Document:

Exhibit

Exhibit 4.2

	
	
	 

STOCKHOLDERS AGREEMENT
DATED AS OF FEBRUARY 12, 2020
AMONG
TRANSPHORM, INC.
AND
KKR PHORM INVESTORS L.P.
	
	
	 

TABLE OF CONTENTS
	
				
	 
	 
	 
	Page

	 
	 
	 
	 

	ARTICLE I
	 
	INTRODUCTORY MATTERS
	1

	 
	 
	 
	 

	1.1
	 
	Defined Terms
	1

	1.2
	 
	Construction
	3

	 
	 
	 
	 

	ARTICLE II
	 
	CORPORATE GOVERNANCE MATTERS
	4

	 
	 
	 
	 

	2.1
	 
	Election of Directors
	4

	2.2
	 
	Director Expenses
	5

	 
	 
	 
	 

	ARTICLE III
	 
	INFORMATION
	5

	 
	 
	 
	 

	3.1
	 
	Books and Records; Access
	5

	 
	 
	 
	 

	ARTICLE IV
	 
	GENERAL PROVISIONS
	5

	 
	 
	 
	 

	4.1
	 
	Termination
	5

	4.2
	 
	Notices
	5

	4.3
	 
	Amendment; Waiver
	6

	4.4
	 
	Further Assurances
	7

	4.5
	 
	Assignment
	7

	4.6
	 
	Third Parties
	7

	4.7
	 
	Governing Law
	7

	4.8
	 
	Jurisdiction; Waiver of Jury Trial
	7

	4.9
	 
	Specific Performance
	7

	4.10
	 
	Entire Agreement
	8

	4.11
	 
	Severability
	8

	4.12
	 
	Table of Contents, Headings and Captions
	8

	4.13
	 
	Counterparts
	8

	4.14
	 
	No Recourse
	8

-i-

STOCKHOLDERS AGREEMENT
This Stockholders Agreement is entered into as of February 12, 2020 by and among Transphorm, Inc. (f/k/a Peninsula Acquisition Corporation), a Delaware corporation (the “Company”), and KKR Phorm Investors L.P. (“KKR Phorm”).
BACKGROUND:
WHEREAS, on June 8, 2015, Transphorm, Inc. and KKR Phorm, among other parties, entered into a Series 1 Preferred Stock Purchase Agreement, whereby KKR Phorm acquired shares of Series 1 Preferred Stock of Transphorm, Inc., a privately-held Delaware corporation, and KKR Phorm subsequently purchased shares of Series 2 Preferred Stock in Transphorm, Inc.; 
WHEREAS, Peninsula Acquisition Corporation, Peninsula Acquisition Sub, Inc. (“Acquisition Sub”) and Transphorm, Inc. entered into an Agreement and Plan of Merger and Reorganization, dated as of February 12, 2020, pursuant to which Acquisition Sub merged with and into Transphorm, Inc., with Transphorm, Inc. continuing as the surviving corporation and a wholly-owned subsidiary of the Company (the “Merger”);
WHEREAS, following the consummation of the Merger, Peninsula Acquisition Corporation changed its name to “Transphorm, Inc.” and Transphorm, Inc. changed its name to “Transphorm Technology, Inc.”;
WHEREAS, following the consummation of the Merger, on February 12, 2020 the Company sold shares of its common stock to KKR Phorm and certain other third parties pursuant to an initial closing of a private placement offering (the “Private Placement” and, together with the Merger, the “Transactions”);
WHEREAS, as a result of the Transactions, KKR Phorm now owns more than 50% of the outstanding shares of the Company’s common stock; and
WHEREAS, the Company and KKR Phorm wish to set forth certain understandings between them, including with respect to certain governance matters.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
INTRODUCTORY MATTERS
1.1    Defined Terms.  In addition to the terms defined elsewhere herein, the following terms have the following meanings when used herein:
“Affiliate” has the meaning set forth in Rule 12b‐2 promulgated under the Exchange Act, as in effect on the date hereof.
“Agreement” means this Stockholders Agreement, as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms hereof.

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“beneficially own” has the meaning set forth in Rule 13d‐3 promulgated under the Exchange Act.
“Board” means the board of directors of the Company.
“Company” has the meaning set forth in the Preamble.
“Common Stock” means the shares of common stock, par value $0.0001 per share, of the Company, and any other capital stock of the Company into which such stock is reclassified or reconstituted and any other common stock of the Company.
“Control” (including its correlative meanings, “Controlled by” and “under common Control with”) means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise) of a Person.
“Director” means any member of the Board.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.
“Governmental Authority” means any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
“KKR Designee” has the meaning set forth in Section ‎2.1(b).
“KKR Entities” means KKR Phorm, its Affiliates and their respective successors and Permitted Assigns. 
“Law” means any statute, law, regulation, ordinance, rule, injunction, order, decree, governmental approval, directive, requirement, or other governmental restriction or any similar form of decision of, or determination by, or any interpretation or administration of any of the foregoing by, any Governmental Authority.
“Necessary Action” means, with respect to any party and a specified result, all actions (to the fullest extent such actions are permitted by applicable Law (including with respect to any fiduciary duties under Delaware Law) and within such party’s control) necessary to cause such result (and at such party’s expense), including, without limitation, (a) preparing and distributing stockholder’s resolutions and amendments to the organizational documents of the Company, if necessary or appropriate, and taking all other actions as are necessary or appropriate, to effect the provisions of this Agreement, (b) causing the adoption of Board resolutions by written consent or at a meeting duly called and convened necessary or appropriate to effect the provisions of this Agreement, and, as applicable, the preparation, approval, filing and obtaining effectiveness with the Securities and Exchange Commission and distribution (including via proxy access, as applicable) to stockholders in accordance with applicable Laws, rules and regulations, of proxy materials or consents in lieu thereof, and such other actions as are necessary or appropriate to effect the provisions of this Agreement, (c) executing agreements and instruments, and (d) making, or causing to be 

