Related Rights pertaining
      thereto.

            

    

    
      	
              3.1.3  

            	
              If
      and to the extent that at the time of creation of this right of pledge, or
      at any time hereafter, a Principal Obligation owed to the Pledgee cannot
      be validly secured through the Parallel Debt, such Principal Obligation
      itself shall be a Secured
Obligation.

            

    

    
      	
              3.2  

            	
              Registration

            

    

    The
Pledgee is entitled to present this Deed and any other document pursuant hereto
for registration to any office, registrar or governmental body in any
jurisdiction the Pledgee deems necessary or useful to protect its
interests.

    
      	
              3.3  

            	
              Related
      Rights

            

    

    Save for
the Original Pledge and the Original Deed of Pledge, only the Pledgee is
entitled to receive and exercise the Related Rights pledged pursuant hereto. The
Pledgee hereby authorises the Pledgor (as envisaged by Section 3:246
paragraph 4 Dutch Civil Code) to receive Dividends paid in cash. The
Pledgee is entitled to revoke this authorisation upon the occurrence of an Event
of Default, and the authorisation shall automatically cease to exist upon the
occurrence of an Enforcement Event.

    
      	
              3.4  

            	
              Voting
      Rights

            

    

    
      	
              3.4.1  

            	
              On
      the third day of August two thousand ten the Company’s general meeting of
      shareholders has resolved to approve the granting of a right of pledge in
      respect of the Shares with the conditional transfer of the Voting Rights
      and other rights and powers attached to the Shares to the Pledgee. A
      photocopy of the resolution of the general meeting of shareholders shall
      be attached to this Deed (Annex
      2).

            

    

    
      
        
          
            	
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          CLIFFORD

          CHANCE

           

          

        

      

    

    
      	
              3.4.2  

            	
              The
      Voting Rights are hereby transferred to the Pledgee subject to the
      cumulative conditions precedent (opschortende
      voorwaarden) of:

            

    

    
      	
              (a)  

            	
              occurrence
      of an Event of Default,

            

    

    
      	
              (b)  

            	
              the
      release of the Original Deed of Pledge;
and

            

    

    
      	
              (c)  

            	
              notice
      by the Pledgee to the Company that it, the Pledgee, will exercise the
      Voting Rights.

            

    

    The
Pledgee agrees to send to the Pledgor, for information purposes only, a copy of
any notice to the Company as referred to in this paragraph 3.4.2 sub (b)
above.

    
      	
              3.4.3  

            	
              Prior
      to receipt by the Company of a notice as referred to in paragraph 3.4.2
      sub (b):

            

    

    
      	
              (a)  

            	
              the
      Pledgor shall have the right to exercise the Voting
      Rights;  and

            

    

    
      	
              (b)  

            	
              the
      Pledgee shall not have the rights attributed by law to the holders of
      Depository Receipts.

            

    

    
      	
              3.4.4  

            	
              Forthwith
      upon receipt by the Company of a notice as referred to in paragraph 3.4.2
      sub (b) the Pledgor shall no longer be entitled to exercise the Voting
      Rights.

            

    

    
      	
              4.  

            	
              REPRESENTATIONS,
      WARRANTIES AND COVENANTS

            

    

    
      	
              4.1  

            	
              Representations
      and warranties

            

    

    
      	
              4.1.1  

            	
              The
      Pledgor hereby represents and warrants to the Pledgee that the following
      is true and correct on the date hereof and on each date on which Security
      Assets are acquired by the Pledgor:

            

    

    
      	
              (a)  

            	
              save
      for the Original Pledge and the Original Deed of Pledge, the Pledgor is
      entitled to pledge the Security Assets as envisaged
  hereby;

            

    

    
      	
              (b)  

            	
              save
      for the Original Pledge and the Original Deed of Pledge and except as
      provided herein, the right of pledge created hereby over the Security
      Assets is a first ranking right of pledge (pandrecht eerste in
      rang), the Security Assets have not been encumbered with limited
      rights (beperkte
      rechten) or otherwise and no attachment (beslag) on the Security
      Assets has been made;

            

    

    
      	
              (c)  

            	
              save
      for the Original Pledge and the Original Deed of Pledge, the Security
      Assets have not been transferred, encumbered or attached in advance, nor
      has the Pledgor agreed to such a transfer or encumbrance in
      advance;  and

            

    

    
      	
              (d)  

            	
              no
      depository receipts have been issued with respect to the Present
      Shares.

            

    

    
      	
              4.1.2  

            	
              Furthermore,
      the Pledgor hereby represents and warrants to the Pledgee that the
      following is true and correct on the date
  hereof:

            

    

    
      
        
          
            	
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          CHANCE

           

          

        

      

    

    
      	
              (a)  

            	
              the
      Present Shares have been validly issued and fully paid and constitute one
      hundred percent (100%) of the share capital of the
  Company;

            

    

    
      	
              (b)  

            	
              it
      has acquired the Present Shares by means of a notarial deed of transfer of
      shares in the capital of the Company, executed before D.F.M.M. Zaman,
      civil law notary (notaris) in Rotterdam,
      The Netherlands, on the sixth day of January nineteen hundred
      ninety-eight.

            

    

    
      	
              4.2  

            	
              Covenants

            

    

    The
Pledgor hereby covenants that it will:

    
      	
              (a)  

            	
              other
      than as explicitly permitted under the terms of the other Finance
      Documents not release, settle or subordinate any Related Rights without
      the Pledgee’s prior written
consent;

            

    

    
      	
              (b)  

            	
              at
      its own expense execute all such documents, exercise any right, power or
      discretion exercisable, and perform and do all such acts and things as the
      Pledgee may request for creating, perfecting, protecting and/or enforcing
      the rights of pledge envisaged
hereby;

            

    

    
      	
              (c)  

            	
              save
      for the Original Pledge and the Original Deed of Pledge, not pledge,
      otherwise encumber or transfer any Security Assets, whether or not in
      advance, or permit to subsist any kind of encumbrance other than as
      envisaged hereby or as explicitly permitted under the terms of the other
      Finance Documents, or perform any act that may harm the rights of the
      Pledgee, or permit to subsist any kind of attachment over the Security
      Assets;

            

    

    
      	
              (d)  

            	
              immediately
      inform the Pledgee of any event or circumstance which may be of importance
      to the Pledgee for the preservation or exercise of the Pledgee’s rights
      pursuant hereto and provide the Pledgee, upon its written request, with
      any other information in relation to the Security Assets or the pledge
      thereof as the Pledgee may request from time to
  time;

            

    

    
      	
              (e)  

            	
              immediately
      inform in writing persons such as a liquidator (curator) in bankruptcy
      (faillissement),
      an administrator (bewindvoerder) in a
      suspension of payment (surséance van betaling)
      or preliminary suspension of payment (voorlopige surséance van
      betaling) or a person making an attachment (beslaglegger), of the
      existence of the rights of the Pledgee pursuant
  hereto;

            

    

    
      	
              (f)  

            	
              not
      procure the issue of any shares in the capital of the Company or any
      Depository Receipts or rights to acquire the same, except to the extent
      explicitly permitted under the terms of the other Finance
      Documents;  and

            

    

    
      
        
          
            	
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          CHANCE

           

          

        

      

    

    
      	
              (g)  

            	
              except
      as explicitly permitted under the terms of the other Finance Documents,
      not vote on any of the Shares without the consent of the Pledgee in favour
      of a proposal to (i) amend the Articles of Association, (ii) dissolve the
      Company, (iii) apply for the bankruptcy (faillissement) or a
      suspension of payments (surséance van betaling)
      or preliminary suspension of payments (voorlopige surséance van
      betaling) of the Company, (iv) convert (omzetten), merge (fuseren) or demerge
      (splitsen) the
      Company or (v) distribute Related
Rights.

            

    

    
      	
              5.  

            	
              ENFORCEMENT

            

    

    
      	
              5.1  

            	
              Default

            

    

    Any
failure to satisfy the Secured Obligations when due shall constitute a default
(verzuim) in the
performance of the Secured Obligations, without any reminder letter (sommatie) or notice of
default (ingebrekestelling) being
required.

    
      	
              5.2  

            	
              Enforcement

            

    

    Upon the
occurrence of an Enforcement Event, the Pledgee may enforce its rights of pledge
and take recourse against the proceeds of enforcement.

    
      	
              5.3  

            	
              No
      right to deviating manner of
enforcement

            

    

    The
Pledgor shall not be entitled to request the court to determine that the
Security Assets pledged pursuant hereto shall be sold in a manner deviating from
the provisions of Section 3:250 Dutch Civil Code.

    
      	
              5.4  

            	
              No
      notice of intention to sell

            

    

    The
Pledgee shall not be obliged to give notice to the Pledgor of any intention to
sell the pledged Security Assets (as provided in Section 3:249 Dutch Civil
Code) or, if applicable, of the fact that it has sold the same Security Assets
(as provided in Section 3:252 Dutch Civil Code).

