Exhibit 4.2
AMENDED AND RESTATED
SHAREHOLDERS' AND VOTING AGREEMENT
by and among
INTEK INFORMATION, INC.
CONNING CAPITAL PARTNERS V, L.P.
THE BEACON GROUP III - FOCUS VALUE FUND, L.P.
U.S. INFORMATION TECHNOLOGY FINANCING, L.P.
ENCOMPASS GROUP, INC.
TRANS COSMOS USA, INC.
BVCF IV, L.P.
and
THE OTHER SHAREHOLDERS
THAT ARE SIGNATORIES HERETO
Dated as of January 14, 2000
TABLE OF CONTENTS
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Section 1. Definitions.......................................................... 1
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Section 2. Methodology for Calculations......................................... 7
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Section 3. Corporate Governance................................................. 8
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3.1. Composition of the Board............................................. 8
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3.2. Committees; Subsidiaries; Audit Committee; Compensation Committee.... 15
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3.3. Vacancies; Removal................................................... 15
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3.4. Non-Voting Observer.................................................. 17
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3.5. Representative....................................................... 20
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3.6. Board and Committee Meetings......................................... 21
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3.7. Directors' Indemnification........................................... 22
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3.8. Irrevocable Proxy................................................... 23
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3.9. Contractual Management Rights........................................ 23
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3.10. Expenses............................................................. 23
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3.11. Cooperation.......................................................... 24
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Section 4. Restrictions on Transfers of Stock................................... 24
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4.1. General.............................................................. 24
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4.2. Shareholders' Agreement.............................................. 25
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4.3. Conflicts with Other Provisions of this Agreement.................... 25
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Section 5. Rights of First Offer................................................ 25
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5.1. First Offer.......................................................... 25
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5.2. First Offer Obligations.............................................. 26
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5.3. Transfer of Subject Stock............................................ 27
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5.4. Closing.............................................................. 27
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5.5 Rights on Certain Management Sales................................... 27
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5.6. Limitations.......................................................... 28
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Section 6. Tag-Along Rights..................................................... 29
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6.1. Tag-Along............................................................ 30
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6.2. Tag-Along Obligations................................................ 29
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6.3. Closing.............................................................. 30
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6.4. Limitations.......................................................... 30
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Section 7. Drag-Along Rights.................................................... 30
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7.1. Drag-Along........................................................... 30
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7.2. Limitations.......................................................... 31
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Section 8. Pre-emptive Rights................................................... 31
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8.1. Pre-emptive Rights................................................... 31
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8.2. Purchase of Pre-Emptive Stock........................................ 32
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8.3. Issuance of Stock.................................................... 32
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8.4. Closing.............................................................. 32
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8.5. Limitations.......................................................... 32
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Section 9. Holdback Agreement; Adjustments...................................... 33
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9.1. General.............................................................. 33
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9.2 Adjustments.......................................................... 33
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Section 10. Certain Covenants.................................................... 34
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10.1. Financial Statements and Other Information........................... 34
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10.2. Restrictions......................................................... 36
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10.3. Reservation of Common Stock.......................................... 38
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10.4. Public Disclosures................................................... 39
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Section 11. Conflicting Agreements............................................... 39
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Section 12. Legend............................................................... 39
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12.1. Legend............................................................... 39
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12.2. Termination of Legend................................................ 40
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i
Section 13. Representations and Warranties....................................... 40
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13.1. Representations and Warranties of Each Party......................... 40
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13.2. Representations and Warranties to Conning and Beacon................. 41
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Section 14. Duration of Agreement................................................ 41
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Section 15. Further Assurances................................................... 41
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Section 16. Increased Authorized Stock........................................... 42
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Section 17. Amendment and Waiver................................................. 42
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Section 18. Severability......................................................... 43
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Section 19. Entire Agreement..................................................... 43
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Section 20. Successors and Assigns............................................... 43
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Section 21. Counterparts......................................................... 43
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Section 22. Remedies............................................................. 43
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Section 23. Notices.............................................................. 44
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Section 24. Governing Law; Consent to Jurisdiction............................... 44
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Section 25. Miscellaneous........................................................ 45
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Section 26. Construction......................................................... 45
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Section 27. Pledges of Shares.................................................... 45
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Section 28. X'Xxxxxxx Life Insurance; Use of Proceeds............................ 45
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Section 29. Rule Against Perpetuities............................................ 46
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Section 30. Spider Technologies, Inc. Spin Off................................... 46
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30.1 No Application to Spider............................................. 46
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30.2 Unwind............................................................... 46
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30.3 Effect on Liquidation Preference..................................... 47
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30.3.2. Spider Excess Preference Distribution................................ 48
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30.3.3. Spider Deficit Distribution.......................................... 49
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ii
AMENDED AND RESTATED
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SHAREHOLDERS' AND VOTING AGREEMENT
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THIS AMENDED AND RESTATED SHAREHOLDERS' AND VOTING AGREEMENT (the
"Agreement") is made effective as of January 14, 2000, by and among INTEK
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INFORMATION, INC., a Delaware corporation (the "Company"), CONNING INSURANCE
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CAPITAL PARTNERS V, L.P. a Delaware limited partnership ("Conning"), THE BEACON
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GROUP III - FOCUS VALUE FUND, L.P., a Delaware limited partnership ("Beacon"),
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U.S. INFORMATION TECHNOLOGY FINANCING, L.P., a Washington limited partnership
("USITF"), ENCOMPASS GROUP, INC., a Washington corporation, ("Encompass"), TRANS
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COSMOS USA, INC., a Washington corporation ("TCI"), BVCF IV, L.P., a Delaware
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limited partnership ("XXXXXXX"), and each of the stockholders of the Company
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executing one of the signature pages attached hereto or who was a party to the
Original Agreement (as defined below) (including by execution of a Joinder
Agreement) and is still a holder of Stock.
W I T N E S S E T H :
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WHEREAS, the Company, Conning, Beacon, Resource Bancshares Corporation,
a South Carolina corporation ("RBC"), USITF, Encompass, TCI, Xxxxxxx X'Xxxxxxx
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("X'Xxxxxxx"), and Xxxxx Xxxxxxxx ("Xxxxxxxx", and together with Conning,
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Beacon, RBC and X'Xxxxxxx, the "Amending Shareholders") are parties to that
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certain Amended and Restated Shareholders' and Voting Agreement made as of April
16, 1999 (the "Original Agreement"); and
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WHEREAS, the Amending Shareholders, who collectively hold at least a
majority of the outstanding Common Stock, and the Company desire to amend and
restate the Original Agreement in its entirety as set forth herein, as permitted
in Section 17 of the Original Agreement; and
WHEREAS, this Agreement is entered into in contemplation of a public
offering of the Company's Common Stock, and addresses issues between the date
hereof and the closing of that offering and the termination of this Agreement
upon that closing; and
WHEREAS, the parties hereto deem it to be in their best interests to
enter into an agreement establishing and setting forth their agreement with
respect to certain rights and obligations associated with ownership of shares of
capital stock of the Company.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and obligations hereinafter set forth, the parties hereto hereby agree
as follows:
Section 1. Definitions.
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As used herein, the following terms shall have the following meanings:
1
"Accepting Shareholder Ratio" means, with respect to an Accepting
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Shareholder or Accepting MT Shareholder (as applicable), a fraction, the
numerator of which shall be the number of shares of outstanding Common Stock
(including, but not limited to, shares of the Subject Stock previously
subscribed for pursuant to Section 5.2 or Section 5.5, as applicable) that are
owned, directly or indirectly, by such Accepting Shareholder or Accepting MT
Shareholder (as applicable), and the denominator of which shall be the aggregate
number of shares of outstanding Common Stock (including, but not limited to,
shares of the Subject Stock previously subscribed for pursuant to Section 5.2 or
Section 5.5, as applicable) that are owned, directly or indirectly, by all
Accepting Shareholders or Accepting MT Shareholders (as applicable) who desire
to purchase shares of Excess Subject Stock or Excess MT Stock, as applicable.
"Affiliate" means (i) with respect to any Person, any other Person
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directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person, (ii) with respect to any natural
Person, shall also mean the spouse, parent, sibling, child, step-child,
grandchild, niece or nephew of such Person, or the spouse thereof, (iii) the
estate of a Shareholder or Affiliate, (iv) any trust created for the benefit of
a Shareholder or by a Shareholder for an Affiliate specified in clause (ii) and
(v) with respect to any Person, any general partner or limited partner of such
Person.
"Agreed Director" has the meaning given it in Section 3.1(a)(v).
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"Bain" means Xxxx & Company, Inc.
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"By-laws" means the By-laws of the Company as in effect on the date
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hereof, as they may be amended from time to time hereafter.
"Cause" means (a) dishonesty that is not the result of an inadvertent or
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innocent mistake of X'Xxxxxxx with respect to the Company or any of its
Subsidiaries, (b) willful misfeasance or nonfeasance of duty by X'Xxxxxxx
intended to injure or having the effect of injuring in some material fashion the
reputation, business or business relationships of the Company or any of its
Subsidiaries or any of their respective officers, directors or employees, (c)
conviction of X'Xxxxxxx upon a charge of any crime involving moral turpitude or
a crime other than a vehicle offense that could reflect in some material fashion
unfavorably upon the Company or any of its Subsidiaries, or (d) willful or
prolonged absence from work by X'Xxxxxxx (other than by reason of disability due
to physical or mental illness) or failure, neglect or refusal by X'Xxxxxxx to
perform his duties and responsibilities without the same being corrected upon 20
days written notice.
"Certificate" means the Amended and Restated Certificate of
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Incorporation of the Company as in effect on the date hereof and as it may be
amended from time to time hereafter.
2
"Common Stock" means the Common Stock, par value $.0001 per share, of
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the Company and any equity securities issued or issuable with respect to the
Common Stock in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization, but does not include capital
stock of Spider Technologies, Inc., including that distributed pursuant to a
Distribution Plan approved by holders of a majority of each of the Series of
Preferred Stock and the Common Stock, each voting as a separate class.
"Common Stock Equivalents" means securities convertible into, or
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exchangeable or exercisable for, shares of Common Stock.
"Drag-Along Initiator" means (i) Conning and its Affiliates, or (ii)
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Beacon and its Affiliates, as the case may be.
"Drag-Along Preconditions" mean (i) the delivery of the Drag-Along
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Notice on or after Xxxxx 0, 0000, (xx) the consent of the holders of at least a
majority of the then outstanding shares of Stock that have been originally
issued by the Company to Beacon as of the date of the Drag-Along Notice (or
issued and outstanding with respect to such Stock upon the exercise, exchange or
conversion thereof), on an as-converted and as-exercised basis, to the Drag-
Along Initiator's exercise of its drag-along rights pursuant to Section 7, and
(iii) the consent of the holders of at least a majority of the outstanding
shares of Series D Preferred as of the date of the Drag-Along Notice (or issued
and outstanding with respect to Series D Preferred upon the exercise, exchange
or conversion thereof) on an as-converted basis to the Drag-Along Initiator's
exercise of its drag-along rights pursuant to Section 7.
"Exchange Agreement" means the Exchange Agreement dated May 7, 1998__by
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and between the Company and Beacon.
"First Offer Ratio" means, with respect to (a) an Offered Shareholder
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and (b) determining the rights thereof in connection with an Offer, a fraction,
the numerator of which shall be the aggregate number of shares of outstanding
Common Stock (including, without limitation, all Common Stock Equivalents (other
than options under employee stock option plans or similar stock purchase rights)
on an as-converted, as-exchanged or as-exercised basis, as applicable) owned,
directly or indirectly, by such Offered Shareholder, and the denominator of
which shall be the aggregate number of shares of outstanding Common Stock
(including, without limitation, all Common Stock Equivalents (other than options
under employee stock option plans or similar stock purchase rights) on an as-
converted, as-exchanged or as-exercised basis, as applicable) owned, directly or
indirectly, by all of the Offered Shareholders.
"GAAP" means United States generally accepted accounting principles, as
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in effect from time to time.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976,
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as amended.
3
"Independent Director" means a director of the Company or any of its
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Subsidiaries that is not a Beacon Director, a Conning Director, an X'Xxxxxxx
Director, a RBC Director, a TCI Director, a Xxxxxxx Director (if appointed) or
a director designated pursuant to Section 3.l(a)(v).
"IPO" means the initial underwritten offering pursuant to which the
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Common Stock becomes registered under Section 12 of the Securities Exchange Act
of 1934, as amended.
