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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K


CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 30, 2017


JAGUAR ANIMAL HEALTH, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction
of incorporation)		   001-36714
(Commission
File Number)		   46-2956775
(IRS Employer
Identification No.)
201 Mission Street, Suite 2375
San Francisco, California
(Address of principal executive offices)		   94105
(Zip Code)

Registrant's telephone number, including area code: (415) 371-8300


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

ý
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

   

Item 1.01    Entry into a Material Definitive Agreement.

Agreement and Plan of Merger

        On March 31, 2017, Jaguar Animal Health, Inc., a Delaware corporation (the "Jaguar"), entered into an Agreement and Plan of Merger (the "Merger Agreement") with Napo Pharmaceuticals, Inc., a Delaware corporation ("Napo"), Napo Acquisition Corporation, a Delaware corporation and wholly owned subsidiary of Jaguar ("Merger Sub"), and Gregory Stock, the Napo representative, pursuant to which, among other things, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Napo, with Napo becoming a wholly-owned subsidiary of Jaguar and the surviving corporation of the merger (the "Merger").

        Subject to the terms and conditions of the Merger Agreement, at the closing of the Merger, (i) each issued and outstanding share of Napo common stock (other than dissenting shares and shares held by Jaguar or Napo) will be converted into a contingent right to receive up to a whole number of shares of Jaguar common stock compromising in the aggregate no more than approximately 21.5% of the fully diluted shares of Jaguar common stock immediately following the consummation of the merger ("Contingent Right Holders"), which contingent right will vest if the subsequent resale of certain shares of Jaguar common stock ("the Tranche A Shares") issued by Jaguar to Nantucket Investments Limited ("Nantucket") in the Napo litigation debt settlement described further below provides Nantucket with specified cash returns upon the subsequent sale of their Tranche A Shares to third parties over a specified period of time (the "Hurdle Amounts"), (ii) existing creditors of Napo (inclusive of Nantucket) will be issued in the aggregate approximately 43,102,595 shares of Jaguar non-voting common stock and 2,005,245 shares of Jaguar voting common stock in full satisfaction of all existing indebtedness then owed by Napo to such creditors and (iii) an existing Napo stockholder will be issued an aggregate of approximately 3,243,243 shares of Jaguar common stock in return for $3 million of new funds invested into Jaguar by such investor, which will be immediately loaned to Napo to partially facilitate the extinguishment of the Nantucket debt in Napo. At closing, it is contemplated that unless consented to or waived by Jaguar, Napo will have no more than (x) $11.3 million in secured and unsecured debt for monies borrowed (a portion of such debt proceeds which will be used to pay off Napo's secured debt owed to Nantucket), (y) $6.2 million of trade payables and certain other debt, excluding transaction expenses and (z) Napo's cash at closing shall be no less than $500,000.

        Shares of Jaguar non-voting common stock have the same rights to dividends and other distributions and are convertible into shares of common stock on a one-for-one basis upon (x) transfers to non-affiliates of Nantucket at the option of the respective holders thereof and (y) the release from escrow of certain non-voting shares held by Nantucket to the legacy stockholders of Napo under specified conditions.

        Jaguar will also assume (i) each outstanding and unexercised option to purchase Napo common stock, which will be converted into options to purchase Jaguar common stock, (ii) each outstanding warrant to purchase Napo capital stock, which will be converted into warrants to purchase Jaguar common stock, and (iii) each outstanding restricted stock unit to acquire Napo capital stock, which will be converted into restricted stock units to acquire Jaguar common stock.

        The stockholders of Jaguar will continue to own their existing shares and the rights and privileges of their existing shares will not be affected by the merger. However, because Jaguar will be issuing new shares of Jaguar common stock and non-voting common stock to Napo creditors, and options, warrants and restricted stock units exercisable for Jaguar common stock to holders of Napo options, warrants and restricted stock units in the merger, the stockholders of Jaguar will experience dilution as a result of the issuance of shares in the merger and each outstanding share of Jaguar common stock immediately prior to the merger will represent a smaller percentage of the total number of shares of Jaguar common stock and non-voting common stock issued and outstanding after the merger. It is expected that Jaguar stockholders and option and warrant holders before the merger will hold approximately 25% of the total Jaguar common stock and non-voting common stock issued and outstanding on a fully diluted basis ("Jaguar Equity Holders") immediately following completion of the

merger. Thus, Jaguar Equity Holders before the merger will experience dilution in the amount of approximately 75% as a result of the merger.

        Consummation of the Merger is subject to certain closing conditions, including, among other things, approval by the stockholders of Jaguar and Napo. The Merger Agreement contains specified termination rights for both Jaguar and Napo, and further provides that, if the merger fails to close for any reason on, or prior to, July 31, 2017, other than as a result directly or indirectly of (x) lack of stockholder approval by either Jaguar or Napo or (y) Napo (i) fails to perform in accordance with the terms and conditions of the Binding Agreement of Terms for Jaguar Animal Health, Inc. Acquisition of Napo Pharmaceuticals, Inc., dated February 8, 2017, between Jaguar and Napo (the "Binding Agreement of Terms") or the merger documents or (ii) fails to abide by or breaches the provisions or representations, warranties and covenants of the Binding Agreement of Terms or the merger documents, then on, or before, the close of business on August 7, 2017, Jaguar will issue 2,000,000 shares of its restricted common stock to Napo.

        The Board of Directors and executive management of Jaguar is expected to remain unchanged following the effective time of the Merger.

        In connection with the Merger, Jaguar will seek stockholder approval to (1) issue shares of Jaguar common stock and non-voting stock as contemplated in the Merger Agreement, (2) adopt an amended and restated certificate of incorporation to: (a) authorize a class of non-voting common stock and (b) change the name of Jaguar to Jaguar Health, Inc., each subject to the consummation of the Merger, and (3) increase the number of shares authorized to be issued under the Jaguar 2014 Stock Incentive Plan.

        The preceding summary does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference.

Settlement of Outstanding Napo Debt

        In order to induce Jaguar to enter into the Merger Agreement, on March 31, 2017, Napo entered into a Settlement and Discounted Payoff Agreement with Nantucket and the lenders named therein (the "Settlement Agreement") pursuant to which Napo agreed, simultaneously with the consummation of the merger, (a) to make a cash payment to Nantucket of no less than $8 million, which will reduce the outstanding principal obligations under the Litigation Financing Agreement, dated October 10, 2014, by and between Napo and Nantucket (the "Financing Agreement"), and (b) in satisfaction as a compromise for the outstanding obligations under the Financing Agreement and the release of any lien or security interest in respect of such outstanding obligations, (x) to transfer to Nantucket 2,666,666 shares of Jaguar common stock owned by Napo and (y) pursuant to the merger agreement, to cause Jaguar to issue to Nantucket 1,940,382 newly issued shares of Jaguar voting common stock and 38,380,028 newly issued shares of Jaguar non-voting common stock, which shares are subject to the terms of the Investor Rights Agreement described below.

        In connection with the execution of the Merger Agreement and the Settlement Agreement, Jaguar and Nantucket entered into an Investor Rights Agreement, dated March 31, 2017 (the "Investor Rights Agreement") pursuant to which, among other things, Jaguar has agreed to register the resale of those shares on one or more registration statements. A portion of these shares will be held in escrow and released to either Nantucket or the former Napo stockholders, depending on whether Nantucket receives sufficient proceeds from the resale of the Tranche A Shares to third parties to satisfy the Hurdle Amounts. The Investor Rights Agreement also provides that Jaguar cannot pay any dividends on any shares of its capital stock or redeem any shares, except in limited circumstances, without the prior written consent of Nantucket.

        The preceding summary does not purport to be complete and is qualified in its entirety by reference to the Investor Rights Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.

Item 3.02    Unregistered Sales of Equity Securities.

        To the extent required by Item 3.02 of Form 8-K, the information contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein.

Item 5.02    Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

(b)
Resignation of Chief Scientific Officer

        On March 30, 2017, Roger Waltzman submitted his resignation, effective April 3, 2017, as Chief Scientific Officer of Jaguar.

Item 8.01    Other Events.

        On March 31, 2017, Jaguar issued a press release in connection with the announcement of the Merger, which is attached as Exhibit 99.1 to this Form 8-K.

Disclaimer on Forward-looking Statements

        This Current Report on Form 8-K contains "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934. These include statements regarding the benefits of the acquisition of Napo, including future financial and operating results, Jaguar's or Napo's plans, objectives, expectations and intentions and the expected timing of completion of the transaction. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expect," "plan," "aim," "anticipate," "could," "intend," "target," "project," "contemplate," "believe," "estimate," "predict," "potential" or "continue" or the negative of these terms or other similar expressions. The forward-looking statements in this release are only predictions. Jaguar has based these forward-looking statements largely on its current expectations and projections about future events. These forward-looking statements speak only as of the date of this release and are subject to a number of risks, uncertainties and assumptions, some of which cannot be predicted or quantified and some of which are beyond Jaguar's control. Except as required by applicable law, Jaguar does not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Important Information for Investors and Stockholders

        This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with the proposed merger between Jaguar and Napo, Jaguar will file with the Securities and Exchange Commission (the "SEC") a registration statement on Form S-4 that will include a joint proxy statement of Jaguar and Napo that also constitutes a prospectus of Jaguar. The definitive joint proxy statement/prospectus will be delivered to Jaguar's and Napo's stockholders. INVESTORS AND SECURITY HOLDERS OF JAGUAR AND NAPO ARE URGED TO READ THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders will be able to obtain free copies of the registration statement and the definitive joint proxy statement/prospectus (when available) and other documents filed with the SEC by Jaguar through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by Jaguar will be available free of charge on Jaguar's internet website at www.jaguaranimalhealth.com or by contacting Jaguar at: Investor Relations, Jaguar Animal Health, Inc., 201 Mission Street, Suite 2375, San Francisco, California, 94105; (415)-371-8300.

Participants in the Merger Solicitation

        Jaguar, Napo, their respective directors and certain of their executive officers and employees may be considered participants in the solicitation of proxies in connection with the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of Jaguar's and Napo's stockholders in connection with the proposed merger will be set forth in the joint proxy statement/prospectus when it is filed with the SEC. Information about the directors and executive officers of Jaguar is set forth in its proxy statement for its 2016 annual meeting of stockholders, which was filed with the SEC on April 29, 2016. Information about the executive officers of Napo is set forth at www.napopharma.com. Additional information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus filed with the above-referenced registration statement on Form S-4 and other relevant materials to be filed with the SEC when they become available.

Item 9.01    Financial Statements and Exhibits

(d)
Exhibits
Exhibit No.   Description
  2.1*   Agreement and Plan of Merger dated March 31, 2017 by and among Jaguar Animal Health, Inc., Napo Pharmaceuticals, Inc., Napo Acquisition Corporation, and Gregory Stock.

 
10.1
 
Investor Rights Agreement, dated March 31, 2017, by and between Jaguar Animal Health, Inc. and Nantucket Investments Limited.

 
99.1
 
Jaguar Animal Health, Inc. Press Release dated March 31, 2017.
*
The Agreement and Plan of Merger filed as Exhibit 2.1 omits certain exhibits and the disclosure schedules to the Merger Agreement pursuant to Item 601(b)(2) of Regulation S-K promulgated by the SEC. The Company agrees to furnish on a supplemental basis a copy of the omitted exhibits and schedules to the SEC upon request.


SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

  JAGUAR ANIMAL HEALTH, INC.

 

By:

  

/s/ KAREN S. WRIGHT

      Name:   Karen S. Wright

      Title:   Chief Financial Officer

Date: March 31, 2017



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Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

        This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered into as of March 31, 2017, by and among Jaguar Animal Health, Inc., a Delaware corporation ("Parent"), Napo Acquisition Corporation, a Delaware corporation ("Merger Sub"), Napo Pharmaceuticals, Inc., a Delaware corporation ("Company"), and Gregory Stock, the Company Representative. Certain capitalized terms that are used in this Agreement are defined in Article IX. Appendix I provides an index to certain capitalized terms that are defined in other provisions of this Agreement.


RECITALS:

        A.    Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the Delaware General Corporation Law (the "DGCL"), Parent, Merger Sub and Company intend to enter into a business combination transaction.

        B.    The Board of Directors of Parent and of Merger Sub have: (i) determined that the Merger (as defined below) and the other transactions contemplated hereby, including the Debt Exchange (as defined below) pursuant to the Settlement Agreements, and the transactions contemplated under the Note Purchase Agreements and the Invesco Commitment Letter (all of the foregoing collectively, the "Transactions") are in the best interests of each such Person and its stockholders; (ii) unanimously approved this Agreement, the Merger and the Transactions; (iii) recommended that the stockholders of Parent adopt and approve this Agreement, the Merger and the Transactions and (iv) solely with respect to the Board of Directors of Parent, determined that Parent, as the sole stockholder of Merger Sub, approve this Agreement, the Merger and the Transactions.

        C.    The Board of Directors of Company has: (i) determined that the Merger and the Transactions are fair to and in the best interests of Company and its stockholders; (ii) unanimously approved this Agreement, the Merger and the Transactions; and (iii) recommended that the stockholders of Company adopt and approve this Agreement, the Merger and the Transactions.

        NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants, promises and representations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, the parties hereto hereby agree as follows:


ARTICLE I
THE MERGER AND EFFECT ON CAPITAL STOCK

        1.1    The Merger.    At the Effective Time (as defined below) and subject to and upon the terms and conditions of this Agreement and the applicable provisions of the DGCL, Merger Sub shall be merged with and into Company (the "Merger"), the separate corporate existence of Merger Sub shall cease and Company shall continue as the surviving corporation in the Merger. Company, as the surviving corporation in the Merger, is hereinafter sometimes referred to as the "Surviving Corporation." As a result of the Merger, the outstanding shares of capital stock of each of Company and Merger Sub shall be converted or cancelled in the manner provided herein. Prior to the Closing (as defined below), Parent shall prepare and, on the Closing Date (as defined below), the Company, Parent and Merger Sub shall (i) cause a certificate of merger with respect to the Merger (the "Certificate of Merger") to be duly executed and filed with the Delaware Secretary of State as provided under the DGCL and (ii) make any other filings, recordings or publications required to be made by the Company or Merger Sub under the DGCL in connection with the Merger. The Merger shall become effective at such time as the Certificate of Merger shall have been duly filed with the Delaware Secretary of State on the Closing Date or on such other date and time (not to exceed thirty (30) days from the date that the Certificate of Merger is duly filed with the Delaware Secretary of State) as shall be agreed to by the Company and Parent and specified in the Certificate of Merger (the date and time the Merger becomes effective being the "Effective Time").

        1.2    Closing.    The closing of the Merger (the "Closing") shall occur at 11:59 p.m. (Pacific Standard Time), on the third (3rd) Business Day after all of the conditions set forth in Article VIII (other than those conditions that by their terms are required to be satisfied or waived at the Closing, but subject to the satisfaction or waiver of such conditions) shall have been satisfied or waived by the party entitled to the benefit of the same or at such other time and date as shall be agreed upon by the parties hereto. The date on which the Closing occurs is referred to in this Agreement as the "Closing Date". The Closing shall take place at the offices of Reed Smith LLP, 1510 Page Mill Road, Suite 110, Palo Alto, CA 94304 or at such other place as agreed to in writing by the parties hereto.

        1.3    Effect of the Merger.    At the Effective Time, the effect of the Merger shall be as provided in this Agreement and the applicable provisions of the DGCL.

        1.4    Certificate of Incorporation; Bylaws.    At the Effective Time, the Certificate of Incorporation of Merger Sub shall be the certificate of incorporation of the Surviving Corporation, and the Bylaws of Merger Sub shall be the Bylaws of the Surviving Corporation.

        1.5    Directors and Officers.    

        1.6    Closing Deliverables.    

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        1.7    Dissenting Shares.    

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 ARTICLE II
EFFECT ON CAPITAL STOCK / AND OUTSTANDING DEBT

        2.1    Effect on Capital Stock.    Subject to the terms and conditions set forth in this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of the parties hereto or the holders of any of the following securities, the following shall occur:

        2.2    Debt Exchange.    At the Effective Time, subject to the terms and conditions of each of the Settlement Agreements, Parent will issue to each existing creditor of the Company listed on Schedule 3 the class and number of shares of stock of Parent set forth opposite such creditor's name on Schedule 3 in full satisfaction, after giving effect to the transactions contemplated by the Investor Rights Agreement and the Settlement Agreements, of all existing indebtedness then owed by the Company to such creditor (the "Debt Exchange").

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        2.3    New Issuances.    At the Effective Time, subject to the terms and conditions of the Note Purchase Agreements and the Invesco Commitment Letter, Parent will issue to each of the Persons listed on Schedule 4 the class and number of shares of stock of Parent set forth opposite such Person's name on Schedule 4.

        2.4    Aggregate Number of Shares to be Issued to Company Stakeholders.    The maximum aggregate number of shares of Parent Common Stock and Parent convertible non-voting common stock to be issued or issuable by Parent to the Company Stakeholders pursuant to the Merger and the Transactions is 69,299,346 (the "Maximum Number of Shares").

        2.5    Exchange of Certificates.    

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        2.6    Company Representative.    Company hereby designates Gregory Stock to represent the interests of the RSU Indemnitors for the purposes of: (i) after the Closing, giving, receiving and forwarding notices and communications pursuant to this Agreement, (ii) taking any actions relating to claims to indemnify, hold harmless or reimburse any indemnified party pursuant to this Agreement, (iii) after the Closing, giving or agreeing to, on behalf of the Company Stockholders, any and all consents, waivers, amendments, or modifications deemed by the Company Representative, in his discretion, to be necessary or appropriate under this Agreement and the execution or delivery of any documents that may be necessary or appropriate in connection therewith, (iv) taking all other actions contemplated for the Company Representative in this Agreement, (v) after the Closing, receiving payments under or pursuant to this Agreement, and (vi) engaging or appointing any agents (including attorneys, accountants and consultants) to assist the Company Representative in complying with the Company Representative's duties and obligations pursuant to this Agreement (such designee and any

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successor, the "Company Representative"). If such Person ceases to serve in such capacity, for any reason, those members of the Board of Directors of Company who were directors of the Company prior to the Closing shall appoint as a successor a Person who was a former stockholder or director of Company or such other Person as such members shall designate. Parent shall be entitled to deal exclusively with the Company Representative on all matters relating to Article VI and Article VII of this Agreement and shall be entitled to rely conclusively (without further evidence of any kind whatsoever) on any document executed or purported to be executed on behalf of any Contingent Right Holder or by the Company Representative, and on any other action taken or purported to be taken on behalf of any Contingent Right Holder or by the Company Representative, as being fully binding upon such Person. Any decision or action by the Company Representative with respect to those matters as to which the Company Representative has authority hereunder, shall constitute a decision or action of all Contingent Right Holders with respect to such matter and shall be final, binding and conclusive upon each such Person. No Contingent Right Holder shall have the right to object to, dissent from, protest or otherwise contest the same. The provisions of this Section 2.5 are independent and severable, are irrevocable and coupled with an interest, and shall not be terminated by any act of any one or more stockholders of the Company, or by operation of Law, whether by death or other event.

        2.7    Tax Consequences.    The parties acknowledge and agree that the Merger will not qualify as a tax-free reorganization within the meaning of Section 368 of the Code, and that the Company Stockholders will not recognize any taxable gain or loss until the Contingent Right Holders Notice Date when the Exchange Agent notifies the Contingent Right Holders as to the final number of Merger Shares, if any, that will be issued to the Contingent Right Holders. At that time, each Company Stockholder will be deemed to have sold his, her or its shares of Company Common Stock in a taxable transaction for a purchase price (the "Purchase Price") equal to the fair market value of the Merger Shares received by such Company Stockholder, and such Company Stockholder will recognize gain or loss accordingly. In addition, a portion of the Purchase Price received by each Company Stockholder will constitute imputed interest that will be taxed at ordinary rates pursuant to Section 483 of the Code. The parties shall not take any position inconsistent with the foregoing on any Tax Return or in any administrative or judicial proceeding, unless otherwise required by applicable Law.


ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY

        Company hereby represents and warrants to Parent and Merger Sub, subject to such exceptions as are specifically disclosed in the disclosure letter supplied by Company to Parent, dated as of the date hereof (the "Company Disclosure Letter"), as set forth below in this Article III.

        3.1    Organization and Qualification; Subsidiaries.    

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        3.2    Capital Stock of Company.    The authorized capital stock of Company consists of the following:

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        3.3    Authority Relative to this Agreement.    Company has all necessary corporate power and authority to execute and deliver this Agreement and all other Transaction Documents to which it is a party (the "Company Transaction Documents") and to perform its obligations hereunder and thereunder, to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Company Transaction Documents by Company and the consummation by Company of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of Company and no other corporate proceedings on the part of Company are necessary to authorize this Agreement and the Company Transaction Documents or to consummate the transactions so contemplated. This Agreement and the Company Transaction Documents have been duly and validly executed and delivered by Company and, assuming the due authorization, execution and delivery by the other parties thereto, constitute the legal and binding obligation of Company, enforceable against Company in accordance with their respective terms, subject to: (i) the effect of bankruptcy, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting the enforcement of creditor's rights generally; and (ii) general equitable principles (whether considered in a proceeding in equity or at law).

        3.4    No Conflict; Required Filings and Consents.    

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        3.5    Financial Statements.    

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        3.6    Compliance; Permits.    

        3.7    No Undisclosed Liabilities.    Except for matters reflected or reserved against in the Company Financial Statements or set forth in the Company Disclosure Letter or as are incurred in connection with the Transactions, Company did not have at such date, and has not incurred since that date, any Liabilities, except Liabilities or obligations which were incurred in the ordinary course of business consistent with past practice, or Liabilities which, in the aggregate would not be reasonably expected to have, a Company Material Adverse Effect.

        3.8    Absence of Litigation.    

        3.9    Employees and Employee Benefit Plans.    

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        3.10    Labor Matters.    

        3.11    Title to Assets; Property.    

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        3.12    Taxes / Definition of Taxes.    

        3.13    Environmental Matters.    To the Knowledge of Company, Company is in compliance, in all material respects, with all applicable Environmental Laws and Environmental Permits. Company is not required to hold any Environmental Permits for the operation of its businesses. To the Knowledge of Company, there is no Environmental Claim pending or overtly threatened against Company nor is there any reasonable basis for any such claim or any Liability, in each case, under any applicable Environmental Law.

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        3.14    Intellectual Property.    

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        3.15    Material Agreements.    Section 3.15 of the Company Disclosure Letter sets forth a list of all Company Material Agreements. All of the Company Material Agreements are in full force and effect and constitute the valid, legal and binding obligation of Company and, to the Knowledge of Company, constitute the valid, legal and binding obligation of the other parties thereof, enforceable against each such Person in accordance with its terms, subject to: (i) the effect of bankruptcy, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting the enforcement of creditor's rights generally; and (ii) general equitable principles (whether considered in a proceeding in equity or at law). Company has not violated or breached, or committed any default under, any Company Material Agreement, and, to the Knowledge of Company, no other Person has violated or breached, or committed any default under, any Company Material Agreement. Company has not received or given any notice or claim of breach or violation of, or default under, any Company Material Agreement. Company has not received or given any notice of an intention to terminate, not renew or challenge the validity or enforceability of any Company Material Agreement. No event has occurred, and no circumstance or condition exists that, with or without notice or lapse of time or both, would, or would reasonably be expected to, (i) result in a material violation or breach of any of the provisions of any Company Material Agreement; (ii) give any Person the right to declare a default or exercise any remedy under any Company Material Agreement; (iii) give any Person the right to accelerate the maturity or performance of any Company Material Agreement; or (iv) give any Person the right to cancel, terminate or materially modify any Company Material Agreement. Each Company Material Agreement will continue to be legal, valid, binding, enforceable, and in full force and effect on substantially identical terms immediately following the consummation of the Transactions, and the consummation of the Transactions shall not (either alone or upon the occurrence of additional acts or events) result in any payment or payments becoming due from Company to any Person or give any Person the right to terminate or alter the provisions of such Company Material Agreement.

