Document:

FE 8-K Dated 05/08/2012 EX-10.3

AMENDMENT

Dated as of May 8, 2012

To the Lenders party to the Credit Agreement 
  and the Administrative Agent referred to below

Ladies and Gentlemen:

Reference is made to the Credit Agreement, dated as of June 17, 2011 (as amended by the Amendment, dated as of October 3, 2011, the “Credit Agreement”), among FirstEnergy Solutions Corp. and Allegheny Energy Supply Company, LLC, as the Borrowers, JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders thereunder, the fronting banks party thereto, the swing line lenders party thereto and the Lenders party thereto.  Capitalized terms used herein and not otherwise defined herein have the meanings given such terms in the Credit Agreement.
Section 1.  Credit Agreement Amendment.  The parties agree that, subject to the satisfaction of the conditions precedent set forth in Section 2 below, the Credit Agreement is amended as follows:
(a)The following new term is inserted in Section 1.01 in appropriate alphabetical order:
“Amendment Effective Date” means May 8, 2012.
(b)The term “Allegheny FERC Order” set forth in Section 1.01 is amended and restated in its entirety to read as follows:
“Allegheny FERC Order” means the Order Accepting for Filing Proposed Market-Based Rates issued by the FERC on September 30, 1999, in Docket No. ER99-4020-000, as amended, extended, supplemented, replaced or renewed from time to time.

(c)The term “Applicable Margin” set forth in Section 1.01 is amended and restated in its entirety to read as follows:
“‘Applicable Margin’ means, (i) prior to the Amendment Effective Date, for any Alternate Base Rate Advance or any Eurodollar Rate Advance made to any Borrower, the interest rate per annum set forth in the relevant row of the table immediately below, determined by reference to the Reference Ratings for such Borrower from time to time in effect:
	
							
	BASIS FOR PRICING
	LEVEL 1
Reference Ratings at least A- by S&P or A3 by Moody’s.
	LEVEL 2
Reference Ratings lower than Level 1 but at least BBB+ by S&P or Baa1 by Moody’s.
	LEVEL 3
Reference Ratings lower than Level 2 but at least BBB by S&P or Baa2 by Moody’s.
	LEVEL 4
Reference Ratings lower than Level 3 but at least BBB- by S&P or Baa3 by Moody’s.
	LEVEL 5
Reference Ratings lower than Level 4 but at least BB+ by S&P or Ba1 by Moody’s.
	LEVEL 6
Reference Ratings lower than BB+ by S&P and Ba1 by Moody’s, or no Reference Ratings.

	Applicable Margin for Eurodollar Rate Advances
	1.25%
	1.5%
	1.75%
	2%
	2.25%
	2.5%

	Applicable Margin for Alternate Base Rate Advances
	0.25%
	0.5%
	0.75%
	1%
	1.25%
	1.5%

and (ii) from and after the Amendment Effective Date, for any Alternate Base Rate Advance or any Eurodollar Rate Advance made to any Borrower, the interest rate per annum set forth in the relevant row of the table immediately below, determined by reference to the Reference Ratings for such Borrower from time to time in effect:
	
							
	BASIS FOR PRICING
	LEVEL 1
Reference Ratings at least A- by S&P or A3 by Moody’s.
	LEVEL 2
Reference Ratings lower than Level 1 but at least BBB+ by S&P or Baa1 by Moody’s.
	LEVEL 3
Reference Ratings lower than Level 2 but at least BBB by S&P or Baa2 by Moody’s.
	LEVEL 4
Reference Ratings lower than Level 3 but at least BBB- by S&P or Baa3 by Moody’s.
	LEVEL 5
Reference Ratings lower than Level 4 but at least BB+ by S&P or Ba1 by Moody’s.
	LEVEL 6
Reference Ratings lower than BB+ by S&P and Ba1 by Moody’s, or no Reference Ratings.

	Applicable Margin for Eurodollar Rate Advances
	1.125%
	1.25%
	1.5%
	1.75%
	2%
	2.5%

	Applicable Margin for Alternate Base Rate Advances
	0.125%
	0.25%
	0.5%
	0.75%
	1%
	1.5%

For purposes of the foregoing, (i) if there is a difference of one level in Reference Ratings of S&P and Moody’s and the higher of such Reference Ratings falls in Level 1, Level 2, Level 3, Level 4 or Level 5, then the higher Reference Rating will be used to determine the pricing level and (ii) if there is a difference of more than one level in Reference Ratings of S&P and Moody’s, the Reference Rating that is one level above the lower of such Reference Ratings will be used to determine the pricing level, unless the lower of such Reference Ratings falls in Level 6, in which case the lower of such Reference Ratings will be used to determine the pricing level.  If there exists only one Reference Rating, such Reference Rating will be used to determine the pricing level.”
(d)The term “Borrower Sublimit” set forth in Section 1.01 is amended by adding the text “, in each case as modified from time to time pursuant to Section 2.06” after the text “$1,000,000,000”.
(e)The term “Disclosure Documents” set forth in Section 1.01 is amended and restated in its entirety to read as follows:
“‘Disclosure Documents’ means (i) FE’s Annual Report on Form 10-K for the year ended December 31, 2011, Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 and Current Reports on Form 8-K filed in 2012 prior to May 8, 2012 and (ii) with respect to any Borrower that is required to file reports with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, such Borrower’s Annual Report on Form 10-K for the year ended December 31, 2011, Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 and Current Reports on Form 8-K filed in 2012 prior to May 8, 2012 and (iii) with respect to any Borrower that is not required to file reports with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, (A) such Borrower’s consolidated balance sheets as of December 31, 2011, and the related consolidated statements of income, retained earnings and cash flows for the fiscal year then ended, certified by PricewaterhouseCoopers LLP, with, in each case, any accompanying notes, all prepared in accordance with GAAP, and (B) the matters described in the portion of Schedule VI hereto applicable to such Borrower as indicated thereon.”
(f)The term “Fee Letters” set forth in Section 1.01 is amended and restated in its entirety to read as follows:
“‘Fee Letters’ means (i) the letter agreement, dated as of April 27, 2011, among the Borrowers and JPMCB, (ii) the letter agreement, dated as of April 27, 2011, among the Borrowers, JPMCB, J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of America, N.A., Barclays Bank PLC, The Royal Bank of Scotland plc and RBS Securities Inc., (iii) the letter agreement, dated as of May 2, 2011, among the Borrowers, Citigroup Global Markets Inc., KeyBank National Association, The Bank of Nova Scotia, Union Bank, N.A., The Bank of Tokyo-Mitsubishi UFJ, Ltd., Wells Fargo Bank, National Association and Wells Fargo Securities, LLC, and (iv) the letter agreement, dated as of April 10, 2012  (the “2012 Amendment Fee Letter”), among the Borrowers, FE, certain Affiliates of FE, RBS, J.P. Morgan Securities LLC, JPMorgan Chase Bank, N.A. and RBS Securities Inc., in each case, as amended, modified or supplemented from time to time.”
(g)The term “Fraction” set forth in Section 1.01 is amended and restated in its entirety to read as follows:
“‘Fraction’ means, for any Borrower at any time, a fraction, the numerator of which shall be the Borrower Sublimit of such Borrower at such time, and the denominator of which shall be (i) for purposes of Section 2.06(c), the amount of the aggregate Commitments at such time and (ii) for all other purposes, the sum of the Borrower Sublimits of all Borrowers at such time.”
(h)The term “Termination Date” set forth in Section 1.01 is amended and restated in its entirety to read as follows:
“‘Termination Date’ means May 8, 2017, subject, for certain Lenders, to the extension described in Section 2.19 hereof, or, in any case, the earlier date of termination in whole of the Commitments pursuant to Section 2.06 or Section 6.01 hereof.”
(i)Section 2.05(a) is amended and restated in its entirety to read as follows:
“(a)    Each Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee on the amount of such Lender’s Percentage of the unused portion of such Borrower’s Borrower Sublimit from the date hereof in the case of each Bank and from the effective date specified in the Assignment and Assumption pursuant to which it became a Lender in the case of each other Lender until the Termination Date applicable to such Lender, payable on the last day of each March, June, September and December during such period, and on such Termination Date, (i) for the period from June 17, 2011 to but including the date that is one day prior to the Amendment Effective Date, at the rate per annum set forth below determined by reference to the Reference Ratings of such Borrower from time to time in effect:
	
							
	BASIS FOR PRICING
	LEVEL 1
Reference Ratings at least A- by S&P or A3 by Moody’s.
	LEVEL 2
Reference Ratings lower than Level 1 but at least BBB+ by S&P or Baa1 by Moody’s.
	LEVEL 3
Reference Ratings lower than Level 2 but at least BBB by S&P or Baa2 by Moody’s.
	LEVEL 4
Reference Ratings lower than Level 3 but at least BBB- by S&P or Baa3 by Moody’s.
	LEVEL 5
Reference Ratings lower than Level 4 but at least BB+ by S&P or Ba1 by Moody’s.
	LEVEL 6
Reference Ratings lower than BB+ by S&P and Ba1 by Moody’s, or no Reference Ratings.

	Commitment Fee
	0.15%
	0.2%
	0.25%
	0.3%
	0.4%
	0.55%

and (ii) for the period from the Amendment Effective Date to such Termination Date, at the rate per annum set forth below determined by reference to the Reference Ratings of such Borrower from time to time in effect:

	
							
	BASIS FOR PRICING
	LEVEL 1
Reference Ratings at least A- by S&P or A3 by Moody’s.
	LEVEL 2
Reference Ratings lower than Level 1 but at least BBB+ by S&P or Baa1 by Moody’s.
	LEVEL 3
Reference Ratings lower than Level 2 but at least BBB by S&P or Baa2 by Moody’s.
	LEVEL 4
Reference Ratings lower than Level 3 but at least BBB- by S&P or Baa3 by Moody’s.
	LEVEL 5
Reference Ratings lower than Level 4 but at least BB+ by S&P or Ba1 by Moody’s.
	LEVEL 6
Reference Ratings lower than BB+ by S&P and Ba1 by Moody’s, or no Reference Ratings.