    
      	
              5.5  

            	
              Application
      of proceeds

            

    

    All
monies received or realised by the Pledgee in connection with the Security
Assets shall be applied by the Pledgee in its capacity as Security Trustee under
the Facility Agreement and in accordance with the relevant provisions of
the  Finance Documents, subject to the mandatory provisions of Dutch
law on enforcement (uitwinning).

    
      	
              6.  

            	
              MISCELLANEOUS
      PROVISIONS

            

    

    
      	
              6.1  

            	
              Waivers

            

    

    
      	
              6.1.1  

            	
              To
      the fullest extent allowed by applicable law, the Pledgor waives (doet afstand van) any
      right it may have of first requiring the Pledgee to proceed against or
      claim payment from any other person or enforce any guarantee or security
      granted by any other person before exercising its rights pursuant
      hereto.

            

    

    
      
        
          
            	
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          CHANCE

           

          

        

      

    

    
      	
              6.1.2  

            	
              The
      Pledgor hereby irrevocably and unconditionally waives (doet afstand van) any
      rights it has under or pursuant to any Dutch law provisions for the
      protection of grantors of security for the debts of third parties,
      including, to the extent relevant, any rights it may have pursuant to
      Sections 3:233, 3:234 and 6:139 Dutch Civil
  Code.

            

    

    
      	
              6.1.3  

            	
              The
      Pledgor hereby irrevocably and unconditionally waives (doet afstand van), to
      the extent necessary in advance, any and all rights of recourse (regres) or subrogation
      (subrogatie)
      vis-à-vis any Obligor that it has or may obtain or acquire after the date
      of this Deed as a result of any enforcement action in respect of the
      rights of pledge granted under or in connection with this Deed (and, to
      the extent such waiver is not enforceable in whole or in part, any rights
      of recourse or subrogation to which the Pledgor is or may become entitled
      under or pursuant to enforcement of any rights of pledge created under or
      pursuant to this Deed are hereby pledged to the Pledgee by way of a non
      disclosed pledge governed by the terms of this Deed), which waiver is
      hereby accepted by the Pledgee.

            

    

    
      	
              6.2  

            	
              Evidence
      of indebtedness

            

    

    An
excerpt from the Pledgee’s records shall serve as conclusive evidence (dwingend bewijs) of the
existence and the amounts of the Secured Obligations, subject to proof to the
contrary.

    
      	
              6.3  

            	
              Unenforceability

            

    

    The
Pledgor and the Pledgee hereby agree that they will negotiate in good faith to
replace any provision hereof that may be held unenforceable with a provision
that is enforceable and which is as similar as possible in substance to the
unenforceable provision.

    
      	
              6.4  

            	
              Power
      of attorney

            

    

    The
Pledgor hereby grants, subject to the condition precedent (opschortende voorwaarde)
of:

    
      	
              (a)  

            	
              the
      occurrence of an Enforcement Event,
or

            

    

    
      	
              (b)  

            	
              a
      failure by the Pledgor to comply with its obligations under Sub-clause
      3.1.2 or Clause 4.2 (b),

            

    

    and
notwithstanding the rights of the pledgee under the Original Pledge, an
irrevocable power of attorney to the Pledgee to act in its name and on its
behalf, authorising the Pledgee to execute all such documents and to perform and
do all such acts and things as the Pledgee may deem necessary or useful in order
to have the full benefit of the rights granted or to be granted to the Pledgee
pursuant hereto, including (i) the exercise of any ancillary rights (nevenrechten) as well as any
other rights it has in relation to the Security Assets and (ii) the performance
of any obligations of the Pledgor hereunder, which authorisation permits the
Pledgee to act or also act as the Pledgor’s counterparty within the meaning of
Section 3:68 Dutch Civil Code.

    
      
        
          
            	
                    AMSDAM-1-737926-v1A

                  	
                    - 9 -

                  	
                    70-40474932

                  

          

          

        

         

      

      
         

        
          

        

      

      
         

        
          CLIFFORD

          CHANCE

           

          

        

      

    

    
      	
              6.5  

            	
              Costs

            

    

    
      	
              6.5.1  

            	
              All
      risks, taxes, fees, costs, charges and other expenses due or incurred in
      respect of or in connection with any of the Security Assets and/or the
      pledge thereof shall be exclusively for the account of the
      Pledgor.

            

    

    
      	
              6.5.2  

            	
              All
      costs, charges and other expenses incurred by the Pledgee in the lawful
      exercise of the powers conferred upon it pursuant hereto (including any
      enforcement measure), or in relation to the negotiation, preparation,
      execution and administration of this Deed, as well as in connection with
      any variation, amendment or supplement to the terms of this Deed, and any
      costs, charges and other expenses incurred by the Pledgee in connection
      with any consent or waiver, shall be payable by the Pledgor to the Pledgee
      on first demand.

            

    

    
      	
              7.  

            	
              TRANSFER

            

    

    
      	
              7.1  

            	
              Power
      to transfer

            

    

    The
Pledgee is entitled to transfer all or part of its rights and/or obligations
pursuant hereto to any transferee and the Pledgor hereby in advance gives its
irrevocable consent to, and hereby in advance irrevocably co-operates with, any
such transfer (within the meaning of Sections 6:156 and 6:159 Dutch Civil
Code).

    
      	
              7.2  

            	
              Transfer
      of information

            

    

    The
Pledgee is entitled to impart any information concerning the Pledgor and/or the
Security Assets to any transferee or proposed transferee.

    
      	
              8.  

            	
              TERMINATION

            

    

    
      	
              8.1  

            	
              Termination
      of pledge

            

    

    Unless
terminated by operation of law, the Pledgee’s rights of pledge created pursuant
hereto shall be in full force and effect vis-à-vis the Pledgor until they shall
have terminated, in part or in whole, as described in Sub-clause 8.2 (Termination by notice (opzegging) and waiver (afstand)) below.

    
      	
              8.2  

            	
              Termination
      by notice (opzegging) and waiver
      (afstand)

            

    

    The
Pledgee will be entitled to terminate by notice (opzegging), in part or in
whole, the rights of pledge created pursuant hereto in respect of all or part of
the Security Assets and/or all or part of the Secured Obligations. If and
insofar as the purported effect of any such termination requires a waiver (afstand van recht) by the
Pledgee, the Pledgor hereby in advance agrees to such waiver.

    
      	
              9.  

            	
              GOVERNING
      LAW AND JURISDICTION

            

    

    
      	
              9.1  

            	
              Governing
      law

            

    

    This Deed
and any non-contractual obligations arising out or in connection to this Deed
are governed by and shall be interpreted in accordance with Dutch
law.

    
      
        
          
            	
                    AMSDAM-1-737926-v1A

                  	
                    - 10 -

                  	
                    70-40474932

                  

          

          

        

         

      

      
         

        
          

        

      

      
         

        
          CLIFFORD

          CHANCE

           

          

        

      

    

    
      	
              9.2  

            	
              Jurisdiction

            

    

    Any
disputes arising from or in connection with this Deed shall be submitted in
first instance to the competent court in Amsterdam, The Netherlands, without
prejudice to the Pledgee’s right to submit any disputes to any other competent
court in The Netherlands or in any other jurisdiction.

    
      	
              9.3  

            	
              Power
      of attorney

            

    

    If a
party to this Deed is represented by an attorney or attorneys in connection with
the execution of this Deed or any agreement or document pursuant hereto and the
relevant power of attorney is expressed to be governed by Dutch law, such choice
of law is hereby accepted by each other party, in accordance with
Article 14 Hague Convention on the Law Applicable to Agency of the
fourteenth day of March nineteen hundred and seventy-eight.

    
      	
              10.  

            	
              THE
      COMPANY

            

    

    The
Company:

    
      	
              (a)  

            	
              acknowledges
      the right of pledge created over the Security
  Assets;

            

    

    
      	
              (b)  

            	
              confirms
      that it has been notified of the right of pledge created over the Related
      Rights;

            

    

    
      	
              (c)  

            	
              undertakes
      to register in its shareholders’
register:

            

    

    
      	
              (i)  

            	
              the
      right of pledge over the Shares;

            

    

    
      	
              (ii)  

            	
              the
      conditional transfer of Voting Rights to the Pledgee;
  and

            

    

    
      	
              (iii)  

            	
              that,
      upon the occurrence of an Event of Default and notice to the Company, as
      set out in more detail in this Deed, the Pledgee shall have the rights
      attributed by law to the holders of depository receipts issued with the
      company’s co-operation (rechten die door de wet zijn
      toegekend aan de houders van met medewerking ener vennootschap uitgegeven
      certificaten van aandelen),

            

    

    and to
provide the Pledgee, as soon as practically possible, with a copy of the
relevant entries in its shareholders’ register;

    
      	
              (d)  

            	
              represents
      and warrants that the representations and warranties of the Pledgor made
      pursuant to paragraphs 4.1.1 sub (a) and (b) and 4.1.2 sub (a) are true
      and correct;

            

    

    
      	
              (e)  

            	
              represents
      and warrants that no Depository Receipts have been issued with respect to
      the Present Shares;

            

    

    
      	
              (f)  

            	
              represents
      and warrants that no rights to acquire shares in the capital of the
      Company have been issued which are still
      outstanding;  and

            

    

    
      	
              (g)  

            	
              covenants
      that it shall not co-operate in the issue of any Depository Receipts or
      issue any shares, or rights to acquire shares, in the capital of the
      Company, except to the extent explicitly permitted under the terms of the
      other Finance Documents.