        3.16    Agreements with Regulatory Agencies.    Company (a) is not subject to any cease-and-desist or other Order issued by, (b) is not a party to any Contract, consent agreement or memorandum of understanding with, (c) is not a party to any commitment letter or similar undertaking to, (d) is not subject to any order or directive by, (e) is not a recipient of any extraordinary supervisory letter from, and (f) has not adopted any board resolutions at the request of (each of clauses (a)-(e) of this Section 3.16, a "Regulatory Agreement"), any Governmental Entity that restricts the conduct of its business or that in any manner relates to its management or its business, or would reasonably be expected, following the Merger and the consummation of the Transactions, to impair in any material respect the Surviving Corporation's ability to conduct the business of Company after the Effective Time, as presently conducted.

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        3.17    Related Party Transactions.    Other than in respect of Contracts or interests related to employment in the ordinary course of business or incentive arrangements under the Company Option Plan, and except as disclosed or otherwise contemplated under this Agreement, to the knowledge of the Company, no Person who is or was a Related Party at any time up to and including the Closing Date (i) is a party to any Contract with or binding upon Company or any of its assets, rights or properties or has any interest in any property owned by any member of Company or has engaged in any transaction with any of the foregoing since January 1, 2015, (ii) has any direct or indirect ownership interest in any material asset used in the business of Company, (iii) is indebted to Company, or (iv) since January 1, 2015, has entered into, or has had any direct or indirect financial interest in, any Contract, transaction or business dealing involving Company.

        3.18    Insurance.    All casualty, general liability, business interruption, product liability, director & officer liability, worker's compensation, environmental, automobile and sprinkler and water damage and other insurance policies and bond and surety arrangements maintained Company are listed in Section 3.18 of the Company Disclosure Letter (the "Company Insurance Policies"), including historical property and casualty claims information with respect to the five (5)-year period prior to the date hereof indicating pending and paid claims as of the date hereof. Company has not received any notice from the applicable carrier regarding any refusal of coverage under, or any rejection of any claim under, any such policies. There are no claims related to the business of Company pending under any Company Insurance Policy as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights.

        3.19    Brokers.    Company has not incurred, or will not incur, directly or indirectly, any Liability for brokerage or finder's fees or agent's commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby.

        3.20    Inapplicability of Anti-takeover Statutes.    The Board of Directors of Company has taken and will take all actions necessary to ensure that the restrictions applicable to business combinations contained in the DGCL are, and will be, inapplicable to the execution, delivery and performance by the Company of this Agreement and to the consummation of the Merger and the Transactions.

        3.21    Full Disclosure.    Neither this Agreement (including the Company Disclosure Letter) nor any Transaction Document: (i) contains any representation or warranty by Company or information regarding Company that is false or misleading with respect to any material fact; or (ii) omits to state any material fact necessary in order to make the representations and warranties regarding Company contained herein and therein, in light of the circumstances under which such representations and warranties were or will be made or provided, not false or misleading.


ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT

        Parent hereby represents and warrants to Company, subject to such exceptions as are specifically disclosed in writing (with reference to a specific section of this Agreement to which each such exception applies) in the disclosure letter supplied by Parent to Company, dated as of the date hereof (the "Parent Disclosure Letter") as set forth below in this Article IV.

        4.1    Organization and Qualification; Subsidiaries.    

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        4.2    Capital Stock of Parent.    The authorized capital stock of Parent consists of the following:

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        4.3    Authority Relative to this Agreement.    Each of Parent and Merger Sub has all necessary corporate power and authority to execute and deliver this Agreement and all other Transaction Documents to which it is a party (the "Parent Transaction Documents"), to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Parent Transaction Documents by Parent and Merger Sub, and the consummation by Parent and Merger Sub of the transactions contemplated hereby and thereby, have been duly and validly authorized by all necessary corporate action on the part of Parent and Merger Sub, and no other corporate proceedings on the part of Parent or Merger Sub are necessary to authorize this Agreement and the Parent Transaction Documents or to consummate the transactions so contemplated. This Agreement and the Parent Transaction Documents have been duly and validly executed and delivered by Parent and Merger Sub and, assuming the due authorization, execution and delivery by the other parties thereto, constitute the legal and binding obligation of Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance with their respective terms, subject to: (i) the effect of bankruptcy, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting the enforcement of creditor's rights generally; and (ii) general equitable principles (whether considered in a proceeding in equity or at law).

        4.4    No Conflict; Required Filings and Consents.    

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        4.5    Reports and Financial Statements; Internal Controls.    

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        4.6    Compliance; Permits.    

        4.7    No Undisclosed Liabilities.    Except for matters reflected or reserved against in the balance sheet (including the notes thereto) as of December 31, 2016 included in the Parent Financial Statements or as disclosed in Section 4.7 of the Parent Disclosure Letter or in the Parent 2016 SEC Documents or incurred in connection with the Transactions, Parent has not incurred since that date, any Liabilities, except Liabilities incurred in the ordinary course of business consistent with past practice, or Liabilities which, in the aggregate would not be reasonably expected to have, a Parent Material Adverse Effect.

        4.8    Absence of Litigation.    

        4.9    Title to Assets; Property.    Parent owns, and has good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all tangible properties or assets and equipment used or held for use in its business or operations or purported to be owned or leased by it, including: (i) all assets reflected on the Parent Financial Statements; and (ii) all other assets reflected in the books and records of Parent as being owned by Parent, except as would not reasonably be expected to result in a Parent Material Adverse Effect. All of said assets are owned by Parent free and clear of any Liens, except for Permitted Liens.

        4.10    Taxes.    Parent has timely filed all Tax Returns required to be filed by it, and all such Tax Returns are accurate, complete and correct. Parent has paid all Taxes required to be paid by it (whether or not shown on any Tax Return described in the preceding sentence). There is no Tax audit or examination now pending or threatened with respect to Parent. No claim has ever been made in writing by any Governmental Entity in a jurisdiction where Parent does not pay Taxes or file Tax Returns that Parent is or may be subject to Tax by that jurisdiction. Parent has not requested or entered into an agreement providing for any extension of time within which to file any Tax Return, make any Tax election, pay any Taxes or pursuant to which any Governmental Entity may assess Taxes.

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All Taxes which Parent was or is required by applicable Law to withhold or collect have been and are being withheld or collected by it and have been paid over to the proper Governmental Entity or, if not yet due, are being held by Parent for payment. Parent has collected and remitted sales, use, value added and similar Taxes applicable in connection with the assets of Parent and the operation of Parent's business. There is no lien for Taxes upon any of the assets of Parent other than liens for Taxes that are not yet due and payable.

        4.11    Environmental Matters.    To the Knowledge of Parent, Parent is in compliance, in all material respects, with all applicable Environmental Laws and Environmental Permits. Parent is not required to hold any Environmental Permits for the operation of its businesses. To the Knowledge of Parent, there is no Environmental Claim pending or overtly threatened against Parent nor is there any reasonable basis for any such claim or any Liability, in each case, under any applicable Environmental Law.

        4.12    Intellectual Property.    

        4.13    Agreements with Regulatory Agencies.    Parent is not subject to, a party to, or a recipient of Regulatory Agreement, any Governmental Entity that restricts the conduct of its business or that in any manner relates to its management or its business, or would reasonably be expected, following the Merger and the consummation of the Transactions, to impair in any material respect the ability of Parent to conduct the business of the Parent after the Effective Time, or the ability of the Surviving Corporation to conduct the business of Company after the Effective Time, in each case, as presently conducted.

        4.14    Insurance.    All casualty, general liability, business interruption, product liability, director & officer liability, worker's compensation, environmental, automobile and sprinkler and water damage and other insurance policies and bond and surety arrangements maintained by Parent are listed in Section 4.14 of the Parent Disclosure Letter (the "Parent Insurance Policies") including historical property and casualty claims information with respect to the five (5)-year period prior to the date hereof indicating pending and paid claims as of the date hereof. Parent has not received any notice from the applicable carrier regarding any refusal of coverage under, or any rejection of any claim under, any such policies. There are no claims related to the business of Parent pending under any Parent Insurance Policy as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights.

        4.15    Brokers.    Parent has not incurred, or will incur, directly or indirectly, any Liability for brokerage or finder's fees or agent's commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby.

        4.19    Inapplicability of Anti-takeover Statutes.    The Board of Directors of Parent has taken and will take all actions necessary to ensure that the restrictions applicable to business combinations contained in the DGCL are, and will be, inapplicable to the execution, delivery and performance of this Agreement and to the consummation of the Merger and the Transactions.

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        4.20    Full Disclosure.    Neither this Agreement (including the Parent Disclosure Letter) nor any Parent Transaction Document: (i) contains any representation or warranty by Parent or information regarding the Parent that is false or misleading with respect to any material fact; or (ii) omits to state any material fact necessary in order to make the representations and warranties regarding Parent contained herein and therein, in light of the circumstances under which such representations and warranties were or will be made or provided, not false or misleading.


ARTICLE V
COVENANTS AND AGREEMENTS

        5.1    Further Assurances.    Each party hereto will, following the date hereof, execute such further documents, instruments, deeds, bills of sale, assignments and assurances and take such further actions as may reasonably be requested by the other to vest the Surviving Corporation with full title to all assets, properties, privileges, rights, approvals, immunities and franchises of Company or to effect the other purposes of this Agreement.

        5.2    Warrants/Equity-Based Awards.    At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holders of any of the following securities:

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        5.3    Expenses.    Except as otherwise specifically set forth elsewhere in this Agreement, all costs and expenses incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such cost or expense.

        5.4    Public Announcements.    The initial press release with respect to this Agreement and the Transactions shall be a release mutually agreed to by Company and Parent. Thereafter, Company and Parent agree that no public release or other public announcement concerning the Transactions shall be issued by any party prior to the Closing without the prior written consent of the other party (which consent shall not be unreasonably withheld, conditioned or delayed), except as such release or announcement may be required by applicable Law or the rules or regulations of the SEC or a Governmental Entity to which the relevant party is subject, wherever situated, in which case the party required to make the release or announcement shall consult with the other party about, and allow the other party reasonable time to comment on, such release or announcement in advance of such issuance.

        5.5    Conduct of Business by the Company.    

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        5.6    Conduct of Business by Parent and Merger Sub.    

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        5.7    Preparation of Form S-4 and Joint Proxy Statement; Stockholder Meetings.    

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        5.8    Access to Information; Confidentiality.    

        5.9    Company Acquisition Proposals.    

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        5.10    Appropriate Action; Consents; Filings.    

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        5.11    Notification of Certain Matters; Transaction Litigation.    

        5.12    Directors' and Officers' Indemnification and Insurance.    

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        5.13    Section 16 Matters.    Assuming that the Company delivers to Parent, in a timely fashion prior to the Effective Time, all requisite information necessary for Parent and Merger Sub to take the actions contemplated by this Section 5.13, the Company, Parent and Merger Sub each shall take all such steps as may be necessary or appropriate to ensure that (a) any dispositions of Company Common Stock (including derivative securities related to such stock) resulting from the Merger and the Transactions by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company immediately prior to the Effective Time are exempt under Rule 16b-3 promulgated under the Exchange Act, and (b) any acquisitions of Parent Common Stock (including derivative securities related to such stock) resulting from the Merger and the Transactions by each individual who may become subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to Parent are exempt under Rule 16b-3 promulgated under the Exchange Act.

        5.14    Stock Exchange Listing.    Parent shall use its reasonable best efforts to cause the shares of Parent Common Stock to be issued pursuant to the Merger to be approved for listing on the NASDAQ, subject to official notice of issuance, prior to the Effective Time.

        5.15    Voting of Shares.    The Company shall vote all shares of Parent Common Stock beneficially owned by it as of the record date for the Parent Stockholder Meeting, if any, in favor of the issuance of shares of Parent Common Stock in connection with the Merger.

        5.16    Termination of Company Stock Plans.    Unless otherwise notified by Parent in writing, prior to the Effective Time, the Company shall take or cause to be taken any and all actions necessary or appropriate to terminate each Company Stock Plan effective no later than immediately prior to the Effective Time.


ARTICLE VI
INDEMNIFICATION OF PARENT

        6.1    RSU Indemnitors.    Attached hereto as Schedule 5 is a schedule (the "Schedule of RSU Indemnitors") that sets forth the names of the RSU Indemnitors and the Fixed Number of Shares issuable under the RSUs of each RSU Indemnitor that are subject to the indemnification provisions of this Article VI.

        6.2    Indemnification of Parent.    Subject to the terms and conditions of this Article VI (including without limitation the limitations set forth in Section 6.6), the RSU Indemnitors shall each severally (and not jointly), pro rata based upon each such RSU Indemnitor's pro rata share of the total Fixed Number of Shares listed on the Schedule of RSU Indemnitors, defend and hold harmless Parent, the Surviving Corporation and their respective Representatives, successors and permitted assigns (the "Parent Indemnitees"), from and against all Losses asserted against, resulting to, imposed upon, or incurred by any Parent Indemnitee by reason of, arising out of or resulting from:

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        6.3    Indemnification Procedures.    

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        6.4    Indemnification of Parent Third Party Claims.    The indemnification obligations and liabilities under this Article VI with respect to actions, proceedings, lawsuits, investigations, demands or other claims brought against Parent by a Person other than Company (a "Parent Third Party Claim") shall be subject to the following terms and conditions:

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        6.5    Insurance Effect.    To the extent that any Losses that are subject to indemnification pursuant to this Article VI are covered by insurance paid for by Company or Parent prior to or after the Closing, Parent shall use commercially reasonable efforts to obtain the maximum recovery under such insurance; provided, that Parent shall nevertheless be entitled to bring a claim for indemnification under this Article VI in respect of such Losses and the time limitations set forth in Section 6.6 for bringing a claim of indemnification under this Agreement shall be tolled during the pendency of such insurance claim. The existence of a claim by Parent for monies from an insurer or against a third party in respect of any Loss shall not, however, delay any payment pursuant to the indemnification provisions contained herein and otherwise determined to be due and owing hereunder. If Parent has received the payment required by this Agreement in respect of any Loss and later receives proceeds from insurance in respect of such Loss, then it shall hold such proceeds or other amounts in trust for the benefit of the RSU Indemnitors and shall pay to the RSU Indemnitors, as promptly as practicable after receipt, a sum equal to the amount of such proceeds or other amount received, up to the aggregate amount of any payments received from the RSU Indemnitors pursuant to this Agreement in respect of such Loss. Notwithstanding any other provisions of this Agreement, it is the intention of the parties that no insurer or any other third party shall be (a) entitled to a benefit it would not be entitled to receive in the absence of the foregoing indemnification provisions, or (b) relieved of the responsibility to pay any claims for which it is obligated.

        6.6    Limitations on Indemnification Survival; Time Limitation.    The representations, warranties, covenants and agreements in this Agreement or in any writing delivered by Company to Parent in connection with this Agreement shall survive for a period of twelve (12) months following the Closing Date (the "Survival Period").

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        6.7    Exclusive Remedy.    Parent, on behalf of itself and the other Parent Indemnitees, hereby acknowledges and agrees that, from and after the Closing, the sole and exclusive remedy of the Parent Indemnitees with respect to any and all claims for money damages arising out of or relating to this Agreement shall be pursuant and subject to the requirements of the indemnification provisions set forth in this Article VI. Notwithstanding any of the foregoing, nothing contained in this Article VI shall in any way impair, modify or otherwise limit a Parent Indemnitee's right to bring any claim, demand or suit against an RSU Indemnitor based upon the Company's actual fraud or intentional or willful misrepresentation or omission, it being understood that a mere breach of a representation and warranty, without intentional or willful misrepresentation or omission, does not constitute fraud.

        6.8    Adjustment to Merger Consideration.    Amounts paid for indemnification under Article VI shall be deemed to be an adjustment to the value of the Merger Shares to the extent they are issued by Parent as a result of the Merger, except as otherwise required by Law.

        6.9    Company Representative Capacities.    The parties acknowledge that the Company Representative's obligations under this Article VI are solely as a representative of Company's stockholders with respect to the obligations to indemnify the Parent Indemnitees under this Article VI and that the Company Representative shall have no personal liability or responsibility for any expenses incurred by him in such capacity and that all payments to Parent as a result of such indemnification obligations shall be made solely from, the Company Indemnitees.


ARTICLE VII
INDEMNIFICATION OF COMPANY INDEMNITEES

        7.1    Indemnification of Company Indemnitees.    Subject to the terms and conditions of this Article VII (including without limitation the limitations set forth in Section 7.5, Parent shall indemnify, defend and hold harmless Persons who receive the Contingent Right from Parent upon consummation of the Merger (the "Company Indemnitees"), from and against all Losses asserted against, resulting to, imposed upon, or incurred by any Company Indemnitee by reason of, arising out of or resulting from:

        7.2    Indemnification Procedures.    

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        7.3    Indemnification of Company Third Party Claims.    The indemnification obligations and liabilities under this Article VII with respect to actions, proceedings, lawsuits, investigations, demands or other claims brought against any of the Company Indemnitees by a Person other than Parent (a "Company Third Party Claim") shall be subject to the following terms and conditions:

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        7.4    Insurance Effect.    To the extent that any Losses that are subject to indemnification pursuant to this Article VII are covered by insurance paid for by Company or Parent prior to or after the Closing, the Company Representative shall use commercially reasonable efforts to obtain the maximum recovery under such insurance; provided, that the Company Representative shall nevertheless be entitled to bring a claim for indemnification under this Article VII in respect of such Losses and the time limitations set forth in Section 7.5 for bringing a claim of indemnification under this Agreement shall be tolled during the pendency of such insurance claim. The existence of a claim by the Company Representative and/or Company Indemnitee for monies from an insurer or against a third party in respect of any Loss shall not, however, delay any payment pursuant to the indemnification provisions contained herein and otherwise determined to be due and owing by Parent. If the Company Representative or Company Indemnitees has or have received the payment required by this Agreement from Parent in respect of any Loss and later they receive proceeds from insurance in respect of such Loss, then the Company Representative or the Company Indemnitees, as the case may be, shall hold such proceeds or other amounts in trust for the benefit of Parent and shall pay to Parent, as promptly as practicable after receipt, a sum equal to the amount of such proceeds or other amount received, up to the aggregate amount of any payments received from Parent pursuant to this Agreement in respect of such Loss. Notwithstanding any other provisions of this Agreement, it is the intention of the parties that no insurer or any other third party shall be (i) entitled to a benefit it would not be entitled to receive in the absence of the foregoing indemnification provisions, or (ii) relieved of the responsibility to pay any claims for which it is obligated.

        7.5    Limitations on Indemnification.    

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        7.6    Exclusive Remedy.    Company, on behalf of itself and the other Company Indemnitees, hereby acknowledges and agrees that, from and after the Closing, the sole remedy of the Company Indemnitees with respect to any and all claims for money damages arising out of or relating to this Agreement shall be pursuant and subject to the requirements of the indemnification provisions set forth in this Article VII. Notwithstanding any of the foregoing, nothing contained in this Article VII shall in any way impair, modify or otherwise limit a Company Indemnitee's right to bring any claim, demand or suit against the other party based upon such other party's actual fraud or intentional or willful misrepresentation or omission, it being understood that a mere breach of a representation and warranty, without intentional or willful misrepresentation or omission, does not constitute fraud.

        7.7    Adjustment to Merger Consideration.    Amounts paid for indemnification under Article VII shall be deemed to be an adjustment to the value of the Merger Shares to the extent they are issued by Parent as a result of the Merger, except as otherwise required by Law.

        7.8    Company Representative.    The parties acknowledge that all actions to be taken by the Company Indemnitees pursuant to this Article VII shall be taken on their behalf by the Company Representative in accordance with the provisions of this Agreement.


ARTICLE VIII
CONDITIONS

        8.1    Conditions to the Obligations of Each Party.    The respective obligations of each party to effect the Merger and to consummate the Transactions shall be subject to the satisfaction or (to the extent permitted by Law) waiver by each of the parties, at or prior to the Effective Time, of the following conditions:

        8.2    Conditions to the Obligations of Parent and Merger Sub.    The obligation of Parent to effect the Merger and to consummate the Transactions are subject to the satisfaction or (to the extent permitted by Law) waiver by Parent, at or prior to the Effective Time, of the following additional conditions:

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        8.3    Conditions to the Obligations of the Company.    The obligations of the Company to effect the Merger and to consummate the Transactions are subject to the satisfaction or (to the extent permitted by Law) waiver by the Company, at or prior to the Effective Time, of the following additional conditions:

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 ARTICLE IX
DEFINED TERMS

        9.1    Definitions.    For purposes of this Agreement, the following terms will have the following meanings when used herein with initial capital letters:

        "Action" means any claim, action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Entity.

        "Affiliate" as applied to any Person, means any other Person directly or indirectly controlling, controlled by, or under common control with, that Person; for purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by Contract or otherwise. "Business Day" means a day other than a Saturday, Sunday or any day on which banks located in the State of New York are authorized or obligated to close. For the avoidance of doubt, no Person that is a lender or creditor of any party hereto shall be deemed to be an Affiliate of such party by virtue of being a lender or creditor to such party.

        "Binding Agreement" means that certain Binding Agreement of Terms for Jaguar Animal Health, Inc. Acquisition of Napo Pharmaceuticals, Inc. dated February 8, 2017 executed by Parent and the Company.

        "Code" means the Internal Revenue Code of 1986, as amended.

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        "Company Board" means the Board of Directors of the Company.

        "Company Licensed Intellectual Property Rights" means any Licensed Intellectual Property Rights of Company.

        "Company Material Adverse Effect" means a Material Adverse Effect on Company.

        "Company Material Agreements" means each Contract to which Company is a party or subject to or by which its assets are bound which: (a) provides for obligations, payments, Liabilities, consideration, performance of services or the delivery of goods to or by such party of any amount or value reasonably expected to be in excess of $50,000 in any annual period; (b) contains covenants limiting the freedom of such party to engage in any line of business in any geographic area or to compete with any Person; (c) is an employment, retention or severance contract or indemnification contract, or a consulting or non-compete agreement, applicable to any employee of or consultant to such party whose annual total compensation exceeds $120,000 or any director of such party; (d) relates to, or is evidence of, or is a guarantee of, or provides security for, indebtedness (whether incurred, assumed, guaranteed or secured by any asset of such party); (e) is a letter of credit, bond or similar arrangement running to the account of, or for the benefit of, such party; (f) is a joint venture or partnership contract or a limited liability company operating agreement; (g) is entered into with, or otherwise relates to, any Affiliate, officer or director or their family members of such party; (h) provides for the payment of cash or other compensation or benefits upon the Merger and the consummation of the Transactions; (i) relates to any loan to any directors, officers or Affiliates of such party; or (j) is otherwise material to the operations and business prospects of such party.

        "Company Owned Intellectual Property Rights" means any Intellectual Property Rights owned by or registered to Company.

        "Company Registered Intellectual Property Rights" means any Registered Intellectual Property Rights included in Company Owned Intellectual Property Rights.

        "Company RSU" means an RSU issued by the Company.

        "Company Stakeholders" means those Persons to be issued (i) shares of Parent Common Stock and/or convertible non-voting common stock of Parent and/or (ii) Parent Warrants, Parent RSUs and/or Parent Options pursuant to this Agreement or any of the Transaction Documents.

        "Company Stock Plan" means the Napo 2006 Equity Incentive Plan.

        "Company Stockholder Approval" means the adoption and approval of this Agreement, the Merger and the Transactions by the affirmative vote of the holders of more than fifty percent (50%) of the issued and outstanding shares of Company Common Stock entitled to vote thereon.

        "Company Stockholders Meeting" means the meeting of the stockholders of the Company that is called for the purpose of obtaining Company Stockholder Approval, all as set forth in Section 5.7(c).

        "Contingent Right Holder" means a Company Stockholder, and "Contingent Right Holders" means the Company Stockholders.

        "Contract" means any contract, agreement, license, lease, guaranty, indenture, sales or purchase order or other legally binding commitment in the nature of a contract (whether or not written) to which a Person is a party.

