Exhibit (d)(4)
STOCK AWARD AGREEMENT
STOCK AWARD AGREEMENT (this "Agreement"), effective as of the date of
grant specified on Annex A-1 hereto ("Date of Grant"), between Organic, Inc.
(the "Company") and Grantee identified on Annex A-1 hereto.
RECITALS
A. The Company has adopted an Equity Incentive Program (as the same may be
hereafter amended, the "Program"). (Capitalized terms used but not otherwise
defined herein (including Annex A-1 hereto) will have the respective meanings
ascribed to them in the Program.)
B. Pursuant to the Program, the Board has authorized the grant to Grantee
of the Stock Award set forth on Annex A-1 hereto on the terms and subject to the
conditions set forth herein, therein and in the Program.
NOW, THEREFORE, the Company and Grantee hereby agree as follows:
1. Grant of Stock Award. Subject to and upon the terms, conditions and
restrictions set forth in this Agreement and in the Program, the Company hereby
grants to Grantee as of the Date of Grant the Stock Award described on Annex A-1
hereto. Grantee hereby expressly acknowledges and agrees that (a) the Stock
Award evidenced hereby is subject to the limitations of the Program and the
Certificate, including without limitation amendment provisions and restrictions
on Grantee's rights, legends on Common Shares issuable pursuant to any Stock
Award and other provisions which could adversely affect the value of the Stock
Award to Grantee or any permitted transferee, (b) there is no assurance that the
Common Shares or the Stock Award will have any value to Grantee or any permitted
transferee, and (c) Grantee has reviewed, understands and has agreed to the
Program, a copy of which as in effect on the Date of Grant has been furnished to
Grantee.
2. Restrictions on Transfer of Stock Award; Consent of Spouse. (a) The
Stock Award and the Common Shares issuable thereunder may not be transferred,
sold, assigned, pledged or hypothecated by Grantee, whether by operation of law
or otherwise, or be made subject to execution, attachment or similar process;
provided, however, that, subject to the terms of the Program, the vested Common
Shares issued pursuant to the Stock Award may be transferred at any time upon
Grantee's death by will or the laws of descent and distribution. No transfer
permitted under this Section 2 will be effective until notice of such transfer
is delivered to the Company describing the terms and conditions of the transfer,
and the Company determines that the transfer complies with the terms of the
Program and this Agreement and with any terms and conditions made applicable to
the transfer by the Company or Board at the time of the transfer. Any transferee
under this Section 2 will be subject to the same terms and conditions hereunder
as would apply to Grantee and to such other terms and conditions made applicable
to the transferee pursuant to this Agreement or by the Board or the
Company. Any purported transfer that does not comply with the requirements of
this Section 2, including without limitation any purported transfer pursuant to
a domestic relations order or agreement, will be void and unenforceable and the
purported transferee will not obtain any rights to or interest in the Stock
Award or Common Shares issued or issuable thereunder.
(b) Grantee acknowledges that the Stock Award or Common Shares
issuable thereunder have not been and will not be registered in accordance with
the Securities Act or applicable state blue sky laws, and that the Stock Award
or Common Shares issuable thereunder may not be sold or transferred and must be
held indefinitely, unless it is subsequently registered under the Securities Act
or an exemption from registration is available. Grantee understands and
acknowledges that the Company is under no obligation to register the Stock Award
or Common Shares issuable thereunder or to supply or file any information or
take any other action which would facilitate sales of the Stock Award or Common
Shares issuable thereunder.
(c) Grantee represents and warrants to the Company that Grantee's
spouse, if any, has duly executed and delivered the Consent of Spouse attached
hereto and agrees that Grantee's rights hereunder will be, without further
action, suspended for any period (and thereby lost during the period of such
suspension) in which (1) Grantee's spouse asserts on his or her own behalf any
rights in respect of a Stock Award or portion thereof or (2) Grantee is married
to a person who has not duly executed a Consent of Spouse in the form attached
hereto.
