Document:

ex10-2.htm

Exhibit 10.2 

 

 

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

Original Issue Date: August 16, 2016

Original Conversion Price (subject to adjustment herein): $2.00

 

$448,000.00

 

ORIGINAL ISSUE DISCOUNT 

SENIOR SECURED CONVERTIBLE DEBENTURE

DUE august 1, 2017

 

THIS ORIGINAL ISSUE DISCOUNT SENIOR SECURED CONVERTIBLE DEBENTURE is one of a series of duly authorized and validly issued Original Issue Discount Senior Secured Convertible Debentures of PFO GLOBAL, INC., a Nevada corporation (the “Company”), having its principal place of business at 14401 Beltwood Pkwy W., Suite 115 , Farmers Branch, TX 75244, designated as its Original Issue Discount Senior Secured Convertible Debenture due August 1, 2017 (this debenture, the “Debenture” and, collectively with the other debentures of such series, the “Debentures”).

 

FOR VALUE RECEIVED, the Company promises to pay to Hillair Capital Investments, L.P. or its registered assigns (the “Holder”), or shall have paid pursuant to the terms hereunder, the principal sum of $448,000.00 on August 1, 2017 (the “Maturity Date”) or such earlier date as this Debenture is required or permitted to be repaid as provided hereunder. This Debenture is subject to the following additional provisions:

 

Section 1.     Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Debenture, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:

 

“Alternate Consideration” shall have the meaning set forth in Section 5(e).

 

 

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“Bankruptcy Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts, (g) the Company or any Significant Subsidiary thereof admits in writing that it is generally unable to pay its debts as they become due, (h) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

 

“Base Conversion Price” shall have the meaning set forth in Section 5(b).

 

“Beneficial Ownership Limitation” shall have the meaning set forth in Section 4(d). 

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

“Buy-In” shall have the meaning set forth in Section 4(c)(v).

 

“Change of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 33% of the voting securities of the Company (other than by means of conversion or exercise of the Debentures and the Securities issued together with the Debentures), (b) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately prior to such transaction own less than 66% of the aggregate voting power of the Company or the successor entity of such transaction, (c) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders of the Company immediately prior to such transaction own less than 66% of the aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a three year period of more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.

 

 

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“Conversion” shall have the meaning ascribed to such term in Section 4. 

 

“Conversion Date” shall have the meaning set forth in Section 4(a).

 

“Conversion Price” shall have the meaning set forth in Section 4(b).

 

“Conversion Schedule” means the Conversion Schedule in the form of Schedule 1 attached hereto.

 

“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Debenture in accordance with the terms hereof.

 

“Debenture Register” shall have the meaning set forth in Section 3(c).

 

“Dilutive Issuance” shall have the meaning set forth in Section 5(b).

 

“Dilutive Issuance Notice” shall have the meaning set forth in Section 5(b).

 

“Equity Conditions” means, during the period in question, (a) the Company shall have duly honored all conversions and redemptions scheduled to occur or occurring by virtue of one or more Notices of Conversion of the Holder, if any, (b) the Company shall have paid all liquidated damages and other amounts owing to the Holder in respect of this Debenture, (c)(i) there is an effective registration statement pursuant to which the Holder is permitted to utilize the prospectus thereunder to resell all of the shares of Common Stock issuable pursuant to the Transaction Documents (and the Company believes, in good faith, that such effectiveness will continue uninterrupted for the foreseeable future) or (ii) all of the Conversion Shares issuable pursuant to the Transaction Documents may be resold pursuant to Rule 144 without volume or manner-of-sale restrictions or current public information requirements as determined by the counsel to the Company as set forth in a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the Holder, (d) the Common Stock is trading on a Trading Market and all of the shares issuable pursuant to the Transaction Documents are listed or quoted for trading on such Trading Market (and the Company believes, in good faith, that trading of the Common Stock on a Trading Market will continue uninterrupted for the foreseeable future), (e) there is a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock for the issuance of all of the shares then issuable pursuant to the Transaction Documents, (f) there is no existing Event of Default and no existing event which, with the passage of time or the giving of notice, would constitute an Event of Default, (g) the issuance of the shares in question (or, in the case of an Optional Redemption, the shares issuable upon conversion in full of the Optional Redemption Amount) to the Holder would not violate the limitations set forth in Section 4(d) herein, (h) there has been no public announcement of a pending or proposed Fundamental Transaction or Change of Control Transaction that has not been consummated, (i) the applicable Holder is not in possession of any information provided by the Company that constitutes, or may constitute, material non-public information and (j) the Conversion Price as of the applicable date in question is equal to $1.90 or more (subject to adjustment for forward and reverse stock splits and the like that occur after the Original Issue Date).

 

 

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“Event of Default” shall have the meaning set forth in Section 8(a).

 

“Fundamental Transaction” shall have the meaning set forth in Section 5(e).

 

“Late Fees” shall have the meaning set forth in Section 2(d).

 

“Mandatory Default Amount” means the sum of (a) the greater of (i) the outstanding principal amount of this Debenture, divided by the Conversion Price on the date the Mandatory Default Amount is either (A) demanded (if demand or notice is required to create an Event of Default) or otherwise due or (B) paid in full, whichever has a lower Conversion Price, multiplied by the VWAP on the date the Mandatory Default Amount is either (x) demanded or otherwise due or (y) paid in full, whichever has a higher VWAP, or (ii) 130% of the outstanding principal amount of this Debenture, and (b) all other amounts, costs, expenses and liquidated damages due in respect of this Debenture.

 

“New York Courts” shall have the meaning set forth in Section 9(d).

 

“Notice of Conversion” shall have the meaning set forth in Section 4(a).

 

“Optional Redemption” shall have the meaning set forth in Section 6(a).

 

“Optional Redemption Amount” means the sum of (a) 120% of the then outstanding principal amount of the Debenture and (b) all liquidated damages and other amounts due in respect of the Debenture.

 

“Optional Redemption Date” shall have the meaning set forth in Section 6(a).

 

“Optional Redemption Notice” shall have the meaning set forth in Section 6(a).

 

 

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“Optional Redemption Notice Date” shall have the meaning set forth in Section 6(a).

 

“Optional Redemption Period” shall have the meaning set forth in Section 6(a).

 

“Original Issue Date” means the date of the first issuance of the Debentures, regardless of any transfers of any Debenture and regardless of the number of instruments which may be issued to evidence such Debentures.

 

“Permitted Indebtedness” means (a) the indebtedness evidenced by the Debentures, (b) the Indebtedness existing on the Original Issue Date and set forth on Schedule 3.1(bb) to the Purchase Agreement and (c) lease obligations and purchase money indebtedness of up to $50,000, in the aggregate, incurred in connection with the acquisition of capital assets and lease obligations with respect to newly acquired or leased assets.

 

“Permitted Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company) have been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of the Company’s business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in the ordinary course of the Company’s business, and which (x) do not individually or in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the Company and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien, (c) Liens incurred in connection with Permitted Indebtedness under clauses (a) and (b) thereunder and (d) Liens incurred in connection with Permitted Indebtedness under clause (c) thereunder, provided that such Liens are not secured by assets of the Company or its Subsidiaries other than the assets so acquired or leased.

 

“Purchase Agreement” means the Securities Purchase Agreement, dated as of August 16, 2016 among the Company and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.

 

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

 

“Share Delivery Date” shall have the meaning set forth in Section 4(c)(ii).

 

“Successor Entity” shall have the meaning set forth in Section 5(e). 

 

 

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“Trading Day” means a day on which the principal Trading Market is open for trading.

 

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market other than the OTCQB or OTCQX, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Stock is then listed or quoted on OTCQB or OTCQX, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

Section 2.     No Interest or Prepayment.

 

a)     No Payment of Interest. The Company shall not be required to pay regularly scheduled interest to the Holder on the aggregate unconverted and then outstanding principal amount of this Debenture. 

 

b)     Prepayment. Except as otherwise set forth in this Debenture, the Company may not prepay any portion of the principal amount of this Debenture without the prior written consent of the Holder. 

 

Section 3.     Registration of Transfers and Exchanges. 

 

a)     Different Denominations. This Debenture is exchangeable for an equal aggregate principal amount of Debentures of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration of transfer or exchange.

 

 

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b)     Investment Representations. This Debenture has been issued subject to certain investment representations of the original Holder set forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal and state securities laws and regulations. 

 

c)     Reliance on Debenture Register. Prior to due presentment for transfer to the Company of this Debenture, the Company and any agent of the Company may treat the Person in whose name this Debenture is duly registered on the records of the Company regarding registrations and transfers of this Debenture (the “Debenture Register”) as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.

 

Section 4.     Conversion.

 

a)     Voluntary Conversion. At any time after the Original Issue Date until this Debenture is no longer outstanding, this Debenture shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder, at any time and from time to time (subject to the conversion limitations set forth in Section 4(d) hereof). The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”), specifying therein the principal amount of this Debenture to be converted and the date on which such conversion shall be effected (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. To effect conversions hereunder, the Holder shall not be required to physically surrender this Debenture to the Company unless the entire principal amount of this Debenture has been so converted in which case the Holder shall surrender this Debenture as promptly as is reasonably practicable after such conversion without delaying the Company’s obligation to deliver the shares on the Share Delivery Date. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Debenture in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the principal amount(s) converted and the date of such conversion(s). The Company may deliver an objection to any Notice of Conversion within one (1) Business Day of delivery of such Notice of Conversion. In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder, and any assignee by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Debenture, the unpaid and unconverted principal amount of this Debenture may be less than the amount stated on the face hereof.