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made, with governmental, administrative or regulatory authorities, all filings, registrations or similar actions that are required to achieve such result. 
“Permitted Assigns” means, with respect to a KKR Entity, a Transferee of shares of Common Stock that agrees to become party to, and to be bound to the same extent as its Transferor by the terms of, this Agreement.
“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or other form of business organization, whether or not regarded as a legal entity under applicable Law, or any Governmental Authority or any department, agency or political subdivision thereof.
“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which: (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, representatives or trustees thereof is at the time owned or Controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; or (ii) if a limited liability company, partnership, association or other business entity, a majority of the total voting power of stock or units or interests (or equivalent ownership interest) of the limited liability company, partnership, association or other business entity is at the time owned or Controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof.  For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or Control the managing member, managing director or other governing body or general partner of such limited liability company, partnership, association or other business entity.
“Total Number of Directors” means the total number of Directors comprising the Board.
“Transfer” (including its correlative meanings, “Transferor”, “Transferee” and “Transferred”) shall mean, with respect to any security, directly or indirectly, to sell, contract to sell, give, assign, hypothecate, pledge, encumber, grant a security interest in, offer, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of any economic, voting or other rights in or to such security.  When used as a noun, “Transfer” shall have such correlative meaning as the context may require.
1.2    Construction.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party.  Unless the context otherwise requires: (a) “or” is disjunctive but not exclusive, (b) words in the singular include the plural and in the plural include the singular, and (c) the words “hereof”, “herein”, and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section references are to this Agreement unless otherwise specified.

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ARTICLE II
CORPORATE GOVERNANCE MATTERS
2.1    Election of Directors.
(a)    KKR Phorm shall have the right, but not the obligation, to nominate to the Board a number of designees equal to at least:  (i) a majority of the Total Number of Directors, so long as the KKR Entities collectively beneficially own 40% or more of the outstanding shares of Common Stock; (ii) 33% of the Total Number of Directors, so long as the KKR Entities collectively beneficially own 20% or more, but less than 40%, of the outstanding shares of Common Stock; and (iii) 10% of the Total Number of Directors, so long as  the KKR Entities collectively beneficially own 10% or more, but less than 20%, of the outstanding shares of Common Stock.  For purposes of calculating the number of Directors that KKR Phorm is entitled to designate pursuant to the immediately preceding sentence, any fractional amounts shall automatically be rounded up to the nearest whole number (e.g., one and one quarter (11⁄4) Directors shall equate to two (2) Directors), and any such calculations shall be made after taking into account any increase in the Total Number of Directors.
(b)    In the event that KKR Phorm has nominated (or has then-serving as its designees) less than the total number of designees KKR Phorm shall be entitled to nominate pursuant to Section ‎2.1(a), KKR Phorm shall have the right, at any time, to nominate such additional designees to which it is entitled, in which case the Company and the Directors shall take all Necessary Action to (x) enable KKR Phorm to nominate and effect the election or appointment of such additional individuals, whether by increasing the size of the Board or otherwise and (y) designate such additional individuals nominated by KKR Phorm to fill such newly created vacancies or to fill any other existing vacancies.  Each such individual whom KKR Phorm actually nominates pursuant to this Section ‎2.1 and who is thereafter elected or appointed to the Board to serve as a Director shall be referred to herein as a “KKR Designee”.
(c)    In the event that a vacancy is created at any time by the death, retirement or resignation of any Director designated pursuant to this Section ‎2.1, the remaining Directors and the Company shall take all Necessary Action to cause the vacancy created thereby to be filled by a new designee of KKR Phorm as soon as possible, and the Company and the Directors hereby agrees to take all Necessary Action to accomplish the same.
(d)    The Company and the Directors agree to take all Necessary Action to include the individuals designated pursuant to this Section ‎2.1 in the slate of nominees recommended by the Board for election at any meeting of stockholders called for the purpose of electing Directors (or written consent in lieu thereof) and to use its and their best efforts to cause the election of each such designee to the Board, including nominating each such individual to be elected as a Director as provided herein, recommending such individual’s election and soliciting proxies or consents in favor thereof.
(e)    For so long as the KKR Entities collectively beneficially own 20% or more of the outstanding shares of Common Stock, the Company and the Directors agree to take all 

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Necessary Action to cause a KKR Designee selected by KKR Phorm to serve as chairman of the Board. 
(f)    For so long as the KKR Entities collectively beneficially own 20% or more of the outstanding shares of Common Stock, the Company and the Directors agree to take all Necessary Action to cause each committee of the Board to include at least one KKR Designee, in each case selected by KKR Phorm. 
2.2    Director Expenses. The Company shall reimburse the reasonable expenses of each Director who is not an employee of the Company for the reasonable costs incurred by such person in attending meetings of the Board (and any committee thereof) and other meetings or events attended by such person on behalf of the Company. 
ARTICLE III
INFORMATION
3.1    Books and Records; Access.  The Company shall, and shall cause its Subsidiaries to, keep proper books, records and accounts, in which full and correct entries shall be made of all financial transactions and the assets and business of the Company and each of its Subsidiaries in accordance with U.S. generally accepted accounting principles.  The Company shall, and shall cause its Subsidiaries to, permit the KKR Entities and their respective designated representatives, at reasonable times and upon reasonable prior notice to the Company, to review the books and records of the Company or any of such Subsidiaries and to discuss the affairs, finances and condition of the Company or any of such Subsidiaries with the officers of the Company or any such Subsidiary; provided, however, that the Company shall not be required to disclose any privileged information of the Company so long as the Company has used its best efforts to provide such information to the KKR Entities without the loss of any such privilege (and taking into account whether or not a KKR Director is then serving on the Board) and notified the KKR Entities that such information has not been provided.
ARTICLE IV
GENERAL PROVISIONS
4.1    Termination.  This Agreement shall terminate on the earlier to occur of (a) such time as KKR Phorms is no longer entitled to nominate a Director pursuant to Section ‎2.1(a) and ‎(b) upon the delivery of a written notice by KKR Phorm to the Company requesting that this Agreement terminate.
4.2    Notices.  Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, mailed first class mail (postage prepaid), sent by reputable overnight courier service (charges prepaid) or sent by electronic mail or facsimile, to the Company at the address, electronic mail address or facsimile number set forth below and to any other recipient at the address, electronic mail address or facsimile number set forth below, or at such address, electronic mail address or facsimile number or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party.  Notices will be deemed to have been given hereunder when, the day delivered personally, five (5) days after deposit in the U.S. mail, one (1) 