"Major Shareholder" means (a) any of Beacon, Conning, USITF, Encompass,
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TCI, X'Xxxxxxx, Xxxxxxx X'Xxxx, the Eden Financial Group, Inc. Capital
Accumulation Profit Sharing Plan FBO Xxxxxxx X. X'Xxxx, RBC, Xxxxx Xxxxxxxx,
Xxxx Xxxxxx, Xxxx X. Xxxxxx, Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxx X.
Xxxxx, Xxxxx Xxxxxx, Xxxxxxx X. Xxxx, Xxxx Xxxxxxx, Xxxx, SLI, Xxxxxxx and any
other Shareholder who (i) is a member of the Company's management and (ii) is so
designated by the Board with the consent of Beacon and Conning, (b) any
purchaser of shares of Series E Preferred pursuant to the provisions of the
Purchase Agreement among the Company, USITF, Encompass, TCI and certain other
parties dated April 16, 1999 (unless otherwise agreed in writing with such
purchaser) who purchases Series E Preferred Stock that, in the aggregate on an
as-converted basis, constitutes the greater of (i) 400,000 shares of Common
Stock (adjusted appropriately to reflect stock splits and combinations and stock
dividends other than a Series E PIK Election) and (ii) one percent of the then
outstanding Common Stock, (c) any purchaser of Series F Preferred pursuant to
the provisions of the Purchase Agreement among the Company and Xxxxxxx dated
November 19, 1999 (the "Xxxxxxx Purchase Agreement") (unless otherwise agreed in
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writing with such purchaser) who purchases Series F Preferred Stock that, in the
aggregate on an as-converted basis, constitutes the greater of (i) 400,000
shares of Common Stock (adjusted appropriately to reflect stock splits and
combinations and stock dividends other than a Series F PIK Election) and (ii)
one percent of the then outstanding Common Stock, and (d) any transferee of
Stock who receives pursuant to such Transfer Common Stock and/or Preferred Stock
that, in the aggregate on an as-converted basis, constitutes the greater of (i)
400,000 shares of Common Stock (adjusted appropriately to reflect stock splits
and combinations and stock dividends other than a Preferred Stock PIK Election)
and (ii) one percent of the then outstanding Common Stock.
"Maximum Post-Issuance Amount" means, with respect to a Major
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Shareholder and determining the rights thereof in connection with a Pre-emptive
Offer, the product of (a) the number of shares of outstanding Common Stock owned
by such Major Shareholder as of the date of the Pre-emptive Notice delivered in
connection with such Pre-emptive Offer multiplied by (b) a fraction, the
numerator of which shall be the aggregate number of shares of outstanding Common
Stock (including, without limitation, all Common Stock Equivalents on an as-
converted, as-exchanged or as-exercised basis, as applicable) immediately
following the consummation of the proposed Issuance that gave rise to the Pre-
emptive Offer and the denominator of which shall be the aggregate number of
shares of outstanding Common Stock (including, without limitation, all Common
Stock Equivalents on an as-converted, as-exchanged or as-exercised basis, as
applicable) as of the date of such Pre-emptive Notice.
4
"Person" means any individual, corporation, limited liability company,
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limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivisions thereof.
"Preferred Stock" means the Series A Preferred, the Series B Preferred,
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the Series C Preferred, the Series D Preferred, the Series E Preferred and the
Series F Preferred.
"Public Sale" means a Transfer pursuant to a bona fide underwritten
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public offering pursuant to an effective registration statement filed under the
Securities Act or pursuant to Rule 144 under the Securities Act.
"Purchase Agreement" means one or more of (i) the Purchase Agreement
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dated as of December 22, 1997, by and among the Company and Beacon, (ii) the
Preferred Stock Purchase Agreement dated as of February 3, 1997, by and among
the Company, Beacon and certain other parties thereto, (iii) the Series D
Preferred Stock Purchase Agreement dated as of May 7, 1998, by and among the
Company, Conning, Beacon and certain other parties thereto, (iv) the Series E
Preferred Stock Purchase Agreement dated as of April 16, 1999, by and among the
Company, USITF, Encompass, TCI and certain other parties, and (v) the Xxxxxxx
Purchase Agreement, as the context may require.
"Qualified IPO" means any underwritten public offering of Common Stock
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(pursuant to an effective registration statement filed under the Securities
Act), (a) resulting in at least $25,000,000 of net proceeds to the Company and
(b) reflecting a per share offering price for each share of Common Stock sold in
such offering of no less than $3.00 (subject to adjustment for stock splits and
combinations, recapitalizations and stock dividends of the Common Stock).
"Registration Rights Agreements" mean (i) that certain Registration
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Rights Agreements made as of May 7, 1998, by and between the Company and
Conning, as amended by Amendment No. 1 dated as of April 16, 1999, Amendment No.
2 dated as of October 30, 1999, and Amendment No. 3 dated as of November 19,
1999, (ii) that certain Amended and Restated Registration Rights Agreement made
as of February 3, 1997, by and among the Company, RBC and X'Xxxxxxx, as amended
by Amendment No. 1 dated May 7, 1998, Amendment No. 2 dated as of April 16,
1999, Amendment No. 3 dated as of October 1, 1999, Amendment No. 4 dated as of
October 30, 1999, and Amendment No. 5 dated as of November 19, 1999, (iii) that
certain Registration Rights Agreement dated as of February 3, 1997, by and among
the Company, Xxxxx Xxxxxxxx, Tyce Fields, Bain, SLI and certain other persons
named therein, as amended by Amendment No. 1 dated May 7, 1998, Amendment No. 2
dated as of April 16, 1999, Amendment No. 3 dated as of October 30, 1999 and
Amendment No. 4 dated as of November 19, 1999, (iv) that certain Registration
Rights Agreement dated as of February 3, 1997, by and between the Company and
Beacon, as amended by Amendment No. 1 dated as of December 22, 1997, Amendment
No. 2 dated May 7, 1998, Amendment No. 3 dated as of April 16, 1999, Amendment
No. 4 dated as of October 30, 1999, and Amendment No. 5 dated as of November 19,
1999, (v) that certain Registration Rights Agreement dated as of April 16, 1999,
by and among the Company, USITF, Encompass, and TCI as amended by Amendment No.
1 dated as of
5
October 30, 1999 and Amendment No. 2 dated as of November 19, 1999, (vi) the
certain Registration Rights Agreement dated as of October 30, 1999 by and
between the Company and the former shareholders of Acorn Information Systems,
Inc. and one additional party, as amended by Amendment No. 1 dated as of
November 19, 1999 and (vii) that certain Registration Rights Agreement dated as
of November 19, 1999 by and between the Company and Xxxxxxx (which may have
added additional parties as contemplated by the Xxxxxxx Purchase Agreement).
"Securities Act" means the Securities Act of 1933, as amended, and,
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where applicable, the rules and regulations promulgated thereunder.
"Series A Preferred" means Series A Preferred Stock, par value $.001 per
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share, of the Company.
"Series B Preferred" means Series B Convertible Preferred Stock, par
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value $.001 per share, of the Company.
"Series C Preferred" means Series C Convertible Preferred Stock, par
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value $.001 per share, of the Company.
"Series D Preferred" means Series D Convertible Preferred Stock, par
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value $.001 per share, of the Company.
"Series E Preferred" means Series E Convertible Preferred Stock, par
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value $.001 per share, of the Company.
"Series F Additional Adjustments" has the meaning given it in the
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Certificate.
"Series F Preferred" means Series F Convertible Preferred Stock, par
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value $.001 per share, of the Company.
"Series NB Warrant" means a Series NB Warrant to purchase shares of
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Common Stock as amended and restated on November 19, 1999.
"Shareholders" means the stockholders party to this Agreement and/or the
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Original Agreement, and any other subsequent holder of Stock who agrees to be
bound by the terms of this Agreement.
"SLI" means Squam Lake Investors II, L.P.
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"Spider Series A Preferred Stock" means Series A Preferred Stock, par
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value $0.0001 of Spider Technologies, Inc., a Delaware corporation.
"Stock" means any shares of Common Stock and any Common Stock
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Equivalents (including, without limitation, the Series A Preferred, Series B
Preferred, Series C Preferred,
6
Series D Preferred, Series E Preferred, Series F Preferred, and the Common Stock
issuable upon conversion or exercise thereof or upon exercise of a Series NB
Warrant), in each case, whether owned on the date hereof or acquired hereafter.
"Subsidiary" means with respect to any Person, (i) any corporation,
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partnership or other entity of which shares of capital stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other similar managing body of such corporation, partnership or
other entity are at the time owned by such Person, or (ii) the management of
which is otherwise controlled, directly or indirectly, through one or more
intermediaries by such Person.
"Tag-Along Ratio" means with respect to a Tag Along Offeree, a fraction,
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the numerator of which is the number of shares of outstanding Common Stock owned
by such Tag-Along Offeree as of the date of a proposed Transfer subject to
Section 6 and the denominator of which is the aggregate number of shares of
outstanding Common Stock owned as of the date of the relevant Tag-Along Notice
by each Tag-Along Initiator and by all other Tag-Along Offerees.
"Transfer" as to any Stock, means to sell, or in any other way, directly
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or indirectly, transfer, assign, distribute, pledge, encumber or otherwise
dispose of, either voluntarily or involuntarily; provided, however, that the
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term "Transfer" shall not include the transfer, assignment, distribution,
pledge, encumbrance or other disposition of all or any part of a Series NB
Warrant in accordance with the terms of such Series NB Warrant.
"Unit" shall have the meaning assigned thereto in the Certificate.
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"Voting Shares" means any securities of the Company the holders of which
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are generally entitled to vote for members of the Board (including, without
limitation, all outstanding shares of Common Stock and Preferred Stock).
"Warrants" means the Amended and Restated Warrant NB-1 of the Company to
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acquire additional Common Stock of the Company.
Section 2. Methodology for Calculations.
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For purposes of this Agreement, the Transfer of a Common Stock
Equivalent shall be treated as the Transfer of the shares of Common Stock into
which such Common Stock Equivalent can be converted, exchanged or exercised.
Except as otherwise provided in this Agreement, for purposes of calculating (a)
the amount of outstanding Common Stock as of any date, (b) the amount of Common
Stock owned by a Person hereunder and (c) related percentages and ratios, all
outstanding shares of the Preferred Stock, the Purchase Option and Series NB
Warrants (but no other Common Stock Equivalents) shall be treated as having been
converted, exchanged or exercised. The Series F Additional Adjustments shall
not be deemed to result in an increase in the number of shares of outstanding
Common Stock until such adjustments occur.
7
Section 3. Corporate Governance.
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3.1. Composition of the Board.
