Prior Agreement hereby agrees and acknowledges that Section 4 of the Prior Agreement shall not be applicable to the issuance of any shares of Class D Common Stock pursuant to the Purchase Agreement (and hereby waives any and all notice requirements in connection therewith). Lastly, the Company shall not be obligated under this Subsection 4.1 to sell any securities to any Person, including but not limited the Investors, who does not qualify as an accredited investor (as such term is defined in Rule 501 as promulgated under the Securities Act) at the time of such offering or sale of New Securities.
(e) Notwithstanding any provision hereof to the contrary, in lieu of complying with the provisions of this Subsection 4.1, the Company may elect to give notice to the Investors within thirty (30) days after the issuance of New Securities. Such notice shall describe the type, price, and terms of the New Securities. Each Investor shall have twenty (20) days from the date notice is given to elect to purchase up to the number of New Securities at the price per share such New Securities were sold for that would, if purchased by such Investor, maintain such Investors percentage-ownership position, calculated as set forth in Subsection 4.1(b) before giving effect to the issuance of such New Securities. The closing of such sale shall occur within sixty (60) days of the date notice is given to the Investors.
4.2 Termination. The covenants set forth in Subsection 4.1 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) upon a Liquidation Event, as such term is defined in the Companys Restated Certificate, whichever event occurs first.
5. Additional Covenants.
5.1 Board Matters. Unless otherwise determined by the vote of a majority of the directors then in office, the Board of Directors shall meet at least quarterly in accordance with an agreed-upon schedule. The Company shall reimburse the nonemployee directors for all reasonable out-of-pocket travel expenses incurred (consistent with the Companys travel policy) in connection with attending meetings of the Board of Directors.
5.2 Right of Co-Sale.
(a) Exercise of Right. If any Common Stock is proposed to be sold by any Key Holder to a Prospective Transferee prior to the closing of the IPO, such Key Holder shall provide a Proposed Transfer Notice to each Investor and the Company and each Investor may elect to exercise its Right of Co-Sale and participate in the Proposed Key Holder Transfer as set forth in Subsection 5.2(b) below and, subject to Subsection 5.2(d), otherwise on the same terms and conditions specified in the Proposed Transfer Notice. An Investor, if it desires to exercise its Right of Co-Sale, must give the selling Key Holder written notice to that effect within fifteen (15) days after receipt of the Proposed Transfer Notice from the selling Key Holder, and upon giving such notice such Investor shall be deemed to have effectively exercised the Right of Co-Sale.
(b) Shares Includable. Each Investor may include in the Proposed Key Holder Transfer that number of shares of such Investors Common Stock equal to (i) the percentage of the total number of issued and outstanding shares of Common Stock of the
Company held by such Investor multiplied by (ii) the number of shares of Common Stock proposed to be sold by the selling Key Holder to the Prospective Transferee.
(c) Purchase and Sale Agreement. Each Investor and the selling Key Holder agree that the terms and conditions of any Proposed Key Holder Transfer in accordance with Section 5.2 will be memorialized in, and governed by, a written purchase and sale agreement with the Prospective Transferee (the Purchase and Sale Agreement) with customary terms and provisions for such a transaction, and each Investor and the selling Key Holder further covenant and agree to enter into such Purchase and Sale Agreement as a condition precedent to any sale or other transfer in accordance with this Section 5.2.
(d) Allocation of Consideration.
(i) Subject to Subsection 5.2(d)(ii), the aggregate consideration payable to each Investor and the selling Key Holder shall be allocated based on the number of shares of Common Stock sold to the Prospective Transferee by each Investor and the selling Key Holder.
(ii) In the event that the Proposed Key Holder Transfer constitutes a Change of Control, the terms of the Purchase and Sale Agreement shall provide that the aggregate consideration from such transfer shall be allocated to each Investor and the selling Key Holder in accordance with the Restated Certificate as if (A) such transfer were a Liquidation Event (as defined in the Restated Certificate), and (B) the Common Stock sold in accordance with the Purchase and Sale Agreement were the only Common Stock outstanding.
(e) Purchase by Selling Key Holder; Deliveries. Notwithstanding Subsection 5.2(c) above, if any Prospective Transferee refuses to purchase securities subject to the Right of Co-Sale from an Investor or upon the failure to negotiate in good faith a Purchase and Sale Agreement satisfactory to the Investor(s) exercising the Right of Co-Sale, no Key Holder may sell any Common Stock to such Prospective Transferee unless and until, simultaneously with such sale, such Key Holder purchases all securities subject to the Right of Co-Sale from each Investor exercising the Right of Co-Sale on the same terms and conditions (including the proposed purchase price) as set forth in the Proposed Transfer Notice and as provided in Subsection 5.2(d)(i); provided, however, if such sale constitutes a Change of Control, the portion of the aggregate consideration paid by the selling Key Holder to each Investor exercising the Right of Co-Sale shall be made in accordance with the first sentence of Subsection 5.2(d)(ii). In connection with such purchase by the selling Key Holder, each Investor exercising the Right of Co-Sale shall deliver to the selling Key Holder any stock certificate or certificates, properly endorsed for transfer, representing the Common Stock being purchased by the selling Key Holder (or request that the Company effect such transfer in the name of the selling Key Holder). Any such shares transferred to the selling Key Holder will be transferred to the Prospective Transferee against payment therefor in consummation of the sale of the Common Stock pursuant to the terms and conditions specified in the Proposed Transfer Notice, and the selling Key Holder shall concurrently therewith remit or direct payment to each Investor exercising the Right of Co-Sale the portion of the aggregate consideration to which such Investor is entitled by reason of its participation in such sale as provided in this Subsection 5.2(e).