	Commitment Fee
	0.125%
	0.175%
	0.225%
	0.275%
	0.35%
	0.5%

For purposes of the foregoing, if (i) there is a difference of one level in Reference Ratings of S&P and Moody’s and the higher of such Reference Ratings falls in Level 1, Level 2, Level 3, Level 4 or Level 5, then the higher Reference Rating will be used to determine the commitment fee, and (ii) there is a difference of more than one level in Reference Ratings of S&P and Moody’s, the Reference Rating that is one level above the lower of such Reference Ratings will be used to determine the commitment fee, unless the lower of such Reference Ratings falls in Level 6, in which case the lower of such Reference Ratings will be used to determine the commitment fee.  If there exists only one Reference Rating, such Reference Rating will be used to determine the commitment fee.”
(j)Section 2.19(a) is amended by replacing the text “any anniversary of the date of this Agreement (the “Anniversary Date”) but no later than 30 days prior to such anniversary of the Closing Date” with the text “any anniversary of the Amendment Effective Date (the “Anniversary Date”) but no later than 30 days prior to such Anniversary Date”.
(k)The last sentence in Section 4.01(g) is amended and restated in its entirety to read as follows:
“Except as disclosed in such Borrower’s Disclosure Documents, there has been no change, event or occurrence since December 31, 2011 that has had a Material Adverse Effect with respect to such Borrower.”
(l)Section 8.01 is amended by replacing the first proviso appearing therein beginning with the text “; provided, however, that no amendment” and ending with the text “or (f) amend this Section 8.01 or the definition of ‘Majority Lenders’;” with the following text:
“; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by all the Lenders affected thereby (other than, in the case of clause (a), (f) or (g) below, any Defaulting Lender), do any of the following: (a) waive any of the conditions specified in Section 3.01 or 3.02, (b) increase the Commitments of the Lenders or subject the Lenders to any additional obligations, (c) change any provision hereof in a manner that would alter the pro rata sharing of payments or the pro rata reduction of Commitments among the Lenders, (d) reduce the principal of, or interest (or rate of interest) on, the Advances or any fees or other amounts payable hereunder, (e) postpone any date fixed for any payment of principal of, or interest on, the Advances or any fees or other amounts payable hereunder, (f) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Advances, the aggregate undrawn amount of outstanding Letters of Credit or the number of Lenders, that shall be required for the Lenders or any of them to take any action hereunder or (g) amend this Section 8.01 or the definition of ‘Majority Lenders’;”.
(m)Section 8.08(d) is amended by replacing the text “clauses (a) through (f) of Section 8.01” appearing in the second paragraph with the text “clauses (a) through (g) of Section 8.01”.
Section 2.   Conditions to Effectiveness of Credit Agreement Amendment.  Section 1 of this amendment (the “Amendment”) shall be effective as of the date hereof when and if (such date being the “Amendment Date”) the following conditions are satisfied:
(a)The Administrative Agent shall have received the following, each dated the same date (except for the financial statements referred to in clause (iv) below), in form and substance satisfactory to the Administrative Agent and with one copy for each Swing Line Lender, each Fronting Bank and each Lender:
(i)    Counterparts of this Amendment, duly executed by each of the Borrowers, the Swing Line Lenders, the Fronting Banks and the Lenders;
(ii)    Certified copies of the resolutions of the Board of Directors of each Borrower approving this Amendment, the Credit Agreement, as amended by this Amendment, and the other Loan Documents to which it is, or is to be, a party and of all documents evidencing any other necessary corporate action with respect to this Amendment, the Credit Agreement, as amended by this Amendment, and such Loan Documents;
(iii)    A certificate of the Secretary or an Assistant Secretary of each Borrower certifying (A) the names and true signatures of the officers of such Borrower authorized to sign this Amendment and each Loan Document to which such Borrower is, or is to become, a party and the other documents to be delivered hereunder; (B) that attached thereto are true and correct copies of the Organizational Documents of such Borrower, in each case as in effect on such date, and (C) that attached thereto are true and correct copies of all governmental and regulatory authorizations and approvals (including such Borrower’s Approval) required for the due execution, delivery and performance by such Borrower of this Amendment, the Credit Agreement, as amended by this Amendment, and each other Loan Document to which such Borrower is, or is to become, a party;
(iv)    Copies of all the Disclosure Documents (it being agreed that those Disclosure Documents publicly available on the SEC’s EDGAR Database or on FE’s website no later than the Business Day immediately preceding the Amendment Date will be deemed to have been delivered under this clause (iv));
(v)    An opinion of Wendy E. Stark, Associate General Counsel of FE, counsel for the Borrowers, substantially in the form of Exhibit A hereto;
(vi)    An opinion of Akin Gump Strauss Hauer & Feld LLP, special counsel for the Borrowers, substantially in the form of Exhibit B hereto;
(vii)    A favorable opinion of King & Spalding LLP, special New York counsel for the Administrative Agent, substantially in the form of Exhibit C hereto; and
(viii)    Such other certifications, opinions, financial or other information, approvals and documents as the Administrative Agent, any Fronting Bank, any Swing Line Lender or any other Lender may reasonably request, all in form and substance satisfactory to the Administrative Agent, such Fronting Bank, such Swing Line Lender or such other Lender (as the case may be).
(b)FE shall have paid all of the fees payable in accordance with the 2012 Amendment Fee Letter.
(c)Each of the representations and warranties in Section 3 of this Amendment shall be true and correct.
Section 3.  Representations and Warranties.  Each Borrower represents and warrants that (i) the representations and warranties of such Borrower contained in Section 4.01 of the Credit Agreement, as amended hereby (with each reference therein to “this Agreement”, “hereunder”, “Loan Document” and words of like import referring to the Credit Agreement being deemed to be a reference to this Amendment and the Credit Agreement, as amended hereby), are true and correct on and as of the date hereof as though made on and as of such date (other than, as to any such representation or warranty that by its terms refers to a specific date other than such date, in which case, such representation and warranty shall be true and correct as of such specific date); and (ii) no event has occurred and is continuing, or would result from the execution, delivery or performance by such Borrower of this Amendment or the performance by such Borrower of the Credit Agreement, as amended hereby, that constitutes an Event of Default or an Unmatured Default with respect to such Borrower.
Section 4.  Effect on the Loan Documents.  The execution, delivery and effectiveness of this Amendment shall not, except as expressly set forth herein, operate as a waiver of any right, power or remedy of any Lender, Swing Line Lender or Fronting Bank or the Administrative Agent under the Credit Agreement or any other Loan Document, or constitute a waiver of any provision of the Credit Agreement or any other Loan Document.  Except as expressly set forth herein, each of the Credit Agreement and the other Loan Documents is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed.  This Amendment shall constitute a Loan Document and shall be binding on the parties hereto and their respective successors and permitted assigns under the Credit Agreement.  Upon and after the execution of this Amendment by each of the parties hereto, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as amended hereby.
Section 5.    Costs, Expenses and Taxes.  Each Borrower agrees to pay on demand all reasonable out-of-pocket costs and expenses incurred by the Administrative Agent, each Fronting Bank and each Swing Line Lender in connection with the preparation, execution, delivery and syndication administration of this Amendment and the other documents to be delivered hereunder, including, without limitation, the reasonable fees and out‐of‐pocket expenses of counsel for the Administrative Agent, the Fronting Banks and the Swing Line Lenders with respect thereto and with respect to advising the Administrative Agent, the Fronting Banks and each Swing Line Lender as to their rights and responsibilities under this Amendment.  Each Borrower further agrees to pay on demand all reasonable out-of-pocket costs and expenses, if any (including, without limitation, reasonable counsel fees and expenses of counsel), incurred by the Administrative Agent, the Fronting Banks, the Swing Line Lenders and the Lenders in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Amendment and the other documents to be delivered hereunder, including, without limitation, counsel fees and expenses in connection with the enforcement of rights under this Section.
Section 6.  Counterparts.  This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
Section 7.  Governing Law.  This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.
If you agree to the foregoing, please evidence such agreement by (i) executing and returning one counterpart of this Amendment by facsimile or e-mail to Meredith Grizzle (fax no. 212-556-2222; e-mail mgrizzle@kslaw.com) and (ii) executing and returning five original counterparts to this Amendment by overnight mail to King & Spalding LLP, 1185 Avenue of the Americas, New York, New York 10036, Attention: Meredith Grizzle.
[Remainder of page intentionally left blank.]

Very truly yours,

FIRSTENERGY SOLUTIONS CORP.

By /s/ Steven R. Staub        
Steven R. Staub
Assistant Treasurer

ALLEGHENY ENERGY SUPPLY COMPANY, LLC

By /s/ Steven R. Staub        
Steven R. Staub
Assistant Treasurer

The undersigned hereby agree to the foregoing:

JPMORGAN CHASE BANK, N.A., as Administrative Agent, as a Lender, as a Fronting Bank and as a Swing Line Lender

By /s/ Peter Christensen    
Name:  Peter Christensen
Title:    Vice President

BANK OF AMERICA, N.A., as a Lender, as a Fronting Bank and as a Swing Line Lender

By /s/ Michael Mason        
Name:  Michael Mason
Title:    Director

THE ROYAL BANK OF SCOTLAND PLC, as a Lender and as a Fronting Bank

By /s/ Andrew N. Taylor    
Name:  Andrew N. Taylor
Title:    Vice President

BARCLAYS BANK PLC, as a Lender 

By /s/ Alicia Borys    
Name:  Alicia Borys
Title:    Vice President
CITIBANK, N.A., as a Lender and as a Fronting Bank 

By /s/ Scott McMutry    
Name:  Scott McMutry
Title:    Vice President
KEYBANK NATIONAL ASSOCIATION, as a Lender and as a Fronting Bank

By /s/ Sherrie I. Manson    
Name:  Sherrie I. Mason
Title:    Senior Vice President
THE BANK OF NOVA SCOTIA, as a Lender and as a Fronting Bank

By /s/ Thane Rattew    
Name:  Thane Rattew
Title:    Execution Head
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as a Lender and as a Fronting bank

By /s/ Mary Ceseo    
Name:  Mary Ceseo
Title:    Vice President
UNION BANK, N.A, as a Lender 

By /s/ Jeff Fesenmaier    
Name:  Jeff Fesenmaier
Title:    Vice President
WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender and as a Fronting Bank

By /s/ Allison Newman    
Name:  Allison Newman
Title:    Director
MORGAN STANLEY BANK, N.A., as a Lender 

By /s/ Michael King        
Name:  Michael King
Title:    Authorized Signatory
BNP PARIBAS, as a Lender 

By /s/ Francis J. Delaney    
Name:  Francis J. Delaney
Title:    Managing Director

By /s/ Pasquale A. Perraglia IV    
Name:  Pasquale A. Perraglia IV
Title:    Vice President

CREDIT SUISSE AG, as a Lender 

By /s/ Doreen Barr    
Name:  Doreen Barr
Title:    Director

By /s/ Alex Verdone    
Name:  Alex Verdone
Title:    Associate

GOLDMAN SACHS BANK USA, as a Lender 

By /s/ Mark Walton    
Name:  Mark Walton
Title:    Authorized Signatory
ROYAL BANK OF CANADA, as a Lender 

By /s/ Kyle E. Hoffman    
Name:  Kyle E. Hoffman
Title:    Authorized Signatory
UBS AG, STAMFORD BRANCH, as a Lender 

By /s/ Irja R. Otsa    
Name:  Irja R. Otsa
Title:    Associate Director

By /s/ Mary E. Evans    
Name:  Mary E. Evans
Title:    Associate Director

MIZUHO CORPORATE BANK, LTD., as a Lender 

By /s/ Leon Mo    
Name:  Leon Mo
Title:    Authorized Signatory
PNC BANK, NATIONAL ASSOCIATION, as a Lender 

By /s/ Christian S. Brown    
Name:  Christian S. Brown
Title:    Senior Vice President
U.S. BANK, N.A., as a Lender 

By /s/ Eric J. Cosgrove    
Name:  Eric J. Cosgrove
Title:    Vice President
THE BANK OF NEW YORK MELLON, as a Lender 

By /s/ Richard K. Fronapfel, Jr.    
Name:  Richard K. Fronapfel, Jr.
Title:    Vice President
COBANK, ACB, as a Lender 

By /s/ Josh Batchelder    
Name:  Josh Batchelder
Title:    Vice President
BANCO BILBAO VIZCAYA ARGENTARIA, S.A., NEW YORK BRANCH, as a Lender 

By /s/ Nietzsche Rodricks    
Name:  Nietzsche Rodricks
Title:    Executive Director

By /s/ Paul Rodriguez        
Name:  Paul Rodriguez
Title:    Vice President
CIBC INC., as a Lender 

By /s/ Robert Casey        
Name:  Robert Casey
Title:    CIBC Inc.
      Authorized Signatory

By /s/ Eoin Roche        
Name:  Eoin Roche
Title:    CIBC Inc.
      Authorized Signatory
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, as a Lender 

By /s/ Darrell Stanley    
Name:  Darrell Stanley
Title:    Managing Director

By /s/ Sharanda Manne        
Name:  Sharanda Manne
Title:    Managing Director
SOVERIEGN BANK, N.A., as a Lender 

By /s/ Robert D. Lanigan    
Name:  Robert D. Lanigan
Title:    Senior Vice President
THE HUNTINGTON NATIONAL BANK, as a Lender 

By /s/ Brian H. Gallagher    
Name:  Brian H. Gallagher
Title:    Senior Vice President

EXHIBIT A
Form of Opinion of Wendy E. Stark, Associate General Counsel of FE

[LETTERHEAD OF FIRSTENERGY CORP.]
May 8, 2012

To the Banks party to the within-mentioned Credit Agreement, 
JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders thereunder, 
the fronting banks party thereto and  the swing line lenders party thereto