        "Derivative Security" means any option, warrant, equity security, equity-linked security, RSU, appreciation rights, phantom equity, or similar ownership interests, calls, rights (including preemptive rights), Contracts, commitments or agreements of any character to which the specified Person is a party or by which either is bound obligating such Person to issue, deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or

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acquisition of, or deliver cash or other consideration with respect to, any shares of capital stock or similar ownership interests or equity-linked securities of such Person or obligating such Person to grant, extend, accelerate the vesting of or enter into any such subscription, option, warrant, equity security, equity-linked security, RSU, appreciation rights, call, right, commitment or agreement.

        "DOL" means the United States Department of Labor.

        "Environmental Claim" means any and all administrative, regulatory or judicial Legal Actions alleging Liability arising out of or resulting from: (1) the presence or Release into the environment of any Hazardous Substance at the Company Leased Real Estate or Parent Leased Real Estate, as applicable; or (2) any violation of Environmental Law.

        "Environmental Laws" means all federal, state or local statutes, laws, regulations, judgments and orders in effect on the Effective Time and relating to protection of human health or the environment, including laws and regulations relating to Releases or threatened Releases of Hazardous Substances, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances.

        "Environmental Permits" means all governmental licenses, permits, registrations and government approvals issued pursuant to Environmental Law.

        "Escrow Account" has the meaning ascribed to it in the Investor Rights Agreement.

        "Escrow Agent" has the meaning ascribed to it in the Investor Rights Agreement.

        "Escrow Agreement" means that certain Escrow Agreement by and among Parent, Nantucket and Citibank, National Association, as Escrow Agent, executed concurrently with the Closing.

        "Form S-4" means the registration statement on Form S-4 to be filed with the SEC by Parent registering the public offering and sale of Parent Common Stock to all Company Stockholders and the existing creditors of the Company in the Transactions, including all shares of Parent Common Stock underlying the Contingent Rights to be issued in exchange for all shares of Company Common Stock in the Merger and all shares of Parent Common Stock and the shares of Parent Common Stock underlying the convertible non-voting common stock to be issued to the existing creditors of the Company in the Debt Exchange, as said registration statement may be amended prior to the time it is declared effective by the SEC.

        "Hazardous Substances" means any chemicals, materials or substances which are defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants" or similar terms under any Environmental Law.

        "Hurdle" has the meaning ascribed to it in the Investor Rights Agreement.

        "Indebtedness" means, without duplication to current liabilities, all: (i) obligations for borrowed money (including any unpaid principal, premium, accrued and unpaid interest, prepayment penalties, commitment and other fees, reimbursements, indemnities and all other amounts payable in connection therewith); (ii) liabilities evidenced by bonds, debentures, notes, or other similar instruments or debt securities; (iii) obligations, contingent or otherwise, in respect of any letters of credit or bankers' acceptances (to the extent drawn), sureties, performance bonds, guaranties, endorsements and other similar obligations, whether secured or not, in respect of the obligations of other Persons; (iv) obligations (including accrued interest) without duplication under a lease agreement that would be capitalized pursuant to GAAP and (v) the deferred purchase price of property or services (excluding earn-out obligations which shall not be deemed Indebtedness under this Agreement). For purposes of calculating Indebtedness, all interest, prepayment penalties, premiums, fees and expenses (if any) and

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other amounts which would be payable if Indebtedness were paid in full at the Closing shall be treated as Indebtedness.

        "Intellectual Property Rights" means all worldwide (a) inventions, whether or not patentable, (b) patents and patent applications, and any reissue, continuation, continuation-in-part, division, extension or reexamination thereof, and any application that claims priority to any of the foregoing in this subpart (b), (c) trademarks, trademark applications, service marks, service mark applications, trade dress, logos, Internet domain names and trade names, whether or not registered, and all goodwill associated therewith, (d) rights of publicity and other rights to use the names and likeness of individuals, (e) copyrights and related rights, whether or not registered, (f) computer software, data, databases, files, and documentation and other materials related thereto, (g) trade secrets and all confidential, proprietary, technical, technological, industrial, business processes and business information, (h) know how, (i) all rights in any of the foregoing provided by bilateral or international treaties or conventions, and (j) all rights to sue or recover and retain damages and costs and attorneys' fees for past, present and future infringement or misappropriation of any of the foregoing.

        "Investor Rights Agreement" means that certain Investor Rights Agreement between Parent and Nantucket executed concurrently with this Agreement.

        "Invesco Commitment Letter" means that certain letter dated February 21, 2017 between Parent and Invesco Asset Management Limited regarding the commitment of the investors named therein to purchase $3,000,000 of common stock of Parent simultaneously with the consummation of the Merger.

        "IRS" means the United States Internal Revenue Service.

        "Joint Proxy Statement" means the joint proxy statement/prospectus to be sent to the holders of the Company Common Stock in connection with the Company Stockholders Meeting and to the holders of Parent Common Stock in connection with the Parent Stockholder Meeting.

        "Kingdon NPA" has the meaning ascribed to it in the definition of "Note Purchase Agreements" in this Section 9.1.

        "Kingdon Purchasers" has the meaning ascribed to it in the definition of "Note Purchase Agreements" in this Section 9.1.

        "Knowledge" means, with respect to Company, the actual Knowledge after reasonable enquiry of Lisa Conte and Charles Thompson, and with respect to Parent, the actual Knowledge after reasonable enquiry of Lisa Conte and Karen Wright.

        "Law" means any federal, state, local (statutory, common or otherwise), municipal, foreign or international, multinational or other law, statute, constitution, treaty, principle of common law, resolution, ordinance, code, edict, guideline, policy, decree, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, applied, implemented or otherwise put into effect by or under the authority of any Governmental Entity.

        "Legal Action" means any claim, action, suit, arbitration, proceeding or governmental investigation or proceeding.

        "Liabilities" means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, including those arising under any Law, Legal Action or Order and those arising under any contract, agreement, arrangement, commitment or undertaking.

        "License Agreements" means all agreements (whether written or oral, including license agreements, research agreements, development agreements, distribution agreements, consent to use agreements and covenants not to sue, or settlement agreements containing like provisions) to which a Person is a party or otherwise bound, pursuant to which a Person has granted or been granted any right to use, exploit

45

or practice any Intellectual Property Rights, or that restrict the right of a Person to use or enforce any Intellectual Property Rights.

        "Licensed Intellectual Property Rights" means any Intellectual Property Rights owned by a third party that a Person has a right to use, exploit or practice by virtue of a license grant, immunity from Legal Action, License Agreement or otherwise.

        "Liens" means all liens, pledges, hypothecations, charges, mortgages, security interests, encumbrances, claims, infringements, interferences, options, right of first refusals, preemptive rights, community property interests or restriction of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset), other than Permitted Liens.

        "Losses" shall mean any loss, damage, injury, liability, claim, demand, settlement, judgment, award, assessment, fine, penalty, Tax, fee (including reasonable attorneys' fees), charge, cost (including costs of investigation) or expense of any nature, including any lost profits and any diminution in value of the business. Notwithstanding anything to the contrary, for purposes of calculating the amount of any Losses under Article VI or Article VII, all references to "material," "materiality," "Material Adverse Effect" and the like shall be disregarded.

        "Material Adverse Effect" means a change, event, effect, violation, inaccuracy, circumstance or other matter which, individually or in the aggregate with other changes, events, effects, violations, inaccuracies, circumstances or other matters, when considered on either a long-term basis or a short-term basis, has had or could reasonably be expected to have or give rise to a material adverse effect on: (a) the business, results of operations, condition (financial or otherwise), capitalization, liabilities, operations or financial performance or assets of the specified party; or (b) the ability of the specified party to consummate the Transactions on a timely basis; provided, however, that none of the following shall constitute or be taken into account in determining whether a Material Adverse Effect has occurred or would occur: (i) changes in general economic, financial market, business or geopolitical conditions; (ii) general changes or developments in any of the industries or markets in which the specified party or its Subsidiaries operate; (iii) changes in any applicable Laws or applicable accounting regulations or principles or interpretations thereof; (iv) any outbreak or escalation of hostilities or war or any act of terrorism, or any acts of God or natural disasters; (v) the negotiation, announcement, consummation or existence of this Agreement and the Transactions, or the performance of this Agreement and the Transactions, including compliance with the covenants set forth herein; and (vi) any action taken by the specified party, or which the specified party causes to be taken by any of its Subsidiaries, in each case which is required or permitted by or resulting from or arising in connection with this Agreement; provided, further, that the facts, circumstances, events, changes, occurrences or effects set forth in clauses (i) through (iii) and (v) above shall be taken into account in determining whether a Material Adverse Effect has occurred to the extent (but only to such extent) such facts, circumstances, events, changes, occurrences or effects have a disproportionate adverse impact on the specified party and its Subsidiaries, taken as a whole, relative to the other participants in the industries in which the specified or its Subsidiaries operate.

        "Nantucket" means Nantucket Investments Limited, a company organized under the laws of Guernsey.

        "Nantucket Settlement Agreement" has the meaning ascribed to it in the definition of "Settlement Agreement" in this Article IX.

        "NASDAQ" means the Nasdaq Stock Market.

        "Net Proceeds" has the meaning ascribed to it in the Investor Rights Agreement.

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        "Note Purchase Agreements" means those certain (i) Amended and Restated Note Purchase Agreement by and among the Company, on the one hand, and Kingdon Associates, M. Kingdon Offshore Master Fund L.P., Kingdon Family Partnership, L.P. and Kingdon Credit Master Fund L.P., as Purchasers (collectively, the "Kingdon Purchasers"), executed concurrently with this Agreement (the "Kingdon NPA"); (ii) Note Purchase Agreement dated March 1, 2017 by and among the Company, on the one hand, and MEF 1, LP and Riverside Merchant Partners, as Purchasers; and (iii) any other agreements for the sale of promissory notes to be issued by the Company that the Company enters into during the Interim Period in accordance with Section 5.5(b).

        "Notice of Assumption and Conversion of Stock Option" means a written notice sent by Parent to each holder of Company Options which notifies the holder that at the Effective Time his or her Company Options were converted into Parent Options and sets forth the number of Parent Options and the exercise price therefor, and confirms that the Parent Options will continue to vest under the same vesting schedule as the one that applied to the Company Options.

        "Order" means any writ, decree, injunction, order, judgment, stipulation, determination, award or similar action.

        "Parent Board" means the Board of Directors of Parent.

        "Parent 2016 SEC Documents" means all forms, reports and documents filed by Parent with the SEC for the period commencing on January 1, 2016 and ending on December 31, 2016, including, without limitation, Parent's Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

        "Parent Licensed Intellectual Property Rights" means any Licensed Intellectual Property Rights of the Parent.

        "Parent Material Adverse Effect" means a Material Adverse Effect on Parent and/or Merger Sub.

        "Parent Owned Intellectual Property Rights" means any Intellectual Property Rights owned by or registered to Parent.

        "Parent Registered Intellectual Property Rights" means any Registered Intellectual Property Rights included in Parent Owned Intellectual Property Rights.

        "Parent RSU" means an RSU issued by Parent pursuant to the Jaguar Stock Plan.

        "Parent Stockholder Approval" means (i) the approval of this Agreement, the Merger and the Transactions and the issuance of Parent Common Stock and shares of Parent's convertible non-voting common stock in connection with the Transactions by the affirmative vote of the holders of more than fifty percent (50%) of the shares of Parent Common Stock represented at the Parent Stockholders' Meeting and entitled to vote thereon, and (ii) the approval of the amendment and restatement of Parent's certificate of incorporation in the form attached hereto as Exhibit A by the affirmative vote of the holders of more than fifty percent (50%) of the issued and outstanding shares of Parent Common Stock entitled to vote thereon.

        "Parent Stockholder Meeting" means the meeting of the stockholders of Parent that is called for the purpose of obtaining Parent Stockholder Approval, all as set forth in Section 5.7(d).

        "Permitted Liens" means (a) statutory Liens for current Taxes or other governmental charges not yet due and payable or the amount or validity of which is being contested in good faith, (b) mechanics', carriers', workers', repairers' and similar statutory Liens arising or incurred in the ordinary course of business for amounts which are not delinquent or which are being contested by appropriate proceedings, (c) zoning, entitlement, building and other land use regulations imposed by Governmental Entities having jurisdiction over such Person's owned or leased real property, which are not violated by the current use and operation of such real property, (d) covenants, conditions, restrictions, easements and other similar non-monetary matters of record affecting title to such Person's owned or leased real

47

property, which do not materially impair the occupancy or use of such real property for the purposes for which it is currently used in connection with such Person's businesses, (e) any right of way or easement related to public roads and highways, which do not materially impair the occupancy or use of such real property for the purposes for which it is currently used in connection with such Person's businesses, (f) Liens arising under workers' compensation, unemployment insurance, social security, retirement and similar legislation, and (g) any other Liens that, in the aggregate, do not materially impair the value or the continued use and operation of the assets or properties to which they relate, including the rights to use a license under the applicable Contract.

        "Person" means any individual, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization, entity or Governmental Entity.

        "Record Date" means the date established by Parent for the Parent Stockholder Meeting.

        "Registered Intellectual Property Rights" means all patents and patent applications, registered copyrights and copyright applications, registered trademarks and trademark applications, and any other Intellectual Property Right that is the subject of an application, certificate, filing, registration or other document issued by, filed with, or recorded by, any Governmental Entity.

        "Related Party" of any specified Person means: (i) an executive officer or director (or any Person that exercises substantially similar right and authority) of such specified Person; (ii) any Person owning 5% or more of the voting shares of such specified Person (assuming the exercise or conversion of any Derivative Securities of such specified Person that represents, directly or indirectly, the right to acquire voting shares of such specified Person); (iii) any Person that can significantly influence the management or operating policies of such specified Person, including the ability that would prevent such specified Person from fully pursuing its own separate interests, through the ownership of securities, contract or both; or (iv) the immediate family members or Affiliates or associates of any Person described in the foregoing clauses of this paragraph.

        "Release" means any release, spill, emission, emptying, leaking, injection, deposit, disposal, discharge, dispersal, leaching, pumping, pouring, or migration into the atmosphere, soil, surface water, groundwater or property.

        "Representatives" of any entity means such entity's directors, officers, employees, legal, investment banking and financial advisors, accountants and any other agents and representatives.

        "RSU Agreement" means an agreement between an RSU Indemnitor and Parent in substantially the form attached hereto as Exhibit B.

        "RSU Grant Agreement" means an agreement between Parent and each RSU Holder that sets forth the terms and conditions of such RSU Holder's Parent RSUs.

        "RSU Holder" means a holder of a Company RSU that, at the Effective Time, is converted into a Parent RSU in accordance with Section 5.2(b).

        "RSU Indemnitor" means each Person who, as of the Closing Date, has entered into an RSU Agreement with Parent in substantially the form attached hereto as Exhibit B.

        "Salix" means Salix Pharmaceuticals, Inc.

        "Salix/Napo Settlement Agreement" means that certain Settlement, Termination, Asset Transfer and Transition Agreement between the Company and Salix, dated March 4, 2016.

        "SEC" means the U.S. Securities and Exchange Commission.

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        "Settlement Agreements" means those certain (i) Settlement and Discounted Payoff Agreement by and among the Company, as Borrower, certain lenders referred to therein and Nantucket as Collateral Agent for such lenders (the "Nantucket Settlement Agreement"), executed concurrently with this Agreement; (ii) Debt and Warrant Settlement Agreement by and among (x) Dorsar Investment Company, Alco Investment Company, Two Daughters LLC, on the one hand, and the Company, to be executed concurrently with this Agreement, (iii) Debt Settlement Agreement between Boies Schiller Flexner LLP and the Company, to be executed concurrently with this Agreement; (iv) Debt Settlement Agreement between Dan Becka and the Company, to be executed concurrently with this Agreement and (v) an agreement between the Company and KCSA Strategic Communications as identified on Schedule 3.

        "Subsidiary" means, with respect to any Person, any corporation or other organization, whether incorporated or unincorporated, of which more than fifty percent (50%) of either the equity interests in, or the voting control of, such corporation or other organization is, directly or indirectly through subsidiaries or otherwise, beneficially owned by such Person.

        "Third Party" means any Person other than Parent, Merger Sub or the Company.

        "Time Period" has the meaning ascribed to it in the Investor Rights Agreement.

        "Tranche A Shares" has the meaning ascribed to it in the Investor Rights Agreement.

        "Tranche B Shares" has the meaning ascribed to it in the Investor Rights Agreement.

        "Tranche C Shares" has the meaning ascribed to it in the Investor Rights Agreement.

        "Transaction Documents" means each of the documents, agreements and instruments related to this Agreement and the Merger or the Transactions, to which the specified Person is a party, including without limitation the Settlement Agreements, the Note Purchase Agreements, the Invesco Commitment Letter, the Investor Rights Agreement and the RSU Agreements.

        "Trigger Date" has the meaning ascribed to it in the Investor Rights Agreement.


ARTICLE X
TERMINATION / GENERAL PROVISIONS

        10.1    Termination.    This Agreement may be terminated at any time prior to the Effective Time, whether before or after receipt of the Company Stockholder Approval or the Parent Stockholder Approval (except as otherwise expressly noted), as follows:

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        10.2    Effect of Termination.    

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        10.3    Notices.    All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given and duly delivered: (i) when delivered (or delivery was properly tendered) by hand; (ii) when delivered (or delivery was properly tendered) by the addressee if sent by a nationally recognized overnight courier; or (iii) on the date sent by e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient, if the original of such notice was duly transmitted in accordance with (i) or (ii) of this Section 10.3 or transmitted by certified mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses for such parties on the signature page hereto (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.3):

or to such other Persons, addresses or email addresses as may be designated in writing by the Person entitled to receive such communication as provided above.

        10.4    Interpretation.    When a reference is made in this Agreement to Exhibits, such reference shall be to an Exhibit to this Agreement unless otherwise indicated. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement. Unless otherwise indicated the words "include," "includes" and "including" when used herein shall be deemed in each case to be followed by the words "without limitation." The headings contained in this Agreement are

51

for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. When reference is made herein to "the business of" an entity, such reference shall be deemed to include the business of all direct and indirect subsidiaries of such entity. A reference in this Agreement to $ or dollars is to U.S. dollars. The words "hereof," "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. References to the "date hereof" shall mean the date first written above. References to "this Agreement" shall include the Company Disclosure Letter and the Parent Disclosure Letter. Any reference to a party to this Agreement shall include a reference to each and every subsidiary of such party to the extent applicable, unless otherwise expressly provided.

        10.5    Counterparts.    This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

        10.6    Entire Agreement.    This Agreement and the documents and instruments and other agreements among the parties hereto as contemplated by or referred to herein, including any confidentiality agreement, the Company Disclosure Letter and the Parent Disclosure Letter constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.

        10.7    Amendment.    This Agreement may be amended, supplemented or modified by action taken by or on behalf of the respective Boards of Directors of the parties hereto at any time prior to the Effective Time, but only to the extent permitted by applicable Law or in accordance with the rules of any self-regulatory organization. No such amendment, supplement or modification shall be effective unless set forth in a written instrument duly executed by or on behalf of each party hereto. After the Effective Time, any such amendment, supplement or modification of this Agreement shall require the written consent of the Board of Directors of Parent and of the Company Representative.

        10.8    Waiver.    At any time prior to the Effective Time any party hereto, by action taken by or on behalf of its Board of Directors, may to the extent permitted by applicable Law (i) extend the time for the performance of any of the obligations or other acts of the other party hereto, (ii) unless prohibited by applicable Law, waive any inaccuracies in the representations and warranties or compliance with the covenants and agreements of the other party hereto contained herein or in any document delivered pursuant hereto or (iii) unless prohibited by applicable Law, waive compliance with any of the conditions of such party contained herein. No such extension or waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party extending the time of performance or waiving any such inaccuracy or non-compliance. No waiver by any party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion.

        10.9    Severability.    In the event that any provision of this Agreement or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other Persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to negotiate in good faith to modify this Agreement so as to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that is mutually agreeable to the parties and that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.

        10.10    Specific Performance.    The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to specific

52

performance of the terms of this Agreement in addition to any other remedy at law or equity. The parties accordingly agree that the parties will be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which they are entitled at law or in equity or under this Agreement.

        10.11    Governing Law; Dispute Resolution.    This Agreement, and all claims or causes of action (whether at law, in contract or in tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance hereof, shall be governed by and construed in accordance with the Laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware. Each of the parties hereto irrevocably (i) consents to submit itself to the personal jurisdiction of the Court of Chancery of the State of Delaware in the event any dispute arises out of this Agreement or any of the Transactions, and, in connection with any such matter, to service of process by notice as otherwise provided herein, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (iii) agrees that it will not bring any action relating to this Agreement or any of the Transactions in any court other than the foregoing Delaware court or, to the fullest extent permitted by applicable Law, the foregoing Federal court. Any party may make service on another party by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for the giving of notices in Section 10.3.

        10.12    Rules of Construction.    The parties hereto are sophisticated and have been represented by attorneys throughout the transactions contemplated hereby who have carefully negotiated the provisions hereof. As a consequence, the parties do not intend that the presumptions of laws or rules relating to the interpretation of contracts against the drafter of any particular clause should be applied to this Agreement or any agreement or instrument executed in connection herewith, and therefore waive their effects.

        10.13    Assignment; Parties in Interest.    No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other party. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns, and, except as provided in the following sentence, nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person (other than (a) the Parent Indemnitees to the extent provided in Article VI, (b) the Company Indemnitees to the extent provided in Article VII, and (c) from and after the Effective Time, the right of the existing creditors of the Company to receive shares of Parent Common Stock or Parent's convertible non-voting common stock in connection with the Debt Exchange pursuant to Section 2.2) any rights, interests, benefits or remedies of any nature whatsoever under or by reason of this Agreement. No current or former employee, director, officer, stockholder, creditor, agent, representative or advisor of Parent or Company, or any of their respective Affiliates, shall have any liability for any obligations or liabilities of Parent or Merger Sub hereunder or under the Transaction Documents, other than to the extent provided in Article VI and Article VII.

        10.14    WAIVER OF JURY TRIAL.    EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

        10.15    Conflict Disclosure/Waiver.    Parent and Company acknowledge that legal counsel to Parent, Reed Smith, LLP ("Parent Counsel") has represented Company in numerous other transactions as

53

general corporate counsel to Company from time to time, including but not limited to the Note Purchase Agreements. Boise Schiller Flexner has represented Company in connection with the Merger, including but not limited to this Agreement and the Settlement Agreements, notwithstanding that Parent Counsel was requested by Company and Parent to be the initial scrivener for all such Transaction Documents. Company and Parent hereby waive any such conflict(s) and have been apprised to seek separate legal representation in connection with this waiver and acknowledge that each may enter into a Conflict Waiver Letter Agreement with Parent Counsel in form and substance reasonably acceptable to Parent Counsel and Company and Parent, respectively.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

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        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers duly authorized thereunto, as of the date first written above.

    NAPO PHARMACEUTICALS, INC.

 
 
By:
 
/s/ CHARLES THOMPSON
        Name:   Charles Thompson
        Title:   Chief Financial Officer
    NAPO ACQUISITION CORPORATION

 
 
By:
 
/s/ KAREN S. WRIGHT
        Name:   Karen S. Wright
        Title:   Chief Financial Officer and Treasurer
    JAGUAR ANIMAL HEALTH, INC.