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(a) Pre-Qualified IPO. Prior to a Qualified IPO, the Board of
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Directors of the Company (the "Board") shall include not more than ten members
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(except as provided in Section 3.1 (a)(vii)) and shall be composed as follows
and as further described in Section 3.1(a)(xi):
(i) Commencing on the closing of the transactions contemplated by
the Purchase Agreement and for so long thereafter as Conning and its Affiliates,
in the aggregate, hold, directly or indirectly, 5% or more of the outstanding
Common Stock (the "Conning Pre-IPO Threshold"), Conning shall have the right to
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designate two persons to serve as members of the Board (each, a "Conning
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Director"); provided, however, that if Conning and its Affiliates, in the
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aggregate, hold, directly or indirectly, less than the Conning Pre-IPO
Threshold, then Conning shall not be entitled to designate any directors, and
the Shareholders shall have the right to remove, with or without cause and
without any further action by any Shareholder or director, any and all Conning
Directors and the right to designate, by election, two new directors, each of
whom shall be an Independent Director;
(ii) Commencing on the closing of the transactions contemplated by
the Purchase Agreement and for so long thereafter as Beacon and its Affiliates,
in the aggregate, hold, directly or indirectly, 5% or more of the outstanding
Common Stock (the "Beacon Pre-IPO Threshold"), Beacon shall have the right to
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designate two persons to serve as members of the Board (each, a "Beacon
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Director"); provided, however, that if Beacon and its Affiliates, in the
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aggregate, hold, directly or indirectly, less than the Beacon Pre-IPO Threshold,
then Beacon shall not be entitled to designate any directors, and the
Shareholders shall have the right to remove, with or without cause and without
any further action by any Shareholder or director, any and all Beacon Directors
and the right to designate, by election, two new directors, each of whom shall
be an Independent Director;
(iii) As long as he is the Chief Executive Officer or Chairman of the
Board of the Company, X'Xxxxxxx shall have the right to designate three persons
to serve as members of the Board (each, an "X'Xxxxxxx Director"), one of whom
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shall be X'Xxxxxxx as long as he is the Chief Executive Officer or Chairman of
the Board of the Company; provided, however, that (A) if X'Xxxxxxx is neither
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the Chief Executive Officer nor Chairman of the Board of the Company (other than
by reason of his removal from such position(s) by the Company for Cause) and, in
combination with his Affiliates, continues to own at least 50% of the number of
shares of outstanding Common Stock (adjusted appropriately to reflect stock
splits and combinations and stock dividends) that he and his Affiliates owned,
in the aggregate, as of February 3, 1997, then X'Xxxxxxx shall be entitled to
designate two persons to serve as members of the Board (who shall be the only
X'Xxxxxxx Directors), and the Shareholders shall have the right to remove, with
or without cause and without further action by any Shareholder or director, any
other X'Xxxxxxx Director and the right to designate, by election, one new
director, who shall be an Independent Director, (B) if X'Xxxxxxx is neither the
Chief Executive Officer nor Chairman of the Board of
8
the Company for any reason and he and his Affiliates, in the aggregate, hold,
directly or indirectly, 5% or more of the outstanding Common Stock, X'Xxxxxxx
shall have the right to designate one person (who may be himself) to serve as a
member of the Board (who shall be the only X'Xxxxxxx Director) and the
Shareholders shall have the right to remove, with or without cause and without
further action by any Shareholder or director, any other X'Xxxxxxx Director and
the right to designate, by election, two new directors, who shall be Independent
Directors and (C) except as provided in the preceding clause (B), (I) if
X'Xxxxxxx is neither the Chief Executive Officer nor Chairman of the Board of
the Company by reason of his removal by the Company from such position(s) for
Cause or (II) if X'Xxxxxxx is neither the Chief Executive Officer nor Chairman
of the Board of the Company for any reason and, in combination with his
Affiliates, does not continue to own, directly or indirectly, at least 50% of
the number of shares of outstanding Common Stock (adjusted appropriately to
reflect stock splits and combinations and stock dividends) that he and his
Affiliates owned, in the aggregate, as of February 3, 1997, then X'Xxxxxxx shall
not be entitled to designate any directors, and the Shareholders shall have the
right to remove, with or without cause and without any further action by any
Shareholder or director, any and all X'Xxxxxxx Directors and the right to
designate, by election, three new directors, each of whom shall be an
Independent Director;
(iv) As long as RBC and its Affiliates, in the aggregate, own,
directly or indirectly, at least 1,800,000 shares of outstanding Common Stock on
an as-converted basis (adjusted appropriately to reflect stock splits and
combinations and stock dividends, but excluding any received or receivable upon
a Series A PIK Election as defined in the Certificate) RBC shall have the right
to designate one person to serve as a member of the Board (the "RBC Director");
------------
provided, however, that if RBC and its Affiliates, in the aggregate, own,
-------- -------
directly or indirectly, less than 1,800,000 shares of outstanding Common Stock
on an as-converted basis (adjusted appropriately to reflect stock splits and
combinations and stock dividends, but excluding any received or receivable upon
a Series A PIK Election as defined in the Certificate), then RBC shall not be
entitled to designate any director, and (A) if Conning, Beacon and X'Xxxxxxx
each have the right to designate at least two directors pursuant to Sections
3.1(a)(i), 3.1(a)(ii) and 3.1(a)(iii), then X'Xxxxxxx, Conning and Beacon shall
have the right to remove, with or without cause and without any further action
by any Shareholder or director, the RBC Director and the right to designate, by
mutual agreement, one new director, who shall be an Independent Director; (B) if
less than all of X'Xxxxxxx, Conning or Beacon continue to have the right to
designate at least two directors pursuant to Sections 3.l(a)(i), 3.l(a)(ii) and
3.1(a)(iii), then whichever of them continues to have such rights shall have the
right (acting by mutual agreement if more than one) to remove, with or without
cause and without any further action by any Shareholder or director, the RBC
Director and the right (acting by mutual agreement if more than one) to
designate one new director, who shall be an Independent Director, and (C) if
none of X'Xxxxxxx, Conning or Beacon is entitled to designate at least two
directors pursuant to Sections 3.1(a)(i), 3.1(a)(ii) and 3.1(a)(iii), then the
Shareholders voting as a single class on an as-converted to Common Stock basis,
shall have the right to remove, with or without cause and without any further
action by any Shareholder or director, the RBC Director and the right to
designate, by election, one new director, who shall be an Independent Director;
9
(v) Conning, Beacon and X'Xxxxxxx, if he is either Chairman of the
Board or Chief Executive Officer, shall by mutual agreement, or if X'Xxxxxxx is
then neither Chairman of the Board nor Chief Executive Officer, the Shareholders
voting as a single class on an as-converted to Common Stock basis, shall have
the right to appoint one director and remove, with or without cause and without
any further action by any Shareholder or director, such director and the right
to designate, by election, one new director, who shall be an Independent
Director (the "Agreed Director"). The initial Agreed Director is Xxxxxxx Xxxx;
---------------
(vi) Commencing on the closing of the transactions contemplated by
the Purchase Agreement and for so long thereafter as TCI and its Affiliates, in
the aggregate, hold, directly or indirectly, 4% or more of the outstanding
Common Stock (the "TCI Pre-IPO Threshold"),TCI shall have the right to designate
---------------------
one person to serve as a member of the Board (the "TCI Director"); provided,
------------ --------
however, that if TCI and its Affiliates, in the aggregate, hold, directly or
-------
indirectly, less than the TCI Pre-IPO Threshold, then TCI shall not be entitled
to designate any director, and the Shareholders shall have the right to remove,
with or without cause and without any further action by any Shareholder or
director, the TCI Director and the right to designate, by election, one new
director, who shall be an Independent Director;
(vii) If a Qualified IPO has not closed before July 31, 2000, (A) the
Board shall be expanded to include not more than eleven members and (B) Xxxxxxx,
and for so long thereafter as Xxxxxxx and its Affiliates, in the aggregate,
hold, directly or indirectly, 4% or more of the outstanding Common Stock (the
"Xxxxxxx Pre-IPO Threshold"), shall have the right to designate one person to
-------------------------
serve as a member of the Board (the "Xxxxxxx Director"); provided, however, that
---------------- -------- -------
if Xxxxxxx and its Affiliates, in the aggregate, hold, directly or indirectly,
less than the Xxxxxxx Pre-IPO Threshold, then Xxxxxxx shall not be entitled to
designate any director, and the Shareholders shall have the right to remove,
with or without cause and without any further action by any Shareholder or
director, the Brinson Director and shall have the right to designate, by
election, one new director, who shall be an Independent Director;
(viii) Subject to Section 3.1(a)(xi), each action of the Board of
Directors shall require seven affirmative votes except that if there is a
Xxxxxxx Director, each such action shall require eight affirmative votes;
(ix) Notwithstanding any other provisions of this Agreement, if the
consolidated financial statements of the Company for the twelve month period
ending March 31, 2001, do not report a positive number for earnings before taxes
and before amortization of goodwill in respect of companies or operations
acquired by the Company or its Subsidiaries after January 1, 1998, (utilizing
the same accounting principles, standards and assumptions as in effect on May 5,
1998 and excluding the effects of (i) performance based compensation paid to
executives of companies or operations acquired by the Company or its
Subsidiaries in an amount (which may be all or a part of such compensation) as
determined by the audit committee of the Board prior to the time of signing of
the letter of intent or term sheet for the acquisition, (ii) such other or
similar charges and costs as the Company's Board of Directors, Conning and
Beacon may agree in writing are appropriate in respect of a particular purchase
of a business, and (iii)
10
accounting charges in respect of stock options including repriced options if
such option or repricing was approved by the Board); then from and after the
date of such financial statements (regardless of whether the Company
subsequently reports a positive such number with respect to any subsequent
fiscal year), action of the Board shall require twelve affirmative votes, and
(A) each Beacon Director shall be entitled to cast three votes, (B) each Conning
Director shall be entitled to cast three votes, (C) each other director shall be
entitled to cast one vote, and (D) the Beacon Directors and Conning Directors
will use good faith efforts to exercise their voting rights together; and
(x) The number of directors that comprise the Board of Directors may
not be changed (A) without the consent of Conning, so long as Conning and its
Affiliates, in the aggregate, continue to own, directly or indirectly, shares of
Stock comprising on an as-converted and as-exercised basis at least the Conning
Pre-IPO Threshold, (B) without the consent of Beacon, so long as Beacon and its
Affiliates, in the aggregate, continue to own, directly or indirectly, shares of
Stock comprising on an as-converted and as-exercised basis at least the Beacon
Pre-IPO Threshold, (C) without the consent of X'Xxxxxxx, so long as X'Xxxxxxx is
entitled to designate an X'Xxxxxxx Director, and (D) without the consent of RBC,
so long as RBC and its Affiliates, in the aggregate, own, directly or
indirectly, at least 2,900,000 shares of outstanding Common Stock on an as-
converted basis (adjusted appropriately to reflect stock splits and combinations
and stock dividends, but excluding any received or receivable upon a Series A
PIK Election as defined in the Certificate).
(xi) As of the date hereof, the Company is in the process of
preparing a registration statement to register its Common Stock with the SEC for
an IPO. Subsequent to the date hereof and prior to the closing of an IPO, or the
termination without closing of the IPO, the composition of the Board of
Directors will be as follows, subject to the rights in (xii) below. The Board of
Directors shall consist of one (1) Conning Director, two (2) Beacon Directors,
Xxxxxxx X. X'Xxxxxxx, Xxxx Xxxxxx and Xxxxxxx Xxxx. The provisions of Sections
3.1(a)(i) (as to the Conning Director), 3.1(a)(ii) (as to the Beacon Directors),
3.1(a)(iii)(as to Xxxxxxx X. X'Xxxxxxx and Xxxx Xxxxxx, and 3.1(a)(v) (as to
Xxxxxxx Xxxx) shall apply. Each decision of the Board of Directors shall require
four (4) affirmative votes at all times that there are six (6) directors. This
subsection (xi) shall be of no further force at the earlier of either (i) the
Board of Directors decides to not continue with or close the IPO or (ii) July
31, 2000.
(xii) Notwithstanding subsection (xi) above, during the period
subsection (xi) is applicable, RBC may reappoint an RBC Director (if it has such
right pursuant to Section 3.1(a)(iv), and TCI may reappoint a TCI Director (if
it has such right pursuant to Section 3.1(a)(vi)). At such time as subsection
(xi) is applicable, and there is either (but not both) an RBC Director or TCI
Director, the Board shall consist of seven members and any action shall require
five (5) affirmative votes, and if there is both an RBC Director and TCI
Director, the Board shall consist of eight members and any action shall require
six (6) affirmative votes. The provisions of Subsections (xi) and (xii) do not
supersede the rights to a Non-Voting Observer under Section 3.4.
11
(b) Post Qualified IPO.
------------------
(i) From and after a Qualified IPO and for so long as Conning and
its Affiliates, in the aggregate, hold (x) 25% or more of the number of shares
of Series D Preferred purchased by Conning pursuant to the Purchase Agreement or
(y) 5% or more of the outstanding Common Stock (the "Conning Post-IPO
----------------
Threshold"), in connection with any election for members of the Board, the
---------
Company shall, at the request of Conning, include one representative designated
by Conning in the slate of directors recommended by the Board to stockholders
for election as directors (such representative designated by Conning being
referred to herein as the "Conning Designee"). The Company and the Shareholders
----------------
shall each use their best efforts to cause the Conning Designee to be elected
to, and to be maintained as a member of, the Board (including (a) in the case of
the Company, recommending to the stockholders of the Company the election of the
Conning Designee to the Board and opposing any proposal to remove the Conning
Designee at each meeting of the stockholders of the Company at which the
election or removal of members of the Board is on the agenda and (b) in the case
of the Shareholders, voting all of their Voting Shares in favor of the Conning
Designee, and voting such shares against any person opposing the Conning
Designee), and shall take no action that would diminish the prospects of the
Conning Designee being elected to the Board or increase the prospects of the
Conning Designee being removed from the Board.