(d) Grantee will execute and perform any market stand-off or similar
agreement in connection with any Listing or any underwritten offering of Common
Shares; provided that (i) the holder of the greatest number of Common Shares
then held by a single Person (the "Largest Shareholder") is subject to a similar
agreement and that the terms thereof are no less onerous than the terms to which
the Largest Shareholder is subject and (ii) if the transaction involves an
underwriting, the agreement was requested by the managing underwriter(s).
(e) In the event that at any time the Largest Shareholder proposes
to sell all or substantially all of the Common Shares beneficially owned (as the
term is defined in Rule 13d-3 under the Exchange Act) by it to one or more third
parties (a "Proposed Purchaser") in a single transaction or a series of related
transactions (a "Company Sale"), it will have the right to require that Grantee
sell to the Proposed Purchaser all or a portion of the Common Shares held by
Grantee that have vested or would, immediately following the consummation of the
Company Sale, vest by giving written notice thereto to Grantee no later than ten
calendar days prior to the closing of the Company Sale. Such sale of Grantee's
Common Shares will be at the same price and on the same terms and conditions as
the Company Sale. Grantee hereby agrees to such drag-along rights and agrees to
do all things necessary to effect such a sale. Such drag-along rights, to the
extent not exercised prior thereto, will lapse upon the occurrence of a Listing.
Nothing in this Section 2(e) will limit the ability of Grantee to exercise
Grantee's rights under Section 5 prior to the consummation of the Company Sale.
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(f) The Person that is the Largest Shareholder from time to time is
an intended third-party beneficiary of Grantee's covenants in Sections 2(d) and
2(e) hereof and may directly enforce such covenants as if it were a party
hereto.
3. Vesting of Stock Award. Subject to the provisions of this Section 3 and
Section 4 below, the Stock Award will become nonforfeitable if and to the extent
and, if applicable, on the terms set forth in the Vesting Schedule on Annex A-1
hereto.
4. Forfeiture of Stock Award; Repurchase Rights. In the event a Grantee's
Continuous Service terminates for any reason, any Common Shares issued pursuant
to the Stock Award that have not vested on the date of termination will be
forfeited on such date, except as the Board may determine in its sole
discretion. In the event of a forfeiture, the certificate(s) representing a
Stock Award or Common Shares issuable thereunder will be canceled if previously
issued to Grantee. The vested Common Shares issued pursuant to the Stock Award
will be subject to repurchase by the Company (the "Repurchase Right") and
Grantee will have the right to put the vested Common Shares issued pursuant to
the Stock Award to the Company (the "Grantee Put"), in each case in accordance
with, and on the terms and conditions set forth in, Annex A-1. Notwithstanding
any other provision of the Program, this Agreement or any other contract or
legal doctrine, the Repurchase Right and, if applicable, the Grantee Put will
not be affected by the circumstances in which Grantee's employment is
terminated, regardless of whether such termination constituted or is alleged to
have constituted a breach of contract, a tort or a violation of law.
5. Dividend and Certain Other Rights. (a) Grantee will have the right to
receive Dividends on the terms and subject to the limitations of the Program.
Any additional Common Shares or other securities that Grantee may become
entitled to receive on any such Common Shares pursuant to a stock dividend,
stock split, combination of shares, recapitalization, merger, consolidation,
separation or reorganization or any other change in the capital structure of the
Company will be subject to the same restrictions as the underlying Common
Shares.
(b) In connection with a Liquidity Transaction Grantee will have the
rights in respect of the Common Shares as set forth in Annex A-1. Attached as
Annex A-2 is a chart summarizing the operation of certain provisions of this
Agreement and the Program in the event of certain transactions. Such chart has
been prepared for convenience of reference. However, in the event of any
inconsistency between Annex A-2 and any provision of the Program or the
Agreement (including Annex A-1 hereto), the Program or the Agreement (including
Annex A-1 hereto) will prevail.
(c) Grantee understands and agrees that the rights attaching to or
arising in respect of the Common Shares to which his or her grant relates are
severely limited and in all events are limited to the rights set forth in the
Program and do not include rights normally attendant to ownership of common
stock such as, solely by way of example, the right to vote, to inspect books and
records, to assert dissenters' rights or to make claims for alleged breaches of
the duty of care or loyalty. Grantee will, however, have the right to enforce
the terms hereof in the manner set forth in Section 16 hereof.