 
 
By:
 
/s/ KAREN S. WRIGHT
        Name:   Karen S. Wright
        Title:   Chief Financial Officer and Treasurer
    COMPANY REPRESENTATIVE

 
 
By:
 
/s/ GREGORY STOCK
        Name:   Gregory Stock

   

[Signature Page to Agreement and Plan of Merger]


 Appendix I—Index to Certain Defined Terms

Term
  Section

AAA

   6.3(d)(ii)

Agreement

   Introductory paragraph

Basket Amount

   6.6(b)

Blue Sky Laws

   3.4(b)

Break-up Fee

   10.2(b)

Certificate of Merger

   1.1

Certificates

   2.5(a)(ii)(A)

Closing Date

   1.2

Closing

   1.2

Company Approvals

   3.6(c)

Company Bylaws

   1.6(a)(iii)

Company Charter

   1.6(a)(iii)

Company Claim Notice

   7.3(a)

Company Common Stock

   2.1(a)

Company Disclosure Letter

   Article III introductory paragraph

Company Disputed Matters

   6.3(c)

Company Financial Statements

   3.5(a)

Company Indemnification Notice

   7.2(a)

Company Indemnitees

   7.1

Company Insurance Policies

   3.18

Company Leased Real Estate

   3.11(b)

Company Leases

   3.11(b)

Company Option Plan

   3.2(b)

Company Options

   3.2(b)

Company Permits

   3.6(b)

Company Plans

   3.9(b)

Company Representative

   2.3

Company Response Notice

   6.3(c)

Company Stock Record

   2.5(a)(i)

Company Stockholder

   2.5(a)(i)

Company Third Party Claim

   7.3

Company Transaction Documents

   3.3

Company Warrant

   5.2(a)

Company

   Introductory paragraph

Contingent Number of Shares

   5.2(b)

Contingent Right Holder

   2.1(c)

Contingent Right Holders Notice Date

   2.5(a)(ii)

Contingent Right

   2.1(a)

Debt Exchange

   2.2

DGCL

   Recitals

Dissenting Shares

   1.7(a)

Effective Time

   1.1

ERISA Affiliate

   3.9(b)

ERISA

   3.9(b)

 

Term
  Section

Exchange Act

   3.4(b)

Exchange Agent

   2.5(a)(ii)

Final Determination

   Schedule 1

Final Determination Date

   Schedule 1

Fixed Number of Shares

   5.2(b)

Former Company DOEA Indemnitee

   5.12(a)

GAAP

   3.5(a)

Governmental Entity

   3.4(b)

Inquiry

   5.9(a)

Interim Period

   5.5(a)

Jaguar Stock Plan

   5.2(b)

Merger Sub

   Introductory paragraph

Merger

   1.1

Merger Shares

   Schedule 1

Outside Date

   10.1(b)(i)

Parent Board Members

   1.5(a)(ii)

Parent Bylaws

   1.6(b)(ii)

Parent Charter

   1.6(b)(ii)

Parent Claim Notice

   6.4(a)

Parent Common Stock

   2.1(a)

Parent Disclosure Letter

   Article IV introductory paragraph

Parent Disputed Matters

   7.2(c)

Parent Financial Statements

   4.5(b)

Parent Indemnification Notice

   6.3(a)

Parent Indemnitees

   6.2

Parent Insurance Policies

   4.14

Parent Option Plans

   4.2(c)(ii)

Parent Options

   4.2(c)(ii)

Parent Response Notice

   7.2(c)

Parent SEC Documents

   4.5(a)

Parent Third Party Claim

   6.4

Parent Transaction Documents

   4.3

Parent Warrants

   5.2(a)

Parent

   Introductory paragraph

Permitted Issuance

   5.6(xi)

Purchase Price

   2.5

Regulatory Agreement

   3.16

Returned Tranche A Shares

   Schedule 2

RSU

   3.2(b)

Sarbanes-Oxley Act

   3.5(d)

Schedule of RSU Indemnitors

   6.1

Securities Act

   3.4(b)

Survival Period

   6.6

Surviving Corporation

   1.1

Tax Returns

   3.12(b)

Tax

   3.12(a)

Transactions

   Recitals

Appendix I


 SCHEDULE 1

CONTINGENT RIGHT OF COMPANY STOCKHOLDERS

        The Contingent Right Holders shall be entitled to receive from the Exchange Agent in respect of their Contingent Rights a number of shares of Parent Common Stock in the aggregate (such shares, the "Merger Shares") equal to the sum of the following:

        For the avoidance of doubt, if the aggregate Net Proceeds to Nantucket from the sale of Tranche A Shares does not equal or exceed the Hurdle applicable for a relevant Time Period on or prior to the third anniversary of the Trigger Date, (x) no Tranche A Shares or Tranche B Shares shall be delivered to the Exchange Agent and (y) the Contingent Right Holders shall have no right to receive any rights, assets or property (including any Tranche A Shares or Tranche B Shares) in respect of their Company Common Stock or Contingent Rights, whether arising from or in connection with the Merger or any of the other transactions contemplated hereby or otherwise.

        The number of Merger Shares, if any, to be issued to each Contingent Right Holder shall be calculated by multiplying the total number of Merger Shares by a fraction, the numerator of which is the maximum number of shares of Parent Common Stock set forth opposite such Contingent Right Holder's name on the Company Stock Record delivered by the Company to Parent pursuant to Section 2.2(a), and the denominator of which is the maximum number of shares of Parent Common Stock that all the Contingent Right Holders may be entitled to receive, as set forth in the Company Stock Record; provided that in calculating the number of whole shares of Parent Common Stock to be issued to each Contingent Right Holder, after aggregating all fractional shares of Parent Common Stock that otherwise such Contingent Right Holder would be entitled to be issued, if any, the number of shares of Parent Common Stock to be issued to each Contingent Right Holder, if any, shall be rounded down to the next lower whole number of shares.

        The final determination (the "Final Determination") as to the final number of Merger Shares, if any, that will be issued to the Contingent Right Holders shall be made by Parent in its reasonable discretion no later than the later to occur of (i) the date on which the Survival Period has ended and

Schedule 1-1

there are no outstanding claims for indemnification under Article VI, and (ii) the third anniversary of the Trigger Date (the "Final Determination Date").

        Notwithstanding anything to the contrary herein, except as expressly set forth in this Schedule 1 and Article VII, the Contingent Right Holders shall not be entitled to receive any rights, assets or property (including cash) in respect of their Company Common Stock or Contingent Rights from and after the Effective Time, whether arising from or in connection with the Merger or any of the other transactions contemplated hereby or otherwise.

Schedule 1-2


 SCHEDULE 2

NUMBER OF SHARES OF PARENT COMMON STOCK ISSUABLE
UNDER PARENT WARRANTS, PARENT RSUs AND
PARENT STOCK OPTIONS

        Warrants:    At the Effective Time, the Company Warrants shall be converted into Parent Warrants that shall be exercisable for an aggregate of 1,237,283 shares of Parent Common Stock; provided, however, that in the event there are either (a) additional issuances by Parent of Parent Common Stock between the date hereof and the Closing that are permitted under Section 5.6(a)(xi) of this Agreement or (b) additional Company equity and convertible debt financings between the date hereof and the Closing that are permitted under Section 5.5(b) of this Agreement, and any such issuance or financing described in clause (a) or (b) above results in the Tranche A Shares or the Tranche C Shares constituting less than the percentages specified in Section 2.1(a)(i) or 2.1(a)(iii) of the Investor Rights Agreement, as applicable, Parent may increase the number of Tranche A Shares and Tranche C Shares to be issued pursuant to Sections 2.1(a)(i) and 2.1(a)(iii) of the Investor Rights Agreement, as applicable, by an amount that is sufficient to cause the applicable percentages to be satisfied and correspondingly reduce the number of shares of Parent Common Stock to be issued upon exercise of the Parent Warrants (with such reduction being applied on a pro rata basis based on the total number of Tranche B Shares and shares of Parent Common Stock issuable upon exercise of the Parent RSUs, Parent Options and Parent Warrants).

        RSUs:    Prior to any adjustments in the number of shares of Company Common Stock issuable under the Parent RSUs subsequent to consummation of the Merger as set forth below, at the Effective Time, the Company RSUs shall be converted into Parent RSUs with an aggregate Fixed Number of Shares of Parent Common Stock issuable under such Parent RSUs of 5,953,557, and the Contingent Number of Shares determined as set forth below; provided, however, that in the event there are either (a) additional issuances by Parent of Parent Common Stock between the date hereof and the Closing that are permitted under Section 5.6(a)(xi) of this Agreement or (b) additional Company equity and convertible debt financings between the date hereof and the Closing that are permitted under Section 5.5(b) of this Agreement, and any such issuance or financing described in clause (a) or (b) above results in the Tranche A Shares or the Tranche C Shares constituting less than the percentages specified in Section 2.1(a)(i) or 2.1(a)(iii) of the Investor Rights Agreement, as applicable, Parent may increase the number of Tranche A Shares and Tranche C Shares to be issued pursuant to Sections 2.1(a)(i) and 2.1(a)(iii) of the Investor Rights Agreement, as applicable, by an amount that is sufficient to cause the applicable percentage to be satisfied and correspondingly reduce the Fixed Number of Shares of Parent Common Stock issuable under such Parent RSUs (with such reduction being applied on a pro rata basis based on the total number of Tranche B Shares and shares of Parent Common Stock issuable upon exercise of the Parent RSUs, Parent Options and Parent Warrants).

        Options:    At the Effective Time, Parent shall issue to the holders of Company Options new Parent Options that shall be exercisable for an aggregate of 548,805 shares of Parent Common Stock; provided, however, that in the event there are either (a) additional issuances by Parent of Parent Common Stock between the date hereof and the Closing that are permitted under Section 5.6(a)(xi) of this Agreement or (b) additional Company equity and convertible debt financings between the date hereof and the Closing that are permitted under Section 5.5(b) of this Agreement and any such issuance or financing described in clause (a) or (b) above results in the Tranche A Shares or the Tranche C Shares constituting less than the percentages specified in Section 2.1(a)(i) or 2.1(a)(iii) of the Investor Rights Agreement, as applicable, Parent may increase the number of Tranche A Shares and Tranche C Shares to be issued pursuant to Sections 2.1(a)(i) and 2.1(a)(iii) of the Investor Rights Agreement, as applicable, by an amount that is sufficient to cause the applicable percentages to be satisfied and correspondingly reduce the number of shares of Parent Common Stock to be issued upon exercise of the Parent Options (with such reduction being applied on a pro rata basis based on the

Schedule 2-1

total number of Tranche B Shares and shares of Parent Common Stock issuable upon exercise of the Parent RSUs, Parent Options and Parent Warrants). The exercise price per share under the new Parent Options shall be as set forth in each option holder's Notice of Assumption and Conversion of Stock Option, which Parent shall send to each option holder no later than thirty (30) days after the Closing.

Contingent Number of Shares issuable under the Parent RSUs:

        If, and only if, pursuant to Section 2.2(b) of the Investor Rights Agreement, Nantucket transfers a portion of its unsold Tranche A Shares to the Exchange Agent (the "Returned Tranche A Shares"), the RSU Holders shall be entitled to receive from the Exchange Agent in respect of their Parent RSUs (including those Parent RSUs held by the RSU Indemnitors, if any, for which all or a portion of the Fixed Number of Shares were forfeited either pursuant to Section 6.3(b) of this Agreement and/or pursuant to the RSU Agreements), a Contingent Number of Shares of Parent Common Stock equal to the total number of Returned Tranche A Shares multiplied by a fraction, the numerator of which is the total Fixed Number of Shares of Parent Common Stock issuable under all of the Parent RSUs that were issued pursuant to Section 5.2(b) of this Agreement (including those Fixed Number of Shares that were forfeited either pursuant to Section 6.3(b) of this Agreement and/or pursuant to the RSU Agreements), and the denominator of which is the sum of (i) the total number of Tranche B Shares plus (ii) the total Fixed Number of Shares of Parent Common Stock issuable under all of the Parent RSUs that were issued pursuant to Section 5.2(b) of this Agreement (including those Fixed Number of Shares that were forfeited either pursuant to Section 6.3(b) of this Agreement and/or pursuant to the RSU Agreements).

        For the avoidance of doubt, if the aggregate Net Proceeds to Nantucket from the sale of Tranche A Shares does not exceed the Hurdle applicable for a relevant Time Period, on or prior to the third anniversary of the Trigger Date, (x) no Tranche A Shares shall be delivered to the Exchange Agent and (y) no Contingent Number of Shares shall be issued to any holder of Parent RSUs issued pursuant to the Merger.

        The Contingent Number of Shares to be issued to the RSU Holders, if any, will be determined by Parent in its reasonable discretion on the first to occur of (i) date that is thirty (30) days after the date on which the Net Proceeds from all sales of Tranche A Shares during the applicable Time Period exceeds the Hurdle for the applicable Time Period, which time is set forth in Section 2.2(b) of the Investor Rights Agreement, (ii) the date on which all of the Tranche A Shares have been sold by Nantucket and (iii) the third anniversary of the Trigger Date.

        The number of Fixed Number of Shares issuable pursuant to Parent RSUs to be issued to each RSU Holder shall be calculated by multiplying the total Fixed Number of Shares issuable under all of the Parent RSUs by a fraction, the numerator of which is the aggregate number of shares of Company Common Stock issuable under the Company RSUs held by such RSU Holder immediately prior to the Effective Time, and the denominator of which is the total number of shares of Company Common Stock issuable under the Company RSUs held by all of the RSU Holders immediately prior to the Effective Time; provided that in calculating the number of whole shares of Parent Common Stock to be issued to each RSU Holder, after aggregating all fractional shares of Parent Common Stock that otherwise such RSU Holder would be entitled to be issued, the number of shares of Parent Common Stock to be issued to each RSU Holder shall be rounded down to the next lower whole number of shares. Notwithstanding the foregoing, the Fixed Number of Shares allocated to the RSU Indemnitors pursuant to this paragraph shall be subject to forfeiture pursuant to Section 6.3(b) of this Agreement and the RSU Agreements.

        The number of Contingent Number of Shares issuable pursuant to Parent RSUs to be issued to each RSU Holder shall be calculated in the same manner as that set forth in the preceding paragraph with respect to the calculation of the number of Fixed Number of Shares issuable pursuant to Parent

Schedule 2-2

RSUs to be issued to each RSU Holder. For the avoidance of doubt, in calculating the number of Contingent Number of Shares to be issued to each RSU Holder, the total Fixed Number of Shares of Parent Common Stock issuable under all of the Parent RSUs that were issued pursuant to Section 5.2(b) of this Agreement shall include those Fixed Number of Shares that were forfeited either pursuant to Section 6.3(b) of this Agreement and/or pursuant to the RSU Agreements.

        Notwithstanding anything to the contrary herein, except as expressly set forth in this Schedule 2, Section 5.2(b) of this Agreement, the Jaguar Stock Plan, the Restricted Stock Unit Award Agreements to be entered into between each RSU Holder and Parent at the Closing, and, with respect to the RSU Indemnitors only, the RSU Agreements, the RSU Holders shall not be entitled to receive any rights, assets or property (including cash) in respect of their Company RSUs from and after the Effective Time, whether arising from or in connection with the Merger or any of the other transactions contemplated hereby or otherwise.

Schedule 2-3


 SCHEDULE 3

SCHEDULE OF PARENT STOCK AND WARRANTS TO BE ISSUED TO
CREDITORS OF THE COMPANY

Name of Creditor
  Class of Parent Stock   Number of Shares  

Nantucket

   Common Stock [balance of Tranche C Shares]     1,940,382 1

Nantucket

   convertible non-voting common stock [Tranche A Shares]     18,479,826 2

Nantucket

   convertible non-voting common stock, to be held in escrow [Tranche B Shares]     19,900,202 3

Dorsar Investment Company

   convertible non-voting common stock     678,483  

Alco Investment Company

   convertible non-voting common stock     1,367,903  

Two Daughters, LLC

   convertible non-voting common stock     106,655  

Boies, Schiller & Flexner LLP

   convertible non-voting common stock     2,014,131  

Dan Becka

   convertible non-voting common stock     555,395  

KCSA Strategic Communications

   Common Stock     64,863  

   

1
Subject to adjustment in accordance with footnote 3 below.

2
Subject to adjustment in accordance with footnote 3 below.

3
In the event there are either (a) additional issuances by Parent of Parent Common Stock between the date hereof and the Closing that are permitted under Section 5.6(a)(xi) of this Agreement or (b) additional Company equity and convertible debt financings between the date hereof and the Closing that are permitted under Section 5.5(b) of this Agreement, and any such issuance or financing described in clause (a) or (b) above results in the Tranche A Shares or the Tranche C Shares constituting less than the percentages specified in Section 2.1(a)(i) or 2.1(a)(iii) of the Investor Rights Agreement, as applicable, Parent may increase the number of Tranche A Shares and Tranche C Shares to be issued pursuant to Sections 2.1(a)(i) and 2.1(a)(iii) of the Investor Rights Agreement, as applicable, by an amount that is sufficient to cause the applicable percentages to be satisfied and correspondingly reduce the number of Tranche B Shares (with such reduction being applied on a pro rata basis based on the total number of Tranche B Shares and shares of Parent Common Stock issuable upon exercise of the Parent RSUs, Parent Options and Parent Warrants); provided, however, the number of Tranche B Shares to be issued shall in any event represent no less than 17.4% of the total issued and outstanding capital stock of Parent (on a fully diluted basis, as such term defined in Section 2.1(d) of the Investor Rights Agreement) as of immediately following the Closing

Schedule 3


 SCHEDULE 4

ADDITIONAL ISSUANCES

Name of Person
  Class of Parent Stock   Number of Shares  

MEF I, LP/Riverside Merchant Partners LLC

   Convertible note     [2,343,752] 1

Invesco

   Common Stock     3,243,243  

Kingdon

   Convertible note     [10,810,811] 2

[Kingdon legal]

   Common Stock     54,054  

   

1
As of the date hereof, only 50% of the total notes have been purchased. It is anticipated that the remaining 50% of the total notes will be purchased on or prior to the Effective Time. The bracketed number of shares of Parent Common Stock reflects the number of shares reserved for conversion of the notes based on the purchase of 100% of the total notes. These notes will not be converted at the Effective Time.

2
The bracketed number of shares of Parent Common Stock reflects the number of shares reserved for conversion of the note. This note will not be converted at the Effective Time.

Schedule 4


 SCHEDULE 5

SCHEDULE OF RSU INDEMNITORS

Name of RSU Indemnitor
  Fixed Number of Shares issuable under the
Parent RSUs1 that are subject to the
indemnification provisions of Article VI 		 

Lisa Conte

     1,925,512  

Pravin Chaturvedi

     87,072  

Steven King

     435,076  

Charles Thompson

     481,448  

Sir William Young

     361,525.3  

Jack Van Hulst

     210,909  

Gregory Stock

     461,935  

Richard Fields

     342,244  

Thomas Van Dyck

     361,525  

Josh Mailman

     100,410  

TOTAL

    4,767,656.3  

        For purposes of Section 6.6(c), the "total number of shares listed on the Schedule of RSU Indemnitors set forth on Schedule 5" means the total Fixed Number of Shares set forth on this Schedule 5, as adjusted pursuant to Schedule 2.

   

1
Fixed Number of Shares are subject to adjustment as set forth in Schedule 2.

Schedule 5



QuickLinks

AGREEMENT AND PLAN OF MERGER
RECITALS
ARTICLE I THE MERGER AND EFFECT ON CAPITAL STOCK
ARTICLE II EFFECT ON CAPITAL STOCK / AND OUTSTANDING DEBT
ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT
ARTICLE V COVENANTS AND AGREEMENTS
ARTICLE VI INDEMNIFICATION OF PARENT
ARTICLE VII INDEMNIFICATION OF COMPANY INDEMNITEES
ARTICLE VIII CONDITIONS
ARTICLE IX DEFINED TERMS
ARTICLE X TERMINATION / GENERAL PROVISIONS
Appendix I—Index to Certain Defined Terms
SCHEDULE 1 CONTINGENT RIGHT OF COMPANY STOCKHOLDERS
SCHEDULE 2 NUMBER OF SHARES OF PARENT COMMON STOCK ISSUABLE UNDER PARENT WARRANTS, PARENT RSUs AND PARENT STOCK OPTIONS
SCHEDULE 3 SCHEDULE OF PARENT STOCK AND WARRANTS TO BE ISSUED TO CREDITORS OF THE COMPANY
SCHEDULE 4 ADDITIONAL ISSUANCES
SCHEDULE 5 SCHEDULE OF RSU INDEMNITORS

Exhibit 10.1

 

 

 

INVESTOR RIGHTS AGREEMENT

 

by and between

 

JAGUAR ANIMAL HEALTH, INC.

 

and

 

NANTUCKET INVESTMENTS LIMITED

 

Dated as of March 31, 2017

 

 


 

TABLE OF CONTENTS

 

 

 

 

Page

ARTICLE I Definitions

2

 

 

 

 

 

Section 1.1.

Defined Terms

2

 

Section 1.2.

Other Definitions

7

 

Section 1.3.

Interpretation

8

 

 

ARTICLE II The Shares

9

 

 

 

 

 

Section 2.1.

Issuance of Shares to Nantucket

9

 

Section 2.2.

Sale of the Tranche A Shares

10

 

Section 2.3.

Tranche B Shares

11

 

 

ARTICLE III Investor Rights

13

 

 

 

 

 

Section 3.1.

Pre-Closing Rights

13

 

Section 3.2.

Post-Closing Rights

13

 

 

ARTICLE IV Registration Rights

15

 

 

 

 

 

Section 4.1.

Shelf Registration Statement; Demand Registration

15

 

Section 4.2.

Incidental Registration

17

 

Section 4.3.

Holdbacks; Other Restrictions and Acknowledgements

19

 

Section 4.4.

Registration Procedures

19

 

Section 4.5.

Underwriting

24

 

Section 4.6.

Information Blackout; Suspension Of Sales

24

 

Section 4.7.

Rule 144

25

 

Section 4.8.

Preparation; Reasonable Investigation; Information

25

 

Section 4.9.

Indemnification and Contribution

26

 

Section 4.10.

Expenses

28

 

Section 4.11.

Termination of Registration Rights

28

 

 

ARTICLE V Miscellaneous

28

 

 

 

 

 

Section 5.1.

Merger or Consolidation

28

 

Section 5.2.

Expenses

28

 

Section 5.3.

Notices

29

 

Section 5.4.

Entire Agreement; Third Party Beneficiaries; Amendment; Waiver

30

 

Section 5.5.

Severability

30

 

Section 5.6.

Applicable Law

30

 

Section 5.7.

Enforcement; Exclusive Jurisdiction

30

 

Section 5.8.

WAIVER OF JURY TRIAL

31

 

Section 5.9.

Counterparts

31

 

Section 5.10.

Successors And Assigns

31

 

Section 5.11.

Effective Date

31

 

i


 

INVESTOR RIGHTS AGREEMENT

 

This INVESTOR RIGHTS AGREEMENT (this “Agreement”), dated as of March 31, 2017 (and effective as set forth in Section 5.11 of this Agreement), is made and entered into by and among Jaguar Animal Health, Inc., a Delaware corporation (the “Company” or “Jaguar”), and Nantucket Investments Limited, a company organized under the laws of Guernsey (“Nantucket”).  The Company and Nantucket are referred to individually as a “Party” and collectively as the “Parties.”

 

RECITALS

 

A.            Concurrently with the execution of this Agreement, (i) Napo Pharmaceuticals, Inc., a Delaware corporation (“Target”), and Nantucket are entering into a Settlement and Discounted Payoff Agreement, dated as of the date hereof (as amended, supplemented or otherwise modified from time to time, the “Settlement Agreement”), pursuant to which, among other things, simultaneously with the consummation of the Merger (as defined below), (a) Target will make a cash payment to Nantucket of no less than $8,000,000 (the “Cash Repayment”), which will reduce the outstanding principal obligations under that certain Financing Agreement, dated as of October 10, 2014 (as amended, supplemented or otherwise modified from time to time, the “Financing Agreement”), by and between Target and Nantucket, and (b) in satisfaction as a compromise for the outstanding obligations under the Financing Agreement (after giving effect to the Cash Repayment) and the release of any lien or security interest in respect of such outstanding obligations, (x) Target will transfer to Nantucket 2,666,666 shares (the “Initial Tranche C Shares”) of Jaguar common stock, par value $0.0001 per share (“Voting Common Stock”), owned by Target, (y) pursuant to the Merger Agreement, Target will cause the Company to issue to Nantucket the Newly Issued Jaguar Shares (as defined below), which Newly Issued Jaguar Shares shall be subject to the terms of this Agreement; and (ii) the Company, Target, and Napo Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), are entering into an Agreement and Plan of Merger, dated as of the date hereof (as amended, supplemented or otherwise modified from time to time, the “Merger Agreement”), pursuant to which, among other things, Merger Sub will merge with and into Target, with Target surviving as the surviving corporation (the “Merger”).