(ii) From and after a Qualified IPO and for so long as Beacon and its
Affiliates, in the aggregate, hold (x) 25% or more of the number of shares of
Series B Preferred purchased by Beacon pursuant to the Purchase Agreement, or
(y) 5% or more of the outstanding Common Stock (the "Beacon Post-IPO
---------------
Threshold"), in connection with any election for members of the Board, the
---------
Company shall, at the request of Beacon, include one representative designated
by Beacon in the slate of directors recommended by the Board to stockholders for
election as directors (such representative designated by Beacon being referred
to herein as the "Beacon Designee"). The Company and the Shareholders shall
---------------
each use their best efforts to cause the Beacon Designee to be elected to, and
to be maintained as a member of, the Board (including (a) in the case of the
Company, recommending to the stockholders of the Company the election of the
Beacon Designee to the Board and opposing any proposal to remove the Beacon
Designee at each meeting of the stockholders of the Company at which the
election or removal of members of the Board is on the agenda and (b) in the case
of the Shareholders, voting all of their Voting Shares in favor of the Beacon
Designee, and voting such shares against any person opposing the Beacon
Designee), and shall take no action that would diminish the prospects of the
Beacon Designee being elected to the Board or increase the prospects of the
Beacon Designee being removed from the Board. The Beacon Designee shall be Xxxx
X. Xxxxxxxxx as long as he is a partner of The Beacon Group or a member of The
Beacon Group Holdings, L.L.C.
(iii) From and after a Qualified IPO and for so long as X'Xxxxxxx (A)
is the Chief Executive Officer or Chairman of the Board of the Company or (B)
(I) owns in combination with his Affiliates, at least 50% of the number of
shares of outstanding Common
12
Stock (adjusted appropriately to reflect stock splits and combinations and stock
dividends) that he and his Affiliates owned, in the aggregate, as of February 3,
1997, and (II) has for Cause ceased to be both the Chief Executive Officer and
Chairman of the Board of the Company, or (C) owns in conjunction with his
Affiliates 5% or more of the outstanding Common Stock, in connection with any
election for members of the Board, the Company shall, at the request of
X'Xxxxxxx, include one representative designated by him (which may be him) in
the slate of directors recommended by the Board to stockholders for election as
directors (such representative designated by X'Xxxxxxx being referred to herein
as the "X'Xxxxxxx Designee"). The Company and the Shareholders shall each use
------------------
their best efforts to cause the X'Xxxxxxx Designee to be elected to, and to be
maintained as a member of, the Board (including (a) in the case of the Company,
recommending to the stockholders of the Company the election of the X'Xxxxxxx
Designee to the Board and opposing any proposal to remove the X'Xxxxxxx Designee
at each meeting of the stockholders of the Company at which the election or
removal of members of the Board is on the agenda and (b) in the case of the
Shareholders, voting all of their Voting Shares in favor of the X'Xxxxxxx
Designee, and voting such shares against any person opposing the X'Xxxxxxx
Designee), and shall take no action that would diminish the prospects of the
X'Xxxxxxx Designee being elected to the Board or increase the prospects of the
X'Xxxxxxx Designee being removed from the Board.
(iv) From and after a Qualified IPO and for so long as RBC and its
Affiliates, in the aggregate, own at least 10% of the outstanding Common Stock,
in connection with any election for members of the Board, the Company shall, at
the request of RBC, include one representative designated by RBC in the slate of
directors recommended by the Board to stockholders for election as directors
(such representative designated by RBC being referred to herein as the "RBC
---
Designee"). The Company and the Shareholders shall each use their best efforts
--------
to cause the RBC Designee to be elected to, and to be maintained as a member of,
the Board (including (a) in the case of the Company, recommending to the
stockholders of the Company the election of the RBC Designee to the Board and
opposing any proposal to remove the RBC Designee at each meeting of the
stockholders of the Company at which the election or removal of members of the
Board is on the agenda and (b) in the case of the Shareholders, voting all of
their Voting Shares in favor of the RBC Designee, and voting such shares against
any person opposing the RBC Designee), and shall take no action that would
diminish the prospects of the RBC Designee being elected to the Board or
increase the prospects of the RBC Designee being removed from the Board.
(v) The rights under this Section 3.1(b) are specifically subject to
the termination provisions of Section 14, so that if a Qualified IPO closes
prior to July 31, 2000, this Section 3.1 shall be of no further force or effect.
(vi) The parties acknowledge that the Company may enter into separate
agreements, effective upon an IPO, with Conning whereby the Company agrees to
nominate a Conning designee to the Board of Directors, with Beacon whereby the
Company agrees to nominate one or two Beacon designees to the Board of
Directors, and with X'Xxxxxxx whereby
13
the Company agrees to nominate an X'Xxxxxxx designee (which may be X'Xxxxxxx) to
the Board of Directors in each case subject to its fiduciary duties in respect
of such nomination.
3.2. Committees; Subsidiaries; Audit Committee; Compensation Committee.
-----------------------------------------------------------------
(a) Subject to the provisions set forth in paragraphs (c) and (d) below,
the Company will, to the extent requested by any of Conning, Beacon, X'Xxxxxxx,
RBC, TCI or Xxxxxxx (if it is entitled to a Xxxxxxx Director), take all actions
necessary to cause at least one Conning Director, Conning Designee, Beacon
Director, Beacon Designee, X'Xxxxxxx Director, X'Xxxxxxx Designee, Agreed
Director, RBC Director, RBC Designee, TCI Director, or Xxxxxxx Director (if it
is entitled to a Xxxxxxx Director), as the case may be, to be appointed to each
committee of the Board and to each of the boards of directors or other similar
managing bodies (and any committee thereof) of each of the Subsidiaries of the
Company.
(b) Subject to the provisions set forth in paragraphs (c) and (d) below,
the Company shall, to the extent requested by Conning, Beacon, X'Xxxxxxx, RBC,
TCI, or Xxxxxxx (if it is entitled to a Xxxxxxx Director), as the case may be,
elect as the board of directors of each Subsidiary those persons who are at the
time Conning Directors, Beacon Directors, X'Xxxxxxx Directors, the RBC Director,
Agreed Director, the TCI Director, a Xxxxxxx Director, a Conning Designee, a
Beacon Designee, an X'Xxxxxxx Designee or an RBC Designee as provided in Section
3.1. If any Conning Director, Conning Designee, Beacon Director, Beacon
Designee, X'Xxxxxxx Director, X'Xxxxxxx Designee, Agreed Director, RBC Director,
RBC Designee, TCI Director or Xxxxxxx Director serving on any committee of the
Board or on any board of directors or other similar managing body (and any
committee thereof) of any Subsidiary of the Company shall cease to serve as a
member of the Board for any reason or otherwise is unable to fulfill his or her
duties on any such committee, board of directors, or other similar managing
body, as the case may be, he or she shall be succeeded by another Person
designated (i) by Conning (with respect to Conning Directors or Conning
Designees), so long as Conning is entitled to designate Conning Directors or a
Conning Designee, as applicable, (ii) by Beacon (with respect to Beacon
Directors or Beacon Designees), so long as Beacon is entitled to designate
Beacon Directors or a Beacon Designee, as applicable, (iii) by X'Xxxxxxx (with
respect to X'Xxxxxxx Directors or X'Xxxxxxx Designees), so long as X'Xxxxxxx is
entitled to designate an X'Xxxxxxx Director or an X'Xxxxxxx Designee, as
applicable, (iv) by RBC (with respect to the RBC Director or RBC Designee), so
long as RBC is entitled to designate an RBC Director or an RBC Designee, as
applicable, (v) as provided in Section 3.1(a)(v) (with respect to the Agreed
Director), (vi) by TCI (with respect to the TCI Director), so long as TCI is
entitled to designate a TCI Director or (vii) by Xxxxxxx (with respect to the
Xxxxxxx Director), so long as Xxxxxxx is entitled to designate a Xxxxxxx
Director.
(c) For so long as requested by Conning or Beacon, there shall be an audit
committee and a compensation committee of the Board of Directors. Each such
committee shall have the scope of responsibilities typical of that type of
committee, but shall only recommend actions to the entire Board of Directors and
shall have no authority to bind the Company. The entire Board of Directors will
not adopt any action contrary to a properly authorized
14
compensation committee or audit committee decision and if the Board of Directors
disagrees with such a decision then no action on the matter may be taken until
there is agreement between the committee and the Board of Directors (except that
this sentence does not apply to any decision as to a matter: (i) that was not
within the scope of the committee's responsibility or (ii) which the Board of
Directors cannot delegate to a committee pursuant to the Delaware General
Corporation Law). The compensation committee shall, among other things,
recommend whether stock option grants will be incentive stock options or non-
qualified stock options. Except as otherwise provided in Section 3.6, a meeting
of the committee may be called by any two of the committee members upon four (4)
days notice. Each such committee shall have three members, shall act by majority
vote of all the committee members, and each member of the committee must be a
director of the Company. Prior to a Qualified IPO, each such committee shall
consist of a designee appointed by X'Xxxxxxx if he is the Chairman of the
Company, or, if he is not, by the Chief Executive Officer of the Company (which
designee may be the Chairman or Chief Executive Officer), a designee appointed
by Beacon so long as Beacon is entitled to designate a Beacon Director under
Section 3.1(a)(ii), and a designee appointed by Conning so long as Conning is
entitled to designate a Conning Director under Section 3.1(a)(i). If Beacon or
Conning do not have a right to appoint a designee, then that committee position
shall be filled by a director of the Company appointed by the Board of Directors
of the Company. The person designating a committee member or observer shall be
entitled to remove and replace its designee from time to time.
The provisions of this paragraph (c) shall terminate upon a Qualified IPO.
(d) Notwithstanding anything in this Section 3.2 to the contrary, no
Shareholder shall be entitled to the rights set forth in paragraphs (a) or (b)
unless such Shareholder is entitled to designate a person to serve as a member
of the Board pursuant to Section 3.1(a) or as a designee as contemplated by
Section 3.1(b).
3.3. Vacancies; Removal.
------------------
(a) If any Conning Director or any Conning Designee shall cease to serve
as a director of the Company for any reason, the vacancy resulting thereby shall
be filled by another person designated by Conning, so long as Conning is
entitled to designate Conning Directors or a Conning Designee, as applicable.
(b) None of the Conning Directors nor any Conning Designee shall be
removed from office without the consent of Conning, so long as Conning is
entitled to designate Conning Directors or a Conning Designee, as applicable.
Each Conning Director and Conning Designee may be removed from office at any
time, with or without cause, at the request of Conning, so long as Conning is
entitled to designate Conning Directors or a Conning Designee, as applicable.
(c) If any Beacon Director or any Beacon Designee shall cease to serve as
a director of the Company for any reason, the vacancy resulting thereby shall be
filled by another
15
person designated by Beacon, so long as Beacon is entitled to designate Beacon
Directors or a Beacon Designee, as applicable.
(d) None of the Beacon Directors nor any Beacon Designee shall be removed
from office without the consent of Beacon, so long as Beacon is entitled to
designate Beacon Directors or a Beacon Designee, as applicable. Each Beacon
Director and Beacon Designee may be removed from office at any time, with or
without cause, at the request of Beacon, so long as Beacon is entitled to
designate Beacon Directors or a Beacon Designee, as applicable.
(e) If any X'Xxxxxxx Director or any X'Xxxxxxx Designee shall cease to
serve as a director of the Company for any reason (other than as set forth in
Section 3.1(a)(iii)), the vacancy resulting thereby shall be filled by another
person designated by X'Xxxxxxx, so long as and only to the extent that X'Xxxxxxx
is entitled to designate an X'Xxxxxxx Director or an X'Xxxxxxx Designee, as
applicable.
(f) Except as set forth in Section 3.l (a)(iii), none of the X'Xxxxxxx
Directors shall be removed from office without the consent of X'Xxxxxxx, so long
as and only to the extent that X'Xxxxxxx is entitled to designate an X'Xxxxxxx
Director or an X'Xxxxxxx Designee, as applicable. Each X'Xxxxxxx Director may be
removed from office at any time, with or without cause, at the request of
X'Xxxxxxx, so long as and only to the extent that X'Xxxxxxx is entitled to
designate an X'Xxxxxxx Director or an X'Xxxxxxx Designee, as applicable.
(g) If any RBC Director or any RBC Designee shall cease to serve as a
director of the Company for any reason (other than as set forth in Section 3.l
(a)(iv)), the vacancy resulting thereby shall be filled by another person
designated by RBC, so long as and only to the extent that RBC is entitled to
designate an RBC Director or an RBC Designee, as applicable.
(h) Except as set forth in Section 3.1(a)(iv), no RBC Director shall be
removed from office without the consent of RBC, so long as and only to the
extent that RBC is entitled to designate an RBC Director or an RBC Designee, as
applicable. Each RBC Director may be removed from office at any time, with or
without cause, at the request of RBC, so long as and only to the extent that RBC
is entitled to designate an RBC Director or an RBC Designee, as applicable.