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(d) For the avoidance of doubt, (i) Grantee will not be entitled to
payment of dividends or other distributions or to receive any other
consideration in the event of a Merger, Liquidity Transaction or other event
("Conversion Event") in respect of Common Shares subject to a Stock Award that
have not vested as of or prior to the relevant date of determination (the
"Determination Date"), giving effect to any accelerated vesting contemplated by
this Agreement, (ii) in the event that Common Shares are converted into cash or
other consideration (excluding, however, common stock of another entity
("Acquiror Stock")) in a Conversion Event, vested Common Shares outstanding
(including any Common Shares deemed outstanding giving effect to any accelerated
vesting contemplated by this Agreement) as of the Determination Date will
receive the consideration provided for in the Conversion Event but unvested
Common Shares as of the Determination Date will be deemed, without further
action, to have been contributed to the capital of the Company and no longer be
outstanding, and (iii) in all events the Company's Repurchase Rights will
continue, before or after a Conversion Event, to apply to all Common Shares
subject to a Stock Award and, if applicable, Acquiror Stock or other
consideration into which Common Shares are converted (other than cash) in any
transaction.
6. Retention of Stock Certificate(s) by the Company. The certificate(s)
representing any Common Shares issued to Grantee pursuant to a Stock Award will
be held in custody by the Company, together with a stock power endorsed in blank
by Grantee with respect thereto, until a Listing. In order for the grant under
this Agreement to be effective, Grantee must sign and return such stock powers
to the Company.
7. No Employment Contract, Etc. In accordance with the Program, nothing
contained in this Agreement will confer upon Grantee any right with respect to
continuance of employment by the Company, nor limit or affect in any manner the
right of the Company to terminate the employment or adjust the compensation of
Grantee. The value of any Stock Award, if any, will not be taken into account in
determining any employee benefit, severance or other amount to which Grantee
might otherwise be entitled from the Company or any of its Affiliates, including
without limitation any pension or other retirement benefit, salary continuation
right or severance benefit or otherwise.
8. Taxes and Withholding. The Company makes no representation or warranty
to Grantee regarding the tax treatment of the Stock Award or the tax effect or
consequence of the grant of the Stock Award to Grantee. Grantee will be solely
responsible for any tax liability which may arise therefrom. To the extent that
the Company is required to withhold any statutorily required federal, state,
local or foreign taxes in connection with the Stock Award or the issuance or
vesting of any restricted Common Shares or other securities pursuant to this
Agreement, and the amounts payable to the Company for such withholding are
insufficient, it will be a condition to the receipt of such payment or the
realization of such benefit that Grantee make arrangements satisfactory to the
Company for payment of the balance of such taxes required to be withheld, which
arrangements (in the discretion of the Board) may include relinquishment of a
portion of such benefit. In no event, however, will the Company
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accept Common Shares for payment of taxes in excess of required tax withholding
rates, except as provided in the Program.
9. Compliance with Law. Notwithstanding any other provision of this
Agreement, the Company will not be obligated to issue any restricted or
nonrestricted Common Shares or other securities pursuant to this Agreement if
the issuance thereof would result in a violation of any federal or state laws.
10. Restrictive Covenants. (a) Grantee agrees that Grantee's position with
the Company requires and will continue to require the performance of services
which are special, unique, extraordinary and of an intellectual character, and
places and will continue to place Grantee in a position of trust with clients
and employees of the Company. Grantee further acknowledges that the rendering of
services to the Company's clients necessarily requires the disclosure of
confidential information and trade secrets of the Company and its clients.
Grantee agrees that, during the course of Grantee's employment with the Company,
Grantee will continue to develop a personal relationship with the clients of the
Company and a knowledge of those clients' affairs and requirements.
Consequently, Grantee agrees that the following covenants and conditions are
reasonable and necessary for the protection of the goodwill and business of the
Company.