 

B.            In connection with the execution of the Merger Agreement and the Settlement Agreement, the Company and Nantucket have agreed to enter into this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Parties, the Parties agree as follows.

 

ARTICLE I
DEFINITIONS 

 

Section 1.1.           Defined Terms.  In addition to the other terms defined in this Agreement, the following terms shall have the following meanings:

 

“Affiliate” means, with respect to any specified Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person. “Control” (including the terms “controlled by” and “under common control with”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or any other means.  For the avoidance of doubt, the Company and its subsidiaries shall not be deemed to be an Affiliate of any Holder by virtue or for purposes of this Agreement.

 

2


 

“Base Period 1 Amount” means $20,250,000 or, if the amount of the Cash Repayment equals $8,500,000 in accordance with the terms of the Settlement Agreement, $20,000,000; provided, that the Base Period 1 Amount shall be subject to adjustment in accordance with the second proviso of Section 5.2.

 

“Base Period 2 Amount” means $27,843,750 or, if the amount of the Cash Repayment equals $8,500,000 in accordance with the terms of the Settlement Agreement, $27,500,000; provided, that the Base Period 2 Amount shall be subject to adjustment in accordance with the second proviso of Section 5.2.

 

“Base Period 3 Amount” means $35,437,500 or, if the amount of the Cash Repayment equals $8,500,000 in accordance with the terms of the Settlement Agreement, $35,000,000; provided, that the Base Period 3 Amount shall be subject to adjustment in accordance with the second proviso of Section 5.2.

 

“Base Period 4 Amount” means $40,500,000 or, if the amount of the Cash Repayment equals $8,500,000 in accordance with the terms of the Settlement Agreement, $40,000,000; provided, that the Base Period 4 Amount shall be subject to adjustment in accordance with the second proviso of Section 5.2.

 

“Base Period 5 Amount” means $45,562,500 or, if the amount of the Cash Repayment equals $8,500,000 in accordance with the terms of the Settlement Agreement, $45,000,000; provided, that the Base Period 5 Amount shall be subject to adjustment in accordance with the second proviso of Section 5.2.

 

“Business Day” means any day on which the NASDAQ Global Market is open for trading.

 

“Change of Control” means (i) any merger, consolidation or other business combination of the Company with any entity in which the stockholders of the Company immediately prior to such transaction in the aggregate cease to own at least 50% of the voting power of the voting securities of the entity surviving or resulting from such transaction (or the ultimate parent thereof), (ii) any sale, transfer, lease, license, assignment or other disposal of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, or (iii) any transaction or series of transactions in which more than 50% of the voting power of the Company’s voting securities is transferred to any Person or group other than pursuant to a transaction or series of transaction primarily for capital raising purposes.

 

“Closing” has the meaning set forth in the Merger Agreement.

 

“Closing Date” means the date on which the Merger is consummated.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the relevant time.

 

“Existing Registration Rights Agreement” means each of the registration rights agreements entered into by the Company as of June 8, 2016 and November 22, 2016, as disclosed by the Company in its reports filed pursuant to the Exchange Act.

 

“FINRA” means the Financial Industry Regulatory Authority.

 

3


 

“Floor Price” means, with respect to any share of Common Stock, a price that is equal to or greater than (i) $1.00 per such share and (ii) the product obtained by multiplying 0.85 by the arithmetic average of the volume weighted average price for Voting Common Stock during the ten consecutive trading day period prior to the proposed sale of such share.

 

“Holders” means Nantucket and its Permitted Transferees.

 

“Hurdle” means, with respect to any Time Period, the amount set forth below next to such Time Period:

 

(a)           Period 1:  the Base Period 1 Amount;

 

(b)           Period 2: the product of (i) the Base Period 2 Amount, multiplied by (ii) the Period 2 Adjustment Factor;

 

(c)           Period 3: the product of (i) the Base Period 3 Amount, multiplied by (ii) the Period 3 Adjustment Factor;

 

(d)           Period 4: the product of (i) the Base Period 4 Amount, multiplied by (ii) the Period 4 Adjustment Factor; and

 

(e)           Period 5: the product of (i) the Base Period 5 Amount, multiplied by (ii) the Period 5 Adjustment Factor.

 

“Law” means any United States, federal, state or local or any foreign law (in each case, statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, statute, regulation or other similar requirement enacted, issued, adopted, promulgated, entered into or applied by any federal, state or local court, administrative or regulatory agency or commission or other governmental authority or instrumentality, domestic or foreign.

 

“Legacy Stockholders of Target” means the registered holders of Target’s outstanding shares of common stock immediately prior to the Effective Time.

 

“Minimum Share Price” means:

 

(a)           if such sale occurs during Period 1, an amount equal to the Base Period 1 Amount divided by the aggregate number of Tranche A Shares issued at the Closing;

 

(b)           if such sale occurs during Period 2, an amount equal to the Base Period 2 Amount divided by the aggregate number of Tranche A Shares issued at the Closing;

 

(c)           if such sale occurs during Period 3, an amount equal to the Base Period 3 Amount divided by the aggregate number of Tranche A Shares issued at the Closing;

 

(d)           if such sale occurs during Period 4, an amount equal to the Base Period 4 Amount divided by the aggregate number of Tranche A Shares issued at the Closing; and

 

(e)           if such sale occurs during Period 5, an amount equal to the Base Period 5 Amount divided by the aggregate number of Tranche A Shares issued at the Closing;

 

provided, that in the event of any stock split, stock dividend, subdivision or combination of Common Stock, the Minimum Share Price amounts shall be proportionately adjusted.

 

4


 

“Net Proceeds” means the amount of proceeds which Nantucket (or any of its Affiliates or Permitted Transferees) receives from the direct or indirect sale or transfer of all Tranche A Shares and Tranche B Shares which have been sold by Nantucket and any of its Affiliates or Permitted Transferees, net of any customary selling fees, costs, expenses or commissions (including the fees of any broker engaged to place such shares) incurred by Nantucket or its Affiliates or Permitted Transferees in connection with such sale or sales but without deducting amounts payable to the Company pursuant to Section 2.2(b)(ii).  For the avoidance of doubt, Net Proceeds shall not include the amount of any cash dividends or distributions which are received with respect to the Tranche A Shares or Tranche B Shares.

 

“Other Registration Rights Agreements” means registration rights agreements entered into by the Company prior to or after the date hereof, excluding an Existing Registration Rights Agreement.

 

“Period 1” means the period from the Closing Date until the date that is 12 months after the Trigger Date.

 

“Period 2” means the period from the first day after the date that is 12 months after the Trigger Date until the date that is 18 months after the Trigger Date.

 

“Period 2 Adjustment Factor” is equal to (a) 1.0, minus (b) the result obtained by dividing (i) the Net Proceeds received in Period 1 by (ii) the Base Period 1 Amount.

 

“Period 3” means the period from the first day after the date that is 18 months after the Trigger Date until the date that is 24 months after the Trigger Date.

 

“Period 3 Adjustment Factor” is equal to (a) 1.0, minus (b) the result obtained by dividing (i) the Net Proceeds received in Period 1 by (ii) the Base Period 1 Amount, minus (c) the result obtained by dividing (i) the Net Proceeds received in Period 2 by (ii) the Base Period 2 Amount.

 

“Period 4” means the period from the first day after the date that is 24 months after the Trigger Date until the date that is 30 months after the Trigger Date.

 

“Period 4 Adjustment Factor” is equal to (a) 1.0, minus (b) the result obtained by dividing (i) the Net Proceeds received in Period 1 by (ii) the Base Period 1 Amount, minus (c) the result obtained by dividing (i) the Net Proceeds received in Period 2 by (ii) the Base Period 2 Amount, minus (d) the result obtained by dividing (i) the Net Proceeds received in Period 3 by (ii) the Base Period 3 Amount.

 

“Period 5” means the period from the first day after the date that is 30 months after the Trigger Date until the date that is 36 months after the Trigger Date.

 

“Period 5 Adjustment Factor” is equal to (a) 1.0, minus (b) the result obtained by dividing (i) the Net Proceeds received in Period 1 by (ii) the Base Period 1 Amount, minus (c) the result obtained by dividing (i) the Net Proceeds received in Period 2 by (ii) the Base Period 2 Amount, minus (d) the result obtained by dividing (i) the Net Proceeds received in Period 3 by (ii) the Base Period 3 Amount, minus (e) the result obtained by dividing (i) Net Proceeds received in Period 4 by (ii) the Base Period 4 Amount.

 

“Permitted Transferee” means any Affiliate of Nantucket or any investment fund, investment vehicle or other account that is, directly or indirectly, managed or advised by Nantucket or any of its Affiliates.

 

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“Person” means any individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

 

“Registrable Securities” means any shares of Common Stock received by the Holders in connection with the transactions contemplated hereby and by the Settlement Agreement upon original issuance and at all times subsequent thereto (including any shares of Voting Common Stock issued or issuable upon the conversion of any shares of Non-Voting Common Stock received by the Holders) and any Voting Common Stock issued or issuable with respect to, on account of or in exchange for such Common Stock, whether by stock split, stock dividend, recapitalization, merger, charter amendment or otherwise that, in each case are held by or issuable to the Holders; provided, however, that the Tranche B Shares shall only be considered Registrable Securities from and after a Nantucket Release Event (except for purposes of Section 4.11); provided, further, that as to any particular Registrable Securities, such securities shall cease to constitute Registrable Securities (i) when a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of thereunder; (ii) when and to the extent such securities are permitted to be publicly sold without limitation as to time, volume or manner of sale pursuant to Rule 144 (or any successor provision to such Rule) under the Securities Act; or (iii) when such securities shall have ceased to be issued and outstanding.

 

“Registration Expenses” means all expenses incurred by the Company in effecting any registration pursuant to this Agreement or with respect to which rights to Piggyback Registration are exercised with respect to Registrable Securities, including the following: (a) all registration, qualification, filing and listing fees and all other fees and expenses associated with filings required to be made with any stock exchange, the SEC or FINRA (including, if applicable, the fees and expenses of any “qualified independent underwriter” and its counsel as may be required by the rules and regulations of FINRA), (b) all printing (including expenses of printing certificates for the Registrable Securities in a form eligible for deposit with the Depository Trust Company and of printing prospectuses) and copying expenses, (c) all messenger, telephone and delivery expenses, fees and disbursements of (i) counsel for the Company and (ii) one separate counsel for all Selling Stockholders (provided, that the fees of such separate counsel shall not exceed $25,000 per offering), (d) blue sky fees and expenses (including the reasonable and documented fees of counsel for the underwriters or the Selling Stockholders in connection with blue sky qualifications of the Registrable Securities pursuant to Section 4.4(a)(vii) and determination of eligibility for investment under the laws of such jurisdictions), (e) expenses of the Company’s independent registered public accountants in connection with the registration under the Securities Act of Registrable Securities (including the expenses of any regular or special reviews or audits or “comfort” letters incident to or required by any such registration), (f) expenses of the Company incurred in connection with any “road show,” (g) Securities Act liability insurance if the Company so desires or the underwriters so require, (h) all fees and expenses incurred in connection with the listing of the Registrable Shares on any securities exchange and all rating agency fees, (i) all fees and disbursements of underwriters customarily paid by the issuer or sellers of securities and (j) any and all of the Company’s internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties and the expense of any annual audit or special experts hired by the Company); but shall exclude any underwriting discounts, selling commissions, brokerage fees and stock transfer taxes attributable to the sale of Registrable Securities by the Holders, or the fees and expenses of counsel (other than one counsel for all Selling Stockholders as (and subject to the limit) described above) and any other advisors engaged by the Holders.

 

“Restricted Period” means the period beginning on the Closing Date and ending on the first anniversary of the Trigger Date.

 

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“Rights Termination Transaction” means (i) any merger, consolidation or other business combination of the Company with any entity in which the stockholders of the Company immediately prior to such transaction in the aggregate cease to own at least 50% of the voting power of the voting securities of the entity surviving or resulting from such transaction (or the ultimate parent thereof) or (ii) any sale, transfer, lease, license, assignment or other disposal of all or substantially all of the assets of the Company and, in the case of either clause (i) or (ii), such matter is subject to a vote of the holders of Common Stock of the Company in accordance with its amended and restated certificate of incorporation and the Delaware General Corporation Law.

 

“SEC” means the United States Securities and Exchange Commission, or such other federal agency at the time having the principal responsibility for administering the Securities Act.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the relevant time.

 

“Time Period” means each of Period 1, Period 2, Period 3, Period 4 and Period 5.

 

“Trigger Date” means the earlier to occur of (i) the Closing Date and (ii) April 1, 2017.

 

“Underwritten Offering” means a sale of securities of the Company to an underwriter or underwriters for reoffering to the public.

 

“WKSI” means a “well-known seasoned issuer” as defined in Rule 405 promulgated under the Securities Act and which (a) is “a well-known seasoned issuer” under paragraph (1)(i)(A) of such definition or (b) is a “well-known seasoned issuer” under paragraph (1)(i)(B) of such definition and is also eligible to register a primary offering of its securities relying on General Instruction I.B.1 of Form S-3 or Form F-3 under the Securities Act.

 

Section 1.2.           Other Definitions.  Each of the following terms is defined in the Section set forth opposite such term:

 

Agreement

Preamble

Approved Tranche B Sale

Section 2.3(d)(iii)

Blackout Period

Section 4.6(a)

Board

Section 3.2(d)

Cash Repayment

Recitals

Common Stock

Section 2.1(a)(i)

Company

Preamble

Company Indemnitees

Section 4.9(b)

Cutback Event

Section 4.2(d)

Demand Effective Date

Section 4.1(a)(iii)

Demand Notice

Section 4.1(a)(iii)

Demand Registration

Section 4.1(a)(iii)

Escrow Agent

Section 2.3(a)

Escrow Agreement

Section 2.3(a)

Expense Calculation VWAP

Section 5.2

Final Determination Date

Section 2.2(a)

Financing Agreement

Recitals

Free Writing Prospectus

Section 4.4(a)(vi)

Holders Indemnitees

Section 4.9(a)

Incidental Notice

Section 4.2(a)

 

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indemnified party

Section 4.9(c)

indemnifying party

Section 4.9(c)

Information Blackout

Section 4.6(a)

Initial Tranche C Shares

Recitals

Inspectors

Section 4.8(a)

Losses

Section 4.9(a)

Merger Agreement

Recitals

Merger Sub

Recitals

MNPI

Section 3.2(d)

Nantucket

Preamble

Nantucket Release Event

Section 2.3(d)(ii)

Newly Issued Jaguar Shares

Section 2.1(a)

Non-Voting Common Stock

Section 2.1(a)(i)

Other Securities

Section 4.2(a)

Party

Preamble

Piggyback Allotment

Section 4.2(a)(ii)

Piggyback Registration

Section 4.2(a)

Records

Section 4.8(a)

Remaining Tranche C Shares

Section 2.1(a)(iii)

Requested Information

Section 4.8(b)

Rights Effective Date

Section 4.1(a)(i)

Selling Stockholders

Section 4.4(a)(iv)

Settlement Agreement

Recitals

Shelf Offering

Section 4.1(a)(ii)

Shelf Registration Statement

Section 4.1(a)(i)

Shelf Takedown

Section 4.1(a)(i)

Stock Assignment

Section 2.3(a)

Take-Down Notice

Section 4.1(a)(ii)

Target

Recitals

Third Party Securities

Section 4.1(a)(v)

Tranche A Shares

Section 2.1(a)(i)

Tranche B Shares

Section 2.1(a)(ii)

Tranche C Shares

Section 2.1(a)(iii)

Voting Common Stock

Recitals

 

Section 1.3.           Interpretation.  Unless otherwise indicated herein to the contrary:

 

(a)           When a reference is made in this Agreement to an Article, Section, Exhibit, Appendix, Schedule, clause or subclause, such reference shall be to an Article, Section, Exhibit, Appendix, Schedule, clause or subclause of this Agreement.

 

(b)           The words “include,” “includes” or “including” and other words or phrases of similar import, when used in this Agreement, shall be deemed to be followed by the words “without limitation.”

 

(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.

 

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(d)           The use of “or” herein is not intended to be exclusive and, when used in this Agreement, shall be interpreted as “and/or” in each instance.

 

(e)           The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms.  Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of names and pronouns shall include the plural and vice versa.

 

(f)            References herein to a Person are also to its successors and permitted assigns.

 

(g)           Any reference herein to any Law (or any provision thereof) shall include such Law (or any provision thereof) and any rule or regulation promulgated thereunder, in each case, including any successor thereto, and as it may be amended, modified or supplemented from time to time.

 

(h)           Any reference herein to “Dollars” or “$” shall mean United States dollars.

 

(i)            When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded.  If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.

 

(j)            This Agreement is the product of negotiations by the Parties having the assistance of counsel and other advisers.  It is the intention of the Parties that this Agreement not be construed more strictly with regard to one Party than with regard to the others.

 

(k)           The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.

 

ARTICLE II
THE SHARES

 

Section 2.1.           Issuance of Shares to Nantucket.

 

(a)           At the Effective Time (as such term is defined in the Merger Agreement), the Company shall issue to Nantucket shares of the Company’s capital stock in the amounts and class set forth below (collectively, the “Newly Issued Jaguar Shares”):

 

(i)            18,479,826 shares of the Company’s convertible non-voting common stock, par value $0.0001 per share (“Non-Voting Common Stock” and, together with the Voting Common Stock, “Common Stock”), which shall represent no less than 20.0% of the total outstanding capital stock of the Company (on a “fully diluted basis” as defined in subsection (d) below) as of immediately following the Closing (such shares, including any shares of Voting Common Stock issued upon conversion of such shares, the “Tranche A Shares”);

 

(ii)           19,900,202 shares of Non-Voting Common Stock, which such shares will be subject to the provisions of Section 2.3 (such shares, the “Tranche B Shares”); and

 

(iii)          1,940,382 shares of Voting Common Stock which, when taken together with the Initial Tranche C Shares, shall represent no less than 5.0% of the total outstanding capital stock of the Company (on a fully diluted basis) as of immediately following the Closing (such shares, the “Remaining Tranche C Shares” and, together with the Initial Tranche C Shares, the “Tranche C Shares”.

 

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(b)                                 At the Closing, the Company shall deliver to Nantucket the Tranche A Shares in certificated form and the Remaining Tranche C Shares at Nantucket’s option, in certificated form or in uncertificated book-entry form (pursuant to written instructions provided by Nantucket to the Company at least three (3) Business Days in advance of the applicable Closing Date); and the Company shall deliver to the Escrow Agent (as such term is defined in Section 2.3(a)) the Tranche B Shares in certificated form to be held by the Escrow Agent in accordance with the Escrow Agreement (as such term is defined in Section 2.3(a)); provided, that, in lieu of receiving the Tranche A Shares in certificated form, Nantucket may elect to have the Tranche A Shares delivered in book entry form through the Direct Registration System with the Company’s transfer agent.

 

(c)                                  When issued, the Newly Issued Jaguar Shares will be duly authorized by all necessary corporate action, and such Newly Issued Jaguar Shares will be validly issued, fully paid and nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof, other than such liability as may exist under applicable law.  On the Closing Date, there will not be any outstanding securities of the Company (including rights, options, warrants, notes, bonds or other instruments convertible into or exchange or exercisable for equity securities of the Company) containing anti-dilution or similar provisions that will be triggered by the issuance of the Newly Issued Jaguar Shares pursuant to the transactions contemplated by this Agreement.

 

(d)                                 For purposes of this Agreement, calculations made “on a fully diluted basis” shall exclude one-half of the shares issuable upon exercise or conversion of options, warrants or other convertible securities of the Company which have an exercise or conversion price of $5.00 or more per share and such securities shall not be deemed to be issuable or outstanding.  In the event that at Closing the number of shares specified in Sections 2.1(a)(i) or 2.1(a)(iii) constitute less than the percentage specified in Section 2.1(a)(i) or 2.1(a)(iii), as applicable, due to a capital raise or financing by the Company or Target between the date hereof and the Closing, the Company may increase the number of shares to be issued pursuant Section 2.1(a)(i) or 2.1(a)(iii), as applicable, by an amount that is sufficient to cause the applicable percentage to be satisfied and correspondingly reduce, pro rata, (i) the number of shares to be issued pursuant to Section 2.1(a)(ii) and (ii) the number of shares of Common Stock issuable upon exercise of the Parent RSUs, Parent Options and Parent Warrants (as such terms are defined in the Merger Agreement); provided however, the number of shares to be issued pursuant to Section 2.1(a)(ii) shall in any event represent no less than 17.4% of the total outstanding capital stock of the Company (on a fully diluted basis) as of immediately following the Closing.

 

(e)                                  From and after the Closing Date, the Company shall, and shall use best commercial efforts to cause its transfer agent to, cooperate with Nantucket and its Permitted Transferees in connection with any transfer of Newly Issued Jaguar Shares (to the extent permitted hereunder) or Initial Tranche C Shares, including arranging for timely delivery of replacement certificates (if any) and taking such other actions as may be reasonably requested to facilitate such transfer on a reasonably timely basis.

 

Section 2.2.                                 Sale of the Tranche A Shares.

 

(a)                                 From and after the Closing Date until the earlier of (i) the third anniversary of the Trigger Date and (ii) the date on which the aggregate Net Proceeds from all sales of the Tranche A Shares during the applicable Time Period (whether or not identified or arranged by the Company) exceeds the Hurdle for the applicable Time Period (such earlier date, the “Final Determination Date”), in the event that any potential purchaser approaches Nantucket or any of its Permitted Transferees from time to time whether directly or by or through any introduction by or from a third party or the Company or otherwise, to acquire some or all of the Tranche A Shares or any such party identifies or arranges a manner of sale of the Tranche A Shares such as, for example, an underwritten offering, Nantucket agrees, and shall cause any of its Permitted Transferees holding Tranche A Shares to agree, to promptly sell some or all of its Tranche A Shares as requested by such party, provided all such sales shall be at or above the Minimum Share Price applicable to the relevant Time Period.

 

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(b)                                 If at any time, the Net Proceeds from all sales of the Tranche A Shares during or prior to the applicable Time Period (whether or not identified or arranged by the Company) exceeds the Hurdle for the applicable Time Period: (i) the Hurdle shall be deemed permanently satisfied; and (ii) Nantucket shall promptly (but in any event within five (5) Business Days) transfer (or cause to be transferred) to the Exchange Agent one-half of the remaining Tranche A Shares after the sale of the Tranche A Share which caused such Hurdle to be satisfied (and in calculating the number of such shares any additional Tranche A Shares that may have been sold in the same transaction as such sale and the proceeds from the sale of which exceed the applicable Hurdle shall be taken into account as if such shares had not been sold); provided, that any fractional shares to be transferred to the Exchange Agent shall be rounded down to the next lower whole number of shares.

 

(c)                                  In connection with a sale of any Tranche A Shares pursuant to Section 2.2(a), Nantucket agrees, and agrees to cause any of its Permitted Transferees that hold such Tranche A Shares, to reasonably cooperate in consummating such sale including executing any and all transfer documents customary in such transactions, including the provision of customary representations and warranties relating to the seller’s title to such Tranche A Shares and such shares shall be sold free and clear of all liens, claims and encumbrances.  Nantucket agrees to promptly notify (but in no event more than three (3) Business Days after such sale) the Company of any sale of any of the Tranche A Shares by it or its Permitted Transferees to any third party and provide the Company complete information regarding the number of Tranche A Shares sold and the price and any other economic terms of such transfers; provided, that, if the Hurdle has not been satisfied on or prior to the third anniversary of the Trigger Date, Nantucket shall have no further obligations pursuant to this sentence.