Re:        Amendment to Credit Agreement, dated as of May 8, 2012
 
Ladies and Gentlemen:
I am Associate General Counsel for FirstEnergy Service Company, and have acted as counsel to its affiliates, FirstEnergy Solutions Corp., an Ohio corporation (“FES”), and Allegheny Energy Supply Company, LLC, a Delaware limited liability company (“Allegheny”, and together with FES, the “Borrowers” and each a “Borrower”), in connection with the execution and delivery of the Amendment, dated as of May 8, 2012 (the “Amendment”), to the Credit Agreement, dated as of June 17, 2011 (as amended by the Amendment dated as of October 3, 2011, the “Original Credit Agreement”, and as further amended by the Amendment, the “Credit Agreement”), among the Borrowers, the banks party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders thereunder, the fronting banks party thereto and the swing line lenders party thereto.  Capitalized terms used herein but not otherwise defined herein shall have the respective meanings assigned to them in the Credit Agreement.  This letter is being furnished to you pursuant to Section 2(a)(v) of the Amendment.  The Amendment and the Credit Agreement are sometimes referred to in this letter collectively as the “Loan Documents” and each individually as a “Loan Document”.
For purposes of this letter, I, or persons under my supervision or control, have reviewed executed originals or copies of executed originals of the Amendment and the Original Credit Agreement.  I, or persons under my supervision or control, have also reviewed originals or copies of such corporate records and other documents and matters and have made such investigation of fact and law as I, or persons under my supervision or control have considered relevant or necessary as a basis for this letter.  In such review, we have assumed the accuracy and completeness of all agreements, documents, records, certificates and other materials submitted to us, the conformity with the originals of all such materials submitted to us as copies (whether or not certified and including facsimiles), the authenticity of the originals of such materials and all materials submitted to us as originals, the genuineness of all signatures (other than those on behalf of the Borrowers) and the legal capacity of all natural persons. 
I have also assumed (a) the due organization, valid existence and good standing under the laws of its jurisdiction of incorporation of each party (other than FES) to each Loan Document, (b) the legal capacity of natural persons, (c) the corporate or other power and due authorization of each Person (other than FES) not a natural person to execute, deliver and perform its obligations under each Loan Document to which it is a party, (d) the due execution, delivery and performance of each Loan Document by each party thereto (other than FES), and (e) that each Loan Document constitutes the valid and binding obligation of each party thereto, enforceable against such party in accordance with its terms.  As to various questions of fact relevant to this letter, I have relied, without independent investigation, upon certificates of public officials, certificates of officers of the Borrowers and representations and warranties of the Borrowers contained in the Credit Agreement.
I am a member of the Bar of the State of Ohio, and, for purposes of this letter, I do not hold myself out as an expert on the laws of any jurisdiction other than the laws of the State of Ohio. I express no opinion herein as to the application or effect of the laws of any jurisdiction other than the laws of the State of Ohio.  The phrase “any applicable law of the State of Ohio” and similar phrases refers to, in my experience, the laws of the State of Ohio generally applicable to transactions of the type contemplated under each Loan Document, and specifically excludes (i) laws of any counties, cities, towns, municipalities and special political subdivisions and any agencies thereof; (ii) zoning, land use, building and construction laws; and (iii) any environmental, labor, tax, pension, employee benefit, antiterrorism, money laundering, insurance, antitrust, securities or intellectual property laws.
Based upon the foregoing and subject to the assumptions, exceptions, qualifications and limitations set forth herein, I am of the opinion that: 
1.FES is a corporation existing and in good standing under the laws of the State of Ohio, is qualified to do business as a foreign corporation in and is in good standing under the laws of each other state in which the ownership of its properties or the conduct of its business makes such qualification necessary, except where the failure to be so qualified would not have a Material Adverse Effect, and has all corporate powers to carry on its business as now conducted and to maintain and operate its property and business. 
2.No Governmental Action is or will be required under applicable laws of the State of Ohio for (a) the execution or delivery by FES of the Amendment or the performance by FES of its obligations under the Loan Documents or (b) the consummation by FES of any transaction contemplated by the Loan Documents, other than (1) such Governmental Action as may be required as a condition to the exercise by FES of its rights under Section 2.06(b) or Section 2.07 of the Credit Agreement and (2) such Governmental Action as may be required after the date hereof in connection with the performance by FES of the general covenants set forth in Sections 5.01(a) and (b) of the Credit Agreement. 
3.Neither the execution or delivery by FES of the Amendment, nor the performance by FES of its obligations under the Loan Documents, the consummation by FES of the transactions contemplated by any such Loan Document, and compliance by FES with the provisions thereof, will result in (a) a breach or default of any of the provisions of the Organizational Documents of FES or (b) a breach or default of any applicable law of the State of Ohio. 
4.Neither the execution or delivery by each Borrower of the Amendment, nor the performance by such Borrower of its obligations under the Loan Documents, the consummation by such Borrower of the transactions contemplated by any such Loan Document, and compliance by such Borrower with the provisions thereof, will result in (a) a breach or default of any indenture, mortgage, lease or other agreement or instrument to which such Borrower or any Subsidiary of such Borrower is a party or by which any of its property is bound or (b) the creation or imposition of any Lien upon any property of such Borrower or of any Subsidiary of such Borrower, except in each case to the extent such breach or default, or the creation or imposition of any such Lien, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect with respect to such Borrower. 
5.The execution and delivery by FES of the Amendment and the performance by FES of each of the Loan Documents to which it is a party are within its corporate powers, have been duly authorized by all necessary corporate action on the part of FES and do not, and will not, require the consent or approval of FES’s shareholders, other than such consents and approvals as have been obtained, given or accomplished.
6.The Amendment delivered by FES on the date hereof has been executed and delivered by FES.
Except as disclosed in any Borrower’s Disclosure Documents, there is no pending or, to the best of my knowledge, threatened action or proceeding  affecting directly such Borrower or any of its Subsidiaries before any court, governmental agency or arbitrator that would reasonably be expected to have a material adverse effect on such Borrower’s ability to perform its obligations under the Loan Documents to which it is a party.
The opinions set forth herein are qualified in their entirety and subject to the following:
A.No examination has been made of, and no opinion is expressed as to the effect of, any zoning ordinance or permit pertaining to the authority of the Borrowers to operate their properties or conduct their businesses.
B.I also express no opinion with respect to the following: 
(i)    the financial condition or solvency of any Borrower;
(ii)    the compliance of the Credit Agreement or any other Loan Document or the transactions contemplated thereby with, or the effect of any of the foregoing with respect to, Federal and state securities laws, rules and regulations;
(iii)    the compliance of the transactions contemplated by the Loan Documents with any regulations or governmental requirements applicable to any Person other than the Borrowers; and
(iv)    the financial ability of the Borrowers or the ability (financial or otherwise) of any other Person to meet their respective obligations under the Loan Documents.
C.This letter and the matters addressed herein are as of the date hereof or such earlier date as is specified herein, and I undertake no, and hereby disclaim any, obligation to advise you of any change in any matter set forth herein, whether based on a change in the law, a change in any fact relating to the Borrowers or any other Person, or any other circumstance occurring after the date hereof.
D.I have assumed that no fraud, dishonesty, forgery, coercion, duress or breach of fiduciary duty exists with respect to any of the matters relevant to this letter.
E.This letter is limited to the matters expressly set forth herein and no opinions are to be inferred or may be implied beyond the opinions expressly set forth herein.
F.This letter is solely for the benefit of the addressees hereof in connection with the transactions contemplated by the Loan Documents and may not be relied on by the addressees hereof for any other purpose or furnished or quoted to or relied on by any other Person (other than the permitted successors and assigns of such addressees under the Credit Agreement) for any purpose without my prior written consent; provided, however, a copy of this opinion may be provided to (i) counsel for the addressees hereof, (ii) your auditors and (iii) regulatory agencies having jurisdiction over you.
Respectfully submitted,

Wendy E. Stark
Associate General Counsel

EXHIBIT B
Form of Opinion of Akin Gump Strauss Hauer & Feld LLP

 
May 8, 2012
To the Banks party to the within-mentioned Credit Agreement,
JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders thereunder, 
the fronting banks party thereto and the swing line lenders party thereto