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day after deposit with a reputable overnight courier service, or the day sent by electronic mail or facsimile (receipt confirmed).
The Company’s address is:
Transphorm, Inc.
75 Castilian Drive 
Goleta, California 93317
Attention: Mario Rivas
Email:  mrivas@transphormusa.com
Facsimile: (805) 961-9528
with a copy (not constituting notice) to:
Wilson Sonsini Goodrich & Rosati, Professional Corporation 
650 Page Mill Road
Palo Alto, California 94303
Attention: Mark Bertelsen
Email: mbertelsen@wsgr.com 
Facsimile: (650) 493-6811
KKR Phorm’s address is:
KKR Phorm Investors L.P. 
c/o Kohlberg Kravis Roberts & Co. L.P.
9 West 57th Street, Suite 4200
New York, New York 10019 
Attention: General Counsel
Email: general.counsel@kkr.com
Facsimile: (212) 750-0003
with a copy (not constituting notice) to:
Jones Day
1755 Embarcadero Road
Palo Alto, California
Attention:  Timothy R. Curry 
Email: tcurry@jonesday.com
Facsimile: (650) 739-3900
4.3    Amendment; Waiver.  This Agreement may be amended, supplemented or otherwise modified only by a written instrument executed by the Company and KKR Phorm.  Neither the failure nor delay on the part of any party hereto to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege 

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with respect to any other occurrence.  No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.
4.4    Further Assurances.  The parties hereto will sign such further documents, cause such meetings to be held and resolutions passed, exercise their votes and do and perform and cause to be done such further acts and things necessary, proper or advisable in order to give full effect to this Agreement and every provision hereof.  To the fullest extent permitted by Law, the Company shall not directly or indirectly take any action that is intended to, or would reasonably be expected to result in, any KKR Entity being deprived of the rights contemplated by this Agreement.
4.5    Assignment.  This Agreement will inure to the benefit of and be binding on the parties hereto and their respective successors and permitted assigns.  This Agreement may not be assigned without the express prior written consent of the other parties hereto, and any attempted assignment, without such consents, will be null and void; provided, however, that, notwithstanding the above, each KKR Entity shall be entitled to assign, in whole or in part, to any of its Permitted Assigns any of its rights hereunder, without such prior written consent.
4.6    Third Parties.  This Agreement does not create any rights, claims or benefits inuring to any Person that is not a party hereto or create or establish any third-party beneficiary hereto.
4.7    Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of laws thereof.
4.8    Jurisdiction; Waiver of Jury Trial.  In any judicial proceeding involving any dispute, controversy or claim arising out of or relating to this Agreement, each of the parties unconditionally accepts the exclusive jurisdiction and venue of the Delaware Court of Chancery or, if the Delaware Court of Chancery does not have subject matter jurisdiction over this matter, the Superior Court of the State of Delaware (Complex Commercial Division) or, if jurisdiction over the matter is vested exclusively in federal courts, the United States District Court for the District of Delaware, and the appellate courts to which orders and judgments thereof may be appealed, and each of the parties hereto irrevocably waives the defense of an inconvenient forum or lack of jurisdiction to the maintenance of any such judicial proceeding.  In any such judicial proceeding, the parties agree that in addition to any method for the service of process permitted or required by such courts, to the fullest extent permitted by Law, service of process may be made by delivery provided pursuant to the directions in Section ‎4.2.  EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING ANY DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
4.9    Specific Performance.  Each party hereto acknowledges and agrees that in the event of any breach of this Agreement by any of them, the other parties hereto would be irreparably harmed and could not be made whole by monetary damages.  Each party accordingly agrees to waive the defense in any action for specific performance that a remedy at law would be adequate and that the parties, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to specific performance of this Agreement without the posting of bond.

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4.10    Entire Agreement.  This Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter hereof.  There are no agreements, representations, warranties, covenants or understandings with respect to the subject matter hereof other than those expressly set forth herein.  This Agreement supersedes all other prior agreements and understandings between the parties with respect to such subject matter.
4.11    Severability.  If any provision of this Agreement, or the application of such provision to any Person or circumstance or in any jurisdiction, shall be held to be invalid or unenforceable to any extent, (a) the remainder of this Agreement shall not be affected thereby, and each other provision hereof shall be valid and enforceable to the fullest extent permitted by Law, (b) as to such Person or circumstance or in such jurisdiction, such provision shall be reformed to be valid and enforceable to the fullest extent permitted by Law and (c) the application of such provision to other Persons or circumstances or in other jurisdictions shall not be affected thereby.
4.12    Table of Contents, Headings and Captions.  The table of contents, headings, subheadings and captions contained in this Agreement are included for convenience of reference only and in no way define, limit or describe the scope of this Agreement or the intent of any provision hereof.
4.13    Counterparts.  This Agreement and any amendment hereto may be signed in any number of separate counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one Agreement (or amendment, as applicable).
4.14    No Recourse.  This Agreement may only be enforced against, and any claims or cause of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement, may only be made against the entities that are expressly identified as parties hereto, and no past, present or future Affiliate, director, officer, employee, incorporator, member, manager, partner, stockholder, agent, attorney or representative of any party hereto shall have any liability for any obligations or liabilities of the parties to this Agreement or for any claim based on, in respect of, or by reason of the transactions contemplated hereby.
[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have executed this Stockholders Agreement on the day and year first above written.
	
			
	COMPANY

	 

	TRANSPHORM, INC.

	 

	By:
	/s/ Mario Rivas

	 
	Name:
	Mario Rivas

	 
	Title:
	Chief Executive Officer

[Signature Page to Stockholders Agreement]

	
			
	KKR PHORM INVESTORS L.P.