            

    

    
      
        
          
            	
                    AMSDAM-1-737926-v1A

                  	
                    - 11 -

                  	
                    70-40474932

                  

          

          

        

         

      

      
         

        
          

        

      

      
         

        
          CLIFFORD

          CHANCE

           

          

        

      

    

    
      	
              11.  

            	
              CIVIL
      LAW NOTARY

            

    

    Each of
the parties to this Deed acknowledges that:

    
      	
              (a)  

            	
              dr.
      T.P. van Duuren, civil law notary (notaris) in Amsterdam,
      The Netherlands, is a partner of Clifford Chance
      LLP;  and

            

    

    
      	
              (b)  

            	
              Clifford
      Chance LLP acts as the legal adviser to the Pledgee and that Van As c.s.
      Advocaten in Nieuwegein, The Netherlands, acts as the Dutch legal adviser
      to the Pledgor and the Company in this transaction;
  and,

            

    

    having
consulted its legal advisers, confirms its agreement and accepts that dr. T.P.
van Duuren, aforementioned, or one of his deputies (kandidaat-notarissen) shall
execute this Deed and that this shall not prevent Clifford Chance LLP from
continuing to act as legal adviser to the Pledgee.

    The
person appearing before me is known to me, civil law notary.

    This
deed, drawn up to be kept in the civil law notary’s custody was executed in
Amsterdam, The Netherlands, on the date first above written.

    The
essential contents of this deed were given and explained to the person
appearing. The person appearing then declared to have noted and approved the
contents and not to want a full reading thereof. Thereupon, after limited
reading, this deed was signed by the person appearing before me and by me, civil
law notary.

    Signed.

    

    
      	
               

              [seal
      and signature]

            	
              ISSUED
      AS A TRUE COPY

              by
      Krishna van Zundert, kandidaat-notaris,

              deputising
      for dr. Thomas Pieter van Duuren,

              civil
      law notary (notaris) in Amsterdam,

              on
      6 August 2010.

            

    

    

    
      
        
          
            	
                    AMSDAM-1-737926-v1A

                  	
                    - 12 -

                  	
                    70-40474932Exhibit 4.2

 

TORNIER
B.V.

 

REGISTRATION RIGHTS
AGREEMENT

 

REGISTRATION RIGHTS
AGREEMENT, dated as of July 16, 2010 (this “Agreement”), among the
investors listed on Schedule I hereto (the “Institutional Investors”),
the persons listed on Schedule II hereto (the “Management Investors” and
together with the Institutional Investors, the “Investors”) and Tornier B.V., a Netherlands private
company with limited liability (besloten vennootschap met
beperkte aansprakelijkheid) (the “Company”).

 

R E C I T A L S

 

WHEREAS, each of the
Investors holds ordinary shares, par value €0.01 per share, of the Company (the
“Ordinary Shares”); and

 

WHEREAS, the Company and the
Investors desire to define and agree to certain registration rights of the
Investors under the Securities Act on the terms and subject to the conditions
herein set forth.

 

NOW, THEREFORE, in
consideration of the foregoing premises and for other good and valuable
consideration, the parties hereby agree as follows:

 

SECTION 1.  DEFINITIONS

 

As used in this Agreement,
the following terms have the respective meanings set forth below:

 

Agreement:  shall have the meaning set forth in the
Preamble hereto;

 

Commission:  shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act;

 

Company:  shall have the meaning set forth in the
Preamble hereto;

 

Demanding Holders:  shall have the meaning set forth in Section 2(b)(ii) hereof;

 

Exchange Act:  shall mean the Securities Exchange Act of
1934, as amended (or any successor act), and the rules and regulations
promulgated hereunder, or any successor statute thereto;

 

Holder:  shall mean any holder of Registrable
Securities a party to this Agreement;

 

Indemnified Party:  shall have the meaning set forth in Section 2(f)(iii) hereof;

 

 

Indemnifying Party:  shall have the meaning set forth in Section 2(f)(iii) hereof;

 

Initial Public Offering:  shall mean the initial public offering of
Ordinary Shares in connection with the declaration or ordering of effectiveness
of the Company’s Registration Statement on Form S-1;

 

Initiating Holder:  shall mean a Holder requesting Registration
pursuant to Section 2(a) or (c), as applicable;

 

Institutional Investor:  shall have the meaning set forth in the
Preamble hereto;

 

Investors:  shall have the meaning set forth in the
Preamble hereto;

 

Issuer Free Writing
Prospectus:  shall mean
an “Issuer Free Writing Prospectus,” as defined in Rule 433 under the
Securities Act, relating to an offer of Registrable Securities;

 

FINRA:  shall mean the Financial Industry Regulatory
Authority;

 

Losses:  shall have the meaning set forth in Section 2(f)(i) hereof;

 

Management Investors:  shall have the meaning set forth in the
Preamble hereto;

 

Ordinary Shares:  shall have the meaning set forth in the
recitals hereto;

 

Participating Holders:  Holders participating in the Registration
relating to the Registrable Securities;

 

Permitted Assignees:  shall have the meaning set forth in Section 4(e) hereto;

 

Person:  shall mean an individual, partnership,
joint-stock company, corporation, trust or unincorporated organization, and a
government or governmental agency or political subdivision thereof;

 

Prospectus:  means the prospectus (including any
preliminary, final or summary prospectus) included in any Registration
Statement, all amendments and supplements to such prospectus and all other
material incorporated by reference in such prospectus;

 

Register, Registered
and Registration:  shall mean a
registration effected by preparing and filing a Registration Statement in
compliance with the Securities Act (and any post-effective amendments filed or
required to be filed) and the declaration or ordering of effectiveness of such
Registration Statement;

 

Registrable Securities:  shall mean all Ordinary Shares held by the
Investors or a Permitted Assignee at any time, including without limitation any
Ordinary Shares of the Company acquired pursuant to any preemptive right, right
of first offer or otherwise, and any other Ordinary Shares issued in respect of
any of such securities (as a result of stock splits, stock

 

2

 

dividends, stock combinations, reclassifications, recapitalizations or
other similar events); provided, however, that such securities shall cease to be
Registrable Securities upon any sale thereof pursuant to an effective
Registration Statement under the Securities Act or that are sold pursuant to Rule 144;

 

Registration Expenses:  shall mean any and all expenses incident to
the performance of or compliance with any Registration or marketing of
securities pursuant to Section 2 hereof other than Selling Expenses,
including all (i) Registration and filing fees, and all other fees and
expenses payable in connection with the listing of securities on any securities
exchange or automated interdealer quotation system, (ii) fees and expenses
of compliance with any securities or “blue sky” laws (including fees and
disbursements of one counsel in connection with “blue sky” qualifications of
the securities registered), (iii) expenses in connection with the
preparation, printing, mailing and delivery of any Registration Statements,
Prospectus, Issuer Free Writing Prospectus and other documents in
connection therewith and any amendments or supplements thereto, (iv) security
engraving and printing expenses, (v) internal expenses of the Company
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), (vi) fees and
disbursements of counsel for the Company and fees and expenses for independent
certified public accountants retained by the Company (including the expenses
associated with the delivery by independent certified public accountants of any
comfort letters requested pursuant to the terms hereof), (vii) fees and
expenses of any special experts retained by the Company in connection with such
Registration, (viii) reasonable fees and expenses of one counsel for all
of the Participating Holders in an amount not to exceed $25,000, which counsel
shall be selected by the Participating Holder holding the largest number of the
Registrable Securities to be sold in the Registration, (ix) fees and
expenses in connection with any review by FINRA of any underwriting
arrangements or other terms of the offering, and all reasonable fees and
expenses of any “qualified independent underwriter,” including the fees and
expenses of any counsel thereto, (x) reasonable fees and disbursements of
underwriters customarily paid by issuers or sellers of securities, but
excluding any underwriting fees, discounts and commissions attributable to the
sale of Registrable Securities, (xi) costs of printing and producing any
agreements among underwriters, underwriting agreements, any “blue sky” or legal
investment memoranda and any selling agreements and other documents in
connection with the offering, sale or delivery of the Registrable Securities, (xii) transfer
agents’ and registrars’ fees and expenses and the fees and expenses of any
other agent or trustee appointed in connection with such offering and (xiii) expenses
relating to any analyst or investor presentations or any “road shows”
undertaken in connection with the Registration, marketing or selling of the
Registrable Securities;

 

Registration Statement:  shall mean any registration statement of the
Company that covers Registrable Securities pursuant to the provisions of this
Agreement filed with, or to be filed with, the Commission under the rules and
regulations promulgated under the Securities Act, including the related
Prospectus, amendments and supplements to such registration statement,
including pre- and post-effective amendments, and all exhibits, financial
information and all material incorporated by reference in such registration
statement;

 

Rule 144; Rule 144A:  shall mean Rule 144 and Rule 144A
under the Securities Act (or any successor provisions then in force);

 

3

 

security, securities:  shall have the meaning set forth in Section 2(a)(1) of
the Securities Act;

 

Securities Act:  shall mean the Securities Act of 1933, as
amended (or any successor act), and the rules and regulations promulgated
thereunder, or any successor statute thereto;

 

Selling Expenses:  shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and all
fees and disbursements of counsel for each of the Holders other than the fees
and expenses of one counsel for all of the Holders which shall be paid for by
the Company in accordance with the terms set forth in clause (viii) of the
definition of “Registration Expenses” set forth herein;

 

Tornier Entities: shall mean,
collectively, KCH Stockholm AB and Phil Invest ApS, and any successor entities
thereto, and their respective Affiliates (excluding the Company and any of its
subsidiaries) and any Permitted Assignees to which Registrable Securities have
been transferred or assigned, as long as such Person is a Holder.