Re:    Amendment to Credit Agreement, dated as of May 8, 2012
Ladies and Gentlemen:
We have acted as special New York counsel to FirstEnergy Solutions Corp., an Ohio corporation (“FES”), and Allegheny Energy Supply Company, LLC, a Delaware limited liability company (“Allegheny”, and together with FES, the “Borrowers” and each a “Borrower”), in connection with the execution and delivery of the Amendment, dated as of May 8, 2012 (the “Amendment”) to the Credit Agreement, dated as of June 17, 2011 (as amended by the Amendment dated as of October 3, 2011, the “Original Credit Agreement”, and as further amended by the Amendment, the “Credit Agreement”), among the Borrowers, the banks party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders thereunder, the fronting banks party thereto and the swing line lenders party thereto.  Capitalized terms used but not defined in this letter have the meanings assigned to them in the Credit Agreement. This letter is being furnished to you at the request of the Borrowers pursuant to Section 2(a)(vi) of the Amendment. The Amendment and the Credit Agreement are sometimes referred to in this letter collectively as the “Loan Documents” and each individually as a “Loan Document”.
The document listed on Schedule I hereto is hereinafter referred to in this opinion as the “Certificate of Good Standing.” 
In connection with this letter, we have reviewed executed originals or copies of executed originals of the Certificate of Good Standing, the Amendment and the Original Credit Agreement.  We have also reviewed copies of the Approvals and originals or certified copies of such corporate and company records of each Borrower and other certificates and documents of officials of each Borrower and certain of their affiliates, public officials and others as we have deemed appropriate for purposes of this letter, and relied upon them to the extent we deem appropriate.  As to various questions of fact relevant to this letter, we have relied, without independent investigation, upon certificates of public officials, certificates of officers of each Borrower, and representations and warranties of each Borrower contained in the Loan Documents. In addition, we have made no inquiry of any Borrower or any other Person (including Governmental Authorities) regarding any judgments, orders, decrees, franchises, licenses, certificates, registrations, permits or other public records or agreements to which any Borrower is a party other than those described herein, and our knowledge of any such matters is accordingly limited.  
We have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity to authentic original documents of all copies submitted to us as conformed, certified or reproduced copies.  We have also assumed (i) the due organization, valid existence and good standing under the laws of its jurisdiction of incorporation of each party to each Loan Document (other than, with respect to valid existence and good standing, Allegheny), (ii) the legal capacity of natural persons, (iii) the corporate or other power and due authorization of each Person (other than Allegheny) not a natural person to execute, deliver and perform its obligations under each Loan Document to which it is a party, (iv) the due execution and delivery of each Loan Document by all parties thereto (other than Allegheny), (v) that each Loan Document constitutes the valid and binding obligation of each party thereto (other than the Borrowers), enforceable against such party in accordance with its terms, (vi) that the execution, delivery and performance by each party to the Loan Documents (other than Allegheny) do not, and will not, require the consent or approval of its shareholders or members, as the case may be, other than such consents and approvals as have been duly obtained, given or accomplished and are in full force and effect and will not result in a breach or violation of, or conflict with, any of the provisions of its Organizational Documents, (vii) that the execution, delivery and performance by any party to the Loan Documents will not result in (a) a breach of or default under, or conflict with, any of the provisions of any indenture, mortgage, lease or other agreement or instrument to which it is a party or (b) a breach or violation of, or conflict with, any law (other than, in the case of any Borrower, any Included Law (as defined herein)) or any order, rule, regulation or determination of any Governmental Authority applicable to it (other than, in the case of any Borrower, its Approval) and (vii) that all required Governmental Action (other than, in the case of any Borrower, under any Included Law) for the execution and delivery by each party to any Loan Document, the performance by it of its obligations thereunder or the consummation by it of any transaction contemplated thereby have been obtained or taken.
In addition, we have also assumed that other than the Amendment, there are no documents or agreements (whether oral or written) between the parties which in any way supplement, modify, amend, alter, conflict with, terminate, or revoke the terms of the Original Credit Agreement. We have also assumed that the terms of the Original Credit Agreement remain in full force and effect (except as amended pursuant to the Amendment) and that no course of dealing or other acts or omissions by the parties to the Original Credit Agreement have occurred that would impair in any respect the enforceability of the Original Credit Agreement in accordance with its terms.
Based upon the foregoing and subject to the assumptions, exceptions, qualifications and limitations set forth herein, we are of the opinion that: 
1.Allegheny is duly existing as a limited liability company in good standing under the laws of the State of Delaware and has the limited liability company power and authority to enter into and perform its obligations under each of the Loan Documents to which it is a party.
2.Each of the Loan Documents to which Allegheny is a party has been duly authorized by all necessary limited liability company action by Allegheny.  The Amendment has been duly executed and delivered by Allegheny.
3.No Governmental Action is or will be required under any Included Law for the due execution and delivery by each Borrower of the Amendment or the performance by it of its obligations under each Loan Document to which it is a party, other than (i) the Approvals, each of which is in full force and effect as of the date hereof, and (ii) such Governmental Action as may be required after the date hereof in connection with the performance by such Borrower of the general covenants set forth in Sections 5.01(a) and (b) of the Credit Agreement. 
4.The execution and delivery by each Borrower of the Amendment does not, and the performance by such Borrower of its obligations under each Loan Document to which it is a party will not, result in a breach or violation of (i) any Included Law, (ii) the Approvals, or (iii) the Organizational Documents of Allegheny listed on Schedule II hereto.
5.Each of the Amendment and the Credit Agreement constitutes a valid and binding obligation of each Borrower, enforceable against each Borrower in accordance with its terms.
The opinions set forth herein are qualified in their entirety and subject to the following:
A.We express no opinion as to the Laws (as defined below) of any jurisdiction other than the Included Laws.  We have made no special investigation or review of any published constitutions, treaties, laws, rules or regulations or judicial or administrative decisions (“Laws”), other than a review of (i) the Laws of the State of New York, (ii) the Delaware Limited Liability Company Act, as amended, and (iii) the Federal Laws of the United States of America.  For purposes of this letter, the term “Included Laws” means the items described in (a) clause (ii) of the preceding sentence and (b) clauses (i) and (iii) of the preceding sentence that are, in our experience, normally applicable to transactions of the type contemplated by the Loan Documents.  The term Included Laws specifically excludes (i) Laws of any counties, cities, towns, municipalities and special political subdivisions and any agencies thereof; (ii) zoning, land use, building and construction Laws; (iii) Federal Reserve Board margin regulations; and (iv) any environmental, labor, tax, pension, employee benefit, antiterrorism, money laundering, insurance, antitrust, securities or intellectual property Laws.
B.When used in this letter, the phrases “known to us”, “to our knowledge” and similar phrases (i) mean the conscious awareness of facts or other information by (a) the lawyer in our firm who signed this letter, (b) any lawyer in our firm actively involved in negotiating and preparing the Loan Documents and (c) solely as to information relevant to a particular opinion, issue or confirmation regarding a particular factual matter, any lawyer in our firm who is primarily responsible for providing the response concerning that particular opinion, issue or confirmation, and (ii) do not require or imply (a) any examination of this firm’s, such lawyer’s or any other Person’s files, (b) that any inquiry be made of the client, any lawyer (other than the lawyers described above), or any other Person, or (c) any review or examination of any agreements, documents, certificates, instruments or other papers (including, but not limited to, the exhibits and schedules to the Loan Documents and the various papers referred to in or contemplated by the Loan Documents and the respective exhibits and schedules thereto) other than the Loan Documents.
C.The opinion expressed in paragraph 1 herein as to the valid existence and good standing of Allegheny is given solely on the basis of the Certificate of Good Standing and speaks only as of the date thereof rather than the date hereof.  Such opinion is limited to the meaning ascribed to such Certificate of Good Standing by the Delaware Secretary of State and applicable Law.
D.The matters expressed in this letter are subject to and qualified and limited by (i) applicable bankruptcy, insolvency, fraudulent transfer and conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally from time to time in effect; (ii) general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity); (iii) principles of commercial reasonableness and unconscionability and an implied covenant of good faith and fair dealing; (iv) the power of the courts to award damages in lieu of equitable remedies; and (v) securities Laws and public policy underlying such Laws with respect to rights to indemnification and contribution.  Although it appears that the requirements of Section 5-1401 of the New York General Obligations Law have been met, we express no opinion on whether the choice of law provision in Section 7 of the Amendment or Section 8.09 of the Credit Agreement would raise any issues under the United States constitution or in equity that would affect whether courts in New York would enforce the choice of New York law to govern the Amendment or the Credit Agreement. We have also assumed that the choice of law of the State of New York as the governing law of the Amendment and the Credit Agreement would not result in a violation of an important public policy of another state having greater contacts with the transactions contemplated by the Loan Documents than the State of New York.
E.This letter and the matters addressed herein are as of the date hereof or such earlier date as is specified herein, and we undertake no, and hereby disclaim any, obligation to advise you of any change in any matter set forth herein, whether based on a change in the law, a change in any fact relating to any Borrower or any other Person, or any other circumstance occurring after the date hereof.  This letter is limited to the matters expressly stated herein and no opinions are to be inferred or may be implied beyond the opinions expressly set forth herein.
F.We have assumed that no fraud, dishonesty, forgery, coercion, duress or breach of fiduciary duty exists with respect to any of the matters relevant to this letter.
G.We express no opinion as to (i) the compliance of the transactions contemplated by the Loan Documents with any Laws applicable to any Person other than the Borrowers; (ii) the financial condition or solvency of any Borrower; (iii) the ability (financial or otherwise) of any Borrower or any other Person to meet its obligations under the Loan Documents; (iv) the compliance of the Loan Documents or the transactions contemplated thereby with, or the effect on any of the opinions expressed herein of, the antifraud provisions of Federal and state securities Laws; (v) the conformity of the Loan Document to any term sheet or commitment letter; or (vi) any provision of any Loan Document which would, to the extent not permitted by applicable Law, restrict, waive access to or vary legal or equitable remedies or defenses (including, but not limited to, a right to notice of and hearing on matters relating to prejudgment remedies, service of process, proper jurisdiction and venue, forum non conveniens and the right to trial by jury) or the right to collect damages (including, but not limited to, actual, consequential, special, indirect, incidental, exemplary and punitive damages).
H.For purposes of this letter, the phrase “transactions of the type contemplated by the Loan Documents” and similar phrases mean (i) the making of Advances and the issuance of Letters of Credit by the banks party to the Credit Agreement and (ii) the performance by the Borrowers of their respective obligations under the Loan Documents.
I.This letter is solely for your benefit, and no other Person (other than your permitted successors and assigns under the Credit Agreement) shall be entitled to rely upon this letter.  Without our prior written consent, this letter may not be quoted in whole or in part or otherwise referred to in any document and may not be furnished or otherwise disclosed to or used by any other Person, provided, however, a copy of this opinion may be provided to (i) counsel for the addressees hereof, (ii) your auditors and (iii) regulatory agencies having jurisdiction over you.
Very truly yours,

AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.

SCHEDULE I 
CERTIFICATE OF GOOD STANDING
Certificate of Good Standing of Allegheny, issued by the Secretary of State of the State of Delaware on May 7, 2012. 
SCHEDULE II 
ORGANIZATIONAL DOCUMENTS
1.Certificate of Formation of Allegheny, filed with the Secretary of State of the State of Delaware on November 12, 1999.
2.Fifth Amended and Restated Limited Liability Company Agreement of Allegheny, effective as of September 4, 2003, the date of the last amendment being February 28, 2012.

EXHIBIT C
Form of Opinion of
Special New York Counsel to the Administrative Agent

May 8, 2012
JPMorgan Chase Bank, N.A., as administrative agent, the fronting banks, the swing line lenders and the lenders party to the Credit Agreement referred to below
Re:    FirstEnergy Solutions Corp. and Allegheny Energy Supply Company, LLC
Ladies and Gentlemen:
We have acted as special New York counsel to JPMorgan Chase Bank, N.A., individually and as administrative agent (the “Administrative Agent”), in connection with the preparation, execution and delivery of the Amendment, dated as of May 8, 2012 (the “2012 Amendment”), to the Credit Agreement, dated as of June 17, 2011 (the “Original Credit Agreement”, and as amended by the Amendment, dated as of October 3, 2011 (the “2011 Amendment”), and the 2012 Amendment, the “Credit Agreement”), among FirstEnergy Solutions Corp., an Ohio corporation (“FES”), Allegheny Energy Supply Company, LLC, a Delaware limited liability Company (“Allegheny”, and together with FES, the “Borrowers”), JPMorgan Chase Bank, N.A., as Administrative Agent for the lenders thereunder, the fronting banks party thereto, the swing line lenders party thereto and the lenders party thereto.  Unless otherwise defined herein, terms defined in the Credit Agreement are used herein as therein defined.  This opinion letter is being delivered pursuant to Section 2(a)(vii) of the 2012 Amendment.
In that connection, we have examined (i) counterparts of the 2012 Amendment, executed by the Borrowers, the Lenders, the Swing Line Lenders, the Fronting Banks and the Administrative Agent, (ii) counterparts of the 2011 Amendment, executed by the Borrowers and the Majority Lenders, (iii) counterparts of the Original Credit Agreement (together with the 2011 Amendment and the 2012 Amendment, the “Opinion Documents”), executed by the Borrowers, the Lenders, the Swing Line Lenders, the Administrative Agent and the Fronting Banks, and (iv) the other documents furnished to the Administrative Agent pursuant to Section 2(a) of the 2012 Amendment, including (without limitation) the opinions of Wendy E. Stark, Associate General Counsel of FE, counsel to the Borrowers, and Akin Gump Strauss Hauer & Feld LLP, special counsel to the Borrowers (collectively, the “Borrowers’ Counsel Opinions”).
In our examination of the documents referred to above, we have assumed the authenticity of all such documents submitted to us as originals, the genuineness of all signatures, the due authority of the parties executing such documents and the conformity to the originals of all such documents submitted to us as copies.  We have also assumed that each of the Lenders, the Swing Line Lenders, the Fronting Banks and the Administrative Agent has duly executed and delivered, with all necessary power and authority (corporate and otherwise), each Opinion Document to which such Person is stated to be a party.  We have further assumed that you have evaluated, and are satisfied with, the creditworthiness of the Borrowers and the business and financial terms evidenced by the Loan Documents.
To the extent that our opinions expressed below involve conclusions as to matters governed by law other than the law of the State of New York and the Federal law of the United States, we have relied upon the Borrowers’ Counsel Opinions and have assumed without independent investigation the correctness of the matters set forth therein, our opinions expressed below being subject to the assumptions, qualifications and limitations set forth in the Borrowers’ Counsel Opinions.  As to matters of fact, we have relied solely upon the documents we have examined.  We note that we do not represent the Borrowers, and accordingly, are not privy to the nature or character of their business.  Accordingly, we have assumed that the Borrowers are subject only to statutes, rules, regulations, judgments, orders and other requirements of law generally applicable to corporations doing business in the State of New York.
Based upon the foregoing, and subject to the qualifications set forth below, we are of the opinion that:
		
	(i)
	Each of the 2012 Amendment and the Credit Agreement is the legal, valid and binding obligation of each Borrower that is a party thereto enforceable against such Borrower in accordance with their respective terms.

		
	(ii)
	While we have not independently considered the matters covered by the Borrowers’ Counsel Opinions to the extent necessary to enable us to express the conclusions stated therein, each of the Borrowers’ Counsel Opinions and the other documents furnished to the Administrative Agent pursuant to Section 2(a) of the 2012 Amendment are substantially responsive to the corresponding requirements set forth in Section 2(a) of the 2012 Amendment pursuant to which the same have been delivered.

Our opinions are subject to the following qualifications:
		
	(a)
	Our opinion in paragraph (i) above is subject to the effect of any applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar law affecting creditors’ rights generally.

		
	(b)
	Our opinion in paragraph (i) above is subject to the effect of general principles of equity, including (without limitation) concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law).

		
	(c)
	We note further that, in addition to the application of equitable principles described above, courts have imposed an obligation on contracting parties to act reasonably and in good faith in the exercise of their contractual rights and remedies, and may also apply public policy considerations in limiting the right of parties seeking to obtain indemnification under circumstances where the conduct of such parties in the circumstances in question is determined to have constituted negligence.

		
	(d)
	We express no opinion herein as to (i) Section 8.06 of the Credit Agreement, (ii) the enforceability of provisions purporting to grant to a party conclusive rights of determination, (iii) the availability of specific performance or other equitable remedies, (iv) the enforceability of rights to indemnity under Federal or state securities laws and (v) the enforceability of waivers by parties of their respective rights and remedies under law.

		
	(e)
	Our opinion in paragraph (i) is limited to the law of the State of New York and the Federal law of the United States, and we do not express any opinion herein concerning any other law.  Without limiting the generality of the foregoing, we express no opinion as to the effect of the law of any jurisdiction other than the State of New York wherein any Lender may be located or wherein enforcement of the Credit Agreement may be sought that limits the rates of interest legally chargeable or collectible.

		
	(f)
	In connection with any provision of the Credit Agreement whereby any Borrower submits to the jurisdiction of any court of competent jurisdiction, we note the limitations of 28 U.S.C. §§1331 and 1332 on Federal court of jurisdiction.