	 

	By:
	its General Partner
KKR Phorm Investors GP LLC

	 

	By:
	/s/ Terence Gallagher

	 
	Name:
	Terence Gallagher

	 
	Title:
	Vice President, Finance

[Signature Page to Stockholders Agreement]Exhibit

Exhibit 10.2

[Craig-Hallum Capital Group LLC Letterhead]

November 14, 2019
Transphorm, Inc.
75 Castilian Drive
Goleta, CA 93117
Attention: Mario Rivas, CEO
Dear Mr. Rivas:
We understand that Transphorm, Inc., a Delaware corporation (“Transphorm”), plans to undertake a transaction (the “Merger Transaction”) whereby a subsidiary (“MergerSub”) of a public shell corporation (“PubCo”) will merge with and into Transphorm, with Transphorm as the surviving entity, thereby becoming a wholly-owned subsidiary of PubCo. References herein to the “Company” shall mean Transphorm, MergerSub and/or PubCo as the context requires. 
Following the Merger Transaction, the Company, with PubCo as the anticipated issuing entity, wishes to issue and sell equity securities (the “Securities”) in a transaction (the “Placement”) exempt from the registration requirements of the U.S. Securities Act of 1933, as amended (the “Securities Act”), commonly referred to as a PIPE transaction. In connection with the Placement, the Company has appointed B. Riley FBR, Inc. (“B. Riley”) to act as its lead placement agent, pursuant to that certain letter agreement between the Company and B. Riley dated as of October 22, 2019, as amended by that certain Amendment No. 1 and Consent dated on or about the date hereof (the “B. Riley Engagement Letter”). This letter agreement (the “Agreement”) confirms the understanding and agreement between Craig-Hallum Capital Group LLC (“C-H”) and the Company to retain C-H as an additional, non-exclusive, placement agent of the Company in connection with the Placement on the terms and conditions set forth below.  References herein to the “Placement Agents” shall mean B. Riley and C-H together.
		
	1.
	Non-Exclusive Appointment.  The Company hereby appoints C-H to act as an additional, non-exclusive, placement agent, on a best efforts basis, during the Placement Engagement Period (defined below) to assist B. Riley in connection with the Placement and authorizes C-H to arrange the Placement in a transaction that is exempt from the registration requirements of the Securities Act.  The Securities will be offered on a limited basis to certain “accredited investors” (as defined in Rule 501 of Regulation D under the Securities Act) mutually agreed upon by B. Riley and the Company.  The Placement is to be made directly by the Company to the purchasers pursuant to agreements (each, a “Purchase Agreement”) entered into by the purchasers and the Company and such other documentation or agreements as may be necessary and appropriate to consummate the Placement, including, without limitation, a registration rights agreement requiring the Company to register the resale of the Securities with the Securities and Exchange Commission.

		
	2.
	Manner and Terms of Placement.  

		
	(a)
	C-H will have no authority under this agreement to bind the Company in any way to any party, including potential purchasers of the Securities.  In addition, nothing contained herein will require the Company to accept the terms of any proposal from a potential purchaser of the Securities. The sale of the Securities to any investor will be evidenced by a Purchase Agreement in a form reasonably satisfactory to the Company.  Prior to the signing of any Purchase Agreement, and subject to all applicable federal and state securities laws, officers of the Company with responsibility for financial affairs will be reasonably available to answer inquiries from potential purchasers of the Securities.  

		
	(b)
	C-H will not have any rights or obligations in connection with the Placement contemplated by this Agreement except as expressly provided herein.  The Company agrees that C-H’s involvement in the contemplated transaction will be subject to C-H’s satisfaction, in its reasonable discretion and judgment, with prevailing market conditions and the results of its due diligence investigation of the Company and its business.  

		
	(c)
	The Company understands that C-H is not undertaking to provide any legal, accounting, tax, regulatory, insurance, executive compensation, environmental or other professional advice or services in connection with this engagement.

		
	(d)
	Nothing in this Agreement shall be construed to limit the ability of C-H or its affiliates to pursue, investigate, analyze, invest in, or engage in investment banking, financial advisory or any other business relationships with entities other than the Company, notwithstanding that such entities may be engaged in a business which is similar to or competitive with the business of the Company, and notwithstanding that such entities may have actual or potential operations, products, services, plans, ideas, customers or supplies similar or identical to the Company’s, or may have been identified by the Company as potential merger or acquisition targets or potential candidates for some other business combination, cooperation or relationship. 

		
	(e)
	The Company acknowledges that all advice (written or oral) given by C-H to the Company is intended solely for the benefit and use of the Company.  Other than to the extent required to be reflected in Board of Directors and committee meeting minutes, no advice (written or oral) of C-H hereunder shall be used, reproduced, disseminated, quoted or referred to at any time, in any manner, or for any purpose, nor shall any public references to C-H be made by the Company (or such persons), without the prior consent of C-H. For the avoidance of doubt, the Company is authorized to share all advice given by C-H with the Company’s legal counsel and accounting firm.

		
	(f)
	If the Placement  is oversubscribed, the portion of the Placement allocated to Insider Investors on the one hand and any other investors on the other hand shall be reduced on a pro rata basis between the two groups; provided, however, that in no event shall the portion of the Placement allocated to investors who are not Insider Investors be reduced below Fifteen Million Dollars ($15,000,000). 

		
	3.
	Fees; Expenses.  

		
	(a)
	As compensation for C-H’s services hereunder, the Company agrees to pay to C-H fees in the form of cash a placement fee equal to 30% of 7.0% of the gross proceeds raised from the sale of any Securities in the Placement to any investors who are not investors listed on Appendix A (the “Insider Investors”), subject to and payable at closing of the Placement.

		
	(b)
	If more than one closing is required in connection with the sale of the Securities, only that portion of the fees payable to C-H applicable to the Securities sold at the respective closing will be payable at such closing.  