 

 

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b)     Conversion Price. The conversion price in effect on any Conversion Date shall be equal to $2.00, subject to adjustment herein (the “Conversion Price”). In addition, on each Trigger Date (as defined below), the Conversion Price shall be reduced, and only reduced, to the lesser of (x) the then Conversion Price, as adjusted and taking into consideration any prior resets, or (y) 90% of the effective price per share of securities issued in a Qualified Offering (as defined below), subject to adjustment hereunder. The Company shall notify each Holder of the applicable adjustment to the Conversion Price as of such date (a “Trigger Date Adjustment Notice”). For purposes of clarification, whether or not the Company provides a Trigger Date Adjustment Notice pursuant to this Section 4(b), each Holder shall receive a number of Conversion Shares based upon the Conversion Price as adjusted pursuant to this Section, regardless of whether a Holder accurately refers to such price in any Notice of Conversion. As used herein, “Qualified Offering” means (a) any registered offering of Common Stock and/or Common Stock Equivalents that occurs after the Original Issue Date or (b) any financing (registered or private placement) (or series of financings) of Common Stock and/or Common Stock Equivalents with gross proceeds of, in the aggregate following the Original Issue Date, $4,000,000 or more that occurs after the Original Issue Date. As used herein, the term “Trigger Date” means the date the Company consummates a Qualified Offering.

 

	 	
c)
	
Mechanics of Conversion.

 

i.     Conversion Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of this Debenture to be converted by (y) the Conversion Price.

 

ii.     Delivery of Certificate Upon Conversion. Not later than three (3) Trading Days after each Conversion Date (the “Share Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder (A) a certificate or certificates representing the Conversion Shares which, on or after the six month anniversary of the Original Issue Date or, shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Purchase Agreement) representing the number of Conversion Shares being acquired upon the conversion of this Debenture and (B) a legal opinion of Company counsel as may be requested by the Holder to enable Holder to deposit the Conversion Share certificates in accounts with its prime broker (or other brokerage account), together with the instruction letter to the Transfer Agent and the resolution of the Board of Directors authorizing the Transaction Documents and any additional supporting documentation requested by the Holder (including, without limitation, any instruction letter to the Company’s transfer agent). On or after the six month anniversary of the Original Issue Date or, the Company shall deliver any certificate or certificates required to be delivered by the Company under this Section 4(c) electronically through the Depository Trust Company or another established clearing corporation performing similar functions. 

 

 

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iii.     Failure to Deliver Certificates. If, in the case of any Notice of Conversion, such certificate or certificates and the related legal opinion of Company counsel, the instruction letter to the Transfer Agent and the resolution of the Board of Directors authorizing the Transaction Documents are not delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind such Conversion, in which event the Company shall promptly return to the Holder any original Debenture delivered to the Company and the Holder shall promptly return to the Company the Common Stock certificates issued to such Holder pursuant to the rescinded Conversion Notice. 

 

iv.     Obligation Absolute; Partial Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this Debenture in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In the event the Holder of this Debenture shall elect to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all or part of this Debenture shall have been sought and obtained, and the Company posts a surety bond for the benefit of the Holder in the amount of 150% of the outstanding principal amount of this Debenture, which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to the Holder to the extent it obtains judgment. In the absence of such injunction, the Company shall issue Conversion Shares or, if applicable, cash, upon a properly noticed conversion. If the Company fails for any reason to deliver to the Holder such certificate or certificates and the related legal opinion of Company counsel, the instruction letter to the Transfer Agent and the resolution of the Board of Directors authorizing the Transaction Documents and other supporting documentation pursuant to Section 4(c)(ii) by the Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day on the fifth (5th) Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Share Delivery Date until such certificates and the related legal opinion of Company counsel, the instruction letter to the Transfer Agent, the resolution of the Board of Directors authorizing the Transaction Documents and other supporting documentation are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 8 hereof for the Company’s failure to deliver Conversion Shares within the period specified herein and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

 

 

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v.     Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. In addition to any other rights available to the Holder, if the Company fails for any reason to deliver to the Holder such certificate or certificates by the Share Delivery Date pursuant to Section 4(c)(ii), and if after such Share Delivery Date the Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Conversion Shares which the Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “Buy-In”), then the Company shall (A) pay in cash to the Holder (in addition to any other remedies available to or elected by the Holder) the amount, if any, by which (x) the Holder’s total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that the Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of the Holder, either reissue (if surrendered) this Debenture in a principal amount equal to the principal amount of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued if the Company had timely complied with its delivery requirements under Section 4(c)(ii). For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of this Debenture with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Debenture as required pursuant to the terms hereof.

 

 

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vi.     Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Debenture, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Debentures), not less than such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion of the then outstanding principal amount of this Debenture. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.

 

vii.     Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Debenture. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.

 

viii.     Transfer Taxes and Expenses. The issuance of certificates for shares of the Common Stock on conversion of this Debenture shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that, the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Debenture so converted and the Company shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares.

 

 

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d)     Holder’s Conversion Limitations. The Company shall not effect any conversion of this Debenture, and a Holder shall not have the right to convert any portion of this Debenture, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, the Holder (together with the Holder’s Affiliates, and any Persons acting as a group together with the Holder or any of the Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of this Debenture with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted principal amount of this Debenture beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other Debentures) beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 4(d) applies, the determination of whether this Debenture is convertible (in relation to other securities owned by the Holder together with any Affiliates) and of which principal amount of this Debenture is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s determination of whether this Debenture may be converted (in relation to other securities owned by the Holder together with any Affiliates) and which principal amount of this Debenture is convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, the Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.   For purposes of this Section 4(d), in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the Company, or (iii) a more recent written notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Debenture, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Debenture held by the Holder. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 4(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Debenture held by the Holder and the Beneficial Ownership Limitation provisions of this Section 4(d) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Debenture.

 

 

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Section 5.     Certain Adjustments.

 

a)     Stock Dividends and Stock Splits. If the Company, at any time while this Debenture is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of the Debentures), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Company) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b)     [RESERVED]

 

c)     Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 5(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Debenture (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

 

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d)     Pro Rata Distributions. During such time as this Debenture is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Debenture, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Debenture (without regard to any limitations on conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

 

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e)     Fundamental Transaction. If, at any time while this Debenture is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion of this Debenture, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Debenture), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Debenture is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 4(d) on the conversion of this Debenture). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Debenture following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Debenture and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 5(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Debenture, deliver to the Holder in exchange for this Debenture a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Debenture which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Debenture (without regard to any limitations on the conversion of this Debenture) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Debenture immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Debenture and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Debenture and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

 

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f)     Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Company) issued and outstanding.

 

g)     Notice to the Holder.

 

i.     Adjustment to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Section 5, the Company shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. 

 

ii.     Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Debenture, and shall cause to be delivered to the Holder at its last address as it shall appear upon the Debenture Register, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to convert this Debenture during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein. 

 

 

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Section 6.     Optional Redemption.

 

a)     Optional Redemption at Election of Company. Subject to the provisions of this Section 6(a), at any time after the six month anniversary of the Original Issue Date, the Company may deliver a notice to the Holder (an “Optional Redemption Notice” and the date such notice is deemed delivered hereunder, the “Optional Redemption Notice Date”) of its irrevocable election to redeem some or all of the then outstanding principal amount of this Debenture for cash in an amount equal to the Optional Redemption Amount on the 10th Trading Day following the Optional Redemption Notice Date (such date, the “Optional Redemption Date”, such 10 Trading Day period, the “Optional Redemption Period” and such redemption, the “Optional Redemption”). The Optional Redemption Amount is payable in full on the Optional Redemption Date. The Company may only effect an Optional Redemption if each of the Equity Conditions shall have been met (unless waived in writing by the Holder) on each Trading Day during the period commencing on the Optional Redemption Notice Date through to the Optional Redemption Date and through and including the date payment of the Optional Redemption Amount is actually made in full. If any of the Equity Conditions shall cease to be satisfied at any time during the Optional Redemption Period, then the Holder may elect to nullify the Optional Redemption Notice by notice to the Company within 3 Trading Days after the first day on which any such Equity Condition has not been met (provided that if, by a provision of the Transaction Documents, the Company is obligated to notify the Holder of the non-existence of an Equity Condition, such notice period shall be extended to the third Trading Day after proper notice from the Company) in which case the Optional Redemption Notice shall be null and void, ab initio. The Company covenants and agrees that it will honor all Notices of Conversion tendered from the time of delivery of the Optional Redemption Notice through the date all amounts owing thereon are due and paid in full. The Company’s determination to pay an Optional Redemption in cash shall be applied ratably to all of the holders of the then outstanding Debentures based on their (or their predecessor’s) initial purchases of Debentures pursuant to the Purchase Agreement.

 

 

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b)     Redemption Procedure. The payment of cash pursuant to an Optional Redemption shall be payable on the Optional Redemption Date. If any portion of the payment pursuant to an Optional Redemption shall not be paid by the Company by the applicable due date, interest shall accrue thereon at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law until such amount is paid in full. Notwithstanding anything herein contained to the contrary, if any portion of the Optional Redemption Amount remains unpaid after such date, the Holder may elect, by written notice to the Company given at any time thereafter, to invalidate such Optional Redemption, ab initio, and, with respect to the Company’s failure to honor the Optional Redemption, the Company shall have no further right to exercise such Optional Redemption. The Holder may elect to convert the outstanding principal amount of the Debenture pursuant to Section 4 prior to actual payment in cash for any redemption under this Section 6 by the delivery of a Notice of Conversion to the Company.

 

Section 7.     Negative Covenants. As long as any portion of this Debenture remains outstanding, unless the holders of at least 67% in principal amount of the then outstanding Debentures shall have otherwise given prior written consent, the Company shall not, and shall not permit any of the Subsidiaries to, directly or indirectly:

 

a)     other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of any kind, including, but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

 

b)     other than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

 

c)     amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially and adversely affects any rights of the Holder;

 

 

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d)     repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock or Common Stock Equivalents other than as to (i) the Conversion Shares or Debentures as permitted or required under the Transaction Documents and (ii) repurchases of Common Stock or Common Stock Equivalents of departing officers and directors of the Company, provided that such repurchases shall not exceed an aggregate of $10,000 for all officers and directors during the term of this Debenture; 

 

e)     repay, repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness, other than (i) the Debentures (including the debentures in the form of the Debentures issued to the Holder pursuant to separate securities purchase agreements in 2015), if on a pro-rata basis, or (ii) the Secured Bridge Promissory Notes issued by Pro Fit, as amended, provided that such Secured Bridge Promissory Notes may only be repaid from proceeds of any cash settlement in respect of the lawsuit titled “VSP Labs, Inc. v. Pro Fit Optix, Inc., et al.”;

 

f)     pay cash dividends or distributions on any equity securities of the Company;

 

g)     enter into any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Company (even if less than a quorum otherwise required for board approval); or

 

h)     enter into any agreement with respect to any of the foregoing.