This opinion letter speaks only as of the date hereof, and we expressly disclaim any responsibility to advise you of any development or circumstance, including changes of law or fact, that may occur after the date of this opinion letter that might affect the opinions expressed herein.  This opinion letter is furnished to the addressees hereof solely in connection with the transactions contemplated by the Credit Agreement, is solely for the benefit of the addressees hereof and may not be relied upon by any other Person or for any other purpose without our prior written consent.  Notwithstanding the foregoing, this opinion letter may be relied upon by any Person that becomes a Lender after the date hereof in accordance with the provisions of the Credit Agreement as if this opinion letter were addressed and delivered to such Person on the date hereof.  Any such reliance must be actual and reasonable under the circumstances existing at the time such Person becomes a Lender, taking into account any changes in law or facts and any other developments known to or reasonably knowable by such Person at such time.
Very truly yours,

MEO:kty:mgExhibit 4.2

 

INVESTORS’ RIGHTS AGREEMENT

 

THIS INVESTORS’ RIGHTS AGREEMENT (the “Agreement”) is made as of the 9th day of February, 2007, by and between LegalZoom.com, Inc., a Delaware corporation (the “Company”), and each of the investors listed on Schedule A hereto, each of which is referred to in this Agreement as an “Investor” (as defined in the Purchase Agreement).

 

RECITALS

 

WHEREAS, the Company’s predecessor and the Investors are parties to the Series A Preferred Stock Purchase and Share Redemption Agreement dated as of January 4, 2007 (the “Purchase Agreement”), as amended by that First Amendment, dated as of the date hereof; and

 

WHEREAS, in order to induce the Company to enter into the Purchase Agreement and to induce the Investors to invest funds in the Company pursuant to the Purchase Agreement, the Investors and the Company hereby agree that this Agreement shall govern the rights of the Investors to cause the Company to register shares of Common Stock issuable to the Investors, to receive certain information from the Company, to participate in future equity offerings by the Company and certain other matters as set forth in this Agreement.

 

NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

 

1.                                       Definitions. For purposes of this Agreement:

 

1.1                                 The term “Affiliate” shall mean with respect to any individual, corporation, partnership, association, trust, or any other entity (in each case, a “Person”), any Person which, directly or indirectly, controls, is controlled by or is under common control with such Person, including, without limitation any general partner, officer or director of such Person and any venture capital fund now or hereafter existing which is controlled by or under common control with one or more general partners or shares the same management company with such person.

 

1.2                                 The term “Change of Control” means, regardless of form thereof, (1) the dissolution or liquidation of the Company, (2) the sale or exclusive license of all or substantially all of the assets of the Company on a consolidated basis to a person or entity which is not an affiliate of the Company, (3) a merger, reorganization or consolidation in which the outstanding shares of Company’s capital stock are converted into or exchanged for a different kind of securities of the successor entity and the holders of the Company’s outstanding voting power immediately prior to such transaction do not own a majority of the outstanding voting power of the successor entity immediately upon completion of such transaction, or (4) the sale of all or substantially all of the outstanding stock of the Company to a person or entity which is not an affiliate of the Company.

 

1.3                                 The term “Common Stock” shall mean shares of the Company’s common stock, par value $0.001 per share.

 

 

1.4                                 The term “Convertible Securities” shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock, but excluding Options.

 

1.5                                 The term “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

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

 

1.7                                 The term “GAAP” shall mean generally accepted accounting principles.

 

1.8                                 The term “Holder” shall mean any Person owning or having the right to acquire Registrable Securities or any assignee thereof in accordance with Section 2.12 hereof.

 

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

 

1.10                           The term “Initiating Holders” means, collectively, any Holders who properly initiate a registration request under this Agreement.

 

1.11                           The term “Investor Nominees” means those two (2) members of the Board of Directors designated by the holders of Series A Preferred Stock.

 

1.12                           The term “IPO” means the Company’s first underwritten public offering of its Common Stock under the Securities Act.

 

1.13                           The term “New Securities” shall mean equity securities of the Company, whether now authorized or not, or rights, options, or warrants to purchase said equity securities, or securities of any type whatsoever that are, or may become, convertible into or exchangeable into or exercisable for said equity securities (collectively “New Securities”).

 

1.14                           The term “Options” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

 

1.15                           The term “Qualified Public Offering” shall mean the Company’s first underwritten public offering on a firm commitment basis by a nationally recognized investment banking organization or organizations pursuant to an effective registration statement under the Securities Act, covering the offer and sale of Common Stock (i) at a price per share of Common Stock of not less than $17.95413 (appropriately adjusted for stock splits, stock dividends, combinations, recapitalizations and the like), (ii) with respect to which the Company receives aggregate gross proceeds attributable to sales for the account of the Company of not less than $50 million, and (iii) with respect to which such Common Stock is listed for trading on either the New York Stock Exchange or the NASDAQ National Market.

 

2

 

1.16                           The term “register,”  “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document.

 

1.17                           The term “Registrable Securities” means (i) the Common Stock issuable or issued upon conversion of the Series A Preferred Stock and (ii) any Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of the shares referenced in clause (i) above, excluding in all cases, however, any Registrable Securities sold by a person in a transaction in which his rights under Section 2 hereof are not assigned or any shares for which registration rights have terminated pursuant to Section 2.15 of this Agreement.

 

1.18                           The term “Registrable Securities then outstanding” means the number of shares determined by adding the number of shares of Common Stock outstanding which are, and the number of shares of Common Stock issuable pursuant to then exercisable or convertible securities which are, Registrable Securities.

 

1.19                           The term “Restated Certificate” shall mean the Amended and Restated Certificate of Incorporation of the Company, as it may be amended from time to time.

 

1.20                           The term “SEC” means the Securities and Exchange Commission.

 

1.21                           The term “SEC Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.

 

1.22                           The term “SEC Rule 144(k)” means Rule 144(k) promulgated by the SEC under the Securities Act.

 

1.23                           The term “SEC Rule 145” means Rule 145 promulgated by the SEC under the Securities Act.

 

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

 

1.25                           The term “Series A Preferred Stock” means shares of the Series A Convertible Preferred Stock, par value $0.001 per share.

 

1.26                           The term “Transaction Documents” means, collectively, the Purchase Agreement, Voting Agreement and this Agreement.

 

1.27                           The term “Violation” means losses, claims, damages, or liabilities (joint or several) to which a party hereto may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations: (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained

 

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therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by any other party hereto, of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law.

 

2.                                       Registration Rights. The Company covenants and agrees as follows:

 

2.1                                 Request for Registration.

 

(a)                                  If the Company shall receive at any time after the earlier of (i) four (4) years after the date of this Agreement or (ii) 180 days after the effective date of the first registration statement for a public offering of securities of the Company (other than a registration statement relating either to the sale of securities to employees of the Company pursuant to a stock option, stock purchase or similar plan or a SEC Rule 145 transaction), a written request from the Holders of at least a majority of the Registrable Securities then outstanding that the Company file a registration statement under the Securities Act covering the registration of all or any portion of their Registrable Securities then outstanding in the manner specified in such request, then the Company shall:

 

(i)                       within ten (10) days of the receipt thereof, give written notice of such request to all Holders, who shall then have twenty (20) days to notify the Company in writing of their desire to be included in such registration;

 

(ii)                    as soon as practicable, and in any event within sixty (60) days of the receipt of such request (subject to the availability of appropriate audited financial statements provided that the Company is using reasonable best efforts to obtain such financial statements), file a registration statement under the Securities Act covering all Registrable Securities which the Holders request to be registered, subject to the limitations of subsection 2.1(b), within twenty (20) days of the mailing of such notice by the Company in accordance with Section 6.5; and

 

(iii)                 use its reasonable best efforts to cause such registration statement to be declared effective by the SEC as soon as practicable after such request.

 

(b)                                 If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to subsection 2.1(a) and the Company shall include such information in the written notice referred to in subsection 2.1(a). The underwriter will be selected by the Initiating Holders subject only to the reasonable approval of the Company. In such event, the right of any Holder to include such Holder’s Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as

 

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provided in subsection 2.3(e) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting. Notwithstanding any other provision of this Section 2.1, if, in good faith, the underwriter advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable Securities which would otherwise be underwritten pursuant hereto, and the number of shares of Registrable Securities that may be included in the underwriting shall be allocated among all Holders of Registrable Securities, including the Initiating Holders, in proportion (as nearly as practicable) to the number of Registrable Securities of the Company owned by each Holder; provided, however, that the number of shares of Registrable Securities held by the Holders to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest one hundred (100) shares.

 

(c)                                  The Company shall not be obligated to effect, or to take any action to effect, any registration

 

(i)                                     pursuant to this Section 2.1:

 

(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, unless the Company is already subject to service in such jurisdiction and except as may be required under the Securities Act;

 

(B)                                After the Company has effected two (2) registrations pursuant to this Section 2.1 and such registrations have been declared or ordered effective;

 

(C)                                If the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a request made pursuant to Section 2.11 below; or

 

(D)                               If the Registrable Securities to be included in the registration statement could then be sold without restriction under SEC Rule 144(k) within a ninety (90) day period; or

 

(ii)                                  Pursuant to any other provision of this Agreement:

 

(A)                              In any particular jurisdiction in which the Company would be required to executed a general consent to service of process in effecting such registration, unless the Company is already subject to service in such jurisdiction and except as may be required under the Securities Act; or

 

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(B)                                If the Registrable Securities to be included in the registration statement could then be sold without restriction under SEC Rule 144(k) within a ninety (90) day period.

 

(d)                                 Notwithstanding the foregoing, if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 2.1 a certificate signed by the Chief Executive Officer of the Company stating that in the good faith judgment of the Board of Directors of the Company (the “Board”) it would be materially detrimental to the Company and its stockholders for such registration statement to become effective or to remain effective as long as such registration statement would otherwise be required to remain effective because such action (x) would materially interfere with a significant acquisition, corporate reorganization or other 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, the Company shall have the right to defer taking action with respect to such filing for a period of not more than sixty (60) days after receipt of the request of the Initiating Holders; provided, however, that the Company may not utilize this right more than two (2) times in any twelve (12)-month period; and provided further that the Company shall not register any securities for the account of itself or any other stockholder during such sixty (60) day period other than a registration statement relating either to the sale of securities to employees of the Company pursuant to a stock option, stock purchase or similar plan or an SEC Rule 145 transaction, a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities, or a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered).

 

A registration statement shall not be counted until such time as such registration statement has been declared effective by the SEC (unless the Initiating Holders withdraw their request for such registration (other than as a result of information concerning the business or financial condition of the Company which is made known to the Investors after the date on which such registration was requested) and elect not to pay the registration expenses therefor pursuant to Section 2.5). A registration statement shall not be counted if, as a result of an exercise of the underwriter’s cut-back provisions, fewer than fifty percent (50%) of the total number of Registrable Securities that Holders have requested to be included in such registration statement are actually included.

 

2.2                                 Company Registration. If the Company proposes to register (including for this purpose a registration effected by the Company for stockholders other than the Holders) any of its stock or other securities under the Securities Act in connection with the public offering of such securities solely for cash (other than a registration statement relating either to the sale of securities to employees of the Company pursuant to a stock option, stock purchase or similar plan or an SEC Rule 145 transaction, a registration on any form which does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities or a registration in which the only Common Stock

 

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being registered is Common Stock issuable upon conversion of debt securities which are also being registered), the Company shall, at such time, promptly give each Holder written notice of such registration. Upon the written request of each Holder given within twenty (20) days after mailing of such notice by the Company in accordance with Section 6.5, the Company shall, subject to the provisions of Section 2.7, cause to be registered under the Securities Act, all of the Registrable Securities that each such Holder has requested to be registered; provided, however, that the Company shall, have no obligation to effect the registration of Registrable Securities held by the Holders to the extent the aggregate number of Registrable Securities sought to be included by the Holders exceeds sixty-seven percent (67%) of the total number of securities proposed to be offered and sold in connection with such registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. The expenses of such withdrawn registration shall be borne by the Company in accordance with Section 2.6 hereof.

 

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

 

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

 

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

 

(c)                                  furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them;

 

(d)                                 use its reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders; provided that the

 

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Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

 

(e)                                  in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement;

 

(f)                                    cause all such Registrable Securities registered pursuant to this Agreement hereunder to be listed on a national securities exchange or trading system and each securities exchange and trading system on which similar securities issued by the Company are then listed;

 

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

 

(h)                                 use its reasonable best efforts to furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to this Section 2, on the date on which such Registrable Securities are sold to the underwriter, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and (ii) a “comfort” letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any.