(b) In consideration of this Agreement, and for other good and
valuable consideration the sufficiency of which is hereby acknowledged, Grantee
hereby agrees as follows:
(i) During the term of his or her employment with the Company,
Grantee will not, directly or indirectly, compete with the Company
anywhere in the world. In accordance with this restriction, but
without limiting its terms, during the term of his or her
employment, Grantee will not, directly or indirectly:
(A) Enter into or engage in any business which competes
with the Business;
(B) Solicit Clients or business or sell any services or
products in competition, or on behalf of any business that competes,
with the Business; or
(C) Divert, entice or take away any Clients or business
of the Company or attempt to do so; and
(ii) For a period of two years following the termination of
his or her employment with the Company (for any reason or without
reason), Grantee will not, directly or indirectly:
(A) Solicit Clients or perform or sell any services or
products to clients in competition with the Business; or
(B) Divert, entice or take away any clients or business
of the Company or attempt to do so in respect of the Business.
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As used in this (i) Section, the term "Client" means (A) anyone who is a client
of the Company or any of its Subsidiaries at the time of the alleged prohibited
conduct, or if Grantee's employment with the Company shall have terminated, at
the date of such termination of employment (as applicable, the "Determination
Date"), (B) anyone who was a client of the Company or any of its Subsidiaries at
any time during the one-year period immediately preceding the Determination
Date, and (C) any prospective clients to whom the Company or any of its
Subsidiaries made a new presentation (or similar offering of services) at any
time during the one year period immediately preceding the Determination Date and
(ii) the term "Business" means the business engaged in or proposed to be engaged
in by the Company or any of its Subsidiaries, or any other activity comparable
thereto or competitive therewith, (A) during the period of Grantee's employment
(for purposes of Section 10(b)(i) or (B) as of the time of termination of
Grantee's employment (for purposes of Section 10(b)(ii)).
(c) In consideration of this Agreement, and for other good and
valuable consideration the sufficiency of which is hereby acknowledged, Grantee
hereby agrees that, while he or she is employed by the Company and until two
years after the termination of Grantee's employment (for any reason or without
reason) with the Company, Grantee will not, directly or indirectly, except on
behalf of the Company or its Subsidiaries, employ as an employee or retain as a
consultant any person who is then employed or, at any time during the 90
calendar days immediately preceding the date of termination of Grantee's
employment, was an employee of or exclusive consultant to the Company or any of
its Subsidiaries, or persuade or attempt to persuade any such employee of or
exclusive consultant to the Company or any of its Subsidiaries to leave the
Company or such other companies or to become employed as an employee or retained
as a consultant by anyone other than the Company or any of its Subsidiaries.
(d) Grantee also agrees that he or she will not at any time (while
Grantee is employed by the Company or thereafter) (i) disclose any confidential
business or technical information or trade secrets relating to the Company or
any of its Subsidiaries or to any of their respective clients (the
"Information"), except as may be required by law or legal process (and then only
after notice to the Company as promptly as reasonably practicable) or (ii)
utilize such Information for his or her own benefit, or for the benefit of third
parties, and all such Information, whether reduced to writing or maintained in
any form of electronic media or in the mind or memory of Grantee, and whether
compiled by Grantee or made available to Grantee pertaining to the Company's or
any such other company's business or their respective clients, will be the
property of the Company or such other company, and any documents or electronic
media in Grantee's possession or control that contain such Information will be
delivered to the Company on the termination of Grantee's employment or at any
other time upon the Company's request. The term "Information" does not include
any information which becomes generally available to the public other than by
breach of this Section.
(e) Grantee expressly agrees that if he or she violates any
provision of this Section, the Company will have the right to cancel all Stock
Awards to Grantee. These rights of the Company are in addition to any and all
other rights and remedies the
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Company may have in equity or at law in connection with such breach. In addition
and without limiting the foregoing (i) if Grantee commits a breach or threatens
to commit a breach of any of the provisions of the Program or this Agreement,
including without limitation the covenants in this Section, the Company will
have the right to have such provisions specifically enforced by any court having
jurisdiction without being required to post bond or other security and without
having to prove the inadequacy of any other available remedies, it being
acknowledged and agreed that any such breach will cause irreparable injury to
the Company and that money damages will not provide an adequate remedy to the
Company and (ii) the Company may take all such other actions and remedies
available to it in law or in equity and will be entitled to such damages as it
can show it has sustained by reason of such breach.