(i) If the Agreed Director shall cease to serve as a director of the
Company Conning, Beacon and X'Xxxxxxx, if he is either Chairman of the Board or
Chief Executive Officer shall by mutual agreement, or if X'Xxxxxxx is not then
either Chairman of the Board or Chief Executive Officer, the Shareholders voting
as a single class on an as-converted to Common Stock basis, shall have the right
to remove, with or without cause and without any further action by any
Shareholder or director, the Agreed Director and the right to designate, by
election, one new director, who shall be an Independent Director; and Conning,
Beacon and X'Xxxxxxx, if he is either Chairman of the Board or Chief Executive
Officer shall by mutual agreement, or if X'Xxxxxxx is not then either Chairman
of the Board or Chief Executive Officer, the Shareholders voting as a single
class on an as-converted to Common Stock basis shall have
16
the right to remove, with or without cause and without any further action by any
Shareholder or director, any substitute Agreed Director and the right to
designate, by election, one new director, who shall be an Independent Director.
(j) Except as set forth in Section 3.1(a)(v) and in Section 3.3(i), the
Agreed Director (or substitute Agreed Director, if applicable) shall not be
removed from office without the consent of X'Xxxxxxx and the other Shareholders,
so long as and only to the extent that the Agreed Director or, under the
circumstances set forth in Section 3.3(i), a substitute Agreed Director is
entitled to serve in such capacity.
(k) If the TCI Director shall cease to serve as a director of the Company
for any reason (other than as set forth in Section 3.l (a)(vi)), the vacancy
resulting thereby shall be filled by another person designated by TCI, so long
as and only to the extent that TCI is entitled to designate a TCI Director.
(l) Except as set forth in Section 3.1(a)(vi), no TCI Director shall be
removed from office without the consent of TCI, so long as and only to the
extent that TCI is entitled to designate a TCI Director. The TCI Director may be
removed from office at any time, with or without cause, at the request of TCI,
so long as and only to the extent that TCI is entitled to designate a TCI
Director.
(m) If the Xxxxxxx Director shall cease to serve as a director of the
Company for any reason (other than as set forth in Section 3.1(a)(vii)), the
vacancy resulting thereby shall be filled by another person designated by
Xxxxxxx, so long as and only to the extent that Xxxxxxx is entitled to designate
a Xxxxxxx Director.
(n) Except as set forth in Section 3.1(a)(vii), no Xxxxxxx Director shall
be removed from office without the consent of Xxxxxxx, so long as and only to
the extent that Xxxxxxx is entitled to designate a Xxxxxxx Director. The Brinson
Director may be removed from office at any time, with or without cause, at the
request of Xxxxxxx, so long as and only to the extent that Xxxxxxx is entitled
to designate a Xxxxxxx Director.
3.4. Non-Voting Observer.
-------------------
(a) At such time as there is no TCI Director, the Company agrees that TCI,
so long as TCI holds 2% or more of the outstanding Common Stock, will be
entitled to have one observer (a "TCI Non-Voting Observer") selected by TCI
-----------------------
present at all meetings of the Board so long as such TCI Non-Voting Observer
executes a confidentiality agreement in form reasonably satisfactory to the
Board and TCI covering such matters, information and materials as may be
disclosed in connection with such Board meetings and such observer shall have
the same access to information concerning the business and operations of the
Company and at the same time as directors of the Company and shall be entitled
to participate in discussions and consult with, and make proposals and furnish
advice to, the Board, without voting, so long as such TCI Non-Voting Observer
executes a confidentiality agreement in form reasonably satisfactory to the
17
Board and TCI covering such matters, information and materials as may be
disclosed in connection with such Board meetings; provided, however, that the
-------- -------
Board shall be under no obligation to take any action with respect to any
proposals made or advice furnished by any TCI Non-Voting Observer, other than to
give due consideration thereto. In addition to any requirements specified in the
By-laws, the Company shall notify the TCI Non-Voting Observer, by telecopy, of
every meeting (or action by written consent) of the Board at least 48 hours in
advance of such meeting (or distribution of written consents), or, if such
notice under the circumstances is not practicable, as soon before the meeting
(or distribution) as is practicable, provided that nothing in this Section 3.4
--------
shall be construed in any way to authorize or allow a party hereto not to comply
with its obligations hereunder or release it from liability and equitable remedy
in the case of a breach.
(b) The Company agrees that if at any meeting for the election of
directors any Conning Director or Conning Designee is not elected to the Board,
or if for any other reason, at any time, neither a Conning Designee nor any
Conning Director is a member of the Board, Conning, so long as Conning holds 10%
or more of the outstanding Common Stock, will be entitled to have one observer
(a "Conning Non-Voting Observer") selected by Conning present at all meetings of
---------------------------
the Board so long as such Conning Non-Voting Observer executes a confidentiality
agreement in form reasonably satisfactory to the Board and Conning covering such
matters, information and materials as may be disclosed in connection with such
Board meetings and such observer shall have the same access to information
concerning the business and operations of the Company and at the same time as
directors of the Company and shall be entitled to participate in discussions and
consult with, and make proposals and furnish advice to, the Board, without
voting, so long as such Conning Non-Voting Observer executes a confidentiality
agreement in form reasonably satisfactory to the Board and Conning covering such
matters, information and materials as may be disclosed in connection with such
Board meetings; provided, however, that the Board shall be under no obligation
-------- -------
to take any action with respect to any proposals made or advice furnished by any
Conning Non-Voting Observer, other than to give due consideration thereto. In
addition to any requirements specified in the By-laws, the Company shall notify
the Conning Non-Voting Observer, by telecopy, of every meeting (or action by
written consent) of the Board at least 48 hours in advance of such meeting (or
distribution of written consents), or, if such notice under the circumstances is
not practicable, as soon before the meeting (or distribution) as is practicable,
provided that nothing in this Section 3.4 shall be construed in any way to
--------
authorize or allow a party hereto not to comply with its obligations hereunder
or release it from liability and equitable remedy in the case of a breach.
(c) The Company agrees that if at any meeting for the election of
directors any Beacon Director or Beacon Designee is not elected to the Board, or
if for any other reason, at any time, neither a Beacon Designee nor any Beacon
Director is a member of the Board, Beacon, so long as Beacon holds 10% or more
of the outstanding Common Stock, will be entitled to have one observer (a
"Beacon Non-Voting Observer") selected by Beacon present at all meetings of the
--------------------------
Board so long as such Beacon Non-Voting Observer executes a confidentiality
agreement in form reasonably satisfactory to the Board and Beacon covering such
matters, information and materials as may be disclosed in connection with such
Board meetings, and such observer shall
18
have the same access to information concerning the business and operations of
the Company and at the same time as directors of the Company and shall be
entitled to participate in discussions and consult with, and make proposals and
furnish advice to, the Board, without voting so long as such Beacon Non-Voting
Observer executes a confidentiality agreement in form reasonably satisfactory to
the Board and Beacon covering such matters, information and materials as may be
disclosed in connection with such Board meetings; provided, however, that the
-------- -------
Board shall be under no obligation to take any action with respect to any
proposals made or advice furnished by any Beacon Non-Voting Observer, other than
to give due consideration thereto. In addition to any requirements specified in
the By-laws, the Company shall notify the Beacon Non-Voting Observer, by
telecopy, of every meeting (or action by written consent) of the Board at least
48 hours in advance of such meeting (or distribution of written consents), or,
if such notice under the circumstances is not practicable, as soon before the
meeting (or distribution) as is practicable, provided that nothing in this
--------
Section 3.4 shall be construed in any way to authorize or allow a party hereto
not to comply with its obligations hereunder or release it from liability and
equitable remedy in the case of a breach.
(d) The Company agrees that if an RBC Designee or an RBC Director is a
member of the Board or RBC has a right to appoint an RBC Director, RBC will be
entitled to have one observer (a "RBC Non-Voting Observer") selected by RBC
-----------------------
present at all meetings of the Board so long as such RBC Non-Voting Observer
executes a confidentiality agreement in form reasonably satisfactory to the
Board and RBC covering such matters, information and materials as may be
disclosed in connection with such Board meetings and such observer shall have
the same access to information concerning the business and operations of the
Company and at the same time as directors of the Company and shall be entitled
to participate in discussions and consult with, and make proposals and furnish
advice to, the Board, without voting so long as such RBC Non-Voting Observer
executes a confidentiality agreement in form reasonably satisfactory to the
Board and RBC covering such matters, information and materials as may be
disclosed in connection with such Board meetings; provided, however, that the
-------- -------
Board shall be under no obligation to take any action with respect to any
proposals made or advice furnished by any RBC Non-Voting Observer, other than to
give due consideration thereto. In addition to any requirements specified in the
By-laws, the Company shall notify the RBC Non-Voting Observer, by telecopy, of
every meeting (or action by written consent) of the Board at least 48 hours in
advance of such meeting (or distribution of written consents), or, if such
notice under the circumstances is not practicable, as soon before the meeting
(or distribution) as is practicable, provided that nothing in this Section 3.4
--------
shall be construed in any way to authorize or allow a party hereto not to comply
with its obligations hereunder or release it from liability and equitable remedy
in the case of a breach. The RBC Non-Voting Observer shall be X. Xxxxxxx
Xxxxxxxx, Jr., until RBC designates another person.
(e) At such time as there is no Xxxxxxx Director, the Company agrees that
Xxxxxxx, so long as Xxxxxxx holds 2% or more of the outstanding Common Stock,
will be entitled to have one observer (a "Xxxxxxx Non-Voting Observer") selected
---------------------------
by Xxxxxxx present at all meetings of the Board so long as such Xxxxxxx Non-
Voting Observer executes a confidentiality agreement in form reasonably
satisfactory to the Board and Xxxxxxx covering such matters,
19
information and materials as may be disclosed in connection with such Board
meetings and such observer shall have the same access to information concerning
the business and operations of the Company and at the same time as directors of
the Company and shall be entitled to participate in discussions and consult
with, and make proposals and furnish advice to, the Board, without voting, so
long as such Xxxxxxx Non-Voting Observer executes a confidentiality agreement in
form reasonably satisfactory to the Board and Xxxxxxx covering such matters,
information and materials as may be disclosed in connection with such Board
meetings; provided, however, that the Board shall be under no obligation to take
-------- -------
any action with respect to any proposals made or advice furnished by any Xxxxxxx
Non-Voting Observer, other than to give due consideration thereto. In addition
to any requirements specified in the By-laws, the Company shall notify the
Xxxxxxx Non-Voting Observer, by telecopy, of every meeting (or action by written
consent) of the Board at least 48 hours in advance of such meeting (or
distribution of written consents), or, if such notice under the circumstances is
not practicable, as soon before the meeting (or distribution) as is practicable,
provided that nothing in this Section 3.4 shall be construed in any way to
--------
authorize or allow a party hereto not to comply with its obligations hereunder
or release it from liability and equitable remedy in the case of a breach.
3.5. Representative.
--------------
(a) In the event that, after receiving proper notice of a meeting of the
Board, a committee of the Board on which a Conning Director or Conning Designee
serves, or a meeting of any board of directors or similar managing body of any
of the Company's Subsidiaries in accordance with such entity's by-laws, any
Conning Director, Conning Designee or Conning Non-Voting Observer determines
that he or she is unable to attend such meeting, Conning shall have the right to
designate a representative to attend and observe such meeting on behalf of such
Conning Director, Conning Designee or Conning Non-Voting Observer, as the case
may be, who shall be entitled to fully participate (other than the right to
vote) in such meeting as if he were a member of the Board or committee, or a
member of the board of directors or similar managing body of the relevant
Subsidiary of the Company or a Conning Non-Voting Observer, as the case may be,
so long as such representative executes a confidentiality agreement in form
reasonably satisfactory to the Board covering such matters, information and
materials as may be disclosed in connection with such Board or committee
meetings.
(b) In the event that, after receiving proper notice of a meeting of the
Board, a committee of the Board on which a Beacon Director or Beacon Designee
serves, or a meeting of any board of directors or similar managing body of any
of the Company's Subsidiaries in accordance with such entity's by-laws, any
Beacon Director, Beacon Designee or Beacon Non-Voting Observer determines that
he or she is unable to attend such meeting, Beacon shall have the right to
designate a representative to attend and observe such meeting on behalf of such
Beacon Director, Beacon Designee or Beacon Non-Voting Observer, as the case may
be, who shall be entitled to fully participate (other than the right to vote) in
such meeting as if he were a member of the Board or committee, or a member of
the board of directors or similar managing body of the relevant Subsidiary of
the Company or a Beacon Non-Voting Observer, as the case may be, so long as such
representative executes a confidentiality agreement in form reasonably
20
satisfactory to the Board covering such matters, information and materials as
may be disclosed in connection with such Board meetings.