		
	(c)
	The Company acknowledges and agrees that it will be responsible for and shall pay all costs and expenses of the Company incident to the purchase, sale and delivery of Securities in the Placement, including, without limitation, all fees and expenses of filing with the SEC and FINRA; all Blue Sky fees and expenses; all fees and disbursements of counsel and accountants for the Company; all printing costs; all costs of background investigations; all “roadshow” costs (regardless of the form in which the roadshow is conducted) and all costs incident to the travel and accommodation of the Company’s personnel, including, without limitation, any roadshow, in connection with the Placement, including, but not limited to, commercial or charter air travel and local hotel accommodations and transportation.

		
	(d)
	In addition to any fees payable to C-H pursuant to this Agreement and regardless of whether the Placement is consummated, the Company agrees to reimburse C-H promptly upon written request (which request may be by email) for (i) all reasonable and documented out-of-pocket fees and disbursements of legal counsel and any other professional advisor retained by C-H in connection with the Placement (it being understood that the retention of any such advisor, other than legal counsel, shall not be made without the prior approval of the Company, which approval shall not be unreasonably withheld); (ii) C-H’s reasonable and documented travel and related expenses arising out of this engagement); and (iii) other reasonable and documented out-of-pocket expenses incurred by C-H in connection with the performance of its services hereunder, including, without limitation, any roadshow. The amounts reimbursed pursuant to this Section 3(d) will not exceed $15,000 in the aggregate without the prior written consent of the Company (which may be given by email).

		
	4.
	Representations and Warranties.  Transphorm represents and warrants to C-H as follows: 

		
	(a)
	Except for the offers and sale of securities, the result of which would not cause the offer and sale of the Securities contemplated by this Agreement to fail to (i) qualify for the exemption from registration afforded by Section 4(a)(2) of the Securities Act and Regulation D thereunder or other applicable exemptions from registration that may be available; (ii) comply with applicable state securities and Blue Sky laws; or (iii) otherwise comply with federal and state securities laws, it has not, directly or indirectly, made any offers or sales of any type of securities 

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during the six month period preceding the date of this letter, and has no intention of making an offer or sale of securities for a period of six months after completion of the Placement contemplated by this Agreement. As used herein, the terms “offer” and “sale” have the meanings specified in Section 2(a)(3) of the Securities Act.
		
	(b)
	Transphorm is duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite power and authority to enter into and carry out the terms and provisions of this Agreement.

		
	(c)
	None of Transphorm, any of its predecessors, any affiliated issuer, any director, general partner, managing member, executive officer, other officer of Transphorm in each case participating in the Placement, any beneficial owner of 20% or more of Transphorm's outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with Transphorm in any capacity at the time of sale (each, a “Transphorm Covered Person” and, together, “Transphorm Covered Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a "Disqualification Event"), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). Transphorm has exercised reasonable care to determine whether any Transphorm Covered Person is subject to a Disqualification Event. Transphorm has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished C-H a copy of any disclosures provided thereunder.  Transphorm will notify C-H in writing, prior to the completion of the Placement of any Disqualification Event relating to any Transphorm Covered Person not previously disclosed to C-H in accordance with this Section 4(c).

		
	(d)
	Nothing contained in Transphorm’s charter documents, by-laws, shareholders’ agreements, or any other document, agreement, contract or instrument to which Transphorm is a party, to which Transphorm is subject, or in any order, judgment or settlement of any court or governmental agency to which Transphorm is bound conflicts with or in any way restricts or otherwise limits or conditions Transphorm’s ability to enter into, and perform under, this Agreement and consummate the transactions contemplated herein. The Company is not required to obtain any consent, waiver, authorization or order of, or make any filing or registration with, any governmental agency to which the Company is subject in order to enter into or consummate the transactions contemplated herein and no payment by the Company to a third party in connection with the entering into of this Agreement or the consummation of the transactions contemplated herein (including, but not limited to, any “tail” payments), other than (i) pursuant to the B. Riley Engagement Letter, (ii) securities laws filings required under the Securities Act, the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and any other applicable state or federal securities, takeover and “blue sky” Laws, (iii) any filings and approvals required by Delaware law, (iv) any filings and approvals required by any over-the-counter market or national securities exchange on which the Securities will be listed, or (v) any other consents, approvals, orders, authorizations, registrations, declarations, filings or notices the failure of which to be obtained or made, individually or in the aggregate, would not have a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and its subsidiaries, taken as a whole.

		
	5.
	Further Obligations of the Company.  The Company undertakes to and agrees with C-H that:

		
	(a)
	It will not, directly or indirectly, make any offer or sale of any of the Securities or any securities of the same or similar class as the Securities, the result of which would cause the offer and sale of the Securities contemplated by this Agreement to fail to (i) qualify for the exemption from registration afforded by Section 4(a)(2) of the Securities Act and Regulation D thereunder or other applicable exemptions from registration that may be available; (ii) comply with applicable state securities and Blue Sky laws; and (iii) otherwise comply with federal and state securities laws.  

		
	(b)
	The Company will be solely responsible for the contents of the marketing materials, any amendments or supplements thereto, any information incorporated by reference therein and any and all other written or oral communications (collectively, the “Marketing Materials”) that have been provided to any actual or potential purchaser of the Securities with the Company’s approval.  The Company represents and warrants that the Marketing Materials will not, as of the date of the offer or sale of the Securities or the closing date of any such sale, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  If at any time prior to the completion of the offer and sale of the Securities an event occurs as a result of which the Marketing Materials (as then amended or supplemented) would or might include any untrue statement of a material fact or omit to state any material fact necessary in order to make the 

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statements therein, in light of the circumstances under which they were made, not misleading, the Company will notify C-H promptly of such event and C-H will have the right to suspend solicitations of potential investors until such time as the Company shall prepare (and if requested to do so by C-H, the Company agrees to prepare promptly) a supplement or amendment to the Marketing Materials which corrects such statement or omission.  The Company authorizes C-H to provide the approved Marketing Materials to potential investors as contemplated herein.
		