(f) The provisions of this Section 10 are in addition to any other
restrictions on or duties of Grantee, whether arising by contract or at law.
11. Program. This Agreement is subject to the Program. Any provision of
the Program applicable to the rights and obligations of the parties to this
Agreement are incorporated into this Agreement by reference. Any amendment to
the Program will be deemed to be an amendment to this Agreement, whether or not
it affects Grantee's rights hereunder. In the event of any inconsistency between
the provisions of this Agreement and the Program, the Program will govern. The
Board, acting pursuant to the Program, will have the right to determine any
questions that arise in connection with this Agreement in its sole discretion
and without liability to Grantee or any other Person. Grantee acknowledges that
the exercise of discretion by the Board, as permitted by the Program, may not
result in an advantageous economic or financial outcome to Grantee and Grantee
accepts this Stock Award subject to the effects of the discretionary
determinations of the Board.
12. Severability; Miscellaneous. In the event that one or more of the
provisions of this Agreement are invalidated for any reason by a court of
competent jurisdiction, any provision so invalidated will be deemed to be
separable from the other provisions hereof, and the remaining provisions hereof
will continue to be valid and fully enforceable. Grantee acknowledges that
he/she has had an opportunity to consult with, and has consulted, his/her legal,
tax and investment advisors concerning the grant to him/her of the Stock Award
and the terms of this Agreement. The Annexes to this Agreement are an integral
part hereof.
13. Integration. This Agreement amends, supersedes, cancels and replaces
all oral or written arrangements which the Company and Grantee had entered into
prior to the date of this Agreement with respect to the Stock Award.
14. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, COUNTERCLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THE
PROGRAM OR THIS AGREEMENT OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR
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INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT.
15. Governing Law. The interpretation, performance and enforcement of this
Agreement will be governed by the laws of the State of New York, without regard
to the conflict of laws principles of such state.
16. Arbitration. (a) Any dispute, controversy or claim arising out of or
relating to the Program or this Agreement, including without limitation any
dispute, controversy or claim as to whether the decision of the Company
respecting the benefits under the Program or interpretation of the Program is
arbitrary and capricious, will be settled by final and binding arbitration in
accordance with the American Arbitration Association Employment Dispute
Resolution Rules.
(b) Within 30 calendar days following receipt by one party of the
other party's notice of desire to arbitrate (the "Filing Date"), the arbitrator
will be selected from a panel or panels of persons submitted by the American
Arbitration Association (the "AAA") having experience with or knowledge of
corporate equity incentive plans or programs. The selection process will be that
which is set forth in the AAA Employment Dispute Resolution Rules. If necessary,
any accounting or financial information or opinions which are needed in order to
settle any dispute hereunder will be provided by an accounting firm of national
reputation. All proceedings of the arbitration will be conducted in New York
City.
(c) The arbitrator will determine how the fees and expenses of the
arbitration, including attorney's fees and a transcript if requested, will be
allocated between the parties. The arbitrator will have no power to amend, add
to or subtract from the Program or this Agreement. The award will be admissible
in any court or agency action seeking to enforce this Program or any portion
thereof. Any action to enforce or vacate the arbitrator's award will be governed
by the Federal Arbitration Act if applicable.
(d) This Section 16 constitutes the exclusive remedy for the breach
or any alleged breach or interpretation of the Program or this Agreement, except
that the Company may bring an action for a breach or alleged breach of any
provision of Section 10 in any federal or state court of competent jurisdiction,
in which event such court will be authorized to resolve any dispute, controversy
or claim in respect of any such breach or alleged breach of Section 10
(including without limitation determining the enforceability thereof).
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
on its behalf by its duly authorized officer and Grantee has also executed this
Agreement in duplicate, as of the day and year written below.
ORGANIC, INC.
