EXHIBIT 4.04
STOCK RESTRICTION AGREEMENT
by and among
Interland, Inc.
and
the parties identified as "Stockholders"
on the signature page hereof
Dated as of August 29, 2002
STOCK RESTRICTION AGREEMENT
THIS STOCK RESTRICTION AGREEMENT ("Agreement") is entered into as of August
29, 2002, by and among Interland, Inc., a Minnesota corporation (the "Company"),
and the parties' identified as "Stockholders" on the signature page hereof
(together, "the Stockholders").
WITNESSETH:
WHEREAS, the Company, PantherCub Acquisition Corporation, a Florida
corporation, InnerHost, Inc., a Florida corporation, and the Stockholders are
parties to an Agreement and Plan of Merger (the "Merger Agreement") executed
contemporaneously herewith, pursuant to which the Stockholders will receive
shares of the Company's Common Stock;
WHEREAS, capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Merger Agreement; and
WHEREAS, the execution and delivery of this Agreement is a condition to the
closing of the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and obligations hereinafter set forth, the parties hereto hereby agree
as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the meanings
ascribed to them below:
"Common Stock" means the Common Stock, par value $.01 per share of the
Company.
"Covered Registrable Securities" means, Registrable Securities held by the
Stockholders and subject to the lock-up provisions of Section 2(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
any rules and regulations promulgated thereunder, all as the same shall be in
effect from time to time.
"Holder" or "Holders" (whether capitalized or not) means the Stockholders
and any Person who shall hereafter acquire and hold Registrable Securities.
"Registrable Securities" means the Common Stock issued to the Stockholders
pursuant to the Merger Agreement (and not forfeited or returned to the Company
pursuant to the terms of the Merger Agreement) and any securities that may be
issued or distributed or be issuable in respect thereof by way of stock
dividend, stock split or other distribution, merger, consolidation, exchange
offer, recapitalization or reclassification or similar transaction involving
such Common Stock or exercise or conversion of any of the foregoing; provided,
however, that any of the foregoing securities shall cease to be `Registrable
Securities' to the extent (i) a Registration Statement with respect to their
sale has been declared effective under the Securities Act and they have been in
fact disposed of pursuant to such Registration Statement (in accordance with
Section 2), or (ii) they have been or may be distributed pursuant to Rule 144
(or any similar provision then in force) under the Securities Act (in accordance
with Section 2).
"Registration Statement" (whether capitalized or not) means any
registration statement of the Company filed with, or to be filed with, the SEC
under the rules and regulations promulgated under the Securities Act on a form
which might be used for the sale of the Registrable Securities by Holders,
including the prospectus, amendments and supplements to such registration
statement, including post-effective amendments, and all material incorporated by
reference in such registration statement.
"SEC" means the United States Securities and Exchange Commission. ---
"Securities Act" means the Securities Act of 1933, as amended, and any
rules and regulations promulgated thereunder, all as the same shall be in effect
from time to time.
2. Lock-up Agreement.
(a) Except as provided in Section 2(b), each Stockholder agrees that,
without the prior written consent of the Company, he will not, directly or
indirectly, (i) sell, contract or offer to sell, sell short, pledge or post as
collateral (except to or in favor of the Company), transfer or otherwise dispose
of (or enter into any transaction or device that is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of) except to or as directed by the Company any Covered Registrable Securities;
or (ii) enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risk of ownership
of any Covered Registrable Securities, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Covered Registrable
Securities, in cash, or otherwise; provided, however that the Stockholder may
transfer all or part of his Covered Registrable Securities (w) to its general
partner and limited partners as part of a general distribution to all such
partners, (x) to a trust for the benefit of himself, his spouse, or other
members of his family so long as the sole trustee of the trust, who possess the
sole right to vote the Covered Registrable Securities transferred to the trust,
is the Stockholder, (y) pursuant to an involuntary transfer of Covered
Registrable Securities including but not limited to a property division in
conjunction with a divorce proceeding, or a sale upon execution or in
foreclosure of any pledge, hypothecation or Lien or by acquisition of an
interest therein by a trustee in bankruptcy or a receiver or a debtor's estate
or (z) upon the Stockholder's death, pursuant to his will or trust or via the
laws of descent and distribution; provided further that the restrictions in this
Section shall cease and be of no further force or effect in the event of: (1) a
Change in Control, as defined in Appendix A, (2) the Company or any of its
material subsidiaries (i) shall generally not, or be unable to, or shall admit
in writing its inability to, pay its debts as its debts become due, or (ii)
shall make an assignment for the benefit of creditors, or petition or apply to
any tribunal for the appointment of a custodian, receiver or trustee for its or
a substantial part of its assets or (iii) shall commence any proceeding under
any law relating to bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution or liquidation or (iv) shall have had any petition filed, or
any proceeding shall have been commenced, against it as a result of or in which
an adjudication is made or order for relief is entered or which remains
undismissed for a period of 30 days or (v) shall have had a receiver, custodian
or trustee appointed for all or a substantial part of its property or (vi) takes
any action effectuating, approving or consenting to any of the events described
in clauses (i) through (v) or (vii) their shall otherwise be any receivership
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over the Company or its material subsidiaries or its or their assets; or (3)
shall make a public announcement of any default or event which with notice, the
passage of time or both would constitute a default in respect of any
indebtedness for borrowed money in excess of $5 million, or (4) any de-listing
of the Common Stock from the Nasdaq National Stock Market or any de-registration
of the Company under the Exchange Act.