 

(d)                                 During the Restricted Period, Nantucket agrees not to directly or indirectly sell, assign, transfer, grant any options with respect to or otherwise convey or encumber any Tranche A Shares or agree to take any such actions or enter into any swap or similar arrangements that transfer the economic consequences of owning the Tranche A Shares, provided that Nantucket may:  (i) transfer Tranche A Shares to Permitted Transferees of Nantucket provided such Permitted Transferee agrees to be bound by this Section 2.2 in a written agreement reasonably acceptable to the Company, (ii) make sales to one or more third parties where the sale price for the Tranche A Shares either (A) is at or above the Floor Price or (B) is approved in writing in advance by the Company’s Chief Executive Officer or Chief Financial Officer and (iii) transfer Tranche A Shares pursuant to Section 2.2(a).  Nantucket acknowledges that any certificates representing the Tranche A Shares will bear a legend that such shares are subject to the provisions hereof; provided, that after the expiration of the Restricted Period, Nantucket shall be entitled to have any such legend(s) removed from any such certificate.

 

(e)                                  Notwithstanding anything to the contrary herein, and except as expressly set forth in this Section 2.2, the Tranche A Shares shall not be subject to any conditions or restrictions on transfer (other than those that may be imposed by applicable securities laws).

 

Section 2.3.                                 Tranche B Shares.

 

(a)                                 Pursuant to the Settlement Agreement, on or prior to the Closing Date, Nantucket shall execute and deliver to escrow agent (the “Escrow Agent”) the escrow agreement (the “Escrow Agreement”) referred to in the Settlement Agreement, together with a stock assignment separate from certificate duly executed in blank by Nantucket with medallion guarantee (the “Stock Assignment”), to be held in escrow by the Escrow Agent until it receives joint written instructions from Nantucket and the Company for the release of the Tranche B Shares in accordance with this Section 2.3.

 

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(b)                                 On or prior to the Closing Date, the Company shall execute and deliver to the Escrow Agent the Escrow Agreement.

 

(c)                                  At the Closing, the Company shall deliver the stock certificate for the Tranche B Shares, registered in the name of Nantucket, to the Escrow Agent to be held in accordance with the terms hereof and of the Escrow Agreement.

 

(d)                                 The Tranche B Shares shall be released from Escrow as follows:

 

(i)                                     If, on or prior to the third anniversary of the Trigger Date, the aggregate Net Proceeds from the sale of Tranche A Shares equals or exceeds the Hurdle applicable for that Time Period, then Nantucket and the Company shall promptly (and in any event within three (3) Business Days) execute and deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to deliver the stock certificate(s) representing any Tranche B Shares that remain in the Escrow Account, together with the Stock Assignment, to the Exchange Agent  for delivery to the Legacy Stockholders of Target in accordance with Section 2.2 of the Merger Agreement.  For the avoidance of doubt, the provisions of this Section 2.3(d)(i) are in addition to Nantucket’s obligation to make the required transfers, if any, to the Exchange Agent in accordance with Section 2.2(b).

 

(ii)                                  If either (x) on the third anniversary of the Trigger Date, the aggregate Net Proceeds received by Nantucket and/or its Permitted Transferees from its or their sale(s) of Tranche A Shares (and, if applicable, any Tranche B Shares that may be sold pursuant to Section 2.3(d)(iii)) (whether or not each such sale was identified or arranged by the Company) do not exceed the Hurdle for Period 5, or (y) at any time on or prior to the third anniversary of the Trigger Date, the Company or any of its material Subsidiaries (as such term is defined in the Merger Agreement) becomes insolvent, or admits in writing its insolvency or inability to pay its debts or perform its obligations as they mature or becomes the subject of any voluntary or involuntary proceeding in bankruptcy, liquidation, dissolution, receivership, attachment or composition or general assignment for the benefit of creditors that is not dismissed with prejudice within sixty (60) days after the institution of such proceeding, attachment or assignment (each of the events in clauses (x) and (y), a “Nantucket Release Event”), then Nantucket and the Company shall promptly (and in any event within three (3) Business Days) execute and deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to deliver the stock certificate(s) representing any Tranche B Shares that remain in the Escrow Account, together with the Stock Assignment, to Nantucket.  Notwithstanding anything to the contrary herein, upon delivery of such certificate(s) and Stock Assignment by the Escrow Agent to Nantucket, the Tranche B Shares shall not be subject to any conditions or restrictions on transfer (other than those that may be imposed by applicable securities laws).

 

(iii)                               From the Closing Date until the third anniversary of the Trigger Date, contemporaneous with or from time to time following the sale of all remaining Tranche A Shares held by Nantucket or its Permitted Transferees, in the event that any potential purchaser approaches Nantucket from time to time whether directly or by or through any introduction by or from a third party or the Company or otherwise, to acquire some or all of the Tranche B Shares or any such party identifies or arranges a manner of sale of the Tranche B Shares such as, for example, an underwritten offering, Nantucket agrees to the sale of some or all of the Tranche B Shares provided (x) such sale shall be at or above the Minimum Share Price applicable to the relevant Time Period or (y) such sale causes the Hurdle applicable for that Time Period to be satisfied (either, an “Approved Tranche B Sale”).  Upon delivery of written notice by the Company to Nantucket of a sale that qualifies as an Approved Tranche B Sale,

 

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Nantucket and the Company shall promptly (and, in any event, within three (3) Business Days) execute and deliver joint written instructions to the Escrow Agent instructing the Escrow Agent (1) to release such number of Tranche B Shares as specified in the notice for such Approved Tranche B Sale to Nantucket, and, subject to such sale being an Approved Tranche B Sale, Nantucket shall sell, or cause to be sold, such Tranche B Shares in accordance with Section 2.2(a) as if such Tranche B Shares were Tranche A Shares.

 

(e)                                  For the avoidance of doubt, the parties acknowledge and agree that during the period that any of the Tranche B Shares are held by the Escrow Agent, Nantucket will be the legal and beneficial owner of each Tranche B Share held (including for purposes of calculating any pro rata participation in any Piggyback Registration and exercising voting rights) until such time as the Escrow Agent has delivered such Tranche B Share to the Exchange Agent in accordance with Section 2.3(d)(i) or such Tranche B Share has been sold to a third party buyer pursuant to Section 2.3(d)(iii).

 

ARTICLE III
INVESTOR RIGHTS

 

Section 3.1.                                 Pre-Closing Rights.

 

(a)                                 From the date hereof until the Closing Date or the earlier termination of this Agreement pursuant to Section 5.11, from time to time upon reasonable notice and request, the Company shall make available to Nantucket members of its senior management team to meet with representatives of Nantucket and discuss the business (provided, that the foregoing shall be conducted in such a manner as not to interfere unreasonably with the conduct of the Company’s business or disclose material non-public information to Nantucket).

 

(b)                                 The Company covenants and agrees that, during the Interim Period (as defined in the Merger Agreement), except to the extent required by Law (as defined in the Merger Agreement), as may be agreed in writing by Nantucket (which consent shall not be unreasonably withheld, delayed or conditioned), as may be expressly required or permitted pursuant to this Agreement, the Company shall not, and shall not permit any of its Subsidiaries (as defined in the Merger Agreement) to, do or take any of the actions described in clauses (i) through (xi) of Section 5.6 of the Merger Agreement and such clauses are hereby incorporated by reference herein (it being understood that all references to Parent in such clauses shall be deemed replaced with “the Company”).

 

(c)                                  No amendment or modification to or waiver of any rights (other than any waiver by the Company of any of the conditions to the Company’s obligations to effect the Closing) under the Merger Agreement shall be permitted, and the Company shall not effect, agree to, authorize, approve or provide any such amendment, modification or waiver, without Nantucket’s prior written consent (which may be withheld or delayed in Nantucket’s sole discretion).

 

(d)                                 The Company shall take all necessary steps to ensure that it has a sufficient number of authorized and unissued shares to permit the issuance of all of the Newly Issued Jaguar Shares at the Closing.  Without limiting the foregoing, prior to the Closing, the Company shall cause its certificate of incorporation to be amended and restated in the form attached hereto as Exhibit A.

 

Section 3.2.                                 Post-Closing Rights.  From the Closing Date until the earliest to occur of (x) achieving a Hurdle, (y) a Change of Control and (z) the third anniversary of the Closing Date:

 

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(a)                                 without the prior written consent of Nantucket, the Company shall not (i) declare, issue, authorize, approve or pay or set apart for payment any dividends or other distribution upon any shares of capital stock of the Company or (ii) redeem, purchase or otherwise acquire for any consideration (or pay or make available for payment a sinking fund for the redemption of) any shares of capital stock of the Company other than repurchases from former employees or services providers in connection with the cessation of such relationship;

 

(b)                                 the Company shall take all necessary measures to ensure that Nantucket is entitled to vote its Non-Voting Common Stock (including any Tranche B Shares) on an as converted basis in connection with any Change of Control that is submitted to the holders of Voting Common Stock for approval;

 

(c)                                  prior to December 30, 2019, without the prior written consent of Nantucket (which may be withheld or delayed in Nantucket’s sole discretion), the Company shall not, and shall cause Target (as the surviving corporation in the Merger) not to, amend or modify in any material respect, or waive any material rights or conditions in, the Kingdon Loan Agreement (as defined in the Settlement Agreement); provided, that Nantucket’s consent shall not be unreasonably withheld or delayed with respect to the addition of customary terms and conditions at the Closing, including enhanced representations, warranties, debt covenants and events of default which are appropriate for similar transactions.

 

(d)                                 Nantucket shall be entitled to designate one observer to attend (whether telephonically or otherwise) all regular and special meetings of the board of directors of the Company (the “Board”) and receive all materials and information provided to the Board at the same time and in the same manner as members of the Board (including any minutes furnished to the Board following such meeting), subject to the execution of a customary confidentiality agreement by such observer; provided, that the Company shall be entitled to exclude such observers from all or a portion of an applicable Board meeting and/or from receiving any such information to the extent any such observer’s presence during all or such portion of an applicable meeting and/or receipt of information (x) would result in the waiver of attorney-client privilege as advised by outside counsel or (y) would result in an actual conflict of interest as reasonably determined by the Board; provided, further, that the Company shall pay the reasonable and documented out-of-pocket travel expenses incurred by such observer in connection with his or her attendance at in-person meetings of the Board; provided, further, that to the extent any material, non-public information of the Company (“MNPI”) is reasonably likely to be discussed at any Board meeting or disclosed in any materials or information to be provided to such observer pursuant to this Section 3.2(d), the Company shall, prior to disclosing or making available such materials or information containing MNPI, request from Nantucket whether it wishes to receive such materials or information without identifying or disclosing such MNPI and the Company shall only proceed to deliver such materials or information containing MNPI to Nantucket if Nantucket consents for such observer to receive such materials or information; provided, further, that solely in the event the Company has arranged for a purchaser of no less than 500,000 Tranche A Shares at a purchase price at or above the Minimum Share Price applicable to the relevant Time Period in accordance with Section 2.2(a) that is reasonably likely to close within 30 days of Nantucket being notified of such potential sale, and such purchaser has a delivered to Nantucket a duly executed, binding share purchase agreement in form and substance reasonably acceptable to Nantucket in respect of such purchase, the Company may withhold any materials or information containing MNPI from Nantucket’s observer, or exclude such observer from participating in any portion of a Board meeting where MNPI is reasonably likely to be discussed, if the Company determines in good faith based on the advice of outside counsel that providing such materials or information, or permitting such participation, would reasonably be likely to cause such sale to fail to occur within such 30 day period due to applicable securities laws; and

 

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(e)                                  from time to time upon reasonable notice and request, the Company shall make available to Nantucket members of its senior management team to meet with representatives of Nantucket and discuss the business (provided, that the foregoing shall be conducted in such a manner as not to interfere unreasonably with the conduct of the Company’s business).

 

ARTICLE IV
REGISTRATION RIGHTS

 

Section 4.1.                                 Shelf Registration Statement; Demand Registration.

 

(a)                                 Subject to the terms and conditions contained herein (including the limitations set forth in Section 4.1(b), Section 4.1(c) and Section 4.6):

 

(i)                                     No later than four Business Days after the Closing Date, the Company shall prepare and file with the SEC a shelf registration statement on Form S-3 or any successor form (except that if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, such registration shall be on another appropriate form) providing for continuous resales of securities pursuant to Rule 415 of the Securities Act (a “Shelf Registration Statement”) with respect to sales of Registrable Securities which may be made by the Holders, and shall use best commercial efforts to cause such Shelf Registration Statement to be declared effective by the SEC as soon as reasonably practicable (and, in any event, no later than three Business Days after the Company is notified by the SEC that such Shelf Registration Statement will not be reviewed or is no longer subject to further review and comments) after the Closing Date (the “Rights Effective Date”).  Upon the demand of Holders pursuant to a notice made at any time and from time to time beginning two Business Days prior to the Rights Effective Date, the Company will facilitate, beginning on the Rights Effective Date, in the manner described in this Section 4.1(a)(i), a “takedown” of shares of Common Stock off of such Shelf Registration Statement (a “Shelf Takedown”), including an Underwritten Offering.  Notwithstanding the foregoing, if the Company is a WKSI, the Company shall file, on or prior to the Rights Effective Date, a Shelf Registration Statement in the form of an automatic shelf registration statement (as defined in Rule 405 under the Securities Act) or any successor form thereto registering all Registrable Securities then held by such Holders.  Within ten days after the Shelf Registration Statement is declared effective, the Company will deliver written notice thereof to all Holders.  Each Holder may elect to participate with respect to all or any portion of its Registrable Securities in the Shelf Registration Statement in accordance with the plan and method of distribution set forth, or to be set forth, in such Shelf Registration Statement by delivering to the Company a written request to so participate within ten days after the Company notifies each Holder in writing of the effectiveness of the Shelf Registration Statement.  Subject to Section 4.1(c), the Company will use its best commercial efforts to keep the Shelf Registration Statement continuously effective (including by filing a new Shelf Registration Statement on or prior to the date any prior Shelf Registration Statement would become unusable under the Securities Act) until the earlier of (i) the date on which all Registrable Securities covered by the Shelf Registration Statement have been sold thereunder in accordance with the plan and method of distribution disclosed in the prospectus included in the Shelf Registration Statement or otherwise cease to be Registrable Securities, and (ii) the date on which the obligations under this Article IV terminate pursuant to Section 4.11.

 

(ii)                                  Following the Rights Effective Date, at any time that a Shelf Registration Statement is effective, if any Holder delivers a notice to the Company (a “Take-Down Notice”) stating that it intends to sell all or part of its Registrable Securities included by it on the Shelf Registration Statement in an Underwritten Offering (a “Shelf Offering”), then, the Company shall promptly amend or supplement the Shelf Registration Statement as may be necessary in order to enable such Registrable Securities to be distributed pursuant to the Shelf Offering.

 

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(iii)                               At any time after the Restricted Period (the “Demand Effective Date”), Holders may request by written notice delivered to the Company (a “Demand Notice”) that the Company register under the Securities Act all or any portion of the Registrable Securities then held by Holders, for sale in the manner specified in such Demand Notice (including, but not limited to, an Underwritten Offering) (a “Demand Registration”); provided, however, that the Holders may not deliver a Demand Notice with respect to any Registrable Securities for which a registration statement is effective under the Securities Act in accordance with the terms and conditions of this Agreement.  In each such case, the Demand Notice shall specify the number of Registrable Securities for which registration is requested and the proposed manner of disposition of such securities.

 

(iv)                              The Company shall use its best commercial efforts to file with the SEC within 20 days after the Company’s receipt of a Demand Notice a registration statement for the public offering and sale, in accordance with the method of disposition specified by Holders in such Demand Notice, of the number of Registrable Securities specified in such notice, and thereafter use its best commercial efforts to cause such registration statement to become effective within 45 days after its filing.  Such registration statement may be on Form S-3 or another appropriate form that the Company is eligible to use and that is reasonably acceptable to the managing underwriter, if any.  A Demand Registration shall not be deemed to have been effected and shall not count as a Demand Registration (i) unless a registration statement with respect thereto has become effective and has remained effective for a period of at least 180 days or such shorter period in which all Registrable Securities included in such Demand Registration have actually been sold thereunder (provided, that such period shall be extended for a period of time equal to the period the holder of Registrable Securities refrains from selling any securities included in such registration statement at the request of the Company or the lead managing underwriter(s) pursuant to the provisions of this Agreement) or (ii) if, after it has become effective, such Demand Registration becomes subject, prior to 180 days after effectiveness, to any stop order, injunction or other order or requirement of the SEC or other governmental authority, other than by reason of any act or omission by the applicable Selling Stockholders.  Demand Registrations shall be on such appropriate registration form of the SEC as shall be selected by the Company and reasonably acceptable to the requesting Holder.

 

(v)                                 If the Company is required to use its best commercial efforts to register Registrable Securities in a registration initiated upon the demand of Holders pursuant to this Section 4.1(a) and the managing underwriters for such offering advise that the inclusion of all securities sought to be registered pursuant to this Section 4.1 may interfere with an orderly sale and distribution of or may adversely affect the success or price of such offering, then the Company will include in such offering, first, the aggregate number of Registrable Securities requested to be included by Holders pursuant to the Demand Notice, second, the shares of Common Stock of third party stockholders that are entitled to registration rights under Other Registration Rights Agreements (“Third Party Securities”), allocated pro rata among the Third Party Securities as the Company and such third party stockholders may agree or as may be provided in the Other Registration Rights Agreement, and third, all other securities requested or proposed to be included in such registration statement (including shares of Common Stock to be sold for the account of the Company).

 

(b)                                 The obligations of the Company to effect, or to take any action to effect, a Demand Registration or an underwritten Shelf Takedown shall be limited as follows:

 

(i)                                     from the period commencing on the Closing Date until the Rights Effective Date, Holders do not have the right to require the Company to effect any underwritten Shelf Takedowns;

 

(ii)                                  from the period commencing on the Closing Date until the Demand Effective Date, Holders do not have the right to require the Company to effect any Demand Registrations;

 

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(iii)                               from the period commencing on the Demand Effective Date through the date on which the obligations under this Article IV terminate pursuant to Section 4.11, Holders do not have the right to require the Company to effect any Demand Registration prior to 365 days following a previous Demand Registration; and

 

(iv)                              the Company shall not be required to effect more than four Demand Registrations in the aggregate.

 

(c)                                  Any Demand Notice may be revoked by notice from the Holder to the Company prior to the effective date of the corresponding registration statement.  A Demand Notice may not be made for a minimum of 60 days after the revocation of an earlier Demand Notice.

 

(d)                                 Any time that a Demand Registration involves an Underwritten Offering, the Holders shall select the investment banker(s) and manager(s) that will serve as managing underwriters (including which such managing underwriters will serve as lead or co-lead) and underwriters with respect to the offering of such Registrable Securities; provided, that such investment banker(s) and manager(s) shall be reasonably acceptable to the Company (such acceptance not to be unreasonably withheld, conditioned or delayed).

 

Section 4.2.                                 Incidental Registration.

 

(a)                                 At any time after the Closing Date until the date on which the obligations under this Article IV terminates pursuant to Section 4.11, subject to the terms and conditions hereof, if the Company proposes to register any equity securities of the Company (whether proposed to be offered for sale by the Company or by any other Person (other than the Holders)) (collectively, “Other Securities”) for public sale under the Securities Act (other than a registration by the Company (i) on Form S-4 or any successor form thereto, (ii) on Form S-8 or any successor form thereto, (iii) pursuant to Section 4.1, (iv) pursuant to an Existing Registration Rights Agreement, or (v) on a form or in a manner which would not permit registration of Registrable Securities for sale to the public under the Securities Act), it will give prompt written notice reasonably in advance of the applicable filing date (which notice shall specify the intended method or methods of disposition) to Holders of its intention to do so (such notice, an “Incidental Notice”), and upon the written request of a Holder delivered to the Company within five Business Days after the requesting Holder’s receipt of an Incidental Notice (which request shall specify the number of Registrable Securities intended to be disposed of by such Holder) the Company will, subject to the terms and conditions hereof, use its best commercial efforts to effect, in connection with the registration of the Other Securities, the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register by the Holders (a “Piggyback Registration”); provided, however, that:

 

(i)                                     if, at any time after giving an Incidental Notice and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register such Other Securities, the Company may, at its election, give written notice of such determination to Holders within five Business Days thereof and thereupon the Company shall be relieved of its obligation to register such Registrable Securities in connection with the registration of such Other Securities, without prejudice, however, to the rights (to the extent applicable and subject to the terms and conditions hereof) of Holders to immediately request that such registration be effected as a registration under Section 4.1;

 

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(ii)                                  in connection with any Underwritten Offering, the Company will not be required to effect any registration of Registrable Securities pursuant to this Section 4.2 if the Company shall have been advised by the managing underwriter for the offering that, in such firm’s reasonable opinion, a registration of Registrable Securities and Other Securities sought to be included in such Piggyback Registration may interfere with an orderly sale and distribution of the securities being sold in such offering or would adversely affect the success thereof; provided, however, that if an offering of some but not all of the Registrable Securities requested to be registered by the Holders and Other Securities sought to be included in such registration (other than pursuant to so-called “piggyback” or other incidental or participation registration rights) would not interfere or have such adverse effect in the reasonable opinion of such firm, then the Company will include in such offering: first, the Other Securities to be registered for the Company’s account, second, the Registrable Securities requested to be registered by the Holders pursuant to this Section 4.2, as well as all other Third Party Securities requested to be registered by third party stockholders under Other Registration Rights Agreements, allocated pro rata among the Registrable Securities and Third Party Securities based on the number of Registrable Securities and Third Party Securities proposed to be registered in such registration by the Holders and such third party stockholders, as applicable (provided, that the Holders shall have priority over all such third party stockholders to sell up 20% of the aggregate securities proposed to be sold in any such offering (the “Piggyback Allotment”)), and third, all Other Securities requested to be included in such registration; and

 

(iii)                               the Company shall not be required to give notice of, or effect any registration of Registrable Securities under this Section 4.2 incidental to, the registration of any of its securities in connection with mergers, consolidations, acquisitions, exchange offers, dividend reinvestment plans or stock options or other employee benefit or compensation plans.

 

(b)                                 In connection with any Underwritten Offering under this Section 4.2, the Company shall not be required to include the Registrable Securities of a Holder unless such Holder accepts the terms of the underwriting as agreed upon between the Company and the lead managing underwriter(s), which shall be selected by the Company.

 

(c)                                  No registration of Registrable Securities effected under this Section 4.2 shall relieve the Company of its obligations (if any) to effect registrations of Registrable Securities pursuant to Section 4.1, and no registration effected pursuant to this Section 4.2 shall be deemed to have been effected pursuant to Section 4.1.

 

(d)                                 Notwithstanding anything to the contrary herein, if the Company conducts any capital raise (whether in the form of debt or equity) or registers any Other Securities pursuant to an Existing Registration Rights Agreement and Nantucket is not permitted to participate for its full Piggyback Allotment of such capital raise or registration (whether due to a cutback initiated by the underwriter or placement agent or otherwise) or, in the case of any debt issuance (with or without warrants), at least twenty percent (20%) of the cash proceeds from such debt issuance are not used to repurchase Tranche A Shares held by Nantucket at the Minimum Share Price applicable to the relevant Time Period (a “Cutback Event”), the Company shall, as promptly as reasonably practicable, cause to be registered a number of shares of Common Stock owned by Nantucket equal to (i) the number of shares included in such capital raise or registration (or, in the case of a debt issuance, a number of shares of Common Stock owned by Nantucket (with such shares being valued at the arithmetic average of the volume weighted average price for Voting Common Stock during the ten consecutive trading day period prior to the date Nantucket notifies the Company of its desire to effect a registration of its shares pursuant to the terms of this Section 4.2(d)) equal to the aggregate dollar amount of such debt issuance), multiplied by (ii) Nantucket’s then-current relative equity beneficial ownership percentage (on an as converted basis, taking into account the Tranche B Shares) of the Company (or relative proportion thereof if Nantucket is granted partial participation (i.e., less than the full Piggyback Allotment) or receives less than twenty percent (20%) of the cash proceeds from such debt issuance); provided, however, that (u) Nantucket’s subsequent sale of such shares shall be subject to the Floor Price during the Restricted Period; (v) no

 

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shares shall be registered pursuant to this Section 4.2(d) unless such shares constitute Registrable Securities; (w) the Company’s obligation to register shares pursuant to this Section 4.2(d) shall only be applicable with respect to shares, if any, owed by Nantucket that are not covered by an effective resale registration statement with the SEC; (x) for the avoidance of doubt, the provisions of Section 4.3(a) shall be applicable with respect to any registration pursuant to this Section 4.2(d); (y) for the avoidance of doubt, any registration of securities effected pursuant to this Section 4.2(b) shall not constitute a Demand Registration for purposes of Section 4.1(b); and (z) any capital raise effected by the Company or Target prior to or at the Closing shall be taken into account for purposes of this Section 4.2(d) solely to the extent such capital raise is not reflected in the Pro Forma Cap Table (as defined in the Settlement Agreement).