 

Section 8.     Events of Default. 

 

a)     “Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

 

i.     any default in the payment of (A) the principal amount of any Debenture, including, without limitation, in connection with an Optional Redemption, or (B) liquidated damages and other amounts owing to a Holder on any Debenture, as and when the same shall become due and payable (whether on a Conversion Date, Optional Redemption Date or the Maturity Date or by acceleration or otherwise) which default is not cured within 30 Trading Days;

 

ii.     the Company shall fail to observe or perform any other covenant or agreement contained in the Debentures (other than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in clause (x) below) which failure is not cured, if possible to cure, within the earlier to occur of (A) 30 Trading Days after notice of such failure sent by the Holder or by any other Holder to the Company and (B) 30 Trading Days after the Company has become or should have become aware of such failure;

 

 

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iii.     a default or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument) shall occur under (A) any of the Transaction Documents or (B) any other material agreement, lease, document or instrument to which the Company or any Subsidiary is obligated (and not covered by clause (vi) below)  

 

iv.     any representation or warranty made in this Debenture, any other Transaction Documents, any written statement pursuant hereto or thereto or any other report, financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue or incorrect in any material respect as of the date when made or deemed made;

 

v.     the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy Event;

 

vi.     the Company or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than $15,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable; 

 

vii.     the Common Stock shall not be eligible for listing or quotation for trading on a Trading Market and shall not be eligible to resume listing or quotation for trading thereon within thirty Trading Days;

 

viii.     the Company shall be a party to any Change of Control Transaction or Fundamental Transaction or shall agree to sell or dispose of all or in excess of 33% of its assets in one transaction or a series of related transactions (whether or not such sale would constitute a Change of Control Transaction);

 

 

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ix.     the Company does not meet the current public information requirements under Rule 144 with respect to the Securities; 

 

x.     the Company shall fail for any reason to deliver certificates to a Holder prior to the fifth Trading Day after a Conversion Date pursuant to Section 4(c) or the Company shall provide at any time notice to the Holder, including by way of public announcement, of the Company’s intention to not honor requests for conversions of any Debentures in accordance with the terms hereof;

 

xi.     the electronic transfer by the Company of shares of Common Stock through the Depository Trust Company or another established clearing corporation is no longer available or is subject to a “chill”; 

 

xii.     any monetary judgment, writ or similar final process shall be entered or filed against the Company, any Subsidiary or any of their respective property or other assets for more than $50,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of 45 calendar days; or

 

xiii.     a false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that the Equity Conditions are satisfied or that there has been no Equity Conditions Failure or as to whether any Event of Default has occurred.

 

b)     Remedies Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Debenture, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become, at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount. Commencing 5 days after the occurrence of any Event of Default that results in the eventual acceleration of this Debenture, the interest rate on this Debenture shall accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Debenture to or as directed by the Company. In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of the Debenture until such time, if any, as the Holder receives full payment pursuant to this Section 8(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

 

 

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Section 9.     Miscellaneous. 

 

a)     Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, by email attachment, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, or such other facsimile number, email address, or address as the Company may specify for such purposes by notice to the Holder delivered in accordance with this Section 9(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, by email attachment, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or email address or address of the Holder appearing on the books of the Company, or if no such facsimile number or email attachment or address appears on the books of the Company, at the principal place of business of such Holder, as set forth in the Purchase Agreement. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment to the email address set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or email attachment to the email address set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given.

 

b)     Absolute Obligation. Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, liquidated damages, on this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct debt obligation of the Company. This Debenture ranks pari passu with all other Debentures now or hereafter issued under the terms set forth herein.      

 

c)     Lost or Mutilated Debenture. If this Debenture shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new Debenture for the principal amount of this Debenture so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof, reasonably satisfactory to the Company.

 

 

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d)     Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Debenture and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Debenture or the transactions contemplated hereby. If any party shall commence an action or proceeding to enforce any provisions of this Debenture, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

e)     Waiver. Any waiver by the Company or the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Company or the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture on any other occasion. Any waiver by the Company or the Holder must be in writing.

 

f)     Severability. If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Debenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.

 

 

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g)     Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Debenture shall be cumulative and in addition to all other remedies available under this Debenture and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Debenture. The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Debenture.

 

h)     Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

 

i)     Headings. The headings contained herein are for convenience only, do not constitute a part of this Debenture and shall not be deemed to limit or affect any of the provisions hereof.

 

j)     Secured Obligation. The obligations of the Company under this Debenture are secured by all assets of the Company and each Subsidiary pursuant to the Security Agreement and Subsidiary Guarantees.

 

 

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k)     Disclosure. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Debenture, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the Company or its Subsidiaries, the Company shall within two (2) Business Days after such receipt or delivery publicly disclose such material, nonpublic information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company or its Subsidiaries, the Company so shall indicate to the Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute material, nonpublic information relating to the Company or its Subsidiaries.

 

********************* 

 

 

(Signature Pages Follow)

 

 

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IN WITNESS WHEREOF, the Company has caused this Debenture to be duly executed by a duly authorized officer as of the date first above indicated.

 

 

	
PFO GLOBAL, INC.

 

	
By: /s/ Matthew Cevasco       

     Name: Matthew Cevasco

     Title: CEO

 

Facsimile No. for delivery of Notices: 817-488-4690

  

 

26

 

 

ANNEX A

 

NOTICE OF CONVERSION

 

 

The undersigned hereby elects to convert principal under the Original Issue Discount Senior Secured Convertible Debenture due August 1, 2017 of PFO Global, Inc., a Nevada corporation (the “Company”), into shares of common stock (the “Common Stock”), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

 

By the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not exceed the amounts specified under Section 4 of this Debenture, as determined in accordance with Section 13(d) of the Exchange Act.

 

The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock. 

 

	
Conversion calculations:  
	
 

	
 
	
Date to Effect Conversion:

	
 
	
 

	
 
	
Principal Amount of Debenture to be Converted:

	
 
	
 

	
 
	
Number of shares of Common Stock to be issued:

	
 
	
 

	
 
	
 

	
 
	
Signature:

	
 
	
 

	
 
	
Name:

	
 
	
 

	
 
	
Address for Delivery of Common Stock Certificates:

	
 
	
 

	
 
	
Or

	
 
	
 

	
 
	
DWAC Instructions:

	
 
	
 

	
 
	
Broker No:                         

	
 
	
Account No:                    

  

 

27

 

 

Schedule 1

 

CONVERSION SCHEDULE

 

The Original Issue Discount Senior Secured Convertible Debentures due on August 1, 2017 in the aggregate principal amount of $_________ are issued by PFO Global, Inc., a Nevada corporation. This Conversion Schedule reflects conversions made under Section 4 of the above referenced Debenture.

 

Dated: 

 

 

	
 

Date of Conversion

(or for first entry,

Original Issue Date)
	
 

Amount of

Conversion
	
 

Aggregate

Principal

Amount

Remaining

Subsequent to

Conversion

(or original

Principal

Amount)
	
 

Company Attest

	
 

 
	
 
	
 
	
 

	
 

 
	
 
	
 
	
 

	
 

 
	
 
	
 
	
 

	
 

 
	
 
	
 
	
 

	
 

 
	
 
	
 
	
 

	
 

 
	
 
	
 
	
 

	
 

 
	
 
	
 
	
 

	
 

 
	
 
	
 
	
 

	
 

 
	
 
	
 
	
 

 

 

28EX-4.2

 Exhibit 4.2 
  

 
  

 
 EVERBRIDGE,
INC. 
 THIRD AMENDED AND RESTATED 

INVESTOR RIGHTS AGREEMENT 
  

 
  

 
 September 9, 2011 

 Table of Contents 

 

									
	 	  	 	  	 	  	Page	 
			
	 1.
	  	Certain Definitions	  	 	2	  
		  	1.1	  	“Affiliate	  	 	2	  
		  	1.2	  	“Board	  	 	2	  
		  	1.3	  	“Commission	  	 	2	  
		  	1.4	  	“Common Stock	  	 	2	  
		  	1.5	  	“Convertible Securities	  	 	2	  
		  	1.6	  	“Derivative Securities	  	 	2	  
		  	1.7	  	“Exchange Act	  	 	2	  
		  	1.8	  	“Form S-3	  	 	2	  
		  	1.9	  	“Holder	  	 	3	  
		  	1.10	  	“Immediate Family Member	  	 	3	  
		  	1.11	  	“Initiating Holders	  	 	3	  
		  	1.12	  	“New Securities	  	 	3	  
		  	1.13	  	“Preferred Stock Directors	  	 	3	  
		  	1.14	  	“Pool	  	 	4	  
		  	1.15	  	“Qualified Public Offering	  	 	4	  
		  	1.16	  	“Register	  	 	4	  
		  	1.17	  	“Registration Statement	  	 	4	  
		  	1.18	  	“Registrable Securities	  	 	4	  
		  	1.19	  	“Registration Expenses	  	 	4	  
		  	1.20	  	“Securities Act	  	 	5	  
		  	1.21	  	“Selling Expenses	  	 	5	  
		  	1.22	  	“Series A Preferred”	  	 	5	  
			
	 2.
	  	Financial Statements and Reports	  	 	5	  
		  	2.1	  	Annual Reports	  	 	5	  
		  	2.2	  	Termination of Information Rights and Inspection Rights	  	 	5	  
			
	 3.
	  	Additional Information	  	 	5	  
			
	 4.
	  	Inspection Rights	  	 	6	  
			
	 5.
	  	Right of Participation	  	 	6	  
		  	5.1	  	Right of Participation to Purchase New Securities	  	 	6	  
		  	5.2	  	Notice	  	 	6	  
		  	5.3	  	Sale of New Securities	  	 	7	  
		  	5.4	  	Termination and Waiver of Right of Participation	  	 	7	  
			