	(c)
	The Company will comply with all requirements of Section 4(a)(2) of the Securities Act and Regulation D thereunder and the rules promulgated thereunder pursuant to the Securities Act (or with all requirements of any other applicable exemption from registration that the Company chooses to use).  The Company agrees to limit offers to sell, and solicitations of offers to buy, the Securities to persons reasonably believed by it to be “accredited investors” (as defined in Rule 501 of Regulation D under the Securities Act).  The Company further agrees that it will not engage in any form of general solicitation or general advertising in connection with the contemplated transactions within the meaning of Rule 502 under the Securities Act.  If applicable, the Company will make a timely filing of Form D pursuant to the requirements of Rule 503 under Regulation D.

		
	(d)
	The Company agrees to take such action (if any) as C-H may reasonably request to qualify the Securities for offer and sale under the securities laws of such states as C-H may specify; provided that in connection therewith the Company will not be required to qualify as a foreign corporation or file a general consent to service of process.  The Company agrees that it will make all filings or take all other action required under applicable state securities laws to permit the sale of the Securities.

		
	(e)
	In order to allow proper coordination of the proposed financing, the Company will promptly notify C-H of any potential purchasers of the Securities known to it to be interested in purchasing any Securities.  In addition, the Company will keep C-H reasonably informed of the status of any discussions or negotiations between the Company and any potential purchaser of Securities.

		
	(f)
	The Company shall be deemed to make to C-H all representations and warranties which it makes to purchasers of the Securities in any Purchase Agreement or other document, and agrees to deliver a letter to C-H at each closing date as set forth in a Purchase Agreement, to the extent that the representations and warranties are made as of each closing date pursuant to the applicable Purchase Agreement, addressed to C-H and in form and substance satisfactory to C-H, stating that C-H is entitled to rely on all representations and warranties of the Company as set forth in such Purchase Agreement.

		
	(g)
	The Company will cause to be delivered to C-H, addressed to C-H, the same opinions of legal counsel, accountants’ comfort letters and certificates and other documents that it provides to purchasers of the Securities pursuant to any Purchase Agreement.

		
	6.
	Indemnification.  The Company agrees to indemnify C-H and its controlling persons, representatives and agents in accordance with the indemnification provisions set forth in Appendix II hereto, which is incorporated herein by reference, and agrees to the other provisions of Appendix II hereto, regardless of whether the proposed Placement is consummated. The obligations of the Company pursuant to this paragraph and Appendix II hereto shall survive any expiration or termination of this agreement or C-H’s engagement hereunder.

		
	7.
	Information to be Provided; Confidentiality.

		
	(a)
	C-H and its agents and counsel will be accorded access to and may examine documents, records and other materials and information of the Company and its subsidiaries (all information so furnished being the “Information”) as C-H reasonably requests and deems necessary to perform its assignment hereunder.   All such Information provided by the Company shall to the best of the Company’s knowledge be complete and accurate and not misleading.  The Company will provide C-H with reasonably access to officers, directors, employees, accountants, counsel and other representatives of the Company (collectively, the “Representatives”) as necessary to perform its assignment hereunder.  C-H will maintain the confidentiality of the Information for a period of two (2) years from the date of this Agreement and shall disclose the Information only as authorized in writing in advance by the Company or as required by law, rule or regulation, including, but not limited to, FINRA Rules 2210 and 2241, or by order of a governmental authority or court of competent jurisdiction.  The Company recognizes and confirms that C-H: (i) will use and rely primarily on the Information 

4

and information supplied to C-H by or on behalf of the Company or any Representative of the Company in performing the services contemplated by this Agreement without having independently verified the same; (ii) does not assume responsibility for the accuracy or completeness of the Information and such other information; and (iii) will not make an appraisal of any assets or liabilities of the Company or any of their market competitors.
		
	(b)
	The confidentiality restrictions of Section 7(a) hereof shall not apply to information that:

		
	(i)
	at the time of disclosure by the Company to C-H is, or thereafter becomes, generally available to the public, other than as a result of a breach by C-H of its obligations under this Agreement;

		
	(ii)
	prior to or at the time of disclosure by the Company to C-H, was already in the possession of C-H or any of its affiliates;

		
	(iii)
	at the time of disclosure by the Company to C-H or thereafter, is obtained by C-H or any of its affiliates from a third party whom C-H reasonably believes to be in possession of the information not in violation of any contractual, legal or fiduciary obligation to the Company with respect to that information; or

		
	(iv)
	is or was independently developed by C-H or its affiliates (for the avoidance of doubt, such information shall not include any confidential information provided to C-H by the Company or the Representatives).

		
	(c)
	The Company acknowledges and agrees that C-H’s role in reviewing any information (including, but not limited to, the Information) is limited solely to performing such reviews as C-H deems necessary for purposes of its own analysis, and shall not be on behalf or for the benefit of the Company or any other person.

The obligations of C-H pursuant to this Section 7 hereto shall survive any expiration or termination of this agreement or C-H’s engagement hereunder, regardless of whether the proposed Placement is consummated.
		
	8.
	Term of Placement Engagement Period; Survival of Provisions.  

		
	(a)
	The term of C-H’s engagement with respect to the Placement (the “Placement Engagement Period”) shall be from the date of execution of this Agreement until March 14, 2020, unless extended by mutual agreement of the parties; provided, however, that either party may terminate the Placement Engagement Period at any time upon 10 days written notice to the other party.

		
	(b)
	Certain provisions of this Agreement shall survive any termination of the Placement Engagement Period as set forth herein. With respect to the expenses payable by the Company pursuant to Section 3, upon termination of the Placement Engagement Period, C-H shall be entitled to collect all such actual expenses accrued through the date of termination in accordance with the terms of Section 3.  If during a period of 9 months following the termination of the Placement Engagement Period, the Company sells any Securities to investors who are not Insider Investors and who are introduced to the Company by the Placement Agents as confirmed between the Company and B. Riley in writing (including by email), with the Company’s confirmation not to be unreasonably withheld, delayed or conditioned (“Placement Agent Introductions”), then it will pay to C-H upon the completion of such a sale a cash fee equal to the fees that would have been payable to C-H pursuant to Section 3 if such sale occurred during the term of C-H’s appointment and authorization hereunder (such fee, the “Fee Tail”); provided, however, that any such Fee Tail shall not apply if the Placement, at least $15,000,000 of which is affirmatively committed to be raised from Placement Agent Introductions, is not closed during the Placement Engagement Period, primarily due to the failure of C-H to perform the services contemplated by this Agreement.  