 

Vertical: shall mean,
collectively, Vertical Fund I, L.P. and Vertical Fund II, L.P., and any successor
funds thereto, and their respective Affiliates (excluding the Company and any
of its subsidiaries) and any Permitted Assignees to which Registrable
Securities have been transferred or assigned, as long as such Person is a
Holder.

 

Warburg Pincus:  shall mean, collectively, TMG Holdings
Cooperatief U.A., any successor entities thereto, and their respective
Affiliates (excluding the Company and any of its subsidiaries) and any
Permitted Assignees to which Registrable Securities have been transferred or
assigned, as long as such Person is a Holder.

 

SECTION 2.  REGISTRATION RIGHTS

 

(a)                                 Demand Registration.

 

(i)                                     Request for Registration.  At any time after the date that is one
hundred and eighty (180) days after the date of the Company’s Initial Public
Offering if the Company shall receive from Warburg Pincus or Vertical, a
written request that the Company effect any Registration with respect to all or
a part of the Registrable Securities owned by such Holder, the Company will:

 

(1)                                 promptly give written notice of the proposed Registration to all other
Holders in accordance with the terms of Section 2(b);

 

(2)                                 as promptly as practicable file a Registration Statement with the
Commission, but no later than (x) ninety (90) days after its receipt of a
request for a Registration on Form S-1 or any similar long-form
Registration Statement or (y) thirty (30) days after its receipt of a
request for Registration on Form S-3 or any similar short-

 

4

 

form Registration
Statement (if and to the extent the Company is eligible to use a Form S-3
registration statement or any similar short-form Registration Statement); and

 

(3)                                 as promptly as practicable, use its reasonable best efforts to effect
such Registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act) as may be so
requested by such Initiating Holder and as would permit or facilitate the sale
and distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are specified in
a written request received by the Company within ten (10) days after
written notice from the Company is given under Section 2(a)(i)(1) above;
provided that the Company shall not be obligated to effect, or take any
action to effect, any such Registration pursuant to this Section 2(a):

 

(A)                               in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such Registration,
qualification or compliance, unless the Company is already subject to service
in such jurisdiction and except as may be required by the Securities Act;

 

(B)                               after the
Company has effected three (3) such Registrations on behalf of Warburg
Pincus and one (1) such Registration on behalf of Vertical pursuant to
this Section 2(a) and such Registrations have been declared or
ordered effective and the sales of such Registrable Securities shall have
closed;

 

(C)                               if the
Registrable Securities requested by all Holders to be registered pursuant to
such request have an anticipated aggregate public offering price (before any
underwriting discounts and commissions) of less than $10,000,000; or

 

(D)                               during the
period starting with the date sixty (60) days prior to the Company’s good faith
estimate of the date of filing of, and ending on the date six (6) months
immediately following the effective date of, any registration statement
pertaining to securities of the Company (other than a registration of
securities in a Rule 145 transaction under the Securities Act on Form S-4
or with respect to an employee benefit plan on Form S-8), provided
that the Company is actively employing in good faith all reasonable best
efforts to cause such registration statement to become effective; provided,
further, that the Company may only delay the filing of a Registration
Statement pursuant to this Section 2(a)(i)(3)(D) for a period of not
more than sixty (60) days, if a filing of any other registration statement is
not made within that period, and the Company may only exercise this right once
in any twelve (12)-month period; or

 

5

 

(E)                                if at the time
the Company receives the request to register Registrable Securities pursuant to
this Section 2(a) above, the Company furnishes to the Initiating
Holder a certificate signed by the President or Chief Executive Officer of the
Company that the Board of Directors of the Company has determined in good
faith, after consultation with external legal counsel, that it would be
materially detrimental to the Company and its stockholders for such
Registration Statement to be effected at such time because such action (x) would
materially interfere with a proposed significant acquisition, disposition,
financing, reorganization, recapitalization or similar transaction involving
the Company, (y) would require premature disclosure of material
information that the Company has a bona fide business purpose for preserving as
confidential or (z) would render the Company unable to comply with
requirements under the Securities Act or Exchange Act, then the Company’s
obligation to comply with this Section 2(a) shall be deferred for a
period not to exceed sixty (60) days from the date of receipt of written
request from the Initiating Holder; provided, however, that the
Company shall not exercise such right more than once in any twelve (12)-month
period.

 

(ii)                                  The Registration Statement filed pursuant to the request of the
Initiating Holder may, subject to the provisions of Section 2(a)(iii) below,
include Ordinary Shares which are held by Holders.  In the event the Initiating Holder requests a
Registration pursuant to this Section 2(a) in connection with a
distribution of Registrable Securities to its partners or members or any other
Holder elects to participate in such Registration pursuant to Section 2(b) hereof
in connection with a distribution of Registrable Securities to its partners or
members, the Registration shall provide for the resale by such partners or
members, if requested by such Holder.

 

(iii)                               Underwriting.  If the Initiating Holder intends to
distribute the Registrable Securities covered by its request by means of an
underwriting, it shall, to the extent such underwritten offering is
contemplated at the time of such request, so advise the Company as a part of
the request made pursuant to Section 2(a). 
If Holders, to the extent they have any registration rights under Section 2(b),
request inclusion of their Ordinary Shares in the underwriting, the Initiating
Holder shall offer to include the Ordinary Shares of such Holders in the
underwriting and may condition such offer on their acceptance of the further
applicable provisions of this Section 2. 
The Holders whose Registrable Securities are to be included in such
Registration and the Company shall enter into an underwriting agreement in
customary form with the managing underwriter or underwriters selected for such
underwriting by the Company and reasonably acceptable to the Initiating Holder;
provided, however, that such underwriting agreement shall not
provide for indemnification or contribution obligations on the part of any
Holder greater than the obligations of the Holders under Section (2)(f)(ii) or
Section 2(f)(iv).

 

Notwithstanding any other
provision of this Section 2(a), if the managing underwriter or
underwriters advises the Holders in writing that marketing factors require a
limitation on the number of shares to be underwritten, some or all of the
securities of the Company 

 

6

 

held by the Management
Investors shall be excluded from such Registration to the extent so required by
such limitation.  If, after the exclusion
of such shares held by the Management Investors, further reductions are still
required due to the marketing limitation, the number of Registrable Securities
included in the Registration by the Initiating Holder and each other
Institutional Investor participating in the Registration shall be reduced on a
pro rata basis (based on the number of shares requested for inclusion in the
Registration by such Holder), by such minimum number of shares as is necessary
to comply with such request.  No
Registrable Securities or any other securities excluded from the underwriting
by reason of the underwriter’s marketing limitation shall be included in such
Registration.  If any Holder who has
requested inclusion in such Registration as provided above disapproves of the
terms of the underwriting, such Person may elect to withdraw therefrom by
providing written notice to the Company, the underwriter and the Initiating
Holder.  The securities so withdrawn
shall also be withdrawn from Registration.

 

(iv)                              In the case of an underwritten offering under this Section 2(a), the
price, underwriting discount and other financial terms for the Registrable
Securities shall be determined by the Initiating Holder.

 

(b)                                 Piggyback Registration.

 

(i)                                     Other than in connection with the Initial Public Offering, if the Company
shall determine to register any of its Ordinary Shares either (x) for its
own account or (y) for the account of the Holders listed in Section 2(a) or
Section 2(c) pursuant to the terms thereof (other than (A) a
Registration relating solely to employee benefit plans on Form S-8 (or a
successor form), (B) a Registration relating solely to a Rule 145
transaction under the Securities Act on Form S-4 (or a successor form), (C) a
Registration on any Registration form which does not permit secondary sales or
does not include substantially the same information as would be required to be
included in a Registration Statement), the Company will, subject to the
conditions set forth in this Section 2(b):

 

(1)                                 promptly give to each of the Holders a written notice thereof (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other state
securities laws); and

 

(2)                                 subject to Sections 2(b)(ii) and (iii) below and any transfer
restrictions any Holder may be a party to, include in such Registration (and
any related qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made by the Holders.  Such written request may specify all or a
part of the Holders’ Registrable Securities and shall be received by the
Company within ten (10) days after written notice from the Company is
given under Section 2(b)(i)(1) above. 
In the event any Holder requests inclusion in a Registration pursuant to
this Section 2(b) in connection with a distribution of Registrable
Securities to its partners or members, the Registration shall provide for the
resale by such partners or members, if requested by such Holder.