	 6.
	  	Demand Registration	  	 	7	  
		  	6.1	  	Request for Registration on Form Other Than Form S-3	  	 	7	  
		  	6.2	  	Request for Registration on Form S-3	  	 	8	  
		  	6.3	  	Right of Deferral	  	 	8	  
		  	6.4	  	Registration of Other Securities in Demand Registration	  	 	8	  
		  	6.5	  	Underwriting in Demand Registration	  	 	8	  
			
	 7.
	  	Piggyback Registration	  	 	10	  
		  	7.1	  	Notice of Piggyback Registration and Inclusion of Registrable Securities	  	 	10	  
		  	7.2	  	Underwriting in Piggyback Registration	  	 	10	  

  
 - i – 

									
	 8.
	  	Expenses of Registration	  	 	11	  
			
	 9.
	  	Termination of Registration Rights; Delay of Registration	  	 	11	  
		  	9.1	  	Termination	  	 	11	  
		  	9.2	  	Delay of Registration	  	 	11	  
			
	 10.
	  	Registration Procedures and Obligations	  	 	12	  
			
	 11.
	  	Information Furnished by Holder	  	 	13	  
			
	 12.
	  	Indemnification	  	 	13	  
		  	12.1	  	Company’s Indemnification of Holders	  	 	13	  
		  	12.2	  	Holder’s Indemnification of Company	  	 	14	  
		  	12.3	  	Indemnification Procedure	  	 	15	  
		  	12.4	  	Contribution	  	 	15	  
		  	12.5	  	Conflicts	  	 	15	  
		  	12.6	  	Survival of Obligations	  	 	15	  
			
	 13.
	  	Limitations on Registration Rights Granted to Other Securities	  	 	16	  
			
	 14.
	  	Market Standoff	  	 	16	  
			
	 15.
	  	Reports Under the Exchange Act	  	 	16	  
			
	 16.
	  	Miscellaneous	  	 	17	  
		  	16.1	  	Successors and Assigns	  	 	17	  
		  	16.2	  	Governing Law	  	 	17	  
		  	16.3	  	Headings	  	 	18	  
		  	16.4	  	Notices	  	 	18	  
		  	16.5	  	Amendment of Agreement and Waivers	  	 	18	  
		  	16.6	  	Severability	  	 	19	  
		  	16.7	  	Additional Investors	  	 	19	  
		  	16.8	  	Amendment and Restatement of Prior Agreement	  	 	19	  
		  	16.9	  	Entire Agreement	  	 	19	  
		  	16.10	  	Third Parties	  	 	19	  
		  	16.11	  	Costs and Attorneys’ Fees	  	 	19	  
		  	16.12	  	Aggregation of Stock	  	 	19	  
		  	16.13	  	Telecopy Execution and Delivery	  	 	19	  
		  	16.14	  	Counterparts	  	 	20	  

  
 - ii – 

 EVERBRIDGE, INC. 

THIRD AMENDED AND RESTATED 

INVESTOR RIGHTS AGREEMENT 

THIS THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (this “Agreement”) is made as of September 9, 2011, by and
among Everbridge, Inc., a Delaware corporation (the “Company”), and the Effective Time Holders listed on the attached Exhibit A. The Effective Time Holders and Prior Investors are collectively herein referred to as the
“Investors.” 
 RECITALS 

A. Certain of the Investors have purchased shares of the Company’s Series A Preferred Stock (the “Series A Preferred”),
pursuant to that certain Series A Preferred Stock Purchase Agreement, by and among the Company and the parties listed on Exhibit A thereto, dated as of May 15, 2008. 

B. Certain of the Investors have purchased shares of the Company’s Series A-1 Preferred Stock (the “Series A-1
Preferred” and, together with the Series A Preferred, the “Preferred Stock”), pursuant to that certain (i) Series A-1 Preferred Stock Purchase Agreement, dated as of April 2, 2009, and (ii) Series A-1
Preferred Stock Purchase Agreement, dated as of April 20, 2010, as amended (such Investors previously having purchased Series A Preferred and Series A-1 Preferred prior to the date hereof, collectively, the “Prior Investors”).

 C. The Company, PMC Financial Services Group, LLC (“PMC”), the holder of a Warrant to purchase up to 625,000 shares of
Common Stock of the Company, and the Prior Investors have previously entered into that certain Second Amended and Restated Investor Rights Agreement, dated as of April 2, 2009 (the “Prior Agreement”). 

D. Concurrent with the execution hereof, Cloud Floor Corporation (“Cloud Floor”) shall merge with and into the Company (the
“Merger”), with the Company continuing as the surviving corporation, pursuant to that certain Merger Agreement, dated as of September 9, 2011, by and among the Company, Cloud Floor, and Jaime Ellertson, in his capacity as the
stockholder representative of the Cloud Floor stockholders (the “Merger Agreement”). 
 E. At the effective time of the
Merger (the “Effective Time”), the stockholders of Cloud Floor (the “Effective Time Holders”) holding shares of Series A Preferred Stock of Cloud Floor (“Cloud Floor Preferred”) shall receive shares
of Series A-1 Preferred pursuant to, and in accordance with the provisions of, the Merger Agreement. 
 F. The Effective Time Holders who
shall the execute and deliver this Agreement, and who shall receive Series A-1 Preferred in the Merger, shall be Investors for all purposes hereof and hereunder. 

G. The obligations in the Merger Agreement are conditioned upon the execution and delivery of this Agreement. 

 H. In connection with the consummation of the Merger, the Company and the Investors wish to enter
into this Agreement in order to (i) provide for certain rights of the Investors, and (ii) supersede and replace the Prior Agreement such that this Agreement is the only investor rights agreement between the Company, PMC, and the Investors.

 I. The Prior Agreement may generally be amended by agreement of the Company and Prior Investors holding a majority of the
“Registrable Securities” (as defined in the Prior Agreement). The Company has executed this Agreement, and the Prior Investors who are signatories to this Agreement hold at least that number of shares necessary to effect an
amendment of the Prior Agreement. The Prior Agreement is superseded and replaced by this Agreement, including with respect to those Prior Investors who are not signatories to this Agreement. 

THE PARTIES AGREE AS FOLLOWS: 

1. Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings: 

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

1.2 “Board” shall mean the Board of Directors of the Company. 

1.3 “Commission” shall mean the Securities and Exchange Commission or any other federal agency at the time administering the
Securities Act. 
 1.4 “Common Stock” shall mean the shares of Common Stock of the Company, $0.001 par value per share.

 1.5 “Convertible Securities” shall mean (a) the Warrant, and (b) the shares of Series A Preferred Stock and
Series A-1 Preferred held by the Investors. 
 1.6 “Derivative Securities” means any securities or rights convertible into,
or exercisable or exchangeable for (in each case, directly or indirectly), Common Stock, including options and warrants. 
 1.7
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. 

1.8 “Form S-3” shall mean Form S-3 issued by the Commission or any substantially similar form then in effect. 

  
 - 2 - 

 1.9 “Holder” shall mean any holder of outstanding Registrable Securities which
have not been sold to the public, but only if such holder is (a) PMC, (b) one of the Investors, or (c) an assignee or transferee of registration rights as permitted by Section 16.1 of this Agreement. 

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

1.11 “Initiating Holders” shall mean Holders who properly initiate a request for registration under this Agreement. 

1.12 “New Securities” shall mean any capital stock of the Company, whether authorized or not, and any rights, options, or
warrants to purchase said capital stock, and securities of any type whatsoever that are, or may become, convertible into or exercisable for said capital stock; provided, however, that “New Securities” does not include: (i) the
Convertible Securities or the Company’s Common Stock issuable upon conversion of the Convertible Securities; (ii) securities issued without consideration pursuant to a dividend, stock split, combination, recapitalization or similar
transaction, (iii) securities issued as a dividend or distribution with respect to the Convertible Securities, (iv) securities issued upon the conversion of any debenture, warrant, option, or other convertible security outstanding on the
date of this Agreement; (v) the issuance of the Company’s capital stock (or rights therefor) in connection with the acquisition by the Company of another corporation or entity by consolidation, corporate reorganizations, or merger or
purchase of all or substantially all of the assets of such corporation or entity as approved by the Board of Directors (including at least one of the Preferred Stock Directors); (vi) the issuance of the Company’s capital stock (or rights
therefor) as approved by the Board of Directors (including at least one of the Preferred Stock Directors) in connection with equipment leasing, real estate, bank financing or similar transactions; (vii) the issuance of the Company’s
capital stock (or rights therefor) as approved by the Board of Directors (including at least one of the Preferred Stock Directors) to vendors or customers; (viii) the issuance of the Company’s capital stock (or rights therefor) as approved
by the Board of Directors (including at least one of the Preferred Stock Directors) in connection with strategic alliances, joint ventures, or other corporate partnerships, research and development agreements, product development or marketing
agreements or other similar agreements; (ix) issuances of securities on terms approved by the holders of at least a majority of the outstanding shares of the Convertible Securities, including a specific waiver of the right of participation set
forth in Section 5 of this Agreement with respect thereto; (x) up to a number of shares in the Pool issued or deemed issued to officers, directors or employees of, or consultants to, the Company pursuant to a warrant, stock grant, option
agreement or plan, purchase plan or other employee stock incentive program or agreement approved by the Board of Directors, and any increase in the Pool approved by the Board or Directors (including the approval of at least one Preferred Stock
Director); or (xi) securities issued by the Company pursuant to a registration statement filed under the Securities Act. 
 1.13
“Preferred Stock Directors” shall mean the directors elected solely by the holders of Series A Preferred and Series A-1 Preferred voting as a separate class pursuant to the Third Amended
and Restated Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on or about the date hereof. 

  
 - 3 - 

 1.14 “Pool” shall mean up to an aggregate of [13,950,000] shares of Common
Stock, which may be reserved for issuance under any, stock grant, option agreement or plan, purchase plan or other employee stock incentive program or agreement approved by the Board of Directors. For purposes hereof, any shares of Common Stock
described above that again become available for issuance by the Company as a result of (A) in respect of shares of Common Stock subject to outstanding options or stock awards, such options or stock awards expiring and/or terminating or
(B) in respect of shares of Common Stock acquired pursuant to the exercise of stock options or stock awards, such shares of Common Stock being reacquired by the Company, shall in each case be added back into the Pool. Reference to the number of
shares of Common Stock in this Section 1.14 shall mean such number of shares as shall be appropriately adjusted for combinations, consolidations, subdivisions, recapitalizations, stock splits or other similar transactions. 