		
	9.
	Independent Contractor; No Fiduciary Duty.  The Company acknowledges and agrees that it is a sophisticated business enterprise and that C-H has been retained pursuant to this Agreement to act as a non-exclusive placement agent in connection with the Placement.  In such capacity, C-H shall act as an independent contractor and not as an agent or fiduciary to the Company or its shareholders, and any duties of C-H arising out of its engagement pursuant to this Agreement shall be contractual in nature and shall be owed solely to the Company.  Each party disclaims any intention to impose any fiduciary duty on the other.

5

		
	10.
	Announcement of the Placement.  If the Placement is consummated in which C-H acts as a placement agent, and to the extent consistent with securities laws governing such transactions, C-H may, at its sole option and expense, place an announcement (“Announcement”) in such newspapers, periodicals and marketing materials as C-H may choose stating that C-H has so acted, and the capacity in which it has acted.  C-H may include the name of the Company and the Company’s logo or other identifying mark, in any Announcements without the consent of the Company. 

		
	11.
	Amendments; Other Engagements.  

		
	(a)
	This Agreement may be modified or amended, or its provisions waived, only in a writing signed by each of the parties hereto.

		
	(b)
	The Company further understands that if C-H is asked to act for the Company in any other formal additional capacity relating to this engagement but not specifically addressed in this letter, then such activities shall constitute separate engagements and the terms and conditions of any such additional engagements will be embodied in one or more separate written agreements, containing provisions and terms to be mutually agreed upon, including without limitation appropriate indemnification and contribution provisions.  The provisions of Appendix II hereto shall apply to any such additional engagements, unless superseded by similar provisions set forth in a separate document applicable to any such additional engagements, and shall remain in full force and effect regardless of any completion, modification or termination of C-H’s engagement(s).

		
	12.
	No Commitment.  This Agreement does not and will not constitute any agreement, commitment or undertaking, express or implied on the part of C-H or any of its affiliates to purchase or to sell any securities (including, but not limited to, the Securities) or to provide any financing and does not ensure the successful arrangement or completion of the Placement.  

		
	13.
	Non-Circumvention.  The Company hereby covenants and agrees that it shall not, by amendment of its charter documents or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other action, avoid or seek to avoid the observance or performance of any of the terms of this Agreement, and the Company will at all times in good faith carry out all of the provisions of this Agreement and take all action as may be reasonably required to protect the rights of the other party herein.  Additionally, if the Company is not the party issuing securities pursuant to the Purchase Agreement, the defined term “Company” as used in this Agreement shall also include such issuing party and the Company shall cause such issuing party to acknowledge and agree to the foregoing by causing such issuing party to become a signatory to this Agreement prior to the completion of the Placement. Without limiting the foregoing, Transphorm shall cause MergerSub and PubCo to become signatories to this Agreement promptly following the closing of the Merger Transaction, and shall cause MergerSub and Pubco to make the representations and warranties made by Transphorm in Section 4 hereof as to themselves as of such date.

		
	14.
	Entire Agreement.  This Agreement constitutes the entire Agreement between the parties and supersedes and cancels any and all prior or contemporaneous arrangements, understandings and agreements, written or oral, between them relating to the subject matter hereof.  

		
	15.
	Severability.  If any portion of this Agreement shall be held or made unenforceable or invalid by a statute, rule, regulation, decision of a tribunal or otherwise, the remainder of this Agreement shall not be affected thereby and shall remain in full force and effect, and, to the fullest extent, the provisions of the Agreement shall be severable.

		
	16.
	Beneficiaries.  This Agreement shall inure to the sole and exclusive benefit of C-H and the Company and the persons referred to in Appendix II hereto and their respective successors and representatives.  The obligations and liabilities under this Agreement shall be binding upon C-H and the Company.  

		
	17.
	Headings.  The descriptive headings of the paragraphs, subparagraphs, and Appendixes of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretations of this Agreement. 

6

		
	18.
	Failure or Delay No Waiver.  It is understood and agreed that failure or delay by either the Company or C-H in exercising any right, power or privilege hereunder shall not operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power, or privilege hereunder.

		
	19.
	Governing Law; Waiver of Trial by Jury.  This Agreement, all aspects of the relationship created by this engagement and any other agreements relating to the engagement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed therein and, in connection therewith, the parties hereto consent to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County or the United States District Court for the Southern District of New York and agrees to venue in such courts.  Notwithstanding the foregoing, solely for purposes of enforcing the Company’s obligations under Appendix II hereto, the Company consents to personal jurisdiction, service and venue in any court proceeding in which any claim relating to or arising out of this engagement is brought by or against any Indemnified Person.  C-H AND THE COMPANY EACH HEREBY AGREES TO WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM, COUNTERCLAIM OR ACTION ARISING OUT OF OR RELATING TO THIS ENGAGEMENT.

		
	20.
	Limitation of Liability. Neither party (nor any of its affiliates) shall be liable for any incidental, indirect, special or consequential damages (i.e., lost profits) arising out of, or in connection with, this Agreement, whether or not such party was advised of the possibility of such damage, except gross negligence, bad faith, willful breach or intentional misconduct. The Company further agrees that the liability limit of C-H and its affiliates, agents, or contractors shall in no event be greater than the aggregate dollar amount which the Company paid during the term of this Agreement to C-H, including any reasonable attorneys’ fees and court costs.

		
	21.
	Interpretation.  No provision of this Agreement will be interpreted in favor of, or against, any of the parties hereto by reason of the extent to which any such party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft hereof or thereof. 