By: __________________________
Name: ___________________
Title:____________________
The undersigned Grantee hereby (i) acknowledges receipt of an executed
original of this Agreement, together with the Annexes thereto, and (ii) accepts
the right to receive the Stock Award covered hereby, subject to the terms and
conditions of the Program and the terms and conditions of this Agreement
(including Annex A-1 hereto).
__________________________
Grantee Name: ____________
Date:__________
Annex A-1
---------
A. Basic Information:
Grantee Name: _________________
Grantee Address: ______________
Date of Grant: ________________
B. Designation of Stock Award Pursuant to Section 1 of the Stock Award
Agreement:
This Stock Award Agreement relates to the award of ______ shares of Class A
Common Stock without the payment of consideration.
C. Vesting Schedule Pursuant to Section 3 of the Stock Award Agreement:
The rights of Grantee under this Stock Award are subject to vesting as follows:
20% on the 1st anniversary of the Date of Grant;
20% on the 2nd anniversary of the Date of Grant;
20% on the 3rd anniversary of the Date of Grant;
20% on the 4th anniversary of the Date of Grant; and
20% on the 5th anniversary of the Date of Grant
(each such anniversary, a "Scheduled Vesting Date").
Notwithstanding the foregoing, (1) all of the unvested Common Shares issued
pursuant to the Stock Award will vest immediately prior to a Change of Control
and (2) at any time during the 30-day period immediately preceding an applicable
Scheduled Vesting Date, Grantee may return the certificate(s) representing the
unvested Common Shares issued pursuant to the Stock Award which will vest upon
such Scheduled Vesting Date to the Company (the "Deferred Shares"), and the
Company will enter into an agreement to issue such Deferred Shares (including
any accrued Dividends or other payments that would have been made with respect
to such shares had they remained outstanding during the deferral period) on a
later date or upon a later event.
A-1-1
D. Repurchase Right and Grantee Put Pursuant to Section 4 of the Stock Award
Agreement:
Repurchase By the Company or Grantee. Either the Company may exercise its
Repurchase Right or a Grantee may exercise a Grantee Put, (i) in the case of the
Company, at any time and (ii) in the case of Grantee, at any time (A) on and
after January 1, 2007, (B) before January 1, 2007, if Grantee's Continuous
Service with the Company is terminated for any reason other than by Grantee
himself or herself, and (C) as provided in Paragraph E of this Annex A-1. The
price per Common Share at which the Repurchase Right and Grantee Put, as
applicable, may be exercised will be equal to the positive difference, if any,
between (A) (1) the average annual PBT for the three full calendar years
immediately preceding such termination ("Average PBT")* times (2) the Ownership
% for Grantee, times (3) 5.5 (or, if such termination occurs after January 1,
2007, the "FP Multiple" as defined in Section 1.3(h) of the Share Purchase
Agreement and determined under Sections 1.3 and 1.4 of the Share Purchase
Agreement), minus (B) all Dividends or other payments previously made with
respect to Grantee's Stock Award; provided, however, if the amount in clause (B)
exceeds the amount in clause (A), the price per Common Share at which the
Repurchase Right and Grantee Put, as applicable, may be exercised will be
$0.0001. For purposes of this Agreement, "Ownership %" means a percentage
(rounded to the nearest one one-tenth of 1%) equal to a fraction, the numerator
of which is the number of shares of Grantee's Class A Common Stock which have
been vested prior to the time of exercise of the Repurchase Right or Grantee
Call, as the case may be, and the denominator of which is the total number of
Common Shares outstanding as of the date of exercise of the Repurchase Right or
the Grantee Put, as the case may be, including all authorized shares of Class A
Common Stock as outstanding for this purpose. If exercised, the Repurchase Right
or Grantee Put will apply regardless of any amount otherwise payable or
receivable under the Program or this Agreement and, from and after the date that
Notice of Exercise has been given, the parties will have no obligations or
rights under the Program or this
----------
* For Grantees whose Stock Award represents 1% or less of the total number of
outstanding Common Shares (treating all authorized shares of Class A Common
Stock as outstanding for this purpose) ("Small Holders"), the following proviso
will be added:
, provided, however, that, notwithstanding the foregoing, if the
Repurchase Right or the Grantee Put (together, the "Trigger Event") is
exercised in any of the years specified below, "Average PBT" will be the
PBT for the corresponding period specified below:
Trigger Event Occurs In Average PBT
----------------------- -----------
2001 or 2002 PBT for the 12 months ended
on last day of immediately
preceding calendar quarter
2003 PBT for 2002
2004 Average annual PBT for 2002
and 2003
A-1-2
Agreement except to make the payments provided in this Paragraph D of this Annex
A-1.