1.15 “Qualified Public Offering” shall mean the closing of a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act covering the offer and sale of Common Stock (other than a registration on Form S-8, Form S-4 or comparable or successor forms), (A) which results in aggregate gross proceeds (prior to
underwriters’ commissions and expenses) to the Company of at least $35,000,000, and (B) a per share price not less than five times the Original Series A-1 Price per share (as such term is defined in the Company’s Third Amended and
Restated Certificate of Incorporation in effect as of the date hereof, appropriately adjusted for combinations, consolidations, subdivisions, recapitalizations, stock splits or other similar transactions). 

1.16 “Register”, “Registered”, and “Registration” shall be terms to refer to a registration effected by
preparing and filing a Registration Statement, and the declaration or ordering of the effectiveness of such Registration Statement. 
 1.17
“Registration Statement” shall be a Registration effected by preparing and filing a registration statement on Form S-1 or S-3 in compliance with the Securities Act. 

1.18 “Registrable Securities” shall mean (a) all Common Stock not previously sold to the public which is issued or
issuable upon conversion or exercise of any of the Company’s Convertible Securities, and (b) any Common Stock, or any Common Stock issued or issuable (directly or indirectly) upon conversion and/or exercise of any other securities of the
Company acquired by the Investors or PMC after the date hereof, in each case, including Common Stock issued pursuant to stock splits, stock dividends and similar distribution. 

1.19 “Registration Expenses” shall mean all expenses incurred by the Company in complying with Sections 8 of this Agreement,
including, without limitation, all federal and state registration, qualification, and filing fees, printing expenses, fees and disbursements of counsel for the Company and one special counsel for all Holders (if different from counsel to the
Company), up to a maximum amount of $25,000 for one special counsel for all Holders for each Registration, blue sky fees and expenses, and the expense of any special audits incident to or required by any such registration, but excluding any stock
transfer taxes, underwriting discounts and commissions. 

  
 - 4 - 

 1.20 “Securities Act” shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. 
 1.21 “Selling
Expenses” shall mean all underwriting discounts and selling commissions applicable to the sale of Registrable Securities pursuant to this Agreement. 

1.22 “Series A Preferred” shall mean the Series A Preferred Stock held by the Investors. 

2. Financial Statements and Reports. 

2.1 Annual Reports. The Company shall deliver to PMC and each Investor, as soon as practicable after the end of each fiscal year of the
Company, and in any event within 120 days thereafter, an audited consolidated balance sheet of the Company as of the end of such year and audited consolidated statements of income and cash flow for such year, which year-end financial reports shall
be in reasonable detail and shall be prepared in accordance with generally accepted accounting principles. The firm auditing, or selected to audit, the Company’s financial statements as herein contemplated, shall be a firm of regional
prominence. 
 2.2 Termination of Information Rights and Inspection Rights. The Company’s obligations pursuant to Sections 2.1,
3 and 4 hereunder shall terminate upon the closing date of a Qualified Public Offering 
 3. Additional Information. The Company
shall deliver to each Investor who holds not less than 4,000,000 shares of Registrable Securities (as adjusted for any stock split, stock dividend, combination, or other recapitalization or reclassification effected after the date hereof, the
following financial information: 
 3.1 As soon as practicable after the end of each quarterly accounting periods in each fiscal year of the
Company and in any event within forty-five (45) days thereafter, an unaudited consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of each such quarterly period and unaudited consolidated statements of income
and cash flows of the Company and its subsidiaries, if any, for such period and for the current fiscal year to date, all prepared in accordance with generally accepted accounting principles, all in reasonable detail, subject to changes resulting
from year-end audit adjustments; 
 3.2 As soon as practicable after the end of the first and second month of each quarter, and in any event
within thirty (30) days thereafter, an unaudited consolidated balance sheet of the Company and its subsidiaries, if any, at the end of such month, and unaudited consolidated statements of income and cash flow for such month (including a
comparison of actual financial results versus the budgeted results for such periods); and 
 3.3 By December 30 of each year, a budget
for the following year, prepared on a monthly basis, and promptly after prepared, any other budgets or revised budgets prepared 

  
 - 5 - 

 
by the Company, such budget(s) to be in a form and to contain such items, which may include, without limitation, balance sheets, income statements, and statements of cash flow, as shall be
determined by the Board of Directors, including the approval of the Series A Directors. 
 3.4 The Company shall provide to ABS all
monthly, quarterly and annual reports, and any and all other reports and/or certificates required by or in connection with the loan documentation entered into by and between the Company and the Company’s lenders, to be delivered to ABS at or
about the same time such reports and/or certificates are delivered to the Company’s lenders. 
 4. Inspection Rights. After
giving reasonable notice to the Company, each Investor shall have the right to visit the Company and view the Company’s minutes, books, records, consents and the like (“Inspection Rights”), which Inspection Rights shall be
consistent with such rights afforded to members of the Board of Directors under applicable law, provided, however, that in the event that any such Investor invoking Inspection Rights does not then owe fiduciary obligations to the Company (i.e. as a
director), such Investor shall agree in writing to hold in confidence and trust all information so provided by the Company or to which such Investor shall have been granted access. 

5. Right of Participation. 

5.1 Right of Participation to Purchase New Securities. The Company hereby grants to each Investor the right of participation to
purchase up to its “Pro Rata Share” (as defined below) of New Securities which the Company may, from time to time, propose to sell and issue. The Investors may purchase said New Securities on the same terms and at the same price at
which the Company proposes to sell the New Securities. The “Pro Rata Share” of each Investor, for purposes of this right of participation, is the ratio of (i) the total number of shares of Common Stock held by such Investor
(including any shares of Common Stock into which the Convertible Securities and all other Derivative Securities held by such Investor are convertible), to (ii) the total number of shares of Common Stock (including any shares of Common Stock
into which the outstanding Convertible Securities and all other Derivative Securities are convertible) outstanding immediately prior to the issuance of the New Securities. 

5.2 Notice. 
 (a) In the
event the Company proposes to undertake an issuance of New Securities, it shall give to each Investor written notice (the “Initial Notice”) of its intention, describing the type of New Securities, the material terms of the New
Securities, including the price and the intended offerees, the terms upon which the Company proposes to issue the same, the number of shares which such Investor is entitled to purchase pursuant to Section 5. 1, and a statement that each
Investor shall have 10 days to respond to such Initial Notice. Each Investor shall have 10 days from the date of receipt of the Initial Notice to agree to purchase any or all of its Pro Rata Share of the New Securities for the price and upon the
terms specified in the Initial Notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased and forwarding payment for such New Securities to the Company if immediate payment is required by such
terms. 

  
 - 6 - 

 (b) The Company shall promptly, in writing (the “Secondary Notice”), inform
each Investor that elects to purchase all of the New Securities available to it (each, a “Participating Investor”) of any other Investor’s failure to do likewise. During the 10 day period commencing after receipt of the
Secondary Notice, each Participating Investor shall be entitled to obtain that portion of the New Securities for which Investors were entitled to, but did not, subscribe equal to the proportion that the number of Registrable Securities then held by
such Participating Investor bears to the total number of Registrable Securities then held by all Participating Investors who wish to purchase some of the unsubscribed shares. 

5.3 Sale of New Securities. In the event that the Participating Investors fail to exercise in full their rights of participation within
the 10 day period following receipt of the Secondary Notice, the Company shall have 75 days thereafter to sell or enter into an agreement (pursuant to which the sale of New Securities covered thereby shall be closed, if at all, within 15 days after
the date of such agreement) to sell the New Securities respecting which such Participating Investor’s rights were not exercised, at a price and upon general terms no more favorable to the purchaser thereof than specified in the Initial Notice.
In the event the Company has not sold or entered into an agreement to sell the New Securities within such 75-day period (or sold and issued New Securities in accordance with the foregoing within 15 days from the date of such agreement), the Company
shall not thereafter issue or sell any New Securities without first offering such securities to such Investor in the manner provided above 

5.4 Termination and Waiver of Right of Participation. The right of participation granted pursuant to this Section 5 shall
terminate upon the closing of a Qualified Public Offering. The right of participation granted under this Section 5 may be waived with respect to any particular sale of New Securities as to all Investors or transferees by the holders of a
majority in interest of the Registrable Securities held by the Investors. 
 6. Demand Registration. 

6.1 Request for Registration on Form Other Than Form S-3. Subject to the terms of this Agreement, in the event that the Company shall
receive from the Holders of at least 20% of the Registrable Securities at any time after the earlier of (i) five years after the date of this Agreement, or (ii) six months after the closing of the Company’s initial public offering of
shares of Common Stock under a Registration Statement, a written request that the Company effect any Registration with respect to all or a part of the Registrable Securities on a form other than Form S-3 for an offering of at least 20% of the then
outstanding Registrable Securities, with an anticipated aggregate offering price to the public, net of Selling Expenses, of greater than $10,000,000, the Company shall (a) promptly, but in no event later than 10 days after such request was
given, give written notice of the proposed Registration to all other Holders, and (b) as soon as practicable, and in any event within 60 days after the date of such request, file a Form S-1 Registration Statement covering all of the Registrable
Securities specified in such request, together with any Registrable Securities of any Holder joining in such request as are specified in a written request given within 20 days after written notice from the Company. The Company shall not be obligated
to take any action to effect any such registration pursuant to this Section 6.1 after the Company has effected two such Registrations pursuant to this Section 6.1 and such Registrations have been declared effective. 