		
	22.
	Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but which together shall be considered a single instrument.  Facsimile and .pdf signatures to this Agreement shall be acceptable and binding.

		
	23.
	Prevailing Party. The prevailing party in any dispute relating to or arising from this Agreement shall have the right to collect from the other party its reasonable costs and attorneys’ fees.

7

If the foregoing terms correctly set forth our agreement, please sign and return to us a duplicate copy of this Agreement.  We look forward to working with you toward the successful conclusion of this engagement.
Very truly yours,
	
		
	 

	 
	 

	By:
	/s/ Rick Hartfiel

	 
	Rick Hartfiel
Managing Partner

	Confirmed and accepted as of this 14th day of November, 2019:

	 

	Transphorm, Inc.

	 
	 

	By:
	/s/ Primit Parikh

	 
	 

	Name:
	Primit Parikh

	 
	 

	Title:
	Co-founder and COO

8

APPENDIX I
Insider Investors

9

APPENDIX II
The Company agrees to indemnify and hold harmless C-H and its affiliates (as defined in Rule 405 under the Securities Act of 1933, as amended) and their respective directors, officers, members, managers, employees, agents and controlling persons (C-H and each such person being an “Indemnified Party”) from and against all losses, claims, damages and liabilities (or actions, including shareholder actions, in respect thereof), joint or several, to which such Indemnified Party may become subject under any applicable federal or state law, or otherwise, which are related to or result from the performance by C-H of the services contemplated by or the engagement of C-H pursuant to this Agreement, and will promptly reimburse any Indemnified Party for all reasonable and documented out-of-pocket expenses (including reasonable counsel fees and expenses) as they are incurred in connection with the investigation of, preparation for or defense arising from any threatened or pending claim, whether or not such Indemnified Party is a party and whether or not such claim, action or proceeding is initiated or brought by the Company.  The Company will not be liable to any Indemnified Party under the foregoing indemnification and reimbursement provisions (i) for any settlement by an Indemnified Party effected without its prior written consent (not to be unreasonably withheld); or (ii) to the extent that any loss, claim, damage, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted primarily from C-H’s gross negligence, bad faith, willful misconduct.  (and C-H will promptly repay such portion of any amounts that are attributable to such finding).  The Company also agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company or its security holders or creditors related to or arising out of the engagement of C-H pursuant to, or the performance by C-H of the services contemplated by, this Agreement except to the extent that any loss, claim, damage or liability (or related expense) is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted primarily from C-H’s bad faith, willful misconduct or gross negligence.
Promptly after receipt by an Indemnified Party of notice of any intention or threat to commence an action, suit or proceeding or notice of the commencement of any action, suit or proceeding, such Indemnified Party will, if a claim in respect thereof is to be made against the Company pursuant hereto, promptly notify the Company in writing of the same.  In case any such action is brought against any Indemnified Party and such Indemnified Party notifies the Company of the commencement thereof, the Company may elect to assume the defense thereof, with counsel reasonably satisfactory to such Indemnified Party, and an Indemnified Party may employ counsel to participate in the defense of any such action provided, that the employment of such counsel shall be at the Indemnified Party’s own expense, unless (i) the employment of such counsel has been authorized in writing by the Company, (ii) the Indemnified Party has reasonably concluded (based upon advice of counsel to the Indemnified Party) that there may be legal defenses available to it or other Indemnified Parties that are different from or in addition to those available to the Company, or that a conflict or potential conflict exists (based upon advice of counsel to the Indemnified Party) between the Indemnified Party and the Company that makes it impossible or inadvisable for counsel to the Indemnifying Party to conduct the defense of both the Company and the Indemnified Party (in which case the Company will not have the right to direct the defense of such action on behalf of the Indemnified Party), or (iii) the Company has not in fact employed counsel reasonably satisfactory to the Indemnified Party to assume the defense of such action within a reasonable time after receiving notice of the action, suit or proceeding, in each of which cases the reasonable and documented out-of-pocket fees, disbursements and other charges of such counsel will be at the expense of the Company; provided, further, that in no event shall the Company be required to pay fees and expenses for more than one firm of attorneys (in addition to local counsel) representing Indemnified Parties unless the defense of one Indemnified Party is unique or separate from that of another Indemnified Party subject to the same claim or action.  Any failure or delay by an Indemnified Party to give the notice referred to in this paragraph shall not affect such Indemnified Party’s right to be indemnified hereunder, except to the extent that such failure or delay causes actual harm to the Company, or prejudices its ability to defend such action, suit or proceeding on behalf of such Indemnified Party.
If the indemnification provided for in this Agreement is for any reason held unenforceable by or unavailable to an Indemnified Party, the Company agrees to contribute to the losses, claims, damages and liabilities for which such indemnification is held unenforceable or unavailable (i) in such proportion as is appropriate to reflect the relative benefits to the Company, on the one hand, and C-H, on the other hand, of the Placement as contemplated whether or not the Placement is consummated or (ii) if (but only if) the allocation provided for in clause (i) is for any reason unenforceable or unavailable, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company, on the one hand, and C-H, on the other hand, as well as any other relevant equitable considerations.  The Company agrees that for the purposes of this paragraph the relative benefits to the Company and C-H of the Placement as contemplated shall be deemed to be in the same proportion that the total value received or contemplated to be received by the Company or its shareholders, as the case may be, as a result of or in connection with the Placement bear to the fees paid or to be paid to C-H under this Agreement.  Notwithstanding the foregoing, the Company expressly agrees that C-H shall not be required to contribute any amount in excess of the 

amount by which fees paid C-H hereunder (excluding reimbursable expenses) exceeds the amount of any damages which C-H has otherwise been required to pay.
The Company agrees that without C-H’s prior written consent, which shall not be unreasonably withheld, it will not, and will not permit any of its affiliates to, settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding in respect of which indemnification or contribution could be sought under the provisions of this Agreement, unless such settlement, compromise or consent includes an unconditional release of each applicable Indemnified Party from all liability arising out of such claim, action or proceeding.

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