 

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

 

2.5                                 Expenses of Demand Registration. All expenses other than underwriting discounts and commissions incurred in connection with registrations, filings or qualifications pursuant to Section 2.1, including (without limitation) all registration, filing and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the Company and the reasonable fees and disbursements of one (1) counsel for the selling Holders shall be borne by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2.1 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all participating Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless the Holders of a majority of the Registrable Securities agree to forfeit their

 

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right to one (1) demand registration pursuant to Section 2.1; provided further, however, that if at the time of such withdrawal, the Holders have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness after learning of such information, then the Holders shall not be required to pay any of such expenses and shall retain their rights pursuant to Section 2.1.

 

2.6                                 Expenses of Company Registration. The Company shall bear and pay all expenses incurred in connection with any registration, filing or qualification of Registrable Securities with respect to the registrations pursuant to Section 2.2 hereof for each Holder (which right may be assigned as provided in Section 2.12 hereof), including (without limitation) all registration, filing, and qualification fees, printers and accounting fees relating or apportionable thereto and the fees and disbursements of one (1) counsel for the selling Holders selected by them, but excluding underwriting discounts and commissions relating to Registrable Securities.

 

2.7                                 Underwriting Requirements. In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Section 2.2, the Company shall not be required to include any of the Holders’ securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total number of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the amount of securities to be sold other than by the Company that the underwriters determine in their reasonable discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters and the Company determine in their sole discretion will not jeopardize the success of the offering. In no event shall any Registrable Securities be excluded from such offering unless all other stockholders’ securities have been first excluded. In the event that the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be apportioned pro rata among the selling Holders based on the number of Registrable Securities held by all selling. Holders or in such other proportions as shall mutually be agreed to by all such selling Holders. Notwithstanding the foregoing, in no event shall the amount of securities of the selling Holders included in the offering be reduced below thirty percent (30%) of the total amount of securities included in such offering, unless such offering is the Company’s IPO in which case the selling Holders may be excluded beyond this amount if the underwriters make the determination described above and no other stockholder’s securities are included in such offering. For purposes of the preceding sentence concerning apportionment, for any selling stockholder which is a Holder of Registrable Securities and which is an investment fund, partnership, limited liability company or corporation, the partners, members, retired partners, retired members, stockholders and Affiliates of such Holder, or the estates and family members of any such partners, retired partners, members and retired members and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single “selling Holder”, and any pro-rata reduction with respect to such “selling Holder” shall be based upon the aggregate amount of shares carrying registration rights owned by all entities and individuals included in such “selling Holder,” as defined in this sentence.

 

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

 

2.9                                 Indemnification. In the event any Registrable Securities are included in a registration statement under this Section 2:

 

(a)                                  To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, members, officers, directors and stockholders of each Holder, legal counsel and accountants for each Holder, any underwriter (as defined in the Securities Act) for such Holder and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any Violation and the Company will pay to each such Holder, underwriter, controlling person or other aforementioned person, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.9(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage liability, or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, underwriter, controlling person or other aforementioned person.

 

(b)                                 To the extent permitted by law, each selling Holder will severally and not jointly indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter, any other Holder selling securities in such registration statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will pay, any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this Section 2.9(b), in connection with investigating or defending any such loss, claim, damages, liability, or action; provided, however, that the indemnity agreement contained in this Section 2.9(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; provided, further, that, in no event shall any indemnity under this Section 2.9(b) exceed the lesser of (i) that proportion of the total of such losses, claims, damages, liabilities or actions indemnified against equal to the

 

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proportion of the total securities sold under such registration statement which is being held by such Holder, or (ii) the amount equal to the net proceeds from the offering received by such Holder, except in the case of fraud or willful misconduct by such Holder.

 

(c)                                  Promptly after receipt by an indemnified party under this Section 2.9 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.9, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.9, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.9.

 

(d)                                 In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any Holder exercising rights under this Agreement, or any controlling person of any such Holder, makes a claim for indemnification pursuant to this Section 2.9 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 2.9 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any such selling Holder or any such controlling person in circumstances for which indemnification is provided under this Section 2.9, then, and in each such case, the Company and such Holder will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) 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 connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense 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, in any such case, (I) no such Holder will be required to contribute any

 

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amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement, and (II) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation; provided further, that in no event shall a Holder’s liability pursuant to this Section 2.9(d), when combined with the amounts paid or payable by such holder pursuant to Section 2.9(b), exceed the proceeds from the offering (net of any underwriting discounts or commissions) received by such Holder, except in the case of willful fraud by such Holder.

 

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

 

(f)                                    Unless otherwise superceded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of the Company and Holders under this Section 2.9 shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 2, and otherwise shall survive the termination of this Agreement.

 

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

 

(a)                                  make and keep public information available, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of the first registration statement filed by the Company for the offering of its securities to the general public so long as the Company is subject to the periodic reporting requirements under Sections 13 or 15(d) of the Exchange Act;

 

(b)                                 file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

 

(c)                                  furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144, the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form.

 

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(d)                                 After the occurrence of the first underwritten public offering of Common Stock of the Company pursuant to an offering registered under the Securities Act on Form S-1 or Form SB-1 (or any comparable successor forms), subject to the limitations on transfers imposed by this Agreement, the Company shall use its reasonable best efforts to facilities and expedite transfers of Registrable Securities pursuant to SEC Rule 144 under the Securities Act, which efforts shall include timely notice to its transfer agent to expedite such transfers of Registrable Securities.

 

2.11                           Form S-3 Registration. In case the Company shall receive from Holders holding Registrable Securities anticipated to have an aggregate sale price (net underwriting discounts and commissions, if any) in excess of $7,500,000 a written request or requests that the Company effect a registration on Form S-3 and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, the Company will:

 

(a)                                  promptly give written notice of the proposed registration, and any related qualification of compliance, to all other Holders; and

 

(b)                                 as soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder’s or Holders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written request given within fifteen (15) days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance, pursuant to this Section 2.11: (1) if Form S-3 is not then available for such offering by the Holders; (2) if the Company shall furnish to the Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board, it would be materially detrimental to the Company and its stockholders for such Form S-3 registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a period of not more than ninety (90) days after receipt of the request of the Holder or Holders under this Section 2.11; provided, however, that the Company shall not utilize this right more than one (1) time in any twelve (12) month period and provided further that the Company shall not register any securities for the account of itself or any other stockholder during such ninety (90) day period (other than a registration relating solely to the sale of securities of participants in a Company stock plan, a registration relating to a corporate reorganization or transaction under SEC Rule 145, a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities, or a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered); or (3) it any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance.

 

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(c)                                  Subject to the foregoing, the Company shall file a registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders. All expenses incurred in connection with a registration requested pursuant to Section 2.11, including (without limitation) all registration, filing, qualification, printer’s and accounting fees and the reasonable fees and disbursements of one (1) counsel for the selling Holder or Holders and counsel for the Company, but excluding any underwriters’ discounts or commissions associated with Registrable Securities, shall be borne by the Company. Registrations effected pursuant to this Section 2.11 shall not be counted as demands for registration or registrations effected pursuant to Sections 2.1.

 

(d)                                 If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as part of their request made pursuant to this Section 2.11 and the Company shall include such information in the written notice referred to in Section 2.11(a). The provisions of Section 2.1(b) shall be applicable to such request (with the substitution of Section 2.11 for references to Section 2.1).

 

2.12                           Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this Section 2 may be assigned (but only with all related obligations) by a Holder to a transferee or assignee of such securities that (i) is a subsidiary, Affiliate, parent, partner, member, limited partner, retired partner, retired member or stockholder of a Holder, (ii) is a Holder’s family member or trust for the benefit of an individual Holder, or (iii), after such assignment or transfer, holds at least 381,400 shares of Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends, combinations and other recapitalizations); provided that: (a) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; (b) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement, including without limitation the provisions of Section 2.14 below; and (c) such assignment shall be effective only if immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Securities Act. For the purposes of determining the number of shares of Registrable Securities held by a transferee or assignee, the holdings of transferee or assignee (i) that is a subsidiary, parent, partner, limited partner, retired partner, member, retired member or stockholder of a Holder; (ii) that is an Affiliate of the Holder, which means with respect to a limited liability company or a limited liability partnership, a fund or entity managed by the same manager or managing member or general partner or management company or by an entity controlling, controlled by, or under common control with such manager or managing member or general partner or management company, (iii) who is a Holder’s Immediate Family Member, or (iv) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member, shall be aggregated together and with those of the assigning Holder; provided that all assignees and transferees who would not qualify individually for assignment of registration rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices or taking any action under this Section 2.

 

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2.13                           Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the Registrable Securities then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder (a) to include such securities in any registration unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of such securities will not reduce the amount of the Registrable Securities of the Holders that are included or (b) to demand registration of any securities held by such holder or prospective holder.

 

2.14                           “Market Stand-Off” Agreement. Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the Company’s IPO and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days) (i) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock held immediately prior to the effectiveness of the Registration Statement for such offering, or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash or otherwise. The foregoing provisions of this Section 2.14 shall apply only to the Company’s IPO, shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, and shall only be applicable to the Holders if all officers, directors and greater than one percent (1%) stockholders of the Company enter into similar agreements. The underwriters in connection with the Company’s IPO are intended third-party beneficiaries of this Section 2.14 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in the Company’s IPO that are consistent with this Section 2.14 or that are necessary to give further effect thereto. Any discretionary waiver or termination of the restrictions of any or all of such agreements by the Company or the underwriters shall apply to all Holders subject to such agreements pro rata based on the number of shares subject to such agreements.

 

In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Registrable Securities of each Holder (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period.

 

2.15                           Termination of Registration Rights.

 

(a)                                  No Holder shall be entitled to exercise any right provided for in this Section 2 after five (5) years following the consummation of the IPO.

 

(b)                                 The rights set forth in this Section 2 shall terminate (i) upon a Deemed Liquidation Event, as such term is defined in the Company’s Amended and Restated Certificate of Incorporation and (ii) as to any Holder, when the Registrable

 

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Securities held by such Holder (together with any Affiliate of such Holder with whom such Holder must aggregate its sales under SEC Rule 144) could be sold without restriction under SEC Rule 144(k) within a ninety (90) day period.

 

3.                                       Information and Observer Rights.

 

3.1                                 Delivery of Financial Statements. The Company shall deliver to each Investor that holds at least 381,400 shares of Series A Preferred Stock issued to it pursuant to the Purchase Agreement (each a “Major Investor”):

 

(a)                                  as soon as practicable, but in any event within one hundred twenty (120) days after the end of each fiscal year of the Company (or one hundred and eighty (180) days after the end of the Company’s fiscal year ending December 31, 2006), a balance sheet and income statement as of the last day of such year, a statement of stockholders’ equity and cash flows for such year and a comparison between the actual figures for such year, the comparable figures for the prior year and the comparable figures included in the Budget (as defined below) for such year, with an explanation of any material differences between them and a schedule as to the sources and applications of funds for such year, such year-end financial reports to be in reasonable detail, prepared in accordance with GAAP (except that the financial report may (i) be subject to normal year-end audit adjustments and (ii) not contain all notes thereto which may be required in accordance with GAAP), and audited and certified by independent public accountants of nationally recognized standing selected by the Company;

 

(b)                                 as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company (or sixty (60) days after the end of each of the first three quarters of the Company’s fiscal year ending December 31, 2007), an unaudited income statement, schedule as to the sources and application of funds for such fiscal quarter, an unaudited balance sheet and a statement of stockholders’ equity and cash flows as of the end of such fiscal quarter;

 

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

 

(d)                                 as soon as practicable, but in any event within thirty (30) days following the end of each month, an unaudited income statement, statement of stockholders’ equity and cash flows, and an unaudited profit or loss statement;

 

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(e)                                  as soon as practicable, but in any event thirty (30) days prior to the end of each fiscal year, a budget and business plan for the next fiscal year (collectively, the “Budget”), prepared on a monthly basis, including balance sheets and sources and applications of funds statements for such months and, as soon as prepared, any other budgets or revised budgets prepared by the Company;

 

(f)                                    with respect to the financial statements called for in Subsections (a), (b) and (c) of this Section 3.1, an instrument executed by the Chief Financial Officer and President or Chief Executive Officer of the Company and certifying that such financials were prepared in accordance with GAAP consistently applied with prior practice for earlier periods (with the exception of footnotes that may be required by GAAP) and fairly present the financial condition of the Company and its results of operation for the periods specified therein, subject to year-end audit adjustment;

 

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

 

(h)                                 if for any period the Company shall have any subsidiary whose accounts are consolidated with those of the Company, then in respect of such period the financial statements delivered pursuant to the foregoing sections shall be the consolidated and consolidating financial statements of the Company and all such consolidated subsidiaries;

 

(i)                                     promptly following receipt by the Company, each audit response letter, accountant’s management letter and other written report submitted to the Company by its independent public accountants in connection with an annual or interim audit of the books of the Company or any of its subsidiaries; and

 

(j)                                     promptly after the commencement thereof, notice of all actions, suits, claims, proceedings, investigations and inquiries that could materially and adversely affect the Company or any of its subsidiaries, if any.