  
 - 7 - 

 6.2 Request for Registration on Form S-3. If a Holder or Holders of Registrable Securities
request that the Company file a Registration Statement on Form S-3 (or any successor form to Form S-3) for a public offering of shares of Registrable Securities the reasonably anticipated aggregate price to the public of which, net of Selling
Expenses, would not be less than $3,000,000, and the Company is a registrant entitled to use Form S-3 to register the Registrable Securities for such an offering, the Company shall (a) promptly, but in no event later than 10 days after such
request was given, give notice thereof to all Holders, and (b) as soon as practicable, and in any event within 60 days after the date of such request, file a Form S-3 Registration Statement covering all of the Registrable Securities specified
in such request, together with any Registrable Securities of any Holder joining in such request as are specified in a written request given within 20 days after written notice from the Company, provided, however, that the Company shall not be
required to effect more than (i) two Registrations pursuant to this Section 6.2 in any 12 month period, and (ii) four Registrations pursuant to this Section 6.2 requested by the Holders of Registrable Securities. The substantive
provisions of Section 6.5 shall be applicable to each Registration initiated under this Section 6.2. 
 6.3 Right of
Deferral. Notwithstanding the foregoing, the Company shall not be obligated to file a registration statement pursuant to this Section 6: 

(a) if the Company, within 20 days of the receipt of the request of the Initiating Holders, gives notice of its bona fide intention to effect
the filing of a Registration Statement with the Commission within 60 days of receipt of such request (other than to a Registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), provided that the Company
is actively employing commercially reasonable efforts to cause such Registration Statement to become effective; 
 (b) within six months
immediately following the effective date of any Registration Statement pertaining to the securities of the Company (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan); or 

(c) if the Company shall furnish to such Holders a certificate signed by the President of the Company stating that in the good faith judgment
of the Board it would be detrimental to the Company or its stockholders for a Registration Statement to be filed in the near future, then the Company shall have the right to defer filing such Registration Statement for a period not to exceed 120
days from the receipt of the request to file such registration by such Holder, provided, however, that the Company shall not exercise the right contained in this subsection (c) more than once in any 12 month period with respect to
a demand by the holders of Registrable Securities. 
 6.4 Registration of Other Securities in Demand Registration. Any Registration
Statement filed pursuant to the request of the Initiating Holders under this Section 6 may, subject to the provisions of Section 6.5, include securities of the Company other than Registrable Securities. 

6.5 Underwriting in Demand Registration. 

  
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 (a) Notice of Underwriting. 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 this Section 6, and the Company shall include such information in the written notice
referred to in Sections 6.1 and 6.2. The right of any Holder to Registration pursuant to Section 6 shall be conditioned upon such Holder’s agreement to participate in such underwriting and the inclusion of such Holder’s Registrable
Securities in the underwriting. 
 (b) Inclusion of Other Holders in Demand Registration. If the Company, officers, or directors of
the Company holding Common Stock other than Registrable Securities, as the case may be, or holders of securities other than Registrable Securities, request inclusion in such Registration, the Initiating Holders, to the extent they deem advisable and
consistent with the goals of such Registration, may, in their sole discretion, on behalf of all Holders, offer to any or all of the Company, such officers or directors, and such holders of securities other than Registrable Securities that such
securities other than Registrable Securities be included in the underwriting and may condition such offer on the acceptance by such persons of the terms of this Section 6. 

(c) Selection of Underwriter in Demand Registration. The Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement with the representative (“Underwriter’s Representative”) of the underwriter or underwriters selected for such underwriting by the Holders of a majority of the
Registrable Securities being registered by the Initiating Holders and agreed to by the Company. 
 (d) Marketing Limitation in Demand
Registration. If the Underwriter’s Representative advises the Initiating Holders in writing that market factors (including, without limitation, the aggregate number of shares of Common Stock requested to be Registered, the general condition
of the market, and the status of the persons proposing to sell securities pursuant to the Registration) require a limitation of the number of shares to be underwritten, then (i) first, the Common Stock (other than Registrable Securities) held
by officers or directors of the Company, (ii) second, the securities other than Registrable Securities, and (iii) third, the securities requested to be registered by the Company, shall be excluded from such Registration to the extent
required by such limitation. If a limitation of the number of shares is still required, the Initiating Holders shall so advise all Holders and the number of shares of Registrable Securities that may be included in the Registration and underwriting
shall be allocated among all holders of Registrable Securities in proportion, as nearly as practicable, to the respective amounts of Registrable Securities entitled to inclusion in such Registration held by such Holders at the time of filing the
Registration Statement. No Registrable Securities or other securities excluded from the underwriting by reason of this Section 6.5(d) shall be included in such Registration Statement. 

(e) Right of Withdrawal in Demand Registration. If any Holder of Registrable Securities, or a holder of other securities entitled
(upon request) to be included in such Registration, disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company, the Underwriter’s Representative and the Initiating Holders,
delivered at least seven days prior to the effective date of the Registration Statement. The securities so withdrawn shall also be withdrawn from the Registration Statement. 

  
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 7. Piggyback Registration. 

7.1 Notice of Piggyback Registration and Inclusion of Registrable Securities. Subject to the terms of this Agreement, if the Company
decides to Register any of its Common Stock (either for its own account or the account of a security holder or holders) on a form that would be suitable for a registration involving Registrable Securities, the Company shall: (i) promptly give
each Holder written notice thereof (which shall include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under the applicable Blue Sky or other state securities laws), and (ii) include in such
Registration (and any related qualification under Blue Sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request delivered to the Company by any Holder within 20 days after
delivery of such written notice from the Company. 
 7.2 Underwriting in Piggyback Registration. 

(a) Notice of Underwriting in Piggyback Registration. If the Registration of which the Company gives notice is for a Registered public
offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 7.1. In such event, the right of any Holder to Registration shall be conditioned upon such underwriting and
the inclusion of such Holder’s Registrable Securities in such underwriting to the extent provided in this Section 7. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and the
other holders distributing their securities through such underwriting) enter into an underwriting agreement with the Underwriter’s Representative for such offering. The Holders shall have no right to participate in the selection of the
underwriters for an offering pursuant to this Section 7. 
 (i) Marketing Limitation in Piggyback Registration. If the
Underwriter’s Representative advises the Holders seeking registration of Registrable Securities pursuant to this Section 7 in writing that market factors (including, without limitation, the aggregate number of shares of Common Stock
requested to be Registered, the general condition of the market, and the status of the persons proposing to sell securities pursuant to the Registration) require a limitation of the number of shares to be underwritten, the Underwriter’s
Representative (subject to the allocation priority set forth in Section 7.2(c)) may exclude some or all Registrable Securities from such registration and underwriting, provided, however, that all other securities, other than the
securities to be issued on behalf of the Company, are entirely excluded from such Registration before any Registrable Securities are excluded. 

(b) Allocation of Shares in Piggyback Registration. If the Underwriter’s Representative limits the number of shares to be
included in a Registration pursuant to Section 7.2(b), the number of shares to be included in such Registration and underwriting shall be allocated among the Holders requesting and contractually entitled (without violating Section 13
herein) to include such securities in such Registration, in proportion, as nearly as practicable, to the respective amounts of Registrable Securities which such Holders would otherwise be entitled to include in such Registration. No Registrable
Securities or other securities excluded from the underwriting by reason of this Section 7.2(c) shall be included in the Registration Statement. 

(c) Withdrawal in Piggyback Registration. If any Holder disapproves of the terms of any such underwriting, such person may elect to
withdraw therefrom by written notice to the Company and the Underwriter’s Representative delivered at least seven (7) days prior to the effective date of the Registration Statement. Any Registrable Securities or other securities excluded
or withdrawn from such underwriting shall be withdrawn from such Registration. 

  
 - 10 - 

 8. Expenses of Registration. Registration Expenses incurred in connection with two
Registrations pursuant to Section 6. 1, and four Registrations for Holders of Registrable Securities pursuant to Section 6.2, and unlimited Registrations pursuant to Section 7, shall be borne by the Company. All Registration Expenses
incurred in connection with any other Registration, qualification, or compliance, shall be apportioned among the Holders and other holders of the securities so registered on the basis of the number of shares so registered. Notwithstanding the above,
the Company shall not be required to pay for any expenses of any Registration proceeding begun pursuant to Section 6 if, for any reason other than as a result of a breach of this Agreement by the Company, the Registration request is
subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (which Holders shall bear such expenses), unless the Holders of a majority of the Registrable Securities agree to forfeit their right
to one demand Registration pursuant to Section 6. All Selling Expenses shall be borne by the holders of the securities Registered pro rata on the basis of the number of shares Registered. 

9. Termination of Registration Rights; Delay of Registration. 

9.1 Termination. The rights to cause the Company to register securities granted under Sections 6 and 7 of this Agreement and to receive
notices pursuant to Section 7 of this Agreement shall terminate, with respect to each Holder, upon the earlier date of: (i) three (3) years after the closing date of the Company’s initial underwritten public offering of Common
Stock of the Company pursuant to a Registration Statement, or (ii) upon any of the following events: (a) any liquidation, dissolution, or winding up of the Company, whether voluntary or not, (b) the sale, lease, assignment, transfer,
conveyance or disposal of all or substantially all of the assets of the Company, (c) the exclusive license of all or substantially all of the material intellectual property rights of the Company, or (d) the acquisition of the Company by
means of consolidation, corporate reorganization, merger or other transaction or series of related transactions in which stockholders of the Company immediately prior to such transaction(s) do not own at least a majority of the outstanding voting
securities of the successor entity. 
 9.2 Delay of Registration. No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of Sections 6-11. 

  
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 10. Registration Procedures and Obligations. Whenever required under this Agreement to
effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible: 
 (a) Prepare and file
with the Commission a Registration Statement with respect to such Registrable Securities and use commercially reasonable 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 Registration Statement effective for up to 120 days (180 days for a Registration Statement on Form S-3); provided, however, that (i) such one hundred twenty (120) day
period shall be extended for a period of time equal to the period that the Holder refrains, at the request of an underwriter of Common Stock (or other securities) of the Company, from selling any securities included in such registration, and
(ii) in the case of any registration of Registrable Securities on Form S-3 that are intended to be offered on a continuous or delayed basis, subject to compliance with applicable Commission rules, such one hundred twenty (120) day period
shall be extended for up to 90 days, if necessary, to keep the Registration Statement effective until all such Registrable Securities are sold]. 