 

7

 

(ii)                                  Underwriting.  If the Registration of which the Company
gives notice is for a Registered public offering involving an underwriting, the
Company shall so advise each of the Holders as a part of the written notice
given pursuant to Section 2(b)(i)(1) above.  In such event, the right of each of the
Holders to Registration pursuant to this Section 2(b) shall be
conditioned upon such Holders’ participation in such underwriting and the
inclusion of such Holders’ Registrable Securities in the underwriting to the
extent provided herein.  The Holders
whose shares are to be included in such Registration shall (together with the
Company) enter into an underwriting agreement in customary form with the
managing underwriter or underwriters selected for underwriting by the Company
(and if the Registration was initiated by a Holder pursuant to Section 2(a) or
Section 2(c), such underwriters must be selected by the Company and
reasonably acceptable to the Initiating Holder); provided, however,
that such underwriting agreement shall not provide for indemnification or
contribution obligations on the part of any Holder greater than the obligations
of the Holders under Section 2(f)(ii) or Section 2(f)(iv).
Notwithstanding any other provision of this Section 2(b), if any
Registration in respect of which any Holder is exercising its rights under this
Section 2(b) involves an underwritten public offering (other than a
demand Registration or Form S-3 Registration pursuant to Section 2(a) or
Section 2(c), in which case the provisions with respect to priority of
inclusion in such Registration set forth in Section 2(a) and Section (c) hereof,
respectively, shall apply) and the managing underwriter or underwriters advises
the Company that in its view marketing factors require a limitation on the
number of shares to be underwritten, and the managing underwriter or
underwriters may (subject to Section 2(b)(iv) and the allocation
priority set forth below) limit the number of Registrable Securities to be
included in the Registration and underwriting to not less than twenty five
percent (25%) of the shares included therein (based on the number of
shares).  The Company shall promptly
advise all holders of securities requesting Registration of such limitation,
and the number of shares of securities that are entitled to be included in the
Registration and underwriting shall be allocated in the following manner:  some or all of the securities of the Company
held by officers and directors of the Company (other than Registrable
Securities and other than securities held by holders who by contractual right
demanded such Registration (“Demanding Holders”)) shall be excluded from
such Registration and underwriting to the extent required by such limitation,
and, if a limitation on the number of shares is still required, the number of
shares that may be included in the Registration and underwriting by each of the
Holders and Demanding Holders shall be reduced, on a pro rata basis (based on
the number of shares held by such holder), by such minimum number of shares as
is necessary to comply with such limitation. 
If any of the Holders or any officer or director disapproves of the
terms of any such underwriting, he, she or it may elect to withdraw therefrom
by providing written notice to the Company and the underwriter.  Any Registrable Securities or other
securities excluded or withdrawn from such underwriting shall be withdrawn from
such Registration.

 

(iii)                               The Company shall have the right to terminate or withdraw any
Registration initiated by it under this Section 2(b), whether or not any
Holder has elected to include securities in such Registration, and shall
promptly notify any Holder that has elected to include shares in such
Registration of such termination or withdrawal.

 

8

 

(c)                                  Form S-3.

 

(i)                                     Following the Initial Public Offering, the Company shall use its
reasonable best efforts to qualify for Registration on Form S-3 for
secondary sales.  After the Company has
qualified for the use of Form S-3, Warburg Pincus shall have the right to
request an unlimited number of Registrations on Form S-3 (such requests
shall be in writing and shall state the number of shares of Registrable
Securities to be disposed of and the intended method of disposition of shares
by the Initiating Holder), provided that the Company shall not be
obligated to effect, or take any action to effect, any such Registration
pursuant to this Section 2(c):

 

(1)                                 unless the Initiating Holders propose to dispose of shares of Registrable
Securities having an aggregate price to the public (before deduction of Selling
Expenses) of more than $10,000,000;

 

(2)                                 within one hundred eighty (180) days of the effective date of the most
recent Registration pursuant to this Section 2(c) in which the Registrable
Securities held by the Initiating Holder could have been included for sale or
distribution;

 

(3)                                 in any particular jurisdiction in which the Company would be required to
execute a general consent to service of process in effecting such Registration,
qualification or compliance, unless the Company is already subject to service
in such jurisdiction and except as may be required by the Securities Act;

 

(4)                                 during the period starting with the date sixty (60) days prior to the
Company’s good faith estimate of the date of filing of, and ending on the date
six (6) months immediately following the effective date of, any
registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction under the Securities
Act or with respect to an employee benefit plan), provided that the
Company is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective; provided, further,
that the Company may only delay the filing of a Registration Statement pursuant
to this Section 2(c)(i)(4) for a period of not more than sixty (60)
days, if a filing of any other registration statement is not made within that
period and the Company may only exercise this right once in any twelve
(12)-month period; or

 

(5)                                 if at the time the Company receives the request to register Registrable
Securities pursuant to this Section 2(c) above, the Company shall
furnish to the Initiating Holder a certificate signed by the President or Chief
Executive Officer of the Company stating that, in the good faith judgment of
the Board of Directors of the Company, after consultation with external legal
counsel, it would be materially detrimental to the Company and its stockholders
for such Form S-3 Registration to be effected at such time because such
action (x) would materially interfere with a proposed significant
acquisition, disposition, financing, reorganization, recapitalization or
similar transaction involving the Company, (y) would require premature
disclosure of material information that the Company has a bona fide business
purpose for preserving as confidential or (z) would render the Company
unable to comply with requirements under the Securities Act 

 

9

 

or Exchange Act, the Company
shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than sixty (60) days after receipt of the
request of the Initiating Holder; provided, however, that the
Company shall not exercise such right more than once in any twelve (12)-month
period.

 

(ii)                                  Upon receipt of any request for Registration pursuant to this Section 2(c),
the Company shall promptly give written notice to all other Holders of the
receipt of a request for Registration pursuant to the procedures set forth in Section 2(b) and
shall allow other Holders ten (10) days to provide written notice of their
participation in the Registration, provided that if the Registration is
for an underwritten offering, the terms of Section 2(a)(iii) above
(including those that apply in the event of a marketing limitation and the
priority set forth therein) shall apply to all participants in such
offering.  Subject to the foregoing, as
promptly as practicable, but no later than thirty (30) days after the Company’s
receipt of a request for Registration pursuant to this Section 2(c), the
Company shall file a Form S-3 Registration Statement with the Commission,
and, as promptly as practicable thereafter, shall use its reasonable best
efforts to effect the Registration of all shares of Registrable Securities on Form S-3
to the extent requested by the Holder or Holders thereof for purposes of
disposition.  If the Company qualifies to
do so, it shall file an automatic Registration Statement on Form S-3 in
response to any request for Registration pursuant to this Section 2(c).

 

(iii)                               The Registration Statement filed pursuant to this Section 2(c) may,
subject to the provisions of this Section 2(c) and Section 2(a)(iii),
include Ordinary Shares of the Holders. 
In the event the Initiating Holder requests a Registration pursuant to
this Section 2(c) in connection with a distribution of Registrable
Securities to its partners or members or any other Holder elects to participate
in such Registration pursuant to Section 2(b) hereof in connection
with a distribution of Registrable Securities to its partners or members, the
Registration shall provide for the resale by such partners or members, if
requested by such Holder.

 

(iv)                              In the case of an underwritten offering under this Section 2(c), the
price, underwriting discount and other financial terms for the Registrable
Securities shall be determined by the Initiating Holder.

 

(d)                                 Expenses of Registration.  All Registration Expenses incurred in connection
with any Registration, qualification or compliance pursuant to this Section 2
shall be borne by the Company.  All
Selling Expenses shall be borne by the Holders of the securities so registered
pro rata on the basis of the number of their shares so registered.