(c) In the event that, after receiving proper notice of a meeting of the
Board or a meeting of any board of directors or similar managing body of any of
the Company's Subsidiaries in accordance with such entity's by-laws, any RBC
Director, RBC Designee or RBC Non-Voting Observer determines that he or she is
unable to attend such meeting, RBC shall have the right to designate a
representative to attend and observe such meeting on behalf of such RBC
Director, RBC Designee, or RBC Non-Voting Observer as the case may be, who shall
be entitled to fully participate (other than the right to vote) in such meeting
as if he were a member of the Board, or a member of the board of directors or
similar managing body of the relevant Subsidiary of the Company, as the case may
be, so long as such representative executes a confidentiality agreement in form
reasonably satisfactory to the Board covering such matters, information and
materials as may be disclosed in connection with such Board meetings.
(d) In the event that, after receiving proper notice of a meeting of the
Board or a meeting of any board of directors or similar managing body of any of
the Company's Subsidiaries in accordance with such entity's by-laws, a TCI
Director determines that he or she is unable to attend such meeting, TCI shall
have the right to designate a representative to attend and observe such meeting
on behalf of such TCI Director, who shall be entitled to fully participate
(other than the right to vote) in such meeting as if he were a member of the
Board, or a member of the board of directors or similar managing body of the
relevant Subsidiary of the Company, as the case may be, so long as such
representative executes a confidentiality agreement in form reasonably
satisfactory to the Board covering such matters, information and materials as
may be disclosed in connection with such Board meetings.
(e) In the event that, after receiving proper notice of a meeting of the
Board or a meeting of any board of directors or similar managing body of any of
the Company's Subsidiaries in accordance with such entity's by-laws, a Brinson
Director determines that he or she is unable to attend such meeting, Xxxxxxx
shall have the right to designate a representative to attend and observe such
meeting on behalf of such Brinson Director, who shall be entitled to fully
participate (other than the right to vote) in such meeting as if he were a
member of the Board, or a member of the board of directors or similar managing
body of the relevant Subsidiary of the Company, as the case may be, so long as
such representative executes a confidentiality agreement in form reasonably
satisfactory to the Board covering such matters, information and materials as
may be disclosed in connection with such Board meetings.
3.6. Board and Committee Meetings.
----------------------------
The Company shall hold regular meetings of its Board on at least a
quarterly basis. The Company agrees, and shall cause the By-laws to be amended
to the extent necessary to provide, that, (i) so long as Conning meets or
exceeds the Conning Pre-IPO Threshold or Conning Post-IPO Threshold, as
applicable, the Conning Designee and each Conning Director shall have the right,
upon reasonable notice, to call meetings of the Board and of each committee
21
of the Board on which he or she is a member, and (ii) so long as Beacon meets or
exceeds the Beacon Pre-IPO Threshold or Beacon Post-IPO Threshold, as
applicable, the Beacon Designee and each Beacon Director, shall have the right,
upon reasonable notice, to call meetings of the Board and of each committee of
the Board on which he or she is a member. The Company agrees that any Conning
Non-Voting Observer or Beacon Non-Voting Observer shall have the right to
request that the Chairman of the Board or the Chief Executive Officer of the
Company call a meeting of the Board and that, upon such request, the Chairman of
the Board shall promptly call a meeting of the Board to be held at such time
(but not earlier than 48 hours from the date such request is made) as shall be
requested by the Conning Non-Voting Observer or Beacon Non-Voting Observer, as
the case may be.
3.7. Directors' Indemnification.
--------------------------
(a) Unless Conning, Beacon and the Board agree that such insurance as
described herein cannot be obtained at commercially reasonable rates, the
Company shall obtain and cause to be maintained in effect, with financially
sound insurers, a policy of directors' and officers' liability insurance
covering each of the directors of the Company, including, without limitation,
the Conning Designee, the Beacon Designee, the X'Xxxxxxx Designee, the RBC
Designee and any TCI Non-Voting Observer, Xxxxxxx Non-Voting Observer, Conning
Non-Voting Observer, Beacon Non-Voting Observer, or RBC Non-Voting Observer in
an amount of at least $3 million per occurrence and $5 million in the aggregate.
(b) The Certificate, By-laws and other organizational documents of the
Company and each of its Subsidiaries shall at all times, to the fullest extent
permitted by law, provide for indemnification of, advancement of expenses to and
limitation of the personal liability of the members of the Board and the members
of the boards of directors or other similar managing bodies of each of the
Company's Subsidiaries and such other persons, if any, who, pursuant to a
provision of such Certificates, By-laws or other organizational documents,
exercise or perform any of the powers or duties otherwise conferred or imposed
upon members of the Board or the boards of directors or other similar managing
bodies of each of the Company's Subsidiaries. Any TCI Non-Voting Observer ,
Conning Non-Voting Observer, Beacon Non-Voting Observer, RBC Non-Voting Observer
and Xxxxxxx Non-Voting Observer shall be entitled to indemnification from the
Company to the maximum extent permitted by law as though he or she were a
director of the Company and any of its Subsidiaries. Such provisions may not be
amended, repealed or otherwise modified in any manner adverse to any member of
the Board or any member of the boards of directors or other similar managing
bodies of any of the Company's Subsidiaries, until at least six years following
the latest date that any Shareholder is entitled to designate or nominate any
director or designee pursuant to Section 3.1.
(c) Each of the Conning Directors, Conning Designee, Beacon Directors,
Beacon Designee, X'Xxxxxxx Director, X'Xxxxxxx Designee, RBC Director, RBC
Designee, the Agreed Director, the TCI Director, the Xxxxxxx Director (if one)
and any TCI Non-Voting Observer, Conning Non-Voting Observer, Beacon Non-Voting
Observer, RBC Non-Voting Observer and Xxxxxxx Non-Voting Observer is intended to
be a third-party beneficiary of the
22
obligations of the Company pursuant to this Section 3.7, and the obligations of
the Company pursuant to this Section 3.7 shall be enforceable by each Conning
Director, Conning Designee, Beacon Director, Beacon Designee, X'Xxxxxxx
Director, X'Xxxxxxx Designee, RBC Director, RBC Designee, the Agreed Director,
the TCI Director, the Xxxxxxx Director (if one) and any TCI Non-Voting Observer,
Conning Non-Voting Observer, Beacon Non-Voting Observer, RBC Non-Voting Observer
and Xxxxxxx Non-Voting Observer.
3.8. Irrevocable Proxy.
-----------------
In order to secure each Shareholder's obligation to vote such Shareholder's
Voting Shares in accordance with the provisions of this Section 3 pursuant to
which each other Shareholder has rights hereunder, each Shareholder hereby
appoints each other Shareholder as his, her or its true and lawful proxy and
attorney-in-fact, with full power of substitution, to vote all of his Voting
Shares of the Company for the election of each Conning Director, Conning
Designee, Beacon Director, Beacon Designee, X'Xxxxxxx Director, X'Xxxxxxx
Designee, RBC Director, RBC Designee, the Agreed Director, the TCI Director, and
the Xxxxxxx Director (if one) as a member of the Board and to take all such
other actions as are necessary to enforce the rights of the various Shareholders
under this Section 3. Each Shareholder may exercise the irrevocable proxy
granted to it hereunder at any time any Shareholder fails to comply with any
provision of this Agreement granting the Shareholder exercising such proxy
rights under this Section 3. The proxies and powers granted by each Shareholder
pursuant to this Section 3.8 are coupled with an interest and are given to
secure the performance of each of the Shareholders' respective obligations to
the various Shareholders under this Section 3. Such proxies and powers shall
survive the death, incompetency and disability of each Shareholder. Such
proxies and powers will be effective until a Qualified IPO, at which time such
proxies and powers shall terminate.
3.9. Contractual Management Rights.
-----------------------------
The Company and each of the Shareholders acknowledge that the provisions of
this Agreement, including this Section 3, are intended, among other things, to
provide Conning and Beacon with "contractual management rights" within the
meaning of the Employee Retirement Income Security Act of 1974, as amended, and
the regulations promulgated thereunder.
3.10. Expenses.
--------
The Company shall pay the reasonable out-of-pocket expenses incurred by
each of the directors of the Company, including, but not limited to, the Conning
Directors, Conning Designee, Beacon Directors, Beacon Designee, the Agreed
Director, the RBC Director, the RBC Designee, the TCI Director, and the Xxxxxxx
Director (if one) and any TCI Non-Voting Observer, the Xxxxxxx Non-Voting
Observer, Conning Non-Voting Observer, RBC Non-Voting Observer, and Beacon Non-
Voting Observer in connection with performing his or her duties, including
without limitation the reasonable out-of-pocket expenses incurred by such person
23
attending meetings of the Board or any committee thereof or meetings of any
board of directors or other similar managing body (and any committee thereof) of
any Subsidiary of the Company.
3.11. Cooperation.
-----------
Each Shareholder shall vote all of its Voting Shares and shall take
all other necessary or desirable actions within its control (including, without
limitation, attending all meetings in person or by proxy for purposes of
obtaining a quorum, executing all written consents in lieu of meetings and
voting to remove members of the Board, as applicable), and the Company shall
take all necessary and desirable actions within its control (including, without
limitation, calling special Board, committee, and shareholder meetings and
voting to remove members of the Board or committee, as applicable), to
effectuate the provisions of this Section 3.
Section 4. Restrictions on Transfers of Stock.
----------------------------------
4.1. General.
-------
No Shareholder shall Transfer any Stock (other than Transfers of Stock
by a Shareholder to its Affiliates, or to the owners or managers of such
Shareholder or its Affiliates, or to the Company pursuant to the Exchange
Agreement), whether owned on the date hereof or acquired hereafter, without
first, if applicable, complying with the provisions of Section 5 hereof and
then, in each case as applicable, complying with the provisions of Section 6
hereof. In addition to, and not in limitation of, the foregoing, so long as the
shares representing at least 25% of the shares of any one of the (i) Series A
Preferred, (ii) Series B Preferred issued to Beacon and its Affiliates, (iii)
Series C Preferred issued to Beacon and its Affiliates or, (iv) Series D
Preferred issued to Conning and its Affiliates outstanding on the date hereof or
purchased pursuant to the Purchase Agreement and the Exchange Agreement, are
outstanding, then until the earliest of (a) a Qualified IPO, (b) a sale of the
Company (whether by sale, merger, consolidation, recapitalization or similar
transaction) of substantially all of its assets or (c) February 3, 2004,
X'Xxxxxxx, Xxxxxxx X. X'Xxxx, (and the Eden Financial Group, Inc. Capital
Accumulation Profit Sharing Plan FBO Xxxxxxx X. X'Xxxx), Xxxx Xxxxxx and Xxxx X.
Xxxxxx and their respective Affiliates who are permitted transferees pursuant to
clause (y) below (collectively "Management Shareholders") shall each not
-----------------------
Transfer more than fifteen percent (15%) of the aggregate number of shares of
Stock held by him or it as of the date hereof or acquired subsequent to such
date other than Stock acquired subsequent to the date hereof other then pursuant
to a Company (or a subsidiary of the Company) benefit plan, including any stock
purchase plan or stock option plan (such a permitted Transfer is referred to as
a "Permitted Management Shareholder Limited Transfer"), except for (x)
-------------------------------------------------
transactions described in items (a), (c), (d), (e), (f), (h), (i) and (k) of
Section 5.6 hereof (y) transfers to Affiliates of the transferee Shareholder for
estate planning purposes and (z) after compliance with Section 5.5, additional
Shares of Stock if Conning and Beacon concur with the Management Shareholder
that an additional Transfer(s) should be allowed to avoid hardship to the
Management Shareholder or his Affiliates. The limit of fifteen percent (15%) in
the preceding sentence shall change to twenty five percent (25%) if either (A)
Conning (together with its Affiliates) owns less than 50% of the
24
Series D Preferred issued to it pursuant to the Purchase Agreement, or (B)
Beacon (together with its Affiliates) own less than 50% of the shares of Series
B Preferred, Series C Preferred, and Series D Preferred (on an as converted to
common basis) owned by it on May 7, 1998, or acquired by it pursuant to the
Exchange Agreement and the Purchase Agreement.