(b) For purposes of this Agreement, Registrable Securities shall either not
be deemed to be, or shall cease to be deemed Covered Registrable Securities (as
applicable) as follows:
(i) From and after the date hereof, 37.5% of the Registrable Securities
shall not be deemed to be Covered Registrable Securities.
(ii) From and after the 90th day following the date hereof, an additional
20.83% of the Registrable Securities shall cease to be deemed Covered
Registrable Securities.
(iii) On the first trading day of each month thereafter (each, a "Release
Date"), an addition 6.94% of the Registrable Securities shall cease to be deemed
Covered Registrable Securities so that on the 9th monthly anniversary of the
date hereof, none of the Covered Registrable Securities issued to such
Stockholder shall be deemed to be Covered Securities and shall be released from
the provisions of Section 2(a) for all time and all purposes, notwithstanding
any previous or subsequent circumstance, event, sale transfer or disposition.
(iv) If, for the period of 10 consecutive trading dates following a Release
Date, the Company has failed to have an effective Registration Statement in
place that is not subject to a blackout or suspension period and that permits
the sale of all the Registrable Securities that are not Covered Securities, an
additional 6.94% of the Registrable Securities shall immediately cease to be
deemed Covered Registrable Securities.
3. Remedies.
The parties hereto acknowledge and agree that the breach of any part of
this Agreement may cause irreparable harm and that monetary damages alone may be
inadequate. The parties hereto therefore agree that any party shall be entitled
to injunctive relief or such other applicable remedy as a court of competent
jurisdiction may provide, without the posting of any bond. Nothing contained
herein, however, will be construed to limit any party's right to any remedies at
law, including recovery of damages for breach of any part of this Agreement.
4. Miscellaneous.
(a) Equitable Adjustments. The provisions of this Agreement including
without limitation the restriction release in Section 2(b) shall be equitably
and appropriately adjusted to take into account any securities that may be
issued or distributed or be issuable in respect thereof by way of stock
dividend, stock split or other distribution, merger, consolidation, exchange
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offer, recapitalization or reclassification or similar transaction involving the
Registrable Securities or the Common Stock or exercise or conversion of any of
the foregoing.
(b) Amendments and Waivers. This Agreement may be amended, modified,
supplemented or waived only upon the written agreement of the party against whom
enforcement of such amendment, modification, supplement or waiver is sought.
(c) Controlling Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to any
applicable principles of conflicts of law. EACH PARTY TO THIS AGREEMENT HEREBY
IRREVOCABLY AGREES THAT ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT SHALL ONLY BE BROUGHT IN THE COURTS OF THE STATE OF
NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK AND HEREBY EXPRESSLY SUBMITS TO THE EXCLUSIVE PERSONAL JURISDICTION AND
VENUE OF SUCH COURTS FOR THE PURPOSES THEREOF AND EXPRESSLY WAIVES ANY CLAIM OF
IMPROPER VENUE AND ANY CLAIM THAT SUCH COURTS ARE AN INCONVENIENT FORUM. EACH
PARTY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS ADDRESS
SET FORTH IN SECTION 4(k), SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH
MAILING.
(d) Binding Nature of Agreement; Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors, and assigns, including
without limitation and without the need for an express assignment, subsequent
Holders of Covered Registrable Securities; provided, however, that any
subsequent Holders of Covered Registrable Securities shall receive such assigned
rights subject to all of the terms and conditions of this Agreement.
(e) Entire Agreement. This Agreement, the Merger Agreement and the Escrow
Agreement contain the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written, except as herein contained. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof.
(f) Section Headings. The section headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
(g) Gender. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context requires.
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(h) Indulgences, Not Waivers. Neither the failure nor any delay on the part
of a party to exercise any right, remedy, power, or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power, or privilege preclude any other or further
exercise of the same or any other right, remedy, power, or privilege, nor shall
any waiver of any right, remedy, power, or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power, or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.
(i) Execution in Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories. Any
photographic or xerographic copy of this Agreement, with all signatures
reproduced on one or more sets of signature pages, shall be considered for all
purposes as of it were an executed counterpart of this Agreement.
(j) Provisions Separable. The provisions of this Agreement are independent
and separable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.
(k) Notices. Except as otherwise provided in this Agreement, all notices,
requests, consents and other communications hereunder to any party shall be
deemed to be sufficient if contained in a written instrument delivered in person
or by telecopy, nationally recognized overnight courier or first class
registered or certified mail, return receipt requested, postage prepaid,
addressed to such party at the address set forth below or such other address as
may hereafter be designated in writing by such party to the other parties:
If to Interland, Inc.:
Interland, Inc.