 

(e)                                  Registration Procedures.  In the case of each Registration effected by
the Company pursuant to this Section 2, the Company will keep the
Participating Holders advised in writing as to the initiation of each
Registration and as to the completion thereof. 
At its expense, the Company will:

 

(i)                                     keep such Registration effective for a period of one hundred twenty (120)
days or until the Participating Holders (or in the case of a distribution to
the partners or members of such Participating Holder, such partners or
members), as applicable, have

 

10

 

 

completed the distribution
described in the Registration Statement relating thereto, whichever first
occurs; provided, however, that (1) such one hundred twenty
(120)-day period shall be extended for a period of time equal to the period
during which the Participating Holders or partners or members, as applicable,
refrain from selling any securities included in such Registration in accordance
with the provisions in Section 2(g)(iii) hereof; and (2) in the
case of any Registration of Registrable Securities on Form S-3 which are
intended to be offered on a continuous or delayed basis, such one hundred
twenty (120)-day period shall be extended until all such Registrable Securities
are sold, provided that Rule 415, or any successor rule under the
Securities Act, permits an offering on a continuous or delayed basis;

 

(ii)                                  as promptly as practicable, prepare and file with the Commission such
pre- and post-effective amendments to such Registration Statement, supplements
to the Prospectus and such amendments or supplements to any Issuer Free Writing
Prospectus as may be (1) reasonably requested by the Initiating Holder (if
any), (2) reasonably requested by any other Participating Holder (to the
extent such request relates to information relating to such Participating Holder),
or (3) necessary to keep such Registration effective for the period of
time required by this Agreement, and comply with provisions of the applicable
securities laws with respect to the sale or other disposition of all securities
covered by such Registration Statement during such period in accordance with
the intended method or methods of disposition by the sellers thereof set forth
in such Registration Statement;

 

(iii)                               notify the Participating Holders and the managing underwriter or
underwriters, if any, and (if requested) confirm such advice in writing and
provide copies of the relevant documents, as promptly as practicable after
notice thereof is received by the Company (1) when the applicable
Registration Statement or any amendment thereto has been filed or becomes
effective, and when the applicable Prospectus or Issuer Free Writing Prospectus
or any amendment or supplement thereto has been filed, (2) to the extent
any of the following relates to the Participating Holders or information supplied
by the Participating Holders, of any written comments by the Commission or any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to such Registration Statement, Prospectus or
Issuer Free Writing Prospectus or for additional information, (3) of the
issuance by the Commission of any stop order suspending the effectiveness of
such Registration Statement or any order by the Commission or any other
regulatory authority preventing or suspending the use of any Prospectus or any
Issuer Free Writing Prospectus or the initiation or threatening of any
proceedings for such purposes, (4) if, at any time, the representations
and warranties of the Company in any applicable underwriting agreement cease to
be true and correct in all material respects, and (5) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for offering or sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose;

 

(iv)                              promptly notify the Participating Holders and the managing underwriter or
underwriters, if any, when the Company becomes aware of the happening of any
event as a result of which the applicable Registration Statement, the
Prospectus included in such Registration Statement (as then in effect) or any
Issuer Free Writing Prospectus contains 

 

11

 

any untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein (in the case of such
Prospectus or any Issuer Free Writing Prospectus, in light of the circumstances
under which they were made) not misleading, and when any Issuer Free Writing Prospectus
includes information that may conflict with the information contained in the
Registration Statement, or, if for any other reason it shall be necessary
during such time period to amend or supplement such Registration Statement,
Prospectus or Issuer Free Writing Prospectus in order to comply with the
Securities Act and, in either case as promptly as practicable thereafter,
prepare and file with the Commission, and furnish without charge to the
Participating Holders and the managing underwriter or underwriters, if any, an
amendment or supplement to such Registration Statement, Prospectus or Issuer
Free Writing Prospectus which shall correct such misstatement or omission or
effect such compliance;

 

(v)                                 use its reasonable best efforts to prevent, or obtain the withdrawal of,
any stop order or other order suspending the use of any Prospectus or any
Issuer Free Writing Prospectus;

 

(vi)                              deliver to each Participating Holder and each underwriter, if any,
without charge, as many copies of the applicable Prospectus (including each
preliminary Prospectus), any Issuer Free Writing Prospectus and any amendment
or supplement thereto as such Participating Holder or underwriter may
reasonably request (it being understood that the Company consents to the use of
such Prospectus, any Issuer Free Writing Prospectus and any amendment or
supplement thereto by such Holder and the underwriters, if any, in connection
with the offering and sale of the Registrable Securities thereby) and such
other documents as such Participating Holder or underwriter may reasonably
request in order to facilitate the disposition of the Registrable Securities by
such Participating Holder or underwriter;

 

(vii)                           subject to the terms set forth in Sections 2(a)(i)(3)(A) and 2(c)(i)(3) hereof,
on or prior to the date on which the applicable Registration Statement is
declared effective; use its reasonable best efforts to (1) register or
qualify the Registrable Securities covered by such Registration Statement under
such other securities or “blue sky” laws of such jurisdictions in the United
States as any Participating Holder reasonably (in light of such Participating
Holder’s intended plan of distribution) requests, provided, that the Company
shall not be required to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required
by the Securities Act; and (2) cause such Registrable Securities to be
registered with or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations of the Company and
do any and all other acts and things that may be reasonably necessary or
advisable to enable such Participating Holder to consummate the disposition of
the Registrable Securities owned by such Participating Holder pursuant to such
Registration Statement;

 

12

 

(viii)                        make such representations and warranties to the Participating Holders and
the underwriters or agents, if any, in form, substance and scope as are
customarily made by issuers in secondary underwritten public offerings;

 

(ix)                                enter into such customary agreements (including underwriting and
indemnification agreements) and take such other actions as the Initiating
Holder or the managing underwriter, if any, reasonably requests in order to
expedite or facilitate the Registration and disposition of such Registrable
Securities;

 

(x)                                   in the case of an underwritten offering, use its reasonable best efforts
to obtain for delivery to the Participating Holders and the managing
underwriter, if any, an opinion or opinions from counsel for the Company dated
the effective date of the Registration Statement or, in the event of an
underwritten offering, the date of the closing under the underwriting
agreement, in form and substance as is customarily given to underwriters in an
underwritten public offering and reasonably satisfactory to a majority in
interest of the Participating Holders, addressed to the underwriters, if any,
and to the Participating Holders;

 

(xi)                                in the case of an underwritten offering, use its reasonable best efforts
to obtain for delivery to the Company and the managing underwriter, if any,
with copies to the Participating Holders (and addressed to the Participating
Holders if permitted by applicable accounting standards), a cold comfort letter
from the Company’s independent certified public accountants in form and
substance as is customarily given by independent certified public accountants
in an underwritten public offering and reasonably satisfactory to a majority in
interest of the Participating Holders, dated the date of execution of the
underwriting agreement and brought down to the closing under the underwriting
agreement;

 

(xii)                             cooperate with each Participating Holder and the underwriters, if any, of
such Registrable Securities and their respective counsel in connection with any
filings required to be made with FINRA;

 

(xiii)                          use its reasonable best efforts to cause all Registrable Securities
covered by the applicable Registration Statement to be listed or quoted on a
national securities exchange or trading system and each securities exchange and
trading system (if any) on which Ordinary Shares issued by the Company are then
listed;

 

(xiv)                         cooperate with the Participating Holders and the underwriters, if any, to
facilitate the timely preparation and delivery of certificates, with requisite
CUSIP numbers, representing Registrable Securities to be sold and not bearing
any restrictive legends; and

 

(xv)                            in the case of an underwritten offering, cause the senior executive
officers of the Company to participate in the customary “road show”
presentations that may be reasonably requested by the managing underwriter in
any such underwritten offering and otherwise to facilitate, cooperate with, and
participate in each proposed offering contemplated herein and customary selling
efforts related thereto.

 

13

 

(f)                                    Indemnification.

 

(i)                                     Indemnification by the Company.  With respect to each Registration which has
been effected pursuant to this Section 2, the Company agrees to indemnify
and hold harmless, to the fullest extent permitted by law, (1) each of the
Participating Holders and each of its officers, directors, limited or general
partners and members thereof, (2) each member, limited or general partner
of each such member, limited or general partner, (3) each of their
respective Affiliates, officers, directors, shareholders, employees, advisors,
and agents and each Person who controls (within the meaning of the Securities
Act or the Exchange Act) such Persons and each underwriter, if any, and each
Person who controls (within the meaning of the Securities Act or the Exchange
Act) any underwriter, against any and all claims, losses, damages, penalties,
judgments, suits, costs, liabilities and expenses (or actions in respect
thereof) (collectively, the “Losses”) arising out of or based on (A) any
untrue statement (or alleged untrue statement) of a material fact contained in
any Registration Statement (including any Prospectus or Issuer Free Writing
Prospectus) or any other document incident to any such Registration,
qualification or compliance (including any notification or the like), (B) any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading (in
the case of any Prospectus or Issuer Free Writing Prospectus, in light of the circumstances
under which they were made not misleading), or (C) any violation by the
Company of the Securities Act or the Exchange Act applicable to the Company and
relating to action or inaction required of the Company in connection with any
such Registration, qualification or compliance, and will reimburse each of the
Persons listed above, for any legal and any other expenses reasonably incurred
in connection with investigating and defending any such Losses, provided
that the indemnity agreement contained herein shall not apply to amounts paid
in settlement of any such Losses if such settlement is effected without the
consent of the Company, which consent shall not be unreasonably withheld or
delayed and the Company will not be liable in any such case to the extent that
any such Losses arise out of or are based on any untrue statement or omission
based upon written information furnished to the Company by any Participating
Holder or underwriter and stated to be specifically for use therein.