 

Section 4.3.                                 Holdbacks; Other Restrictions and Acknowledgements.

 

(a)                                 In connection with any Underwritten Offering, if requested by the managing underwriter, each Holder agrees to enter into customary agreements restricting the public sale or distribution of equity securities of the Company (including sales pursuant to Rule 144 under the Securities Act) during the period commencing on the launch of such offering but no earlier than ten days prior to the “pricing” of such Underwritten Offering and continuing for not more than 90 days after the date of the “final” prospectus (or “final” prospectus supplement if the Underwritten Offering is made pursuant to a shelf registration statement), pursuant to which such Underwritten Offering shall be made, or such lesser period as is required by the lead managing underwriter(s).

 

(b)                                 If any Demand Registration or Shelf Takedown involves an Underwritten Offering, the Company, if requested by the managing underwriter, will not effect any public sale or distribution of any common equity (or securities convertible into or exchangeable or exercisable for common equity) (other than (i) a registration statement on Form S-4, Form S-8 or any successor forms thereto or any other form for the registration of securities issued or to be issued in connection with a merger, acquisition or employee benefit plan, and (ii) pursuant to an Existing Registration Rights Agreement) for its own account within 30 days after the effective date of such registration except as may otherwise be agreed between the Company and the lead managing underwriter(s) of such Underwritten Offering.

 

(c)                                  Neither the Company nor any of its subsidiaries has entered, nor shall the Company or any of its subsidiaries, on or after the date of this Agreement until the date on which the obligations under this Article IV terminate pursuant to Section 4.11, enter, into any agreement that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.

 

Section 4.4.                                 Registration Procedures.

 

(a)                                 If and whenever the Company is required by the provisions of this Agreement to use best commercial efforts to effect or cause a registration as provided in this Agreement and at such times as customarily occur in registered offerings or shelf takedowns, as applicable, the Company shall as expeditiously as reasonably practicable:

 

(i)                                     use best commercial efforts to (a) prepare and file with the SEC, a registration statement within the time periods specified herein which registration statement shall be available for the sale or exchange of the Registrable Securities in accordance with the intended method or methods of distribution and comply as to form in all material respects with the requirements of the applicable form and include or incorporate by reference all financial statements required by the SEC to be filed therewith; (b) cause such registration statement to become effective as promptly as practicable and to remain effective under the Securities Act in accordance with the terms and conditions of this

 

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Agreement; provided, however, that the Company may discontinue any registration of its securities which are not Registrable Securities at any time prior to the effective date of the registration statement relating thereto; (c) prevent the occurrence of any event that would cause a registration statement be not effective and usable for resale of the Registrable Securities registered pursuant thereto (during the period that such registration statement is required to be effective pursuant to this Agreement); and (d) cause each registration statement and the related prospectus and any amendment or supplement thereto, as of the effective date of such registration statement, amendment or supplement to comply in all material respects with any requirements of the Securities Act, the Exchange Act and the rules and regulations of the SEC and not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

 

(ii)                                  (a) prepare and file with the SEC such amendments, post-effective amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for such period of time required by Section 4.4(a)(i), as such period may be extended pursuant to Section 4.6, and as may be necessary for such registration statement to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement, (b) respond to any comments received from the SEC with respect to each registration statement. prospectus or any amendment thereto, and (c) provide Holders true and complete copies of all correspondence from and to the SEC relating to such registration statement. prospectus or any amendment thereto other than any comments that the Company determines in good faith would result in the disclosure to such Holders of material and non-public information concerning the Company that is not already in the possession of such Holder;

 

(iii)                               if requested by the lead managing underwriter(s), if any, or the Holders of a majority of the then outstanding Registrable Securities being sold in connection with an Underwritten Offering, include in a prospectus supplement or post-effective amendment such information as the lead managing underwriter(s), if any, and such Holders may reasonably request in order to permit the intended method of distribution of such securities and make all required filings of such prospectus supplement or such post-effective amendment within the time period specified in this Agreement; provided, however, that the Company shall not be required to take any actions under this Section 4.4(a)(iii) that are not, in the opinion of counsel for the Company, in compliance with applicable Law;

 

(iv)                              within a reasonable time prior to the filing of any registration statement, any prospectus, any amendment to a registration statement, amendment or supplement to a prospectus or any Free Writing Prospectus, provide copies of such documents to the Holders of the Registrable Securities being sold and to the underwriter or underwriters of an Underwritten Offering, if applicable, and to underwriter’s counsel; provided, that before filing such registration statement or any amendments thereto, the Company will furnish to the Holders which are including Registrable Securities in such registration (“Selling Stockholders”), their counsel and the lead managing underwriter(s), if any, copies of all such documents proposed to be filed, which documents will be subject to the review and reasonable comment of such counsel, and other documents reasonably requested by such counsel, including any comment letter from the SEC.  The Company shall not file any such registration statement or prospectus or any amendments or supplements thereto with respect to a Demand Registration to which the Holders of a majority of Registrable Securities reasonably object;

 

(v)                                 comply in all material respects with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during the period during which any such registration statement is required to be effective;

 

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(vi)                              furnish to Holders and any underwriter of Registrable Securities, (a) such number of copies (including manually executed and conformed copies) of such registration statement and of each amendment thereof and supplement thereto (including all annexes, appendices, schedules and exhibits), (b) such number of copies of the prospectus, used in connection with such registration statement (including each preliminary prospectus and any summary prospectus) and each free writing prospectus (as defined in Rule 405 of the Securities Act) (a “Free Writing Prospectus”) utilized in connection therewith and any other prospectus filed under Rule 424 under the Securities Act, and (c) such number of copies of other documents, in each case as Holders or such underwriter may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities;

 

(vii)                           use best commercial efforts to register or qualify or reasonably cooperate with the Holders selling Registrable Securities pursuant to such registration statement, the underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption form such registration or qualification) of all Registrable Securities covered by such registration statement under the securities or “blue sky” laws of states of the United States as Holders or any underwriter shall reasonably request, and to keep each such registration or qualification (or exemption therefrom) effective during the period such registration statement is required to be kept effective hereunder and take any other action which may be reasonably necessary to enable such Holders and underwriters to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holders; provided, however, that the Company shall not be required to (a) qualify generally to do business as a foreign corporation or as a dealer in securities in any jurisdiction wherein it would not but for the requirements of this clause (vii) be qualified or subject, or (b) subject itself to taxation or consent to general service of process (other than service of process in connection with such registration or qualification or any sale of Registrable Securities in connection therewith) in any such jurisdiction;

 

(viii)                        reasonably cooperate with Holders and the sole underwriter or managing underwriter of an Underwritten Offering of shares, if any, to facilitate the timely preparation and delivery of certificates representing the shares to be sold and not bearing any restrictive legends unless required by applicable Law; and enable such shares to be in such denominations (consistent with the provisions of the governing documents thereof) and registered in such names as the Holders or the sole underwriter or managing underwriter of an Underwritten Offering of shares, if any, may reasonably request consistent with this Agreement;

 

(ix)                              use best commercial efforts to cause the Registrable Securities covered by such registration statement to be registered with, or approved by, such other United States public, governmental or regulatory authorities, if any, as required to enable the Holders thereof to consummate the disposition of such Registrable Securities;

 

(x)                                 use best commercial efforts to list and maintain the listing of the securities covered by such registration statement on the NASDAQ, if the listing of such Registrable Securities are then permitted under the applicable rules of such exchange;

 

(xi)                              notify Holders as promptly as practicable and, if requested by Holders, confirm such notification in writing, (a) when a prospectus or any prospectus supplement has been filed with the SEC, and, with respect to a registration statement or any post-effective amendment thereto, when the same has been declared effective by the SEC, (b) of the issuance by the SEC of any stop order suspending the effectiveness of the registration statement or the initiation of any proceedings by the SEC for that purpose, (c) of the receipt by the Company of any notification with respect to the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (d) of the occurrence of any event which requires the making of any changes to a registration statement or related prospectus so that such documents will not

 

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contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (and the Company shall promptly prepare and furnish to Holders a reasonable number of copies of a supplemented or amended prospectus such that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading), (e) any request by the SEC or any other U.S. or state governmental authority for amendments or supplements to the registration statement or the prospectus or for additional information, and (f) of the Company’s determination that the filing of a post-effective amendment to the registration statement shall be necessary or appropriate;

 

(xii)                           (a) provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by such registration statement from and after a date not later than the effective date of such registration statement and provide and enter into any reasonable agreements with a custodian for the Registrable Securities and, (b) no later than the effective date of the applicable Registration Statement, provide a CUSIP number for all Registrable Securities;

 

(xiii)                        enter into such agreements (including, in the case of an Underwritten Offering, underwriting agreements in customary form, scope and substance as is customary in Underwritten Offerings) and use best commercial efforts to take such other appropriate actions as are reasonably requested by the Holders of Registrable Securities being sold in connection therewith (including those reasonably requested by the managing underwriters, if any) as are customary and reasonably necessary to expedite or facilitate the disposition of such Registrable Securities, and in that regard, in an Underwritten Offering (i) make such representations and warranties to the Holders of such Registrable Securities and the underwriters, if any, with respect to the business of the Company and its subsidiaries, and the registration statement, prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers in Underwritten Offerings, and, if true, confirm the same if and when requested, (ii) deliver such documents and certificates as reasonably requested by the Holders of a majority of the Registrable Securities being sold, their counsel and the lead managing underwriters(s), if any, to evidence the continued validity of the representations and warranties made pursuant to sub-clause (i) above and to evidence compliance with any customary conditions contained in the underwriting agreement entered into by the Company, (iii) use best commercial efforts to cause its independent accountants to deliver to the Company (and to the Holders of Registrable Securities being sold in any registration) an accountants’ comfort letter (or, in the case of any such Person which does not satisfy the conditions for receipt of a “comfort” letter specified in Statement on Auditing Standards No. 72, an “agreed upon procedures” letter) substantially similar to that in scope delivered in an underwritten public offering and covering audited and interim financial statements included in the registration statement and (iv) use best commercial efforts to furnish to the Holders of Registrable Securities being included in any such registration an opinion of counsel in substance and scope to that customarily delivered to underwriters in public offerings, addressed to the underwriters which opinion shall be reasonably satisfactory to such underwriters and its counsel; the above shall be done at each closing under such underwriting or similar agreement, or as and to the extent required thereunder;

 

(xiv)                       in connection with any Underwritten Offering, to the extent the managing underwriter(s) of such offering shall request, have appropriate officers of the Company prepare and make presentations as part of a customary “road show”, which may be videotaped or otherwise electronically delivered, and other information meetings reasonably organized by the underwriters, in each case upon reasonable advance notice and at mutually agreed times and otherwise use its best commercial efforts to cooperate as reasonably requested by the Holders and the underwriters in the offering, marketing or selling of the Registrable Securities, provided, however, that the Company shall only be required to participate in any “road show” once in any 270-day period;

 

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(xv)                          cooperate with each seller of Registrable Securities and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA; and

 

(xvi)                       use best commercial efforts to obtain the withdrawal of any order suspending the effectiveness of such registration statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction at the earliest reasonable practicable date, except that, subject to the requirements of Section 4.4(a)(vii), the Company shall not for any such purpose be required to (A) qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not but for the requirements of this clause (xvi) be obligated to be so qualified, (B) subject itself to taxation in any such jurisdiction or (C) file a general consent to service of process (other than service of process in connection with such registration or qualification or any sale of Registrable Securities in connection therewith) in any such jurisdiction.

 

(b)                                 The Company may require each Holder of Registrable Securities being sold in a registration hereunder and each underwriter, if any, to furnish to the Company in writing such information regarding such Holder or underwriter and the distribution of such Registrable Securities as the Company may from time to time reasonably request to complete or amend the information required by such registration statement.

 

(c)                                  Upon the receipt of any notice from the Company of the occurrence of any event of the kind described in clause (b), (c), (d), (e) and (f) of Section 4.4(a)(xi), Holders shall forthwith discontinue any offer and disposition of Registrable Securities pursuant to the registration statement and prospectus covering such Registrable Securities until all Holders shall have received copies of a supplemented or amended prospectus which is no longer defective, or until it is advised in writing by the Company that the use of the applicable prospectus may be resumed, and, if so directed by the Company, shall deliver to the Company, at the Company’s expense, all copies (other than permanent file copies) of the defective prospectus covering such Registrable Securities which are then in the Holders’ possession. If the Company shall provide any notice of the type referred to in the preceding sentence, the period during which the registration statements are required to be effective as set forth under Section 4.4(a)(i) shall be extended by the number of days the Holder is required to discontinue disposition of such securities.

 

(d)                                 Notwithstanding the registration obligations set forth in this Article IV, if the SEC informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly inform the Holders and use its best commercial efforts to file amendments to such registration statement covering the maximum number of Registrable Securities permitted to be registered by the SEC, on Form S-3 or such other form available to register for resale the Registrable Securities as a secondary offering; provided, however, that prior to filing such amendment, the Company shall be obligated to use diligent efforts to advocate with the SEC for the registration of all of the Registrable Securities in accordance with the SEC Guidance, including without limitation, Compliance and Disclosure Interpretation 612.09; provided, further, that the Company will use its best commercial efforts to file with the SEC, as promptly as allowed by SEC or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-3 or such other form available to register for resale those Registrable Securities that were not registered for resale previously due to the application of this Section 4.4(d).

 

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Section 4.5.                                 Underwriting.

 

(a)                                 If requested by the underwriters for any Underwritten Offering of Registrable Securities pursuant to a registration hereunder, the Company will enter into and perform its obligations under an underwriting agreement with the underwriters for such offering, such agreement to contain such representations and warranties by the Company and such other terms and provisions as are customarily contained in underwriting agreements with respect to secondary distributions, including customary provisions relating to indemnities and contribution and the provision of opinions of counsel and accountants’ letters.

 

(b)                                 If any registration pursuant to Section 4.2 shall involve, in whole or in part, an Underwritten Offering, the Company may require Registrable Securities requested to be registered pursuant to Section 4.2 to be included in such underwriting on the same terms and conditions as shall be applicable to the securities being sold through underwriters under such registration.  In such case, Holders, if requesting registration, shall be a party to any such underwriting agreement.  Such agreement shall contain such representations and warranties by the Holders requesting registration and such other terms and provisions as are customarily contained in underwriting agreements with respect to secondary distributions, including provisions relating to indemnities and contribution.

 

(c)                                  In any offering of Registrable Securities pursuant to a registration hereunder, if requested by the managing underwriter, Holders shall also enter into such additional or other agreements as may be customary in such transactions, which agreements may contain, among other provisions, such representations and warranties as the Company or the underwriters of such offering may reasonably request (including those concerning Holders, their Registrable Securities, Holders’ intended plan of distribution and any other information supplied by it to the Company for use in such registration statement), and customary provisions relating to indemnities and contribution.

 

Section 4.6.                                 Information Blackout; Suspension Of Sales.

 

(a)                                 Upon written notice from the Company to Holders that the Company has determined in good faith that (i) the sale of Registrable Securities pursuant to a registration statement would require disclosure of non-public material information that would materially and adversely interfere with any pending material financing or business transaction involving the Company or (ii) a registration statement contains or may contain 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, in light of the circumstances under which they were made, not misleading (an “Information Blackout”), the Company may postpone the filing or initial effectiveness of any registration statement required hereunder and, if such registration statement has become effective, the Company shall not be required to maintain the effectiveness of such registration statement and Holders shall suspend sales of Registrable Securities pursuant to such registration statement, in each case, until deemed advisable in the good faith judgment of the Company, and for a period of no longer than 90 days after the Company makes such good faith determination (such period, a “Blackout Period”); provided, the Company shall not have the right to initiate a Blackout Period more than two times in any 365-day period.  In the event of an Information Blackout under clause (i) of the definition thereof, the Company shall deliver to the Holders requesting registration a certificate signed by either the chief executive officer or the chief financial officer of the Company certifying that, in the good faith judgment of the board of directors of the Company, the conditions described in clause (i) of the definition of Information Blackout are met.  Such certificate shall contain an approximation of the anticipated delay.

 

(b)                                 Any delivery by the Company of notice of an Information Blackout during the 45 days immediately following effectiveness of any registration statement effected pursuant to Section 4.1(a) shall give the Holders the right, by written notice to the Company within 20 Business Days after the end of such Blackout Period, to cancel such registration.

 

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(c)                                  If one or more Information Blackouts should occur, then the termination of the rights and obligations of the Parties pursuant to Section 4.11 shall be extended by an aggregate number of days equal to the total number of days in the Blackout Period(s).

 

Section 4.7.                                 Rule 144.  With a view to making available to the Holders of Registrable Securities the benefits of Rule 144 under the Securities Act, the Company shall use best commercial efforts to (a) timely file the reports required to be filed by it under the Exchange Act or the Securities Act and the rules adopted by the SEC thereunder (including the reports under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144), and (b) take such further action as any Holder may reasonably request and make available information necessary to comply with Rule 144, all to the extent required from time to time to enable the Holders to sell Registrable Securities without registration under the Securities Act within the limitations of the exemption provided by Rule 144.  Upon the written request of Holders, the Company will promptly deliver a written statement as to whether it has complied with the filing requirements under Rule 144(c)(1) or any successor thereto and will cooperate in all reasonable respects with the Holders (including facilitating the delivery of customary opinions of counsel) to remove any restrictive legends contained on any certificates (other than those required by applicable Law) so as to facilitate a sale by the Holders of such shares under Rule 144.

 

Section 4.8.                                 Preparation; Reasonable Investigation; Information.

 

(a)                                 In connection with the preparation and filing of each registration statement registering Registrable Securities under the Securities Act, (i) the Company will give the Holders and underwriters, if any, and their respective counsel and accountants, drafts of such registration statement for their review and comment prior to filing, (ii) during normal business hours and subject to such reasonable limitations as the Company may impose to prevent disruption of its business, the Company will provide the underwriters, its counsel and accountants, as well as counsel and accountants to Holders (the “Inspectors”), reasonable and customary access to the Company’s books and records, including, if reasonably requested, all relevant financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”) and cause appropriate officers, managers and employees of the Company to supply all information reasonably requested by any such Inspector as shall be necessary, in the reasonable opinion of such underwriters, its counsel and Holder’s counsel, to conduct a reasonable investigation within the meaning of the Securities Act; provided, however, the Company shall not be required to provide any information if (A) the Company believes, after consultation with counsel for the Company, that to do so would cause the Company to forfeit any attorney-client privilege that was applicable to such information or (B) either (1) the Company has requested and been granted from the SEC confidential treatment of such information contained in any filing with the SEC or documents provided supplementally or otherwise or (2) the Company reasonably determines in good faith that such Records are confidential and so notifies the Inspectors in writing; unless prior to furnishing any such information with respect to clause (1) or (2) such Holder requesting such information enters into, and causes each of its Inspectors to enter into, a confidentiality agreement on terms and conditions reasonably acceptable to the Company; provided, further, that each Holder agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction or by another governmental authority, give notice to the Company and allow the Company, at its expense, to undertake appropriate action seeking to prevent disclosure of the Records deemed confidential, and (iii) without limiting the generality of Section 4.8(b), as a condition precedent to including any Registrable Securities in any such registration, the Company may require each Holder and each underwriter, if any, to furnish the Company in writing such information regarding such Holder or underwriter and the distribution of such Registrable Securities as the Company may from time to time reasonably request in writing or as shall be required by applicable Law or the SEC in connection with any registration.

 

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(b)                                 Not less than five Business Days before the expected filing date of each registration statement pursuant to this Agreement, the Company shall notify each Holder of Registrable Securities who has timely provided the requisite notice hereunder entitling such Holder to register Registrable Securities in such registration statement of the information, documents and instruments from such Holder that the Company or any underwriter reasonably requests in connection with such registration statement, including a questionnaire, custody agreement, power of attorney, lock-up letter and underwriting agreement (the “Requested Information”).  If the Company has not received, on or before the second Business Day before the expected filing date, the Requested Information from such Holder, the Company may file the registration statement without including Registrable Securities of such Holder.  The failure to so include in any registration statement the Registrable Securities of a Holder of Registrable Securities (with regard to that registration statement) shall not result in any liability on the part of the Company to such Holder.

 

Section 4.9.                                 Indemnification and Contribution.

 

(a)                                 In the case of each offering of Registrable Securities made pursuant to this Agreement, the Company shall, to the extent permitted by applicable Law, indemnify and hold harmless each Holder and its Affiliates and their respective officers, directors, members and shareholders, each Person, if any, who controls (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) such Holder or such other indemnified Person and the officers, directors, members and shareholders of each such controlling Person (collectively, “Holders Indemnitees”), from and against any and all claims, liabilities, losses, damages, judgments, fines, penalties, charges, amounts paid in settlement, expenses of investigation and reasonable and documented attorneys’ fees and expenses (“Losses”), as incurred, arising out, caused by, resulting from or based upon any untrue statement or alleged untrue statement of a material fact contained in the registration statement (or in any preliminary prospectus, Free Writing Prospectus or final prospectus included therein) relating to the offering and sale of such Registrable Securities, or any amendment thereof or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus only, in light of the circumstances under which they were made) not misleading; provided, that the Company shall not be liable to any Holders Indemnitee in any such case to the extent that any Losses arises out of, or is based upon, any information furnished to the Company in writing by or on behalf of Holders specifically for use in the preparation of the registration statement (or in any preliminary or final prospectus included therein), or any amendment thereof or supplement thereto or due to such furnished information having an omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading.

 

(b)                                 In the case of each offering of Registrable Securities made pursuant to this Agreement in which a Holder is participating, Holders shall, jointly and severally, indemnify and hold harmless the Company and its Affiliates and their respective officers, directors, members and shareholders and each Person, if any, who controls (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) the Company and such other indemnified Persons and the officers, directors, members and shareholders of each such controlling Person (collectively, the “Company Indemnitees”), from and against any and all Losses arising out of or based upon, any information contained in the registration statement (or in any preliminary prospectus, Free Writing Prospectus or final prospectus included therein) relating to the offering and sale of such Registrable Securities or any amendment thereof or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the

 

26


 

case of a prospectus only, in light of the circumstances under which they were made) not misleading, but in each case only to the extent that such untrue statement is contained in, or such fact is omitted from, information furnished in writing to the Company by or on behalf of Holders specifically for use in the preparation of such registration statement (or in any preliminary or final prospectus included therein).  The aggregate liability of the Holders under this Section 4.9(b) shall not exceed the total net proceeds received by all such Holders from such offering giving rise to such liability.