Any determination of PBT, PBT Margin, FP Multiple, Revenues or Revenue Growth
Rates (as defined in the Share Purchase Agreement) which shall have become
binding, final and conclusive pursuant to Section 1.4 of the Share Purchase
Agreement will be binding, final and conclusive on the Company and Grantee for
purposes hereof, regardless of any actual or alleged defect in the manner of
determination.
Closing of Repurchase: The closing of the purchase and sale of Common Shares in
connection with the exercise of the Repurchase Right or the Grantee Put, as the
case may be (the "Call/Put Closing"), will be held at the offices of the Company
(or such other mutually agreed to location) within the later of (i) ten calendar
days after exercise of the Repurchase Right or the Grantee Put, as the case may
be, and whichever occurs earlier and (ii) if applicable, 45 calendar days after
calculation of Average PBT in accordance herewith. At the Call/Put Closing,
Grantee will deliver certificates evidencing all of the Common Shares being
transferred, which at or prior to the Call/Put Closing will be duly endorsed by
Grantee in blank for transfer or, accompanied by stock powers duly endorsed in
blank, or, if the Company possesses such certificates, the Company will retain
and cancel them pursuant to this Agreement and the stock power previously
delivered, in each case, with requisite stock transfer tax stamps, if any,
affixed. The transfer of all the Common Shares will be free and clear of all
claims, liens and encumbrances. Any indebtedness or advance owed by Grantee to
the Company or Seneca or any of its Affiliates may be deducted from the payment
due from the Company to Grantee.
E. Liquidity Transaction Pursuant to Section 5:
1. In connection with a Liquidity Transaction or Change in Control (whether by
Merger or otherwise) that is not a Related Party Transaction: (i) All of the
unvested Class A Common Stock issued pursuant to the Stock Award will vest
immediately prior to, and subject to, the closing of such Liquidity Transaction
or Change in Control transaction and (ii) Grantee will be entitled to receive
upon the closing of such Liquidity Transaction or Change in Control transaction
for each vested share of Class A Common Stock (giving effect to the accelerated
vesting of any such shares of Class A Common Stock as aforesaid) the same
consideration per share that is payable in such Liquidity Transaction with
respect to each other share of Common Stock; provided, however, that the Common
Shares subject to Grantee's Stock Award may be converted into such equity
securities or equity-linked rights as may be approved by the Board as equitable
in the circumstances. Thereafter, all other rights of Grantee hereunder will
terminate without further action and Grantee will have no further rights under
the Program or Stock Award Agreement.
2. In connection with a Liquidity Transaction or Change in Control (whether by
Merger or otherwise) that is also a Related Party Transaction: At Grantee's
A-1-3
election made in accordance with such procedures as the Board establishes
therefor, Grantee may elect, in lieu of the consideration provided in Paragraph
E(1) of this Annex A-1, to exercise a Grantee Put with respect to Grantee's
Stock Award and receive the consideration set forth in Paragraph D of this Annex
A-1 (calculated as if the date of Notice of Exercise of such right were the date
of such Grantee's termination of Continuous Service, except that the proviso in
Paragraph D applicable to Small Holders will not apply under this Paragraph
E(2)). Thereafter, all other rights of Grantee hereunder will terminate without
further action.