000 Xxxxxxxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
with a copy to General Counsel
If to the Stockholders:
Spire Capital Partners, L.P.
c/o Spire Capital Management
00 Xxxxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx
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with a copy to:
Xxxxxxxxxxxx Xxxx & Xxxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxx
All such notices, requests, consent and other communications shall be
deemed to have been given when received.
(l) Construction. The parties hereto acknowledge and agree that each party
has participated in the drafting of this Agreement and that this document has
been reviewed by the respective legal counsel for the parties hereto and that
the normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be applied to the interpretation
of this Agreement. No inference in favor of, or against, any party shall be
drawn from the fact that one party has drafted any portion hereof.
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IN WITNESS WHEREOF, the undersigned have executed this Stock Restriction
Agreement as of the date set forth above.
COMPANY:
INTERLAND, INC.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxx
---------------------------------------
Title: VP, General Counsel
--------------------------------------
STOCKHOLDERS:
SPIRE CAPITAL PARTNERS, L.P.
By: Spire Capital Partners, L.L.C.,
its General Partner
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Managing Member
SPIRE INVESTMENT, L.L.C.
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Managing Member
XXXXXX-XXXXXX MEDIA PARTNERS, L.P.
By: Xxxxxx-Xxxxxx Media, L.L.C.,
its General Partner
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Managing Member
[Signature Page to Stock Restriction Agreement]
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APPENDIX A
Change in Control Definition
"Acquiring Corporation" shall mean an entity which as a result of a
Business Combination owns the Company or substantially all of the Company's
assets directly or through one or more subsidiaries).
"Beneficial Owner" with respect to a Person, means securities of which that
Person is a beneficial owner as defined in Rule 13d-3 promulgated under the
Exchange Act.
"Business Combination" means a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving the Company or a sale or
other disposition of all or substantially all of the assets of the Company.
"Change in Control" means:
(i) a change in the beneficial ownership of the Company's voting stock
(arising other than by means of a tender offer) such that any Person becomes a
Beneficial Owner, directly or indirectly, of securities of the Company
representing a Control Share. A "Change in Control" shall not include ownership
by any Person, who (A) as of the date hereof is the Beneficial Owner of
securities representing a Control Share or (B) is an employee benefit plan (or
related trust) sponsored or maintained by the Company or any 90% or more owned
Subsidiary of the Company;
(ii) holders of voting securities of the Company approve the consummation
of a Business Combination, unless, immediately following such Business
Combination, each of the following two conditions is satisfied:
(A) all or substantially all of the Persons who were the Beneficial Owners
of the outstanding Common Stock and voting securities of the Company immediately
prior to such Business Combination beneficially own directly or indirectly, more
than 50% of both the then-outstanding shares of Common Stock (or common stock
equivalents) and the combined voting power of the then-outstanding securities
entitled to vote generally, including in the election of directors,
respectively, of the Acquiring Corporation in substantially the same proportions
immediately prior to such Business Combination;
(B) no Person (excluding the Acquiring Corporation or any employee benefit
plan (or related trust) maintained or sponsored by the Company or by the
Acquiring Corporation) beneficially owns, directly or indirectly, securities
representing a Control Share of the Acquiring Corporation (except to the extent
that such level of ownership in the Company existed prior to the Business
Combination);
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(iii) such time as the Continuing Directors do not constitute a majority of
the Board of Directors of the Company (the "Board") (or, if applicable, the
Board of Directors of an Acquiring Corporation);
(iv) the holders of the voting securities of the Company approve a complete
liquidation of the Company or a sale of all or substantially all of the assets
of the Company; or
(v) a tender offer (for which any required SEC filing under Section 14(d)
of the Exchange Act of 1934 has been made) is made for the Common Stock or other
voting securities of the Company. In the case of a tender offer described in
this paragraph (v), a "Change in Control" will be deemed to have occurred upon
the first to occur of:
(A) any time during the offer when the Person making the offer either owns
or has accepted for payment securities of the Company;
(B) three business days before the offer is to terminate unless the offer
is withdrawn first.
"Continuing Director" means at any date a member of the Board of Directors
(i) who was a member of the Board on the date hereof or (ii) who was nominated
or elected in a formal resolution adopted by at least a majority of the
directors who were Continuing Directors at the time of such nomination or
election provided, however, that there shall be excluded from the definition of
Continuing Director any individual whose assumption of the office occurred as a
result of an actual or threatened election contest or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person other than the
Board.
"Control Share" with regard to securities of the Company or an Acquiring
Corporation, means ownership of either (x) 50 percent or more of the total
voting power of the then outstanding securities, or (y) 50 percent or more of
the outstanding Common Stock. Percentage ownership shall be computed in
accordance with Rule 13d-3 promulgated under the Exchange Act.
"Person" shall mean an individual, entity, or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act.
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