 

(c)                                  In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section 4.9, such Person (the “indemnified party”) shall promptly notify the Person against whom such indemnity may be sought (the “indemnifying party”) in writing; provided, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations provided for in Section 4.9(a) or (b), except to the extent that the indemnifying party is actually prejudiced by such failure to give notice.  In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel of its choosing and shall pay as incurred the reasonable fees and disbursements of such counsel related to such proceeding.  In any such proceeding, any indemnified party shall have the right to retain its own counsel at its own expense.  Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of one specified counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel, in the written opinion of such counsel, would be inappropriate due to actual or potential differing interests between them.  It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm for all such indemnified parties.  The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent but if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such judgment.  No indemnifying party will consent to entry of any judgment or enter into any settlement which (A) does not include as an unconditional term the giving by the claimant or plaintiff, to the indemnified party, of a release from all liability in respect of such claim or litigation or (B) involves the imposition of equitable remedies or the imposition of any non-financial obligations on the indemnified party.

 

(d)                                 If the indemnification provided for in this Section 4.9 is held by a court of competent jurisdiction to be unavailable in respect of any Losses (or actions or proceedings in respect thereof) referred to herein, then each indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by the indemnified party as a result of such Losses (or actions or proceedings in respect thereof) in proportion as is appropriate to reflect the relative fault of all parties in connection with the statements or omissions which resulted in such Losses (or actions or proceedings in respect thereof), as well as any other relevant equitable considerations.  The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

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The Parties agree that it would not be just and equitable if contributions pursuant to this Section 4.9(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 4.9(d).  The amount paid or payable by an indemnified party as a result of the Losses (or actions or proceedings in respect thereof) referred to above shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this Section 4.9(d), no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation and no indemnifying party shall be required to contribute any amount in excess of the amount by which the total price at which the securities were offered to the public by the indemnifying party exceeds the amount of any damages which the indemnifying party has otherwise been required to pay by reason of an untrue statement or omission.

 

(e)                                  The indemnity provided for hereunder shall not inure to the benefit of any indemnified party to the extent that such indemnified party failed to comply with the applicable prospectus delivery requirements of the Securities Act as then applicable to the Person asserting the Loss for which indemnity is sought.  The indemnification provided for under this Agreement shall survive the transfer of the Registrable Securities (but shall not inure to the benefit of any transferee, other than a Holder) and the termination of this Agreement.

 

Section 4.10.                          Expenses.  In connection with any registration under this Agreement, the Company shall pay all Registration Expenses, regardless of whether the registration becomes effective.  Holders shall be responsible for all other expenses incurred in connection with such registration, including any underwriting discounts, selling commissions, brokerage fees and stock transfer taxes attributable to the sale of Registrable Securities by the Holders, or the fees and expenses of counsel (other than any such fees and expenses that are included in Registration Expenses) and any other advisors engaged by the Holders.

 

Section 4.11.                          Termination of Registration Rights.  After the Closing Date, the rights and obligations of the Parties set forth in (a) this Article IV shall automatically terminate on the earlier to occur of (i) the date that the Holders cease to hold any Registrable Securities and (ii) a Rights Termination Transaction, and (b) Section 4.2 shall automatically terminate once the aggregate Net Proceeds from all sales of the Tranche A Shares during the applicable Time Period (whether or not identified or arranged by the Company) exceeds the Hurdle for the applicable Time Period; provided, however, that the provisions set forth in Section 4.9 shall survive any such termination.

 

ARTICLE V
MISCELLANEOUS 

 

Section 5.1.                                 Merger or Consolidation.  In the event the Company engages in a merger, restructuring, reorganization or consolidation in which the shares of Common Stock are converted into securities of another entity, appropriate arrangements will be made so that the rights provided under this Agreement continue to be provided to Holders by such successor entity, except in the event of a Rights Termination Transaction.

 

Section 5.2.                                 Expenses.  Each of the Parties shall bear its own expenses with respect to the transactions contemplated by this Agreement, the Settlement Agreement and the Merger Agreement; provided, that the Parties agree that the Company shall pay all reasonable expenses of Nantucket (including the reasonable fees, disbursements and expenses payable to consultants, accountants and counsel) incurred in connection with such transactions not to exceed $250,000 in the aggregate, which such expenses may be paid, at the Company’s option, either in cash or the issuance of additional shares of Voting Common Stock (with each share valued at $0.925 per share) equal to the dollar amount of such expenses (which such shares shall be deemed Tranche C Shares for purposes of this Agreement); provided, further, that, if the arithmetic average of the volume weighted average price for Voting

 

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Common Stock during the ten consecutive trading day period prior to the Rights Effective Date (the “Expense Calculation VWAP”) is lower than $0.925 per share, then an amount equal to (a) $250,000, minus (b) the product of (i) the Expense Calculation VWAP multiplied by (ii) the number of additional shares so issued pursuant the immediately preceding proviso, shall be deemed added to the Base Period 1 Amount (with proportionate increases also being added to the Base Period 2 Amount, the Base Period 3 Amount, the Base Period 4 Amount and the Base Period 5 Amount).

 

Section 5.3.                                 Notices.  All notices, requests, demands, claims and other communications under this Agreement shall be in writing and shall be deemed duly given (a) when delivered personally to the recipient, (b) one Business Day after being sent to the recipient by overnight delivery via a reputable courier service (charges prepaid), (c) when sent if sent to the recipient by facsimile transmission (provided that the sender receives confirmation of receipt), (d) four Business Days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid and (e) when sent if sent by email (but only if such notice, request, demand, claim or other communication is also concurrently provided or sent using one of the methods specified in clauses (a) through (d) above), and, in each case, addressed to the intended recipient as set forth below:

 

 

if to Holders, to:

 

 

 

Nantucket Investments Limited

 

Regency Court

 

Glategny Esplanade

 

St. Peter Port

 

Guernsey GY1 1WW

 

Attention: Mark Woodall

 

Telephone: +44 1481 723450

 

Facsimile: +44 1481 716868

 

 

 

with a copy to:

 

 

 

Klee, Tuchin, Bogdanoff & Stern LLP

 

1999 Avenue of the Stars

 

39th Floor

 

Los Angeles, CA 90067

 

Attention: Lee Bogdanoff / Justin Yi

 

Telephone: (310) 407-4000

 

Facsimile: (310) 407-9090

 

 

 

if to the Company, to:

 

 

 

Jaguar Animal Health, Inc.

 

201 Mission Street, Suite 2375

 

San Francisco, CA 94105

 

Attention: Lisa A. Conte, President and CEO

 

Telephone: (415) 371-8300

 

Facsimile: (415) 371-8311

 

 

 

with a copy to:

 

 

 

Reed Smith LLP

 

101 Second Street, Suite 1800

 

San Francisco, CA 94105

 

Attention: Donald Reinke

 

Telephone: (415) 659-5989

 

Facsimile: (415) 391-8269

 

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Section 5.4.                                 Entire Agreement; Third Party Beneficiaries; Amendment; Waiver.  This Agreement (together with the several agreements and other documents and instruments referred to herein (including the Merger Agreement and the Settlement Agreement)) (a) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter hereof and (b) other than as provided in Section 4.9, is not intended to confer any rights, benefits, remedies, obligations or liabilities upon any Person other than the Parties and their respective successors and assigns.  This Agreement may not be amended, modified or supplemented, except by an instrument in writing signed on behalf of each of the Parties.  Any agreement on the part of a Party to any waiver of any obligation of the other Parties shall be valid only if set forth in an instrument in writing signed on behalf of such waiving Party.  The failure of any Party to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights, nor shall any single or partial exercise by any Party of any of its rights under this Agreement preclude any other or further exercise of such rights or any other rights under this Agreement.  The Parties hereto are sophisticated and have been represented by attorneys throughout the transactions contemplated hereby who have carefully negotiated the provisions hereof.  As a consequence, the Parties do not intend that the presumptions of laws or rules relating to the interpretation of contracts against the drafter of any particular clause should be applied to this Agreement or any agreement or instrument executed in connection herewith, and therefore waive their effects.

 

Section 5.5.                                 Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated, so long as the economic and legal substance of the transactions contemplated hereby, taken as a whole, are not affected in a manner materially adverse to any Party.  Upon any such determination, the Parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties as closely as possible and to the end that the transactions contemplated hereby shall be fulfilled to the maximum extent possible.

 

Section 5.6.                                 Applicable Law.  This Agreement shall be governed and construed in accordance with the Laws of the State of Delaware without giving effect to the principles of conflicts of law thereof or of any other jurisdiction.

 

Section 5.7.                                 Enforcement; Exclusive Jurisdiction.  The Parties agree that irreparable damage would occur and that the Parties would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in the state courts of the State of New York or, if under applicable Law exclusive jurisdiction over such matter is vested in the federal courts, any federal court located in the State of New York without proof of actual damages or otherwise, this being in addition to any other remedy to which they are entitled at law or in equity.  Each Party agrees not to oppose the granting of such relief in the event a court determines that such a breach has occurred, and to waive any requirement for the securing or posting of any bond in connection with such remedy. In addition, each of the Parties hereto (a) consents to submit itself, and hereby submits itself, to the personal jurisdiction of the state courts of the State of New York and any federal court located in the State of New York, in the event any dispute arises out of this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and agrees not to plead or claim any objection to the laying of venue in any such court or that any judicial proceeding in any such court has been brought in an inconvenient forum, (c) agrees that it will not bring any action relating to this Agreement in any court other than the state courts of the State of New York or, if under applicable Law exclusive jurisdiction is vested in the federal courts, any federal court located in the State of New York and (d) consents to service of process being made through the notice procedures set forth in Section 5.3.

 

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Section 5.8.                                 WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT.

 

Section 5.9.                                 Counterparts.  This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the Parties and delivered to the other Parties (including by facsimile or via portable document format (.pdf)), it being understood that all Parties need not sign the same counterpart.

 

Section 5.10.                          Successors And Assigns.  Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any Party (whether by operation of law or otherwise) without the prior written consent of the other Party, and any such assignment without such consent shall be null and void; provided, however, that Nantucket may assign its rights and obligations under this Agreement in whole or in part to any Permitted Transferee.  Subject to the foregoing, this Agreement will inure to the benefit of and be binding on the Parties and their respective successors and permitted assigns.

 

Section 5.11.                          Effective Date.  This Agreement shall be effective as of the Closing Date, and if the Merger Agreement is terminated in accordance with its terms, then this Agreement shall terminate and be null and void ab initio; provided, however, that Section 3.1 and this Article V shall be effective as of the date hereof.

 

[The remainder of this page is intentionally left blank.]

 

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

 

 

 

JAGUAR ANIMAL HEALTH, INC.

 

 

 

 

 

By:

/s/ Lisa A. Conte

 

Name:

Lisa A. Conte

 

Title:

Chief Executive Officer

 


 

 

NANTUCKET INVESTMENTS LIMITED

 

 

 

 

 

By:

/s/ Mark Woodall

 

Name:

Mark Woodall

 

Title:

Director

 



Exhibit 99.1

 

 

 

Jaguar Animal Health and Napo Pharmaceuticals Enter Definitive Merger Agreement

 

Merger Will Provide an Important Revenue Stream to Jaguar from Mytesi, an FDA Approved Napo Anti-Diarrheal Launched October 2016 Offering a First-in-Class, Novel Mechanism of Action Highly Conserved Across All Mammals

 

San Francisco, CA (March 31, 2017) - Napo Pharmaceuticals, Inc. (“Napo”), a human health company developing and commercializing novel gastro-intestinal prescription products from plants used traditionally in rainforest areas,  and Jaguar Animal Health, Inc. (NASDAQ: JAGX) (“Jaguar”), an animal health company focused on developing and commercializing first-in-class gastrointestinal products for companion and production animals, foals, and high value horses, announced today that they have entered into a definitive merger agreement (the “Agreement”) by unanimous approval by the boards of directors of both companies.

 

Under the terms of the Agreement, Jaguar’s stockholders and option and warrant holders calculated on a fully diluted basis as of today (excluding approximately 365,437 shares issuable under securities convertible at $5.00 or more per share) will hold approximately 25% of the total outstanding fully diluted equity of Jaguar.  Conversely, the balance of the outstanding fully diluted equity of Jaguar will be held by existing Napo creditors, RSU, option and warrant holders together with new convertible debt and equity investors upon consummation of the merger. As indicated on February 9, 2017, the financial terms of the merger include an approximate 3-to-1 Napo-to-Jaguar value ratio to calculate relative ownership of the combined entity.

 

Holders of Napo common stock immediately prior to the merger (the “Napo Stockholders”) will receive contingent rights to receive, upon the satisfaction of certain conditions as described more fully below, up to 21.5% of Jaguar’s shares calculated on a fully-diluted basis (the “Escrow Shares”), which such shares will be held in an escrow account upon the closing. Assuming a specified cash return (a “Hurdle Amount”) is achieved from the subsequent resale of certain shares of common stock issued by Jaguar to one of Napo’s existing secured creditors in connection with the merger (the “Tranche A Shares”), as described further below, the Napo Holders will be entitled to receive their pro rata share of the Escrow Shares following the release of the Escrow Shares from escrow. In addition, if such Hurdle Amount is achieved before all of such Tranche A Shares are sold, then 50% of the remaining unsold Tranche A Shares will be distributed pro rata among the Napo Stockholders and RSU holders.   The proposed merger remains subject to customary conditions to closing, including but not limited to regulatory approvals inclusive of the effectiveness of the S-4 Registration Statement, debt limitations of Napo, absence of any material adverse change in the business, results of operations or condition (financial or otherwise)  of either party and stockholder approval from each party.  As of January 31, 2017, Napo owned approximately 19% of Jaguar’s outstanding shares of common stock.

 


 

Napo’s proprietary, patented gastrointestinal compound, crofelemer, is a first-in-class anti-secretory agent sustainably harvested from the rainforest. The merger of the two companies will provide Jaguar with an important prescription revenue stream from sales of Mytesi™ (crofelemer 125mg delayed-release tablets), a Napo prescription product formerly known as Fulyzaq. Mytesi™ is a human drug approved by the U.S. FDA for the symptomatic relief of noninfectious diarrhea in adults with HIV/AIDS on antiretroviral therapy. Napo launched Mytesi™ in October 2016. Napo and Jaguar estimate the potential U.S. market for Mytesi™ to be approximately $100 million in gross annual sales. Napo is deploying a direct sales effort in the field to promote Mytesi™ to HIV prescribers in the second quarter of 2017, with both live representatives and telesales. As a result, Napo and Jaguar forecast that Mytesi™ will generate approximately $7.0 million in net sales in 2017, with the greatest impact on prescription growth coincident with the deployment of the sales force and a sampling program.

 

The product candidates in the pipelines of both companies target a mechanism of action highly conserved across all mammals, and benefit from the chronic safety profile that supports Mytesi™.

 

“Upon the consummation of the merger, as stated previously, we believe Jaguar and Napo together will be poised to realize a number of synergistic, value-adding benefits—most importantly a prescription product revenue stream—and an expanded pipeline of important follow-on indications for Mytesi™ upon which to forge global partnerships,” commented Lisa Conte, Jaguar’s President and CEO and Napo’s interim CEO. “The board members of both Jaguar and Napo are confident that this merger will enable both companies, through a joint management team, to benefit from the economies of scale of combined manufacturing for various human and animal indications and enhance potential value creation.”

 

Napo holds global unencumbered rights to key indications for Mytesi™, and is seeking geographical collaborations to develop and commercialize Mytesi™ worldwide. Napo is continuing development of Mytesi™ for other antidiarrheal indications, with investigational studies completed in irritable bowel syndrome, cholera, traveler’s diarrhea, and in pediatric patients, and two planned investigator-initiated trials of the product in breast cancer patients suffering from chemotherapy-induced diarrhea (CID). Napo is also evaluating an orphan indication around congenital diarrhea disease, such as congenital tufting enteropathy, an intractable form of chronic diarrhea of infancy leading to significant mortality. This rare disease has a higher incidence in Middle Eastern families.1

 

Crofelemer is also the active pharmaceutical ingredient in Canalevia™, Jaguar’s lead prescription drug product candidate for companion animals, which is being evaluated for treatment of acute diarrhea and CID in dogs and is the subject of a recently forged collaboration with Elanco US Inc. Diarrhea is one of the most common reasons for veterinary office visits for dogs, and according to the American Veterinary Medical Association, there were approximately 70 million dogs in the U.S. in 2012.

 

In conjunction with the proposed merger, Napo entered into a settlement and discounted payoff agreement with one of its existing secured creditors. As a discounted payoff and complete settlement and satisfaction of certain loans previously made by such lenders to Napo under a litigation financing agreement, Napo has agreed, upon consummation of the merger, to (i) pay such creditor the amount of $8 million in cash and (ii) pay in kind certain shares of Jaguar voting and non-voting common stock, including certain shares of Jaguar non-voting common stock comprising the Escrow Shares to be held pursuant to an escrow agreement. Assuming the Hurdle is achieved from the subsequent resale of the Tranche A Shares within a certain time period , all or a portion of the Escrow Shares will be released from escrow to the Napo Stockholders.

 


 

Additional Description of the Proposed Merger

 

The proposed merger has been unanimously approved by the boards of directors of both companies. Subject to the conditions to closing outlined above, the proposed merger is expected to close during the second quarter of 2017. The merger agreement contains further details with respect to the proposed merger. If the merger is consummated, Jaguar’s name will be changed to Jaguar Health, Inc., and Napo will operate as a wholly-owned subsidiary of Jaguar, focused on human health.

 

The directors and executive officers of Napo will resign from their positions with Napo upon the closing of the proposed merger and the combined company will be under the leadership of Jaguar’s current executive management team. Following the closing of the proposed merger, the board of directors of the combined company is expected to consist of the seven existing members of the Jaguar board.

 

Additionally, the financial terms of the merger and conditions to closing include provisions that without Jaguar’s consent or waiver (i) Napo’s secured convertible debt shall not exceed $11.3 million and its trade payables and certain other debt shall not exceed $6.2 million, (ii) a third party will invest $3.0 million in Jaguar for approximately 3.2 million shares of newly issued common stock of Jaguar with the investment proceeds loaned to Napo immediately prior to consummation of the merger and (iii) Napo’s cash at closing shall be no less than $500,000. Jaguar and Napo believe these debt and investment conditions will provide the combined entity with a stronger capital structure.

 

Reed Smith LLP and Stifel Nicolaus & Company, Incorporated are serving as Jaguar’s legal and financial advisors, respectively, in connection with the transaction, and Boies Schiller Flexner is serving as Napo’s legal advisor.

 

About Crofelemer

 

Napo’s proprietary, patented gastrointestinal compound, crofelemer, is a first-in-class anti-secretory agent isolated and purified from Croton lechleri, a medicinal plant sustainably harvested under fair-trade working conditions in several South American countries. Crofelemer (trade name Mytesi™) was approved in 2012 and is indicated for the symptomatic relief of noninfectious diarrhea in adult patients with HIV/AIDS on antiretroviral therapy. Crofelemer is in various stages of clinical development by Napo for the following indications:

 

·                  Crofelemer for diarrhea predominant irritable bowel syndrome (IBS-D), Phase 2,

·                  Crofelemer for acute infectious diarrhea, including cholera, Phase 2,

·                  Crofelemer for pediatric diarrhea, Phase 1, and

·                  Crofelemer for chemotherapy-induced diarrhea, Phase 2.

 

About Mytesi™

 

Mytesi™ (crofelemer 125mg delayed-release tablets) is an antidiarrheal indicated for the symptomatic relief of noninfectious diarrhea in adult patients with HIV/AIDS on antiretroviral therapy (ART). Mytesi™ is not indicated for the treatment of infectious diarrhea. Rule out infectious etiologies of diarrhea before starting Mytesi™. If infectious etiologies are not considered, there is a risk that patients with infectious etiologies will not receive the appropriate therapy and their disease may worsen. In clinical studies, the most common adverse reactions occurring at a rate greater than placebo were upper respiratory tract infection (5.7%), bronchitis (3.9%), cough (3.5%), flatulence (3.1%), and increased bilirubin (3.1%). Please see complete Prescribing Information available at Mytesi.com

 


 

About Napo Pharmaceuticals, Inc.

 

San Francisco-based Napo Pharmaceuticals, Inc. focuses on the development and commercialization of proprietary pharmaceuticals for the global marketplace in collaboration with local partners.

 

For more information, please visit www.napopharma.com.

 

About Jaguar Animal Health, Inc.

 

Jaguar Animal Health, Inc. is an animal health company focused on developing and commercializing first-in-class gastrointestinal products for companion and production animals, foals, and high value horses. Canalevia™ is Jaguar’s lead prescription drug product candidate, intended for the treatment of various forms of diarrhea in dogs. Equilevia™ (formerly referred to as SB-300) is Jaguar’s prescription drug product candidate for the treatment of gastrointestinal ulcers in horses. Canalevia™ and Equilevia™ contain ingredients isolated and purified from the Croton lechleri tree, which is sustainably harvested. Neonorm™ Calf and Neonorm™ Foal are the Company’s lead non-prescription products. Neonorm™ is a standardized botanical extract derived from the Croton lechleri tree. Canalevia™ and Neonorm™ are distinct products that act at the same last step in a physiological pathway generally present in mammals. Jaguar has nine active investigational new animal drug applications, or INADs, filed with the FDA and intends to develop species-specific formulations of Neonorm™ in six additional target species, formulations of Equilevia™ in horses, and Canalevia™ for cats and dogs.

 

For more information, please visit www.jaguaranimalhealth.com.

 

Important Additional Information will be filed with the SEC

 

This press release may be deemed solicitation material regarding the intended merger between Jaguar and Napo. Jaguar currently intends to file with the SEC a Registration Statement on Form S-4 that will include a proxy solicitation. Jaguar also plans to file other relevant materials with the SEC. Stockholders of Jaguar and Napo are urged to read the proxy solicitation/prospectus contained in the Registration Statement when it becomes available and any other relevant materials filed with the SEC because these materials will contain important information about the potential merger. Once available, these materials will be made available to the stockholders of Jaguar and Napo at no expense to them. The Registration Statement, proxy statement/prospectus and other relevant materials, including any documents incorporated by reference therein, once available, may be obtained free of charge at the SEC’s website at www.sec.gov or from Jaguar at www.jaguaranimalhealth.com or by emailing grussell@kcsa.com.

 

Jaguar and certain of its directors and executive officers may be deemed to be participants in the solicitation of proxies in connection with the potential merger. Information about the executive officers and directors of Jaguar is set forth in Jaguar’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 as filed with the SEC on February 15, 2017 and Definitive Proxy Statement for the 2016 Annual Meeting of Stockholders of Jaguar filed with the SEC on April 29, 2016.

 


 

Notice as to Unregistered Securities

 

In connection with the intended merger, shares of common stock and other securities of Jaguar have been and will be offered to accredited institutional and individual investors pursuant to one or more exemptions from registration under the Securities Act of 1933, as amended (the “Securities Act”). These securities have not been registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the U.S. absent registration or an applicable exemption from registration requirements.

 

Forward-Looking Statements

 

Certain statements in this press release constitute “forward-looking statements” within the meaning of section 27A of the Securities Act and section 21E of the Securities Exchange Act of 1934, as amended. These include statements regarding the structure, timing and completion of the proposed merger or Napo debt settlement, expectations regarding the capitalization, resources and ownership structure of the combined company, the combined company’s ability to benefit from economies of scale, access efficiencies, and enhance potential value creation, the expectation that the merger conditions to closing will be satisfied including the receipt by Jaguar of a $3.0 million third party investment, the belief that the combined entity will have a stronger capital structure, Jaguar’s plan to develop formulations of Equilevia™ in horses and species-specific formulations of Neonorm™ in additional target species, and Jaguar’s plan to develop formulations of Canalevia™ for cats and dogs. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “aim,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “forecast,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this release are only predictions. Jaguar has based these forward-looking statements largely on its current expectations and projections about future events. These forward-looking statements speak only as of the date of this release and are subject to a number of risks, uncertainties and assumptions, some of which cannot be predicted or quantified and some of which are beyond Jaguar’s control. Except as required by applicable law, Jaguar does not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

 

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1W Tang et al. Novel Mutations in EPCAM Cause Congenital Tufting Enteropathy. Journal of Clinical Gastroenterology. 2016 Nov 21.

 

Source: Jaguar Animal Health, Inc.

 

Contact:

Garth Russell

KCSA Strategic Communications

P: 212-896-1250

grussell@kcsa.com

 

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