(b) Prepare and file, as soon as is reasonably practicable, with the Commission, 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) 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 Company shall not be required in connection therewith or as a condition thereto to qualify to do business in any jurisdiction where it is not so qualified or to file a
general consent to service of process in any such states or jurisdictions, and provided, further, that in the event any jurisdiction in which the securities shall be qualified imposes a non-waivable requirement that expenses incurred in connection
with the qualification of the securities be borne by selling shareholders, such expenses shall be payable pro rata by selling shareholders. 

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

  
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 (g) Provide a transfer agent and registrar for all Registrable Securities registered pursuant to
such Registration Statement and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration. 

(h) Furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to this Agreement, on the date that such
Registrable Securities are delivered for sale in connection with a registration pursuant to this Agreement, (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 (with a copy provided to each holder of Registrable Securities) in an underwritten public offering, and (ii) a 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 (with a copy provided to each holder of Registrable Securities). 

(i) List the Registrable Securities covered by such registration statement with any securities exchange on which the Common Stock of the
Company is then listed, or such securities exchange as shall be selected by the Company, or, if the Company fails to make an application to so list within 30 days of a request for the same by the Holders in connection with a Registered public
offering involving an underwriting, the Holders may determine the place of listing, subject to qualification by the Company to list its shares thereon. 

(j) Notify, as promptly as practicable, each seller of Registrable Securities under such registration statement of (i) the effectiveness
of such registration statement or any post-effective amendments thereto, (ii) the filing of any post-effective amendments to such registration statement, (iii) the filing of a supplement to such registration statement, or (iv) the
issuance of a stop order with respect to such registration statement. 
 (k) Make available for inspection upon reasonable notice during
the Company’s regular business hours by each seller of Registrable Securities, any underwriter participating in any distribution pursuant to such registration statement, and any attorney, accountant, or other agent retained by such seller or
underwriter, all material financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant, or agent in connection with such registration statement. 
 11. Information Furnished by Holder.
It shall be a condition precedent of the Company’s obligations under this Agreement that each Holder of Registrable Securities included in any Registration furnish to the Company such information regarding such Holder and the distribution
proposed by such Holder or Holders as the Company may reasonably request. 
 12. Indemnification. 

12.1 Company’s Indemnification of Holders. To the extent permitted by law, the Company shall indemnify each Holder, each of its
officers, directors, and constituent partners, legal counsel for the Holders, and each person controlling such Holder, with respect to which Registration, qualification, or compliance of Registrable Securities has been effected

  
 - 13 - 

 
pursuant to this Agreement, and each underwriter, if any, and each person who controls any underwriter against all claims, losses, damages, liabilities, or actions in respect thereof
(collectively, “Damages”) to the extent such Damages arise out of or are based upon any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus or other document (including any related Registration
Statement) incident to any such Registration, qualification, or compliance, or are based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading,
or any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, Exchange Act, or any state securities law and the Company shall
reimburse each such Holder, each such underwriter, and each person who controls any such Holder or underwriter, for any legal and any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage,
liability, or action; provided, however, that the indemnity contained in this Section 12.1 shall not apply to amounts paid in settlement of any such Damages if settlement is effected without the consent of the Company (which consent shall not
be unreasonably withheld); and provided, further, that the Company shall not be liable in any such case to the extent that any such Damages arise out of or are based upon any untrue statement or omission based upon written information furnished to
the Company by such Holder, underwriter, or controlling person and stated to be for use in connection with the offering of securities of the Company. 

12.2 Holder’s Indemnification of Company. To the extent permitted by law, each Holder shall, severally but not jointly, if
Registrable Securities held by such Holder are included in the securities as to which such Registration, qualification or, compliance is being effected pursuant to this Agreement, indemnify the Company, each of its directors and officers, each legal
counsel and independent accountant of the Company, each underwriter, if any, of the Company’s securities covered by such a Registration Statement, each person who controls the Company or such underwriter within the meaning of the Securities
Act, and each other such Holder, each of its officers, directors, and constituent partners, and each person controlling such other Holder, against all Damages arising out of or based upon any untrue statement (or alleged untrue statement) of a
material fact contained in any such Registration Statement, prospectus, offering circular, or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation or alleged violation by such Holder 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, and shall reimburse the Company, such Holders, such directors, officers, partners, persons, law and accounting firms, underwriters, or control persons for any legal and any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability, or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement,
prospectus, offering circular, or other document in reliance upon and in conformity with written information furnished to the Company by such Holder and stated to be specifically for use in connection with the offering of securities of the Company,
provided, however, that the indemnity contained in this Section 12.2 shall not apply to amounts paid in settlement of any such Damages if settlement is effected without the consent of such Holder (which consent shall not be unreasonably
withheld) and provided, further, that each Holder’s liability under this Section 12.2 shall not exceed such Holder’s proceeds from the offering of securities (net of the Selling Expenses paid by such Holder) made in connection with
such Registration. 

  
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 12.3 Indemnification Procedure. Promptly after receipt by an indemnified party under this
Section 12 of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party under this Section 12, notify the indemnifying party in writing of the
commencement thereof and generally summarize such action. The indemnifying party shall have the right to participate in and to assume the defense of such claim, provided, however, that the indemnifying party shall be entitled to select counsel for
the defense of such claim with the approval of any parties entitled to indemnification, which approval shall not be unreasonably withheld; provided further, however, that if either party reasonably determines that there may be a conflict between the
position of the Company and the Holders in conducting the defense of such action, suit, or proceeding by reason of recognized claims for indemnity under this Section 12, then counsel for such party shall be entitled to conduct the defense to
the extent reasonably determined by such counsel to be necessary to protect the interest of such party with the fees and expenses of such counsel to be paid by the indemnifying party. The failure to notify an indemnifying party promptly of the
commencement of any such action, if prejudicial to the ability of the indemnifying party to defend such action, shall relieve such indemnifying party, to the extent so prejudiced, of any liability to the indemnified party under this Section 12,
but the omission so to notify the indemnifying party shall not relieve such party of any liability that such party may have to any indemnified party otherwise than under this Section 12. 

12.4 Contribution. If the indemnification provided for in this Section 12 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any Damages referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a
result of such Damages 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
Damages 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 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 each Holder’s liability for contribution shall not exceed such Holder’s proceeds from the offering of securities (net of the Selling Expenses paid by such Holder) made in
connection with a Registration. 
 12.5 Conflicts. 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. 

12.6 Survival of Obligations. The obligations of the Company and Holders under this Section 12 shall survive the completion of any
offering of Registrable Securities in a registration statement under this Agreement or otherwise. 

  
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 13. Limitations on Registration Rights Granted to Other Securities. From and after the
date of this Agreement, the Company shall not, without the 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 providing
for the granting to such holder of any information or Registration rights. 
 14. Market Standoff. Each Holder hereby agrees that, if
so requested by the Company and the Underwriter’s Representative (if any) in connection with the Company’s initial public offering, such Holder shall not sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise transfer or dispose of any Registrable Securities or other securities of the Company without the prior written consent of the Company and the Underwriter’s Representative for such period of time (not to exceed 180 days) following the
effective date of a Registration Statement of the Company filed under the Securities Act as may be requested by the Underwriter’s Representative provided, however, that all officers, directors and key employees of the Company and
stockholders who hold 5% or more of the issued and outstanding securities of the Company, enter into similar agreements. In order to enforce the foregoing covenant, (i) the Company shall have the right to place restrictive legends on the
certificates representing the shares subject to this Section 14 and to impose stop transfer instructions with respect to the Registrable Securities and such other shares of stock of each Holder (and the shares or securities of every other
person subject to the foregoing restriction) until the end of such period and (ii) the Holder agrees to execute the form of agreement requested by the Company and/or underwriter, subject to the provisions herein contained. Notwithstanding the
foregoing, the provisions of this Section 14 shall not apply to any securities issued by the Company that are purchased by Holders on the open market. 

All certificates evidencing Convertible Securities and Registrable Securities shall bear such restrictive legends as the Company and the
Company’s counsel deem necessary or advisable under applicable law or pursuant to this Agreement, including, without limitation, the following: 

“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS ON TRANSFER FOR A PERIOD OF UP TO 180 DAYS FOLLOWING THE EFFECTIVE DATE OF
A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR AN OFFERING OF THE COMPANY’S SECURITIES PURSUANT TO THE MARKET STANDOFF PROVISIONS OF AN INVESTOR RIGHTS AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL PURCHASER OF SUCH
SECURITIES.” 
 15. Reports Under the Exchange Act. With a view to making available to the Holders the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of the Commission 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 Rule 144, at all times after 90
days after the effective date of the first Registration Statement filed by the Company for the offering of its securities to the public; 

  
 - 16 - 

 (b) take such action as is necessary to enable the Holders to utilize Form S-3 for the sale of
their Registrable Securities, such action to be taken as soon as practicable after the end of the fiscal year in which the first Registration Statement filed by the Company for the offering of its securities to the general public is declared
effective; 
 (c) file with the Commission in a timely manner all reports and other documents required of the Company under the Securities
Act and the Exchange Act; and 
 (d) furnish to any Holder, so long as the Holder owns any Registrable Securities, promptly upon request
(i) a written statement by the Company that it has complied with the reporting requirements of Rule 144 (at any time after 90 days after the effective date of the first Registration Statement filed by the Company), 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 Commission which
permits the selling of any such securities without Registration or pursuant to such form. 
 16. Miscellaneous. 

16.1 Successors and Assigns. The rights under this Agreement may be assigned (but only with all related obligations) by a Holder to a
transferee of Registrable Securities that (i) is an Affiliate of a Holder; (ii) is a Holder’s Immediate Family Member or trust for the benefit of an individual Holder or one or more of such Holder’s Immediate Family Members; or
(iii) is transferred at least 25% of the Registrable Securities then held by such Holder; provided, however, that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of
such transferee and the Registrable Securities with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of
this Agreement. The rights and obligations of the Company hereunder may not be assigned under any circumstances. Subject to the foregoing, the terms and conditions of this Agreement inure to the benefit of and are binding upon the respective
successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as expressly provided herein. 
 16.2 Governing Law. This
Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, excluding those laws that direct the application of the laws of another jurisdiction. 