 

(k)                                  Notwithstanding anything else in this Section 3.1 to the contrary, the Company may cease providing the information set forth in this Section 3.1 during the period starting with the date sixty (60) days prior to the Company’s good faith estimate of the date of filing of, and ending on a date one hundred eighty (180) days after the effective date of the registration effecting the IPO; provided that the Company is actively employing its reasonable best efforts to cause such registration statement to become effective.

 

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3.2                                 Inspection. The Company shall permit each Major Investor and such persons as each Major Investor may designate, at such Major Investor’s expense, to visit and inspect the Company’s properties, to examine its books of account and records and to discuss the Company’s affairs, finances and accounts with its officers, employees and public accountants (and the Company hereby authorizes said accountants to discuss with such Major Investor and such designees such affairs, finances and accounts) all at such reasonable times as may be reasonably requested by the Major Investor; provided, however, that the Company shall not be obligated pursuant to this Section 3.2 to provide access to any information which it reasonably considers to be a trade secret or similar confidential information or would adversely affect the attorney-client privilege between the Company and its counsel.

 

3.3                                 Termination of Information and Inspection Covenants. The covenants set forth in Section 3.1 and Section 3.2 shall terminate as to the Major Investors and be of no further force or effect immediately prior to the consummation of the sale of shares of Common Stock in the Company’s Qualified Public Offering.

 

3.4                                 Confidentiality. Each Investor agrees that such Investor will keep confidential and will not disclose or divulge any confidential information obtained from the Company pursuant to the terms of this Agreement, unless such confidential information (i) is known or becomes known to the public in general (other than as a result of a breach of this Section 3.4 by such Investor), (ii) is or has been independently developed or conceived by the Investor without use of the Company’s confidential information or (iii) is or has been made known or disclosed to the Investor by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that an Investor may disclose confidential information (a) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company, (b) to any prospective investor of any Registrable Securities from such Investor as long as such prospective investor agrees to be bound by the provisions of this Section 3.4, (c) to any Affiliate, partner (including, without limitation, any existing or prospective limited partner), member, stockholder or wholly owned subsidiary of such Investor in the ordinary course of business, or (d) as may otherwise be required by law, provided that the Investor takes reasonable steps to minimize the extent of any such required disclosure. The Company acknowledges that the Investors are in the business of venture capital investing and therefore review the business plans and related proprietary information of many enterprises, including enterprises which may have products or services which compete directly or indirectly with those of the Company. Nothing in this Agreement shall preclude or in any way restrict the Investors from investing or participating in any particular enterprise whether or not such enterprise has products or services which compete with those of the Company.

 

4.                                       Right of First Offer.

 

4.1                                 Right of First Offer. Subject to the terms and conditions specified in this Section 4.1, and applicable securities laws, in the event the Company proposes to offer or sell any New Securities, the Company shall first make an offering of such New Securities to each Investor in accordance with the following provisions of this Section 4.1. And Investor shall be entitled to apportion the right of first offer hereby granted it among itself and its partners, members and Affiliates in such proportions as it deems appropriate.

 

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(a)                                  The Company shall deliver a notice, in accordance with the provisions of Section 6.5 hereof, (the “Offer Notice”) to each of the Investors stating (i) its bona fide intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such New Securities.

 

(b)                                 By written notification received by the Company, within ten (10) calendar days after receipt of the Offer Notice by the Investors, each of the Investors may elect to purchase or obtain, at the price and on the terms specified in the Offer Notice, up to that portion of such New Securities which equals the proportion that the number of shares of Common Stock issued and held, or issuable upon conversion of the Series A Preferred Stock (and any other securities convertible into, or otherwise exercisable or exchangeable for, shares of Common Stock) then held, by such Investor bears to the total number of shares of Common Stock of the Company then issued and outstanding (assuming full conversion and exercise of all Convertible Securities and Options). The Company shall promptly, in writing, inform each Investor that elects to purchase all the shares available to it (each, a “Fully-Exercising Investor”) of any other Investor’s failure to do likewise. During the five (5) day period commencing after receipt of such information, each Fully-Exercising Investor shall be entitled to obtain that portion of the New Securities for which Investors were entitled to subscribe but which were not subscribed for by the Investors which is equal to the proportion that the number of shares of Common Stock issued and held, or issuable upon conversion of the Series A Preferred Stock then held, by such Fully-Exercising Investor bears to the total number of shares of Common Stock issued and held, or issuable upon conversion of the Series A Preferred Stock then held, by all Fully-Exercising Investors who wish to purchase such unsubscribed shares.

 

(c)                                  To the extent that the New Securities referred to in the Offer Notice are not elected to be purchased or obtained as provided in Section 4.1 (b) hereof, the Company may, during the ninety (90) day period following the expiration of the period provided in Section 4.1 (b) hereof, offer the remaining unsubscribed portion of such New Securities (collectively, the “Refused Securities”) to any person or persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice. If the Company does not enter into an agreement for the sale of the New Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered to the Investors in accordance with this Section 4.1.

 

(d)                                 The right of first offer in this Section 4.1 shall not be applicable to: (i) shares of Common Stock issued or deemed issued as a dividend or distribution on Series A Preferred Stock; (ii) shares of Common Stock issued or issuable by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by Article Fourth, Section B.4(e) and Article Fourth, Section B.4(f) of the Company’s Amended and Restated Certificate of Incorporation; (iii) up to 2,205,650 shares of Common Stock, including Options therefor (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar

 

19

 

recapitalization affecting such shares), issued to employees or directors of, or consultants or advisors to, the Corporation or any of its subsidiaries pursuant to the Company’s 2000 Stock Option Plan and 2007 Stock Option Plan, whether issued before or after the date hereof (provided that any Options for such shares that expire or terminate unexercised or any restricted stock repurchased by the Corporation at cost shall not be counted toward such maximum number unless and until such shares are regranted as new stock grants (or as new Options) pursuant to the terms of any such plan, agreement or arrangement); (iv) shares of Common Stock or Convertible Securities actually issued upon the exercise of Options or shares of Common Stock actually issued upon the conversion or exchange of Convertible Securities, in each case provided such issuance is pursuant to the terms of such Option or Convertible Security, (v) shares of Common Stock issued in connection with a “public offering” that is registered under the Securities Act, or (vi) shares of Series A Preferred Stock issued pursuant to the Purchase Agreement.

 

(e)                                  The right of first offer set forth in this Section 4.1 may not be assigned or transferred except that (i) such right is assignable by each Investor to any Affiliate of such Investor, and (ii) such right is assignable by any Investor to any other Investor.

 

4.2                                 Termination. The provisions of this Section 4 shall terminate immediately prior to the consummation of the Company’s Qualified Public Offering.

 

5.                                       Additional Covenants.

 

5.1                                 Insurance. As soon as reasonably practicable following the date hereof, the Company shall obtain, and thereafter so long as any Series A Preferred Stock remains outstanding maintain, from financially sound and reputable insurers (i) Directors and Officers Errors and Omissions insurance in coverage amounts satisfactory to the Investors; (ii) property and casualty insurance in coverage amounts satisfactory to the Investors and (iii) unless otherwise determined by the Board, term “key-person” insurance in coverage amounts of at least $1,000,000 on the life of each of John Suh, Brian Liu, Brian Lee, Edward Hartman and Frank Monestere and any other executive officer in amounts determined by the Board. Each “key person” policy shall name the Company as loss payee and neither policy shall be cancelable by the Company without prior approval of the Board, including the Investor Nominees.

 

5.2                                 Employee Agreements. The Company will cause each person now or hereafter employed by it or any subsidiary with access to confidential information and/or trade secrets to enter into an employment agreement containing provisions relating to non-disclosure and invention assignment in the form attached hereto as Exhibit A. The Company will cause each person now or hereafter engaged by the Company or any subsidiary as a consultant/independent contractor to enter into an independent contractor agreement containing provisions relating to non-disclosure and invention assignment in the form attached hereto as Exhibit B. In addition, the Company shall not amend, modify, terminate, waive or otherwise alter, in whole or in part, the non-disclosure and invention assignment provisions in any of the above-referenced agreements between the Company and any employee without the consent of the Investor Nominees.

 

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5.3                                 Employee Vesting. Unless approved by the Board (including the Investor Nominees) all future employees and consultants of the Company who shall purchase, or receive options to purchase, shares of the Company’s capital stock following the date hereof shall be required to execute stock purchase or option agreements providing for (i) vesting of shares over a four-year period with the first twenty-five percent (25%) of such shares vesting following twelve (12) months of continued employment or services, and the remaining shares vesting in equal monthly or annual installments over the following three (3) year period and (ii) a one hundred eighty (180)-day lockup period in connection with the Company’s IPO. The Company shall retain a “right of first refusal” on employee transfers until the Company’s IPO and the right to repurchase unvested shares at cost, or fair market value, if less.

 

5.4                                 Meetings of the Board of Directors. The Board shall meet no less than once every three (3) months either in person or via teleconference or other similar means.

 

5.5                                 Compensation of Directors. The Company shall promptly reimburse in full each Director of the Company who is not an employee of the Company for all of his reasonable out-of-pocket expenses incurred in attending each meeting of the Board of Directors or any Committee thereof.

 

5.6                                 Corporate Existence. The Company shall maintain its corporate existence.

 

5.7                                 By-laws. The Company shall at all times cause its By-laws to provide that unless otherwise required by the laws of the State of Delaware, any two (2) directors shall have the right to call a meeting of the Board of Directors. The Company shall at all times maintain provisions in its By-laws indemnifying all directors against liability and absolving all directors from liability to the Company and its stockholders to the maximum extent permitted under the laws of the State of Delaware.

 

5.8                                 Restrictive Agreements Prohibited. Neither the Company nor any of its subsidiaries shall become a party to any agreement which by its terms expressly restricts the Company’s performance of this Agreement or any other Transaction Document.

 

5.9                                 Affiliated Transactions. All transactions (other than the purchase of the Company’s on-line services in the ordinary course) by and between the Company and any officer, director or holder of at least one percent (1%) of the fully diluted capital stock of the Company or persons known by the Company to be controlling, controlled by, under common control with or otherwise affiliated with such officer, director or holder shall be conducted on an arm’s-length basis, shall be on terms and conditions no less favorable to the Company than could be obtained from nonrelated persons and shall be approved in advance by the Investor Nominees.

 

5.10                           Successor Indemnification. In the event that the Company or any of its successors or assigns (i) consolidates with or merges into any other entity and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any person or entity, then, and in each such case, to the extent necessary, proper provision shall be made so that the successors and assigns of the Company assume the obligations of the Company with respect to indemnification of members of the Board of Directors as in effect immediately prior to such transaction, whether

 

21

 

in the Company’s bylaws, Amended and Restated Certificate of Incorporation, or elsewhere, as the case may be.

 

5.11                           Termination of Covenants. The covenants set forth in this Section 5, except as provided below, shall terminate and be of no further force or effect upon the consummation of a Qualified Public Offering.

 

6.                                       Miscellaneous.

 

6.1                                 Transfers, Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

6.2                                 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to its principles of conflicts of laws.

 

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

 

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

 

6.5                                 Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their address as set forth on the signature page or Schedule A hereto, or to such email address, facsimile number or address as subsequently modified by written notice given in accordance with this Section 7.5. If notice is given to the Company, a copy shall also be sent to Latham & Watkins LLP, 633 West Fifth Street, Suite 4000, Los Angeles, CA 90071-2007, Attention: David M. Hernand, Esq., Fax No.: (213) 891-8763, e-mail: david.hernand@lw.com.

 

6.6                                 Costs of Enforcement. If any Party to this Agreement seeks to enforce its rights under this Agreement by legal proceedings, the non-prevailing Party shall pay all costs and expenses incurred by the prevailing Party, including, without limitation, all reasonable attorneys’ fees.