3. In connection with a Merger: (a) If the Merger does not result in a Change in
Control and is not a Related Party Transaction, (i) shares of Class A Common
Stock will be treated the same as all other Common Shares; provided, however,
that the Common Shares subject to Grantee's Stock Award may be converted into
such equity securities or equity-linked rights as may be approved by the Board
as equitable in the circumstances, (ii) the vesting provisions applicable to
Class A Common Stock will continue to apply to any Acquiror Stock or other
securities received on or in respect of Class A Common Stock in the Merger,
(iii) all calculations of PBT, Net Income, Revenues, Revenue Growth Rate, PBT
Margin and Dividends will be made giving effect to the Merger on a prospective
basis and based on the consolidated results of operations of the surviving,
resulting corporation or combining entities in the transaction, and (iv) the
Class A % and the Ownership % will be adjusted to give effect to the change in
capital stock of the Company resulting from the Merger and the ownership
interest of the holders of Class A Common Stock.
(b) If the Merger does not result in a Change in Control and is a Related
Party Transaction, (i) Grantee will be entitled, at Grantee's election made in
accordance with such procedures as the Board establishes therefor, (A) to be
treated as provided in Paragraph E(3)(a) of this Annex A-1 or (B) to exercise a
Grantee Put with respect to Grantee's Stock Award and receive the consideration
set forth in Paragraph D of this Annex A-1 of the Stock Award Agreement
(calculated as if the date of Notice of Exercise of such right were the date of
such Grantee's termination of Continuous Service, except that the proviso in
Paragraph D applicable to Small Holders will not apply under this Paragraph
E(3)(b)). Thereafter all other rights of Grantee hereunder will terminate
without further action and Grantee will have no further rights under the Program
or Stock Award Agreement.
(c) If the Merger results in a Change of Control, Grantee will have the
rights specified in Paragraph E(3)(a) of this Annex A-1 if the Merger is not a
Related Party Transaction and Paragraph E(3)(b) of this Annex A-1 if the Merger
is a Related Party Transaction, as applicable, except that all Class A Common
Stock will be deemed without further action to have vested immediately prior to
the completion of the Merger.
4. Notwithstanding anything in this Annex to the contrary, no Grantee will be
entitled to exercise a Grantee Put in connection with a Merger, sale of stock or
other transaction in which (i) one or more of the beneficial owners of stock of
Parent (or a subsidiary of such owner) continue to own at least 50% of the
voting stock of the Company and (ii) holders of Common Shares (other than Class
A Common Stock) do not receive cash or any
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other property other than common stock, preferred stock or other equity
interests of the Company, the Successor Company or another constituent entity
for the conversion or sale of such Common Shares in the transaction.
F. Definitions: For purposes of this Agreement, the following terms used herein
with initial capital letters will have the following meanings:
"Change of Control" means (A) any Liquidity Transaction or other
consolidation, merger or other business acquisition or combination transaction
in which the record or nominal holders of the Company's outstanding Common
Shares immediately before such transaction do not, immediately after such
transaction, retain stock representing a majority of the voting or economic
power of the acquiring, resulting or surviving Person, (B) the sale, transfer or
assignment of securities of the Company representing a majority of the voting or
economic power of all the Company's outstanding voting securities by the record
or nominal holders thereof or the sale or other disposition of all or
substantially all of the business and assets of the Company, or (C) such other
event as the Board determines in its sole discretion should constitute a "Change
in Control" under this Agreement.
"Liquidity Transaction" means any merger, consolidation, reorganization,
recapitalization, stock sale or other transaction (excluding the payment of
dividends and other distributions of current or retained earnings) in which
Common Shares receive, are converted into or exchanged for cash or any other
property other than common stock, preferred stock or other equity interests of
the Company or the Successor Company.
"Merger" means a merger, consolidation or other business combination
transaction to which the Company is a party which does not constitute a
Liquidity Transaction.
"Related Party Transaction" means a Liquidity Transaction in which a
Substantial Shareholder of the Company is also a Substantial Shareholder of
another constituent entity (or an Affiliate of another constituent entity) in
the Liquidity Transaction.
"Substantial Shareholder" of a Person means any Person that owns, directly
or indirectly, over 20% of either the common stock or other voting equity of the
first Person or, directly or indirectly, over 20% of the combined equity capital
of the first Person.
"Successor Company" means the acquiring, surviving or resulting Person in
a Merger or Liquidity Transaction.
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