4.2. Shareholders' Agreement.
-----------------------
Except in connection with a Public Sale, any transferee of Stock
(including Transfers of Stock by a Shareholder to its Affiliates, or to the
owners or managers of such Shareholder or its Affiliate) who is not a
Shareholder shall upon consummation of, and as a condition to, such Transfer
execute and deliver to the Company (which the Company shall then deliver to all
other Shareholders) an agreement in form and substance satisfactory to the
Company, Conning (so long as Conning is a Shareholder) and Beacon (so long as
Beacon is a Shareholder) pursuant to which such transferee agrees to be bound by
the terms of this Agreement for the benefit of the parties hereto and such
transferee shall thereafter be deemed to be a Shareholder for all purposes of
this Agreement.
4.3. Conflicts with Other Provisions of this Agreement.
-------------------------------------------------
Any Transfer or attempted Transfer of Stock in violation of any
provision of this Agreement shall be void, and the Company shall not record such
Transfer on its books or treat any purported transferee of such Stock as the
owner of such Stock for any purpose.
Section 5. Rights of First Offer.
---------------------
In addition to and not in limitation of any other restrictions on
Transfers of Stock contained in this Agreement, any Transfers of Stock by a
Shareholder shall be consummated only in accordance with the following
procedures:
5.1. First Offer.
-----------
The transferring Shareholder shall first deliver to the Company and
each Major Shareholder (the "Offered Shareholders") a written notice (an "Offer
Notice"), that shall (a) state the transferring Shareholder's intention to
------
Transfer Stock to one or more Persons in a bona fide, arm's length transaction,
the amount and type of Stock to be Transferred (the "Subject Stock"), the
-------------
purchase price therefor (which shall be payable in cash) and a summary of the
other material terms of the proposed Transfer and (b) offer the Company and the
Offered Shareholders the option to acquire all or a portion of such Subject
Stock upon the terms and subject to the conditions of the proposed Transfer as
set forth in the Offer Notice (the "Offer"); provided that such Offer may
----- --------
provide that it must be accepted by the Company and Offered Shareholders (in the
aggregate) on an all or nothing basis (an "All or Nothing Sale"). The Offer
-------------------
shall remain open and irrevocable for the periods set forth below (and, to the
extent the Offer is accepted during such periods, until the consummation of the
sale contemplated by the Offer). The Company shall have the right and option,
for a period of 30 days after delivery of the Offer Notice (the
25
"Company Acceptance Period"), to accept all or any part of the Subject Stock at
-------------------------
the cash purchase price and on the terms stated in the Offer Notice. Such
acceptance shall be made by delivering a written notice to the transferring
Shareholder and each of the Offered Shareholders within the Company Acceptance
Period.
5.2. First Offer Obligations.
-----------------------
If the Company shall fail to accept all of the Subject Stock offered
pursuant to, or shall reject in writing, the Offer (the Company being required
to notify in writing to the transferring Shareholder and each of the Offered
Shareholders of its rejection or failure to accept in the event of the same),
then, upon the earlier of the expiration of the Company Acceptance Period or the
date five days immediately after the giving of such written notice of rejection
or failure to accept such offer by the Company, each Offered Shareholder shall
have the right and option, for a period of 10 days thereafter (the "Shareholder
-----------
Acceptance Period"), to accept for purchase at the cash purchase price and on
-----------------
the terms stated in the Offer Notice up to the number of shares of Subject Stock
so offered and not accepted by the Company (the "Refused Stock") equal to the
-------------
product of (a) the aggregate number of shares of the Refused Stock multiplied by
(b) the First Offer Ratio; provided, however, that, if the Offer contemplated an
--------- -------
All or Nothing Sale, the Offered Shareholders who purchase Refused Stock
pursuant to this Section 5.2 must, in the aggregate, accept the Offer with
respect to all, but not less than all, of the Refused Stock, at the cash
purchase price and on the terms stated in the Offer Notice. Such acceptance
shall be made by an Offered Shareholder by delivering a written notice to the
Company and the transferring Shareholder within the Shareholder Acceptance
Period specifying the number of shares such Offered Shareholder will purchase
(the "First Offer Shares"). If, upon the expiration of the Shareholder
------------------
Acceptance Period, the aggregate number of shares of the Refused Stock exceeds
the aggregate number of First Offer Shares (such excess being referred to herein
as "Excess Refused Stock"), each Offered Shareholder (each, an "Accepting
-------------------- ---------
Shareholder") who, during the Shareholder Acceptance Period, accepted the Offer
-----------
with respect to the maximum number of shares of the Refused Stock allocable to
such Offered Shareholder pursuant to the first sentence of this Section 5.2,
shall have the right and option to accept within 10 days following conclusion of
the Shareholder Acceptance Period (the "Excess Period") for purchase at the cash
-------------
purchase price and on the terms stated in the Offer Notice up to the number of
shares of Excess Refused Stock equal to the product of (a) the aggregate number
of shares of Excess Refused Stock multiplied by (b) the Accepting Shareholder
Ratio. The process described in the foregoing sentence shall be repeated within
the Excess Period with respect to any shares of Excess Refused Stock not
accepted for purchase until the conclusion of the Excess Period or, with respect
to an All or Nothing Sale, until all shares of Excess Refused Stock have been
accepted for purchase within the Excess Period. All acceptances of Subject Stock
by an Offered Shareholder pursuant to an Offer shall be irrevocable.
26
5.3. Transfer of Subject Stock.
-------------------------
If effective acceptance shall not be received pursuant to Section 5.2
above or 5.5 below with respect to all of the Subject Stock offered for sale
pursuant to the Offer Notice, then the transferring Shareholder may Transfer all
or any portion of the Subject Stock so offered for sale and not so accepted (or,
in the case of an All or Nothing Sale, all, but not less than all, of the
Subject Stock offered for sale pursuant to the Offer Notice), at a cash price
not less than the price, and on terms not more favorable to the purchaser
thereof than the terms, stated in the Offer Notice at any time within 90 days
after the expiration of the Shareholder Acceptance Period (the "Sale Period").
-----------
In the event that all of the Subject Stock is not sold by the transferring
Shareholder during the Sale Period, the right of the transferring Shareholder to
Transfer such Stock shall expire and the obligations of this Section 5 shall be
reinstated.
5.4. Closing.
-------
All Transfers of Subject Stock to the Offered Shareholders, a Conning
Offeree or a Beacon Offeree, pursuant to this Section 5 shall be made free and
clear of all liens (other than this Agreement and any applicable registration
rights agreement) and shall be consummated contemporaneously at the offices of
the Company on the later of (a) a mutually satisfactory business day within (i)
30 days after the expiration of the Shareholder Acceptance Period or (ii) ten
days after expiration of the Management Transfer Acceptance Period, as
applicable and (b) the fifth business day following the expiration or
termination of all waiting periods under the HSR Act applicable to such
Transfers, or at such other time and/or place as the parties may agree. The
delivery of certificates or other instruments evidencing such Subject Stock duly
endorsed for transfer shall be made on such date against payment of the purchase
price for such Subject Stock.
5.5 Rights on Certain Management Sales. In the case of a Permitted
----------------------------------
Management Shareholder Limited Transfer:
(i) Unless waived by Beacon and Conning, the provisions of Section
5.1 shall apply except that the Offer Notice will be given only to (a) Conning
and its Affiliates who have been Transferred Stock from Conning (collectively
"Conning Offerees"), (b) Beacon and its Affiliates who have been Transferred
-----------------
Stock from Beacon (collectively "Beacon Offerees"), (c) TCI, USITF, Encompass
---------------
and their respective Affiliates to whom they have transferred stock
(collectively "TCI Offerees") and (d) Xxxxxxx and its Affiliates who have been
------------
Transferred Stock from Xxxxxxx (collectively "Xxxxxxx Offerees"). No Offer
----------------
Notice need be given to the Company or any other Shareholder other than Conning
Offerees, Beacon Offerees, Xxxxxxx Offerees and TCI Offerees.
(ii) Each Beacon Offeree, Conning Offeree, Xxxxxxx Offeree and TCI
Offeree shall have the right and option, for a period of 30 days after the Offer
Notice is given (the "Management Transfer Acceptance Period"), to accept for
-------------------------------------
purchase at the cash purchase price and on the terms stated in the Offer Notice
up to the number of shares of Subject Stock so
27
offered equal to the product of (a) the aggregate number of shares of the
Subject Stock multiplied by (b) the First Offer Ratio (provided, however, that
-------- -------
only Stock held by Beacon Offerees, Conning Offerees, Xxxxxxx Offerees, and TCI
Offerees shall be included in the numerator and denominator of the First Offer
Ratio); provided; however, that, if the Offer contemplated an All or Nothing
-------- -------
Sale, the Beacon Offerees, Conning Offerees, Xxxxxxx Offerees, and TCI Offerees
who purchase Subject Stock pursuant to this Section 5.5 must, in the aggregate,
accept the Offer with respect to all, but not less than all, of the Subject
Stock, at the cash purchase price and on the terms stated in the Offer Notice.
Such acceptance shall be made by a Beacon Offeree, Conning Offeree, Xxxxxxx
Offeree and TCI Offerees by delivering a written notice to the Company and the
transferring Shareholder within the Management Transfer Acceptance Period
specifying the number of shares such Offeree will purchase (the "First MT Offer
--------------
Shares"). If, upon the expiration of the Management Transfer Acceptance Period,
------
the aggregate number of shares of the Subject Stock exceeds the aggregate number
of First MT Offer Shares (such excess being referred to herein as "Excess MT
---------
Stock"), each Beacon Offeree, Conning Offeree, Xxxxxxx Offeree and TCI Offeree
-----
(each, an "Accepting MT Shareholder") who, during the Management Transfer
------------------------
Acceptance Period, accepted the Offer with respect to the maximum number of
shares of the Subject Stock allocable to such Beacon Offeree, Conning Offeree,
Xxxxxxx Offeree and TCI Offeree pursuant to the first sentence of this Section
5.5(ii), shall have the right and option to accept within ten days following
conclusion of the Management Transfer Acceptance Period (the "Excess MT Period")
----------------
for purchase at the cash purchase price and on the terms stated in the Offer
Notice up to the number of shares of Excess MT Stock equal to the product of (a)
the aggregate number of shares of Excess MT Stock multiplied by (b) the
Accepting Shareholder Ratio (provided, however, that only Stock held by Beacon
-------- -------
Offerees, Conning Offerees, Xxxxxxx Offerees and TCI Offerees shall be included
in the numerator and denominator of the Accepting Shareholder Ratio). The
process described in the foregoing sentence shall be repeated within the Excess
MT Period with respect to any shares of Excess MT Stock not accepted for
purchase until the conclusion of the Excess MT Period or, with respect to an All
or Nothing Sale, until all shares of Excess MT Stock have been accepted for
purchase within the Excess MT Period. All acceptances of Subject Stock by a
Beacon Offeree, Conning Offeree, Xxxxxxx Offeree or TCI Offeree pursuant to an
Offer shall be irrevocable.
5.6. Limitations.
-----------
The requirements of this Section 5 shall not apply to (a) any Transfer
of Stock pursuant to Section 7 of this Agreement, (b) any Transfer pursuant to a
Public Sale, (c) cashless exercises of stock options (whether effected by
surrendering stock options or outstanding shares of Stock), (d) repurchases by
the Company of stock options, (e) repurchases by the Company of Stock from
terminated or departing consultants, directors or employees (provided that such
repurchases do not exceed, in the aggregate, one percent of the outstanding
Common Stock), (f) repurchases by the Company of Stock funded by life insurance
proceeds, (g) (subject to written consent of Conning and Beacon, and compliance
with the provisions of Sections 4.2 and 5.5 hereof), Permitted Management
Shareholder Limited Transfers, (h) the Transfer or Transfers of up to 250,000
shares of Common Stock (adjusted appropriately to reflect stock splits and
combinations, and stock dividends), in the aggregate, by X'Xxxxxxx to Xxxx
Xxxxxx, (i) the
28
Transfer by X'Xxxxxxx of up to 200,000 shares of Common Stock (adjusted
appropriately to reflect stock splits and combinations, and stock dividends) to
RBC pursuant to an Escrow Agreement dated December 22, 1997, by and among
X'Xxxxxxx, RBC and the XxXxxx Law Firm, P.A. (which transfer has occurred); (j)
the Transfer by a Shareholder to an Affiliate for estate planning purposes, (k)
Transfers to the Company pursuant to the Escrow Agreement or otherwise covering
indemnification claims of the Company in the Protocall Transaction, (l)
Transfers to the Company pursuant to the Stock Purchase Agreement (the "Acorn
-----
Purchase Agreement") between the Company, shareholders of Acorn Information
------------------
Services, Inc., and Acorn Information Services, Inc. for indemnification or
similar claims of the Company and Transfers by one such shareholder to another
such shareholder pursuant to specific provisions of the Acorn Purchase Agreement
in substantially the form such agreement is approved by the Company's Board of
Directors and (m) the Transfer by X'Xxxxxxx by way of a pledge of 600,000 shares
of Common Stock to secure a loan from the Company, and any foreclosure thereon
or payment of such loan by delivery of such shares. Transfers under one clause
of this Section 5.6 shall not reduce the amount of Stock that may be Transferred
under another clause of this Section 5.6.