 

(ii)                                  Indemnification by the Participating Holders.  Each of the Participating
Holders agrees (severally and not jointly) to indemnify and hold harmless, to
the fullest extent permitted by law, the Company, each of its directors and
officers and each underwriter, if any, of the Company’s securities covered by
such a Registration Statement, each Person who controls the Company (within the
meaning of the Securities Act or the Exchange Act) or such underwriter, any
other Participating Holder and each of their respective officers, directors,
partners and members, and each Person controlling such Participating Holder
(within the meaning of the Securities Act or the Exchange Act) against any and
all Losses arising out of or based on (A) any untrue statement (or alleged
untrue statement) of a material fact contained in any Registration Statement
(including any Prospectus or Issuer Free Writing Prospectus) or any other
document incident to any such Registration, qualification or compliance
(including any notification or the like) 

 

14

 

made by such
Participating Holder in writing or (B) any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary to
make the statements by such Participating Holder therein not misleading (in the
case of any Prospectus or Issuer Free Writing Prospectus, in light of the
circumstances under which they were made not misleading) and will reimburse the
Persons listed above for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such Losses, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in reliance upon and in conformity
with written information furnished to the Company by such Participating Holder
and stated to be specifically for use therein; provided, however,
that the indemnity agreement contained herein shall not apply to amounts paid
in settlement of any such Losses if such settlement is effected without the
consent of the Participating Holder, which consent shall not be unreasonably
withheld or delayed and the obligations of each of the Participating Holders
hereunder shall be limited to an amount equal to the net proceeds such
Participating Holder receives in such Registration.

 

(iii)                               Conduct of the Indemnification Proceedings.  Each party entitled to indemnification under
this Section 2(f) (the “Indemnified Party”) shall give notice
to the party required to provide indemnification (the “Indemnifying Party”)
promptly after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom;
provided that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not unreasonably be withheld) and the
Indemnified Party may participate in such defense at such party’s expense
(unless the Indemnified Party shall have reasonably concluded that there may be
a conflict of interest between the Indemnifying Party and the Indemnified Party
in such action, in which case the fees and expenses of counsel shall be at the
expense of the Indemnifying Party), and provided further that the failure of
any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 2(f) unless
the Indemnifying Party is materially prejudiced thereby.  No Indemnifying Party, in the defense of any
such claim or litigation shall, except with the prior written consent of each
Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.  Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.

 

(iv)                              If the indemnification provided for in this Section 2(f) is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any Losses, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party hereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in 

 

15

 

connection with the
statements or omissions (or alleged statements or omissions) which resulted in
such Losses, as well as any other relevant equitable considerations.  The relative fault of the Indemnifying Party
and of the Indemnified Party shall be determined by reference to, among other
things, whether the untrue (or alleged untrue) statement of a material fact or
the omission (or alleged omission) to state a material fact relates to
information supplied by the Indemnifying Party or by the Indemnified Party and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission; provided, however,
that the obligations of each of the Participating Holders hereunder shall be
several and not joint and shall be limited to an amount equal to the net
proceeds such Participating Holder receives in such Registration.

 

(v)                                 Subject to the limitations on the Holders’ liability set forth in Section 2(f)(ii) and
2(f)(iv), the remedies provided for in this Section 2(f) are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any Indemnified Party at law or equity.  The remedies shall remain in full force and
effect regardless of any investigation made by or on behalf of such Holder or
any Indemnified Party and survive the transfer of such securities by such
Holder.

 

(g)                                 Participating Holders.

 

(i)                                     Each of the Participating Holders shall furnish to the Company such
information regarding such Participating Holder and the distribution proposed
by such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any Registration, qualification or
compliance referred to in this Section 2.

 

(ii)                                  In the event that, either immediately prior to or subsequent to the
effectiveness of any Registration Statement, any Participating Holder shall
distribute Registrable Securities to its partners or members, such
Participating Holder shall so advise the Company and provide such information
as shall be necessary to permit an amendment to such Registration Statement to
provide information with respect to such partners or members, as selling
security holders.  Promptly following
receipt of such information, the Company shall file an appropriate amendment to
such Registration Statement reflecting the information so provided.  Any incremental expense to the Company
resulting from such amendment shall be borne by such Participating Holder.

 

(iii)                               Each Holder agrees that at the time that such Holder is a Participating
Holder, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 2(e)(iv), such Holder shall
forthwith discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until such Holder’s
receipt of the copies of a supplemented or amended Prospectus or Issuer Free
Writing Prospectus or until such Holder is advised in writing by the Company
that the use of the Prospectus or Issuer Free Writing Prospectus, as the case
may be, may be resumed, and, if so directed by the Company, such Holder shall
deliver to the Company all copies, other than any permanent file copies then in
such 

 

16

 

Holder’s possession, of
the most recent Prospectus or any Issuer Free Writing Prospectus covering such
Registrable Securities at the time of receipt of such notice.  If the Company shall give such notice, the
Company shall extend the period during which such Registration Statement shall
be maintained effective by the number of days during the period from and
including the date of the giving of notice pursuant to Section 2(e)(iv) to
the date when the Company shall make available to such Holder a copy of the
supplement or amended Prospectus or Issuer Free Writing Prospectus or is
advised in writing that the use of the Prospectus or Issuer Free Writing
Prospectus may be resumed.

 

(h)                                 Rule 144, 144A and Regulation S.

 

With a view to making
available the benefits of certain rules and regulations of the Commission
which may permit the sale of restricted securities to the public without
Registration, the Company agrees to:

 

(i)                                     use its reasonable best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act at any time after it has become subject to
such reporting requirements (or, if following the Initial Public Offering the
Company is not required to file such reports, it will, upon the reasonable
request of the Holders holding a majority of the then outstanding Registrable
Securities, make publicly available such necessary information for so long as
necessary to permit sales pursuant to Rules 144, 144A or Regulation S
under the Securities Act);

 

(ii)                                  take such further action as the Holders holding a majority of the then
outstanding Registrable Securities may reasonably request, to the extent
required from time to time to enable the Holders to sell Registrable Securities
without Registration under the Securities Act within the limitation of the
exemptions provided by (1) Rules 144, 144A or Regulation S under the
Securities Act, as such Rules may be amended from time to time, or (2) any
similar rule or regulation hereafter adopted by the Commission; and

 

(iii)                               so long as a Holder owns any Registrable Securities, furnish to such
Holder upon request, a written statement by the Company as to its compliance
with the requirements of Rule 144, the Securities Act and the Exchange Act
and, if not, the specifics thereof, copies of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed
as such Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing the Holder to sell any such securities
without Registration.

 

(i)                                     Clear Market.  With respect to any underwritten offerings of
Registrable Securities by Warburg Pincus, Vertical or the Tornier Entities, the
Company agrees not to effect (other than pursuant to such registration or
pursuant to a “Special Registration” (as defined below)) any public sale or
distribution, or to file any Registration Statement (other than such
registration or a Special Registration) covering, in the case of an
underwritten offering of Ordinary Shares, any of its equity securities or any
securities convertible into or exchangeable or 

 

17

 

exercisable for such
securities, during the period not to exceed ten (10) days prior and sixty
(60) days following the effective date of such offering or such longer period
up to ninety (90) days as may be requested by the managing underwriter for such
underwritten offering.  “Special Registration”
means the registration of (A) equity securities and/or options or other
rights in respect thereof solely registered on Form S-4 or Form S-8
(or successor form) or (B) shares of equity securities and/or options or
other rights in respect thereof to be offered to directors, members of
management, employees, consultants, customers, lenders or vendors of the
Company or its subsidiaries or in connection with dividend reinvestment plans.

 

(j)                                     Termination.  The registration rights set forth in this Section 2
shall not be available (i) for those Holders (including the Management
Investors) that beneficially own less than 5% of the Company’s outstanding
securities if, in the written opinion of counsel to the Company, all of the
Registrable Securities then owned by such Holder could be sold in any ninety
(90)-day period pursuant to Rule 144 and (ii) as to any Holder, if
all of the Registrable Securities held by such Holder have been sold in a
Registration pursuant to the Securities Act or an exemption therefrom.  This Agreement shall terminate upon a
liquidation or dissolution of the Company. 
Notwithstanding the foregoing, the indemnification provisions in Section 2(f) and
Sections 3 and 4 shall survive any termination of this Agreement.

 

SECTION 3.  INTERPRETATION OF THIS AGREEMENT

 

(a)                                  Directly or Indirectly.  Where any provision in this Agreement refers
to action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.

 

SECTION 4.  MISCELLANEOUS

 

(a)                                  Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such State without regard to
conflicts of law principles.

 

(b)                                 Section Headings.  The headings of the sections and subsections
of this Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.

 

(c)                                  Notices.