 

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6.7                                 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the Registrable Securities then outstanding. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Registrable Securities then outstanding, each future holder of all such Registrable Securities, and the Company. Notwithstanding the foregoing, this Agreement may not be amended or terminated and the observance of any term hereunder may not be waived with respect to any Investor without the written consent of such Investor, unless such amendment, termination or waiver applies to all Investors in the same fashion (it being agreed that a waiver of the provisions of Section 4 with respect to a particular transaction shall be deemed to apply to all Investors in the same fashion if such waiver does so by its terms, notwithstanding the fact that certain Investors may nonetheless, by agreement with the Company, purchase securities in such transaction). The Company shall give prompt written notice of any amendment or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, termination or waiver. Any amendment, termination or waiver effected in accordance with this Section 6.7 shall be binding on all parties hereto, even if they do not execute such consent. No waivers of or exceptions to any term, condition or provision of this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.

 

6.8                                 Severability. The invalidity of unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision

 

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

 

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

 

6.11                           Transfers of Rights. Each Investor hereto hereby agrees that it will not, and may, not assign any of its rights and obligations hereunder, unless such rights and obligations are assigned by such Investor to (a) any person or entity to which Registrable Securities are transferred by such Investor, or (b) to any Affiliate of such Investor, and, in each case, such transferee shall be deemed an “Investor” for purposes of this Agreement; provided that such assignment of rights shall be contingent upon the transferee providing a written instrument to the Company notifying the Company of such transfer and assignment and agreeing in writing to be bound by the terms of this Agreement.

 

6.12                           Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall

 

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any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

6.13                           Remedies. It is specifically understood and agreed that any breach of the provisions of this Agreement by any Person subject hereto will result in irreparable injury to the other parties hereto, that the remedy at law alone will be an inadequate remedy for such breach, and that, in addition to any other legal or equitable remedies which they may have, such other parties may seek judicial relief to enforce their respective rights by actions for specific performance (to the extent permitted by law) and the Company may refuse to recognize any unauthorized transferee as one of its stockholders for any purpose, including, without limitation, for purposes of dividend and voting rights, until the relevant party or parties have complied with all applicable provisions of this Agreement.

 

6.14                           Dispute Resolution. Any unresolved controversy or claim arising out of or relating to this Agreement, except as otherwise provided in this Agreement, shall be submitted to arbitration by one arbitrator mutually agreed upon by the parties, and if no agreement can be reached within thirty (30) days after names of potential arbitrators have been proposed by the American Arbitration Association (the “AAA”), then by one arbitrator having reasonable experience in corporate finance transactions of the type provided for in this Agreement and who is chosen by the AAA. The arbitration shall take place in the State of New York, in accordance with the AAA rules then in effect, and judgment upon any award rendered in such arbitration will be binding and may be entered in any court having jurisdiction thereof. There shall be limited discovery prior to the arbitration hearing as follows: (a) exchange of witness lists and copies of documentary evidence and documents relating to or arising out of the issues to be arbitrated, (b) depositions of all party witnesses and (c) such other depositions as may be allowed by the arbitrators upon a showing of good cause. Depositions shall be conducted in accordance with the rules of civil procedure in the State of New York, the arbitrator shall be required to provide in writing to the parties the basis for the award or order of such arbitrator, and a court reporter shall record all hearings, with such record constituting the official transcript of such proceedings. The prevailing party shall be entitled to reasonable attorney’s fees, costs, and necessary disbursements in addition to any other relief to which such party may be entitled. Each of the parties to this Agreement consents to personal jurisdiction for any equitable action sought in a U.S. District Court for the Southern District of New York or any court of the State of New York having subject matter jurisdiction.

 

[Remainder of Page Intentionally Left Blank]

 

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

 

	
 
    	
LEGALZOOM.COM,   INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Brian   Liu
    
	
 
    	
Name:
    	
Brian   Liu
    
	
 
    	
Title:
    	
Chairman   of the Board
    
	
 
    	
Address:
    	
7083   Hollywood Blvd, Suite 180
    
	
 
    	
 
    	
Los   Angeles, CA 90028
    

 

INVESTORS’ RIGHTS AGREEMENT

 

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
POLARIS   VENTURE PARTNERS V, L.P.
    
	
 
    	
By:
    	
POLARIS   VENTURE MANAGEMENT CO. V, L.L.C.
    
	
 
    	
 
    	
ITS   GENERAL PARTNER
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   William   E. Bilodeau
    
	
 
    	
Name:
    	
William   E. Bilodeau
    
	
 
    	
Title:
    	
Attorney-in-fact
    
	
 
    	
Address:
    	
1000   Winter Street, Suite 3350
    
	
 
    	
 
    	
Waltham,   MA 02451
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
POLARIS   VENTURE PARTNERS ENTREPRENEURS’ FUND V, L.P.
    
	
 
    	
By:
    	
POLARIS   VENTURE MANAGEMENT CO. V, L.L.C.
    
	
 
    	
 
    	
ITS   GENERAL PARTNER
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   William   E. Bilodeau
    
	
 
    	
Name:
    	
William   E. Bilodeau
    
	
 
    	
Title:
    	
Attorney-in-fact
    
	
 
    	
Address:
    	
1000   Winter Street, Suite 3350
    
	
 
    	
 
    	
Waltham,   MA 02451
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
POLARIS   VENTURE PARTNERS FOUNDERS’ FUND V, L.P.
    
	
 
    	
By:
    	
POLARIS   VENTURE MANAGEMENT CO. V, L.L.C.
    
	
 
    	
 
    	
ITS   GENERAL PARTNER
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   William   E. Bilodeau
    
	
 
    	
Name:
    	
William   E. Bilodeau
    
	
 
    	
Title:
    	
Attorney-in-fact
    
	
 
    	
Address:
    	
1000   Winter Street, Suite 3350
    
	
 
    	
 
    	
Waltham,   MA 02451
    
				

 

INVESTORS’ RIGHTS AGREEMENT

 

 

	
 
    	
INVESTORS   (cont):
    
	
 
    	
 
    	
 
    
	
 
    	
POLARIS   VENTURE PARTNERS SPECIAL FOUNDERS’ FUND V, L.P.
    
	
 
    	
By:
    	
POLARIS   VENTURE MANAGEMENT CO. V, L.L.C.
    
	
 
    	
 
    	
ITS   GENERAL PARTNER
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   William   E. Bilodeau
    
	
 
    	
Name: 
    	
William   E. Bilodeau
    
	
 
    	
Title: 
    	
Attorney-in-fact
    
	
 
    	
Address:
    	
1000   Winter Street, Suite 3350
    
	
 
    	
 
    	
Waltham,   MA 02451
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
KAYNE   ANDERSON PRIVATE INVESTORS, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
Address:
    	
1800   Avenue of the Stars
    
	
 
    	
 
    	
Suite 200
    
	
 
    	
 
    	
Los   Angeles, CA 90067
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Michael   Madden
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Thomas   Newby
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Thomas   Kelly
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Michael   Montgomery
    
					

 

INVESTORS’ RIGHTS AGREEMENT

 

 

	
 
    	
INVESTORS   (cont):
    
	
 
    	
 
    	
 
    
	
 
    	
POLARIS   VENTURE PARTNERS SPECIAL FOUNDERS’ FUND V, L.P.
    
	
 
    	
By:
    	
POLARIS   VENTURE MANAGEMENT CO. V, L.L.C.
    
	
 
    	
 
    	
ITS   GENERAL PARTNER
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name: 
    	
 
    
	
 
    	
Title: 
    	
 
    
	
 
    	
Address:
    	
1000   Winter Street, Suite 3350
    
	
 
    	
 
    	
Waltham,   MA 02451
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
KAYNE   ANDERSON PRIVATE INVESTORS, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ R   Nell Malik
    
	
 
    	
Name:
    	
R Nell   Malik
    
	
 
    	
Title:
    	
Sr.   Managing Director
    
	
 
    	
Address:
    	
1800   Avenue of the Stars
    
	
 
    	
 
    	
Suite 200
    
	
 
    	
 
    	
Los   Angeles, CA 90067
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Michael   Madden
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Thomas   Newby
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Thomas   Kelly
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Michael   Montgomery
    
					

 

INVESTORS’ RIGHTS AGREEMENT

 

 

	
 
    	
INVESTORS   (cont):
    
	
 
    	
 
    	
 
    
	
 
    	
POLARIS   VENTURE PARTNERS SPECIAL FOUNDERS’ FUND V, L.P.
    
	
 
    	
By:
    	
POLARIS   VENTURE MANAGEMENT CO. V, L.L.C.
    
	
 
    	
 
    	
ITS   GENERAL PARTNER
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name: 
    	
 
    
	
 
    	
Title: 
    	
 
    
	
 
    	
Address:
    	
1000   Winter Street, Suite 3350
    
	
 
    	
 
    	
Waltham,   MA 02451
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
KAYNE   ANDERSON PRIVATE INVESTORS, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
Address:
    	
1800   Avenue of the Stars
    
	
 
    	
 
    	
Suite 200
    
	
 
    	
 
    	
Los   Angeles, CA 90067
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/   Michael   Madden
    
	
 
    	
Michael   Madden
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Thomas   Newby
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Thomas   Kelly
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Michael   Montgomery
    
					

 

INVESTORS’ RIGHTS AGREEMENT

 

 

	
 
    	
INVESTORS   (cont):
    
	
 
    	
 
    	
 
    
	
 
    	
POLARIS   VENTURE PARTNERS SPECIAL FOUNDERS’ FUND V, L.P.
    
	
 
    	
By:
    	
POLARIS   VENTURE MANAGEMENT CO. V, L.L.C.
    
	
 
    	
 
    	
ITS   GENERAL PARTNER
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name: 
    	
 
    
	
 
    	
Title: 
    	
 
    
	
 
    	
Address:
    	
1000   Winter Street, Suite 3350
    
	
 
    	
 
    	
Waltham,   MA 02451
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
KAYNE   ANDERSON PRIVATE INVESTORS, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
Address:
    	
1800   Avenue of the Stars
    
	
 
    	
 
    	
Suite 200
    
	
 
    	
 
    	
Los   Angeles, CA 90067
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Michael   Madden
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/   Clinton Toms Newby III
    
	
 
    	
Clinton   Toms Newby III
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/   Thomas   Kelly
    
	
 
    	
Thomas   Kelly
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Michael   Montgomery
    
					

 

INVESTORS’ RIGHTS AGREEMENT

 

 

	
 
    	
INVESTORS   (cont):
    
	
 
    	
 
    	
 
    
	
 
    	
POLARIS   VENTURE PARTNERS SPECIAL FOUNDERS’ FUND V, L.P.
    
	
 
    	
By:
    	
POLARIS   VENTURE MANAGEMENT CO. V, L.L.C.
    
	
 
    	
 
    	
ITS   GENERAL PARTNER
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name: 
    	
 
    
	
 
    	
Title: 
    	
 
    
	
 
    	
Address:
    	
1000   Winter Street, Suite 3350
    
	
 
    	
 
    	
Waltham,   MA 02451
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
KAYNE   ANDERSON PRIVATE INVESTORS, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
Address:
    	
1800   Avenue of the Stars
    
	
 
    	
 
    	
Suite 200
    
	
 
    	
 
    	
Los   Angeles, CA 90067
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Michael   Madden
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Thomas   Newby
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Thomas   Kelly
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/   Michael   Montgomery
    
	
 
    	
Michael   Montgomery
    
					

 

INVESTORS’ RIGHTS AGREEMENT

 

 

	
 
    	
INVESTORS   (cont):
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   James   Min
    
	
 
    	
James   Min
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Robert   Louv
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Shiv   Kapoor
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Daniel   Williams
    

 

INVESTORS’ RIGHTS AGREEMENT

 

 

	
 
    	
INVESTORS   (cont):
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
James   Min
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Robert   Louv
    
	
 
    	
Robert   Louv
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Shiv   Kapoor
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Daniel   Williams
    

 

INVESTORS’ RIGHTS AGREEMENT

 

 

	
 
    	
INVESTORS   (cont):
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
James   Min
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Robert   Louv
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Shiv   Kapoor
    
	
 
    	
Shiv   Kapoor
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Daniel   Williams
    

 

INVESTORS’ RIGHTS AGREEMENT

 

 

	
 
    	
INVESTORS   (cont):
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
James   Min
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Robert   Louv
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Shiv   Kapoor
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Daniel   Williams
    
	
 
    	
Daniel   Williams
    

 

INVESTORS’ RIGHTS AGREEMENT

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00204-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00204-of-00352.parquet"}]]