  
 - 17 - 

 16.3 Headings. The headings of the sections of this Agreement are for convenience and
shall not by themselves determine the interpretation of this Agreement. 
 16.4 Notices. All notices and other communications
required or permitted hereunder shall be in writing and shall be deemed effectively given (i) upon actual delivery to the party to be notified, (ii) three (3) business days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (iii) one business day after deposit with a recognized overnight courier, specifying next business day delivery, addressed (a) if to an Investor, at the Investor’s address set forth on the
Schedule of Investors, or at such other address as the Investor shall have furnished to the Company in writing upon 10 days’ notice, (b) if to PMC, at PMC’s address set forth below, or at such other address as PMC shall have furnished
to the Company in writing upon 10 days’ notice, or (c) if to the Company, at the following address or at such other address as the Company shall have furnished to PMC and the Investors upon 10 days’ notice: 

Everbridge, Inc. 
 505 N. Brand
Blvd., Suite 700 
 Glendale, California 91203 

Attention: Chief Executive Officer 

With a copy to: 
 Procopio, Cory,
Hargreaves & Savitch LLP 
 525 B Street, Suite 2200 

San Diego, CA 92101 
 Attention:
Roger C. Rappoport, Esq. 
 If to PMC : 

PMC Financial Services Group, LLC 

1720 East Wilshire Avenue, 2nd Floor 

Santa Ana, California 92705 

Attention : Steven Enyeart 
 A
copy of any notice given to the Investors shall also be sent to: 
 Nixon Peabody LLP 

100 Summer Street 
 Boston, MA
02110 
 Attention: Gregory M. O’Shaughnessy, Esq. 

16.5 Amendment of Agreement and Waivers. Any provision of this Agreement may be amended (or any provisions waived) only by a written
instrument signed by the Company and by persons holding at least a majority of the Registrable Securities (voting as a single class on an as-converted to Common Stock basis). Notwithstanding the foregoing, any provision of this Agreement may be
waived by the waiving party on such party’s own behalf without the consent of any other party. Anything herein to the contrary notwithstanding, the rights of PMC under this Agreement may not be amended, modified or waived, without the prior

  
 - 18 - 

 
written consent of PMC, unless such amendment, modification or waiver affects the rights of PMC under this Agreement in the same and proportional manner and extent as such amendment, modification
or waiver affects the rights of the other Holders under this Agreement. 
 16.6 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then such
provision(s) shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms. 

16.7 Additional Investors. Persons who purchase from the Company shares of Series A-1 Preferred after the date of this Agreement and
who execute signature pages to this Agreement shall become parties hereto and such persons shall thereby be bound by, and subject to, all of the terms and provisions of this Agreement applicable to a Holder or Investor, and no consent or waiver of
any other party hereto, other than the Company, shall be required to add any such additional party. Exhibit A shall be updated to include such additional Investors. 

16.8 Amendment and Restatement of Prior Agreement. The Prior Agreement is hereby amended and restated in its entirety. Such amendment
and restatement is effective upon execution of this Agreement by the Company and by the holders of a majority of the Registrable Securities (as defined in the Prior Agreement), voting together as a single class on an as-converted to Common Stock
basis. Upon such execution, the Prior Agreement shall have no further force or effect. 
 16.9 Entire Agreement. This Agreement
constitutes the entire agreement among the parties with regard to the subject matter hereof and supercedes any and all prior negotiations, correspondence, understandings and agreements among the parties regarding the subject matter hereof. 

16.10 Third Parties. Nothing in this Agreement, express or implied, is intended to confer upon any person, other than the parties
hereto and their successors and assigns, any rights or remedies under or by reason of this Agreement. 
 16.11 Costs and Attorneys’
Fees. In the event that any action, suit or other proceeding is instituted concerning or arising out of this Agreement or any transaction contemplated hereunder, the prevailing party shall recover all of such party’s costs and
attorneys’ fees incurred in each such action, suit or other proceeding, including any and all appeals or petitions therefrom. 
 16.12
Aggregation of Stock. All Registrable Securities held by Affiliated entities or persons shall be aggregated together for purposes of determining the availability of any rights under this Agreement. 

16.13 Telecopy Execution and Delivery. A facsimile, telecopy or other reproduction of this Agreement may be executed by one or more
parties hereto and delivered by such party by facsimile or any similar electronic transmission device pursuant to which the signature of or on behalf of such party can be seen. Such execution and delivery shall be

  
 - 19 - 

 
considered valid, binding and effective for all purposes. At the request of any party hereto, all parties hereto agree to execute and deliver an original of this Agreement as well as any
facsimile, telecopy or other reproduction hereof. 
 16.14 Counterparts. This Agreement may be executed by facsimile and in any
number of counterparts, each of which when so executed and delivered will be deemed an original, and all such counterparts together will constitute one and the same instrument. 

[Signature Page Follows] 

  
 - 20 - 

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

	
	EVERBRIDGE, INC.
	a Delaware corporation
	
	 /s/ Cinta Putra

	Cinta Putra, Chief Executive Officer

 Signature Page to Third Amended and Restated 

Investor Rights Agreement 

											
	 INVESTORS:

(Prior Investors)
  

	ABS VENTURES IX L.P.	 		 		 	
					
	By:	 	Calvert Capital V L.L.C.,	 		 		 	
		 	its General Partner	 		 		 	
						
		 	By:	 	 /s/ Bruns Grayson
	 		 		 	
		 	Name:	 	Bruns Grayson	 		 		 	
		 	Title:	 	Manager	 		 		 	
			
	 /s/ Cinta Putra
	 		 	 /s/ Jaime Ellertson

	CINTA PUTRA	 		 	 JAIME ELLERTSON

				
	 /s/ Roger Rappoport
	 		 		 	
	ROGER RAPPOPORT	 		 		 	

  

											
	 INVESTORS:

(Effective Time Holders receiving Series A-1 Preferred in the Merger)

 

	DOLPHIN EQUITY PARTNERS HI, LLC	 		 		 	BRMR, LLC
						
	By:	 	 /s/ Richard Brekka
	 		 		 	By:	 	 /s/ Barry Rubenstein

	Name:	 	Richard Brekka	 		 		 	Name:	 	 Barry Rubenstein

	Title:	 	Managing Member	 		 		 	Title:	 	 CEO

					
	DOUGHTY HANSON	 		 		 		 	
		 		 		 	)	 		 	
	 SIGNED by 
	 		 	)	 		 	
	 DOUGHTY HANSON &CO 
	 		 	)	 		 	
	 TECHNOLOGY II LP 
	 		 	)	 	 /s/ Irwin Lieber

	 acting through its General Partner, 
	 		 	)	 	IRWIN LIEBER
	 Doughty Hanson & Co Technology II
	 		 	)	 		 	
	 Limited, acting by:
	 		 	)	 		 	

																	
	  
	 		 	 /s/ Richard Lund
	 		 		 		 		 		 	
	Authorized Signatory	 		 	Authorized Signatory	 		 		 		 		 		 	
	SIGNED by	 		 		 		 		 	)	 		 		 	
	 OFFICERS NOMINEES LIMITED 
	 		 		 	)	 		 		 	
	acting by:	 		 		 		 		 	)	 		 		 	
									
	  
	 		 	 /s/ Richard Lund
	 		 		 		 		 		 	
	Authorized Signatory	 		 	Authorized Signatory	 		 		 		 		 		 	

 Signature Page to Third Amended and Restated 

Investor Rights Agreement 

 EXHIBIT A 

Schedule of Investors 

(Prior Investors) 
  

																			
	 Investor Name and Address
	 	No. Series A
Preferred	 	 	No. Series A-1 Preferred	 
	 	 	Purchased 4-2-2009	 	 	Purchased 4-20-2010	 	 	Additional Closing	 	Total	 
						
	 ABS Ventures IX L.P.

850 Winter Street

Suite 275

Waltham, MA 02451
	 	 	17,862,140	  	 	 	4,613,610	  	 	 	5,767,012	  	 	8,751,852
 (Note Conversion

9-9-2011)
	 	 	36,994,614	  
						
	 Roger Rappoport

c/o Procopio, Cory, Hargreaves & Savitch LLP

530 B Street, Suite 2100

San Diego, CA 92101
	 	 	130,097	  	 	 	—  	  	 	 	—  	  	 		 	 	130,097	  
						
	 Jaime Ellertson

36 Thornberry Lane

Sudbury, MA 01776
	 	 	—  	  	 	 	—  	  	 	 	1,153,402	  	 		 	 	1,153,402	  
						
	 Eastward Capital Partners IV, L.P.

432 Cherry Street

West Newton, Massachusetts 02465

Attention: Mr. David Z. Alpert
	 	 	—  	  	 	 	—  	  	 	 	131,487	  	 		 	 	131,487	  
						
	 Eastward Capital Partners V, L.P.

432 Cherry Street

West Newton, Massachusetts 02465

Attention: Mr. David Z. Alpert
	 	 	—  	  	 	 	—  	  	 	 	440,599	  	 		 	 	440,599	  
						
	 Eastward Investors, L.P.

432 Cherry Street

West Newton, Massachusetts 02465

Attention: Mr. David Z. Alpert
	 	 	—  	  	 	 	—  	  	 	 	4,613	  	 		 	 	4,613	  
						
	 Cinta Putra

c/o Everbridge, Inc.

505 N. Brand Blvd., Suite 700

Glendale, California 91203
	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	988,854
 (Note Conversion

1-20-2011)
	 	 	988,854	  

 Exhibit A 

 Schedule of Investors 

(Effective Time Holders receiving Series A-1 Preferred in the Merger) 
  

			
	 Name and Address
	  	 Number of Shares (Series A-1
Preferred)

		
	 Dolphin Equity Partners III, LLC

590 Madison Avenue, 18th Floor

New York, NY 10022
	  	
		
	 BRMR, LLC

68 Wheatley Road

Brookville, NY 11545
	  	
		
	 Doughty Hanson

45 Pall Mall London

London SW1Y 5JG

United Kingdom
	  	
		
	 Officers Nominees Limited

45 Pall Mall London

London SW1Y 5JG

United Kingdom
	  	
		
	 Irwin Lieber

8 Applegreen Drive

Old Westbury, NY 11568
	  	

 Exhibit A

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