 

(i)                                     All communications under this Agreement shall be in writing and shall be
delivered by hand or facsimile or mailed by overnight courier or by registered
or certified mail, postage prepaid:

 

(1)                                  if to the Company, to Vice President, Global Business and Corporate
Development, 7701 France Avenue South, Suite 600, Edina, MN 55435, with a
copy (which shall not constitute notice) to: 
Faegre & Benson LLP, 2200 Wells Fargo Center, 90 South Seventh
Street, Minneapolis, MN 55402-3901, marked for attention of Jonathan Zimmerman,
or at such other address as it may have furnished in writing to the Holders;
and

 

18

 

(2)                                  if to the Holders, at the address or facsimile number listed on Schedule
I hereto, or at such other address or facsimile number as may have been
furnished the Company in writing.

 

(ii)                                  Any notice so addressed shall be deemed to be given: if delivered by hand
or facsimile, on the date of such delivery if a business day and delivered
during regular business hours, otherwise the first business day thereafter; if
mailed by overnight courier, on the date of delivery; and if mailed by
registered or certified mail, on the third business day after the date of such
mailing.

 

(d)                                 Reproduction of Documents.  This Agreement and all documents relating
thereto, including, without limitation, any consents, waivers and modifications
which may hereafter be executed may be reproduced by the Holders by any
photographic, photostatic, microfilm, microcard, miniature photographic or
other similar process and the Holders may destroy any original document so
reproduced.  The parties hereto agree and
stipulate that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not
the original is in existence and whether or not such reproduction was made by
the Holders in the regular course of business) and that any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.

 

(e)                                  Successors and Assigns.  The registration rights and obligations set
forth in Section 2 may not be assigned, in whole or in part, without the
written consent of (i) the Company and (ii) the Holders holding a
majority of the then-outstanding Registrable Securities; provided, however,
that notwithstanding the foregoing, the registration rights and obligations set
forth in Section 2 may be assigned, in whole or in part, by any
Institutional Investor to any transferee of Registrable Securities that holds
(after giving effect to such transfer) in excess of one percent (1%) of the
then-outstanding Registrable Securities, provided such transferee agrees to be
bound by all of the terms and conditions applicable to Holders (“Permitted
Assignees”).  Any purported assignment
in violation of this provision shall be void ab initio and of no force or
effect.  Subject to the foregoing, this
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of each of the parties.

 

(f)                                    Entire Agreement; Amendment and Waiver.  This Agreement constitutes the entire
understandings of the parties hereto relating to the subject matter hereof and
supersede all prior agreements or understandings with respect to the subject
matter hereof among such parties.  This
Agreement may be amended, and the observance of any term of this Agreement may
be waived, with (and only with) the written consent of the Company and the
Holders holding a majority of the then-outstanding Registrable Securities.  Any amendment or waiver effected in
accordance with this Section 4(f) shall be binding upon each Holder
and all of their Registrable Securities (whether or not such Holder consented
to any such amendment or waiver (unless required herein)).

 

(g)                                 Injunctive Relief.  It is hereby agreed and acknowledged that it
will be impossible to measure in money the damage that would be suffered if the
parties fail to comply with any of the obligations herein imposed on them and
that in the event of any such failure, an 

 

19

 

aggrieved Person will be
irreparably damaged and will not have an adequate remedy at law.  Any such Person shall, therefore, be entitled
(in addition to any other remedy to which it may be entitled in law or in equity)
to injunctive relief, including specific performance, to enforce such
obligations, and if any action should be brought in equity to enforce any of
the provisions of this Agreement, none of the parties hereto shall raise the
defense that there is an adequate remedy at law.

 

(h)                                 WAIVER OF JURY TRIAL.  EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY ACTIONS, SUITS, DEMAND LETTERS, JUDICIAL, ADMINISTRATIVE OR
REGULATORY PROCEEDINGS, OR HEARINGS, NOTICES OF VIOLATION OR INVESTIGATIONS
ARISING OUT OF OR RELATING TO THIS AGREEMENT. 
EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) SUCH
PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER AND (B) SUCH PARTY
MAKES THIS WAIVER VOLUNTARILY.

 

(i)                                     No Inconsistent Agreements.  The Company is not currently a party to any
agreement which is, or could be inconsistent with, the rights granted to the
Holders by this Agreement.

 

(j)                                     Severability.  In the event that any part or parts of this
Agreement shall be held illegal or unenforceable by any court or administrative
body of competent jurisdiction, such determination shall not affect the
remaining provisions of this Agreement which shall remain in full force and
effect.

 

(k)                                  Counterparts.  This Agreement may be executed in two or more
counterparts (including by email or facsimile signature), each of which shall
be deemed an original and all of which together shall be considered one and the
same agreement.

 

[Remainder of Page Intentionally
Left Blank]

 

20

 

IN WITNESS WHEREOF, the
undersigned have executed this Agreement as of the date first set forth above.

 

	
   

  	
  TORNIER B.V.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ G.F.X.M. Nieuwenhuizen

  
	
   

  	
   

  	
  Name: Mr. G.F.X.M. Nieuwenhuizen

  
	
   

  	
   

  	
  Title: Managing Director A

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ R. Arendsen

  
	
   

  	
   

  	
  Name: R. Arendsen

  
	
   

  	
   

  	
  Title: Managing Director B

  

 

 

	
  TMG HOLDINGS COOPERATIEF U.A.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Timothy J. Curt

  	
   

  
	
  Name: Timothy J. Curt

  	
   

  
	
  Title: Authorized Signatory, Director A

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ R. Arendsen

  	
   

  
	
  Name: R. Arendsen

  	
   

  
	
  Title: Authorized Signatory, Director B

  	
   

  

 

 

VERTICAL FUND I, L.P.

 

By:  The Vertical Group, L.P.,
its General Partner

By:  The Vertical Group GPHC,
LLC, its General Partner

 

 

	
  By:

  	
  /s/ John E. Runnells

  	
   

  
	
  Name:

  	
   John E. Runnells

  	
   

  
	
  Title:

  	
  Authorized Signatory

  	
   

  

 

 

VERTICAL FUND II, L.P.

 

By:  The Vertical Group, L.P.,
its General Partner

By:  The Vertical Group GPHC,
LLC, its General Partner

 

 

	
  By:

  	
  /s/  John E. Runnells

  	
   

  
	
  Name:

  	
  John E. Runnells

  	
   

  
	
  Title:

  	
  Authorized Signatory

  	
   

  

 

 

	
  KCH STOCKHOLM AB

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Carl Henry Salomonsson

  	
   

  
	
  Name:

  	
  Carl Henry Salomonsson

  	
   

  
	
  Title:

  	
  Chairman of the Board

  	
   

  
	
   

  	
   

  
	
  PHIL INVEST APS

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Niels Ahlmark

  	
   

  
	
  Name:

  	
  Niels Ahlmark

  	
   

  
	
  Title:

  	
  Manager

  	
   

  

 

 

	
  DOUGLAS W. KOHRS

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Douglas W. Kohrs

  	
   

  

 

 

Schedule I

 

 

	
  Investor Name and Address

  	
   

  
	
   

  	
   

  
	
  TMG Holdings Cooperatief U.A.

  	
   

  
	
  Fred. Roeskestraat 123

  	
   

  
	
  1076 EE Amsterdam

  	
   

  
	
  The Netherlands

  	
   

  
	
   

  	
   

  
	
  c/o Warburg Pincus Private Equity IX, L.P.

  	
   

  
	
  450 Lexington Avenue

  	
   

  
	
  New York, NY 10017

  	
   

  
	
  Facsimile: (646) 824-9312

  	
   

  
	
  Attention: Sean D. Carney

  	
   

  
	
   

  	
   

  
	
  Vertical Fund I, L.P.

  	
   

  
	
  c/o
  The Vertical Group

  	
   

  
	
  25
  DeForest Ave.

  	
   

  
	
  Summit,
  NJ 07901

  	
   

  
	
  Facsimile: (908) 273-9434

  	
   

  
	
  Attention: Richard B. Emmitt

  	
   

  
	
   

  	
   

  
	
  Vertical Fund II, L.P.

  	
   

  
	
  c/o
  The Vertical Group

  	
   

  
	
  25
  DeForest Ave.

  	
   

  
	
  Summit,
  NJ 07901

  	
   

  
	
  Facsimile: (908) 273-9434

  	
   

  
	
  Attention: Richard B. Emmitt

  	
   

  
	
   

  	
   

  
	
  KCH Stockholm AB

  	
   

  
	
  Mr. Carl-Henry
  Salomonsson

  	
   

  
	
  Hamilton
  Advokatbyra Karlstad AB

  	
   

  
	
  Kungsgatan
  2 A, Box 606

  	
   

  
	
  651
  13 Karlstad, Sweden

  	
   

  
	
   

  	
   

  
	
  Phil Invest ApS

  	
   

  
	
  Vester
  Volgade 90

  	
   

  
	
  DK-1552
  Copenhagen

  	
   

  
	
  Denmark

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 

Schedule II

 

	
  Management Investors Name and Address

  	
   

  
	
   

  	
   

  
	
  Douglas W. Kohrs

  	
   

  
	
  7444
  Shannon Drive

  	
   

  
	
  Edina,
  MN 55439

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