Section 6. Tag-Along Rights.
----------------
6.1. Tag-Along.
---------
No Shareholder shall Transfer any Stock owned by such Shareholder
without complying with the terms and conditions set forth in this Section 6
(after having complied with the provisions of Section 5).
6.2. Tag-Along Obligations.
---------------------
Any Major Shareholder (the "Tag-Along Initiator") desiring to Transfer
-------------------
any shares of Stock shall, after expiration of all required notice periods under
Section 5, give not less than 10 days' prior written notice of such intended
Transfer to each Major Shareholder ("Tag-Along Offeree") and to the Company.
-----------------
Such notice (the "Tag-Along Notice") shall set forth the terms and conditions of
----------------
such proposed Transfer, including the name of the proposed transferee, the
number of shares of such Stock proposed to be transferred by the Tag-Along
Initiator (the "Tag-Along Shares"), the purchase price per Tag-Along Share of
----------------
such Stock proposed to be paid therefor and the payment terms and type of
Transfer to be effectuated. Within 10 days after delivery of the Tag-Along
Notice by the Tag-Along Initiator to each Tag-Along Offeree and to the Company,
each Tag-Along Offeree shall, by written notice to the Tag-Along Initiator and
the Company, have the opportunity and right to sell to the transferee in such
proposed Tag Along offer (upon the same terms and conditions as the Tag-Along
Initiator) up to that number of shares of such Stock owned by the Tag-Along
Offeree equal to the product of (x) such Tag-Along Offeree's Tag-Along Ratio
multiplied by (y) the aggregate number of Tag-Along Shares. The amount of Tag-
Along Shares to be sold by any Tag-Along Initiator shall be reduced to the
extent necessary to provide for such sales of shares of such Stock by Tag-Along
Offerees. No
29
Person may Transfer shares in any transaction that is subject to this Section 6
unless the transferee agrees to be bound by and complies with the terms of this
Agreement.
6.3. Closing.
-------
At the closing of any proposed Transfer in respect of which a Tag-
Along Notice has been delivered, the Tag-Along Initiator together with all Tag-
Along Offerees electing to sell shares, shall deliver, free and clear of all
liens (other than this Agreement and any applicable registration rights
agreement), to the proposed transferee certificates evidencing the shares to be
sold thereto duly endorsed with transfer powers and shall receive in exchange
therefore the consideration to be paid or delivered by the proposed transferee
in respect of such shares as described in the Tag-Along Notice.
6.4. Limitations.
-----------
The provisions of this Section 6 shall not apply to (a) any Public
Sale, (b) any Transfer by a Major Shareholder to the Company, (c) any Transfers
to an Offered Shareholder or the Company pursuant to Section 5, (d) any
Transfers pursuant to Section 7, (e) cashless exercises of stock options
(whether effected by surrendering stock options or outstanding shares of Stock),
(f) repurchases by the Company of stock options, (g) repurchases by the Company
of Stock from terminated or departing consultants, directors or employees
(provided that such repurchases do not exceed, in the aggregate, one percent of
the outstanding Common Stock), (h) repurchases by the Company of Stock funded by
life insurance proceeds, and (i) Transfers described in Sections 5.6(g), 5.6(h),
5.6(i), 5.6(j), 5.6(k), 5.6(l) and 5.6(m). Transfers under one clause of this
Section 6.4 shall not reduce the amount of Stock that may be Transferred under
another clause of this Section 6.4.
Section 7. Drag-Along Rights.
-----------------
7.1. Drag-Along.
----------
If a Drag-Along Initiator determines to Transfer or exchange (in a
business combination or otherwise) in one or a series of related bona fide
arm's-length transactions (collectively, the "Drag-Along Transaction") to an
----------------------
unrelated and unaffiliated third party all of the shares of Stock held by the
Drag-Along Initiator, then, upon 30 days' written notice from the Drag-Along
Initiator to the other Shareholders and the Company (the "Drag-Along Notice"),
-----------------
which notice shall include reasonable details of the proposed transaction,
including the proposed time and place of closing and the consideration to be
received by the Shareholders, each other Shareholder shall be obligated to, and
shall sell, transfer and deliver, or cause to be sold, transferred and
delivered, to such third party, all of his shares of Stock in the same
transaction at the closing thereof (and will deliver certificates for all of his
shares at the closing, free and clear of all liens, claims, or encumbrances
except this Agreement and any registration rights agreement with the Company
applicable to such Stock), and each Shareholder shall receive the same
consideration per share on an as-converted to Common Stock basis upon
consummation of
30
such Drag-Along Transaction as is received by the Drag-Along Initiator after
giving effect to any liquidation preference to which any Shareholder is entitled
pursuant to the terms of the Certificate; provided, however, that if within 30
-------- -------
days of receipt of a notice from the Drag-Along Initiator as provided in this
Section 7. 1, the Company irrevocably commits, in writing, either (a) to use its
best efforts to complete a Qualified IPO or (b) to purchase all of the shares of
Stock of the Drag-Along Initiator at the Fair Market Value of the consideration
the Drag-Along Initiator would receive in connection with the Drag-Along
Transaction, then the closing of the Drag-Along Transaction shall be suspended
until the earlier of (x) 120 days after the Company so commits or (y) the date
the Company determines that it will be unable to complete the Qualified IPO
within such 120-day period. If the Company fails to either (i) complete the
Qualified IPO within 120 days or (ii) purchase the Drag-Along Initiator's shares
at the Fair Market Value of the consideration the Drag-Along Initiator would
receive in connection with the Drag-Along Transaction, the Drag-Along Initiator
shall have the right to compel the Shareholders to satisfy the general
provisions of this Section 7.1 in order to consummate the Drag-Along Transaction
without further delay. As used in this Section 7.1, "Fair Market Value" means,
-----------------
with respect to the consideration the Drag-Along Initiator would receive in
connection with the Drag-Along Transaction, the value of such consideration,
which, to the extent other than cash, shall take into account, in addition to
the cash value thereof, the assumptions and reasonable expectations underlying
the Drag-Along Transaction, including, without limitation, any anticipated tax
benefit, synergies or other projected economic benefits, as confirmed by an
independent investment bank reasonably satisfactory to Beacon, Conning and the
Company.
7.2. Limitations.
-----------
The provisions of Section 7.l (a) shall only be applicable if (i)
there has been no IPO and (ii) the Drag-Along Preconditions have been satisfied,
and (b) shall not, in any event, apply with respect to (i) any Transfer prior to
February 3, 2002, (ii) any Public Sale or (iii) any Transfer by a Shareholder to
an Affiliate of such Shareholder.
Section 8. Pre-emptive Rights. The Company shall not issue, sell or
------------------
exchange, or agree to issue, sell or exchange (collectively, "Issue," and any
-----
issuance, sale or exchange resulting therefrom, an "Issuance") any shares of
--------
Stock, except as authorized by the Board and in accordance with the following
procedures:
8.1. Pre-emptive Rights.
------------------
The Company shall deliver to each Major Shareholder (other than any
Major Shareholders that are not "accredited investors" as defined in Section 501
of Regulation D under the Securities Act) a written notice (a "Pre-emptive
-----------
Notice") that shall (i) state the Company's intention to Issue Stock to one or
------
more Persons, the amount and type of Stock to be Issued (the "Issuance Stock"),
--------------
the purchase price therefor and a summary of the other material terms of the
proposed Issuance and (ii) offer (the "Pre-emptive Offer") each Major
-----------------
Shareholder the option to acquire only that portion of the Issuance Stock as is
set forth in Section 8.2. The Pre-emptive Offer shall remain open and
irrevocable for the periods set forth below (and, to the extent the
31
Pre-emptive Offer is accepted during such periods, until the consummation of the
Issuance contemplated by the Pre-emptive Offer).
8.2. Purchase of Pre-Emptive Stock.
-----------------------------
Every Major Shareholder shall have the right and option, for a period
of 30 days after delivery of the Pre-emptive Notice (the "Pre-emptive Acceptance
----------------------
Period"), to accept for purchase at the purchase price and on the terms stated
------
in the Pre-emptive Notice up to the number of shares of Issuance Stock (such
number being determined on an as-converted basis, if applicable) equal to the
difference between (a) the Maximum Post-Issuance Amount and (b) the number of
shares of outstanding Common Stock owned by such Major Shareholder as of the
date of the Pre-emptive Notice. Such acceptance shall be made by delivering a
written notice to the Company by each Major Shareholder within the Pre-emptive
Acceptance Period specifying the maximum number of shares of the Issuance Stock
such Major Shareholder will purchase.
8.3. Issuance of Stock.
-----------------
After passage of the Pre-emptive Acceptance Period, the Company may
Issue all or any portion of the shares of the Issuance Stock not purchased by a
Major Shareholder pursuant to Section 8.2 at a price not less than the price,
and on terms not more favorable to the purchaser thereof, than the terms stated
in the Pre-emptive Notice at any time within 90 days after the expiration of the
Pre-emptive Acceptance Period (the "Issuance Period"). In the event that all of
---------------
the Issuance Stock is not Issued by the Company during the Issuance Period, the
right of the Company to Issue such unsold Issuance Stock shall expire.
8.4. Closing.
-------
All Sales of Issuance Stock to the Major Shareholders subject to any
Pre-emptive Notice shall be consummated contemporaneously at the offices of the
Company on the later of (a) a mutually satisfactory business day within 30 days
after the expiration of the Pre-emptive Acceptance Period or (b) the fifth
business day following the expiration or termination of all waiting periods
under the HSR Act, applicable to such Issuance, or at such other time and/or
place as the Company and the Major Shareholders may agree. The delivery of
certificates or other instruments evidencing such Issuance Stock shall be made
by the Company on such date against payment of the purchase price for such
Issuance Stock.
8.5. Limitations.
-----------
The provisions of this Section 8 shall not apply to any Issuance by
the Company (a) in connection with an IPO or any subsequent registered public
offering of Stock, (b) pursuant to either (i) any stock option or similar plan
(or shares of the Company's Common Stock issuable thereunder) approved by the
Board or (ii) any employee stock purchase plan approved by the Board, (c) upon
conversion, exchange or exercise of any securities convertible into, or
exchangeable or exercisable for, shares of the Company's Common Stock, (d) in
connection with
32
(i) an acquisition of a business or the assets of a business (whether by merger
or any other transaction structure with respect to which Stock may be issued in
connection with or as a consequence of such acquisition), (ii) entering into, or
borrowing funds pursuant to, a credit agreement or similar financing agreement,
(iii) entering into or acquiring a financing lease, (e) any issuance of Stock by
the Company as provided in the Purchase Agreement, (f) any PIK Election as
contemplated in the Certificate, (g) any issuance of Stock by the Company
pursuant to the Exchange Agreement, and (h) any issuance of Stock by the Company
upon exercise of any Warrant and (i) any Series F Additional Adjustment if
additional securities are issued as a result thereof.
Section 9. Holdback Agreement; Adjustments.
-------------------------------
9.1. General.
-------
Each Shareholder agrees that (i) to the extent requested in writing by
a managing underwriter of an IPO or any underwritten public offering effected
pursuant to a demand registration request under any of the Registration Rights
Agreements or any other registration rights agreement between such Shareholder
and the Company, it will not Transfer any Stock or any other equity security of
the Company or any security convertible into or exchangeable or exercisable for
any equity security of the Company (other than as part of such underwritten
public offering) during the time period reasonably requested by the managing
underwriter, commencing not more than ten days prior to commencement of such
public offering, not to exceed 180 days, and (ii) to the extent requested in
writing by a managing underwriter of any underwritten public offering effected
by the Company for its own account within three years after an IPO, it will not
Transfer after such offering any of the Stock or any other equity security of
the Company or any security convertible into or exchangeable or exercisable for
any equity security of the Company (other than as part of such underwritten
public offering) during the time period reasonably requested by the managing
underwriter, which period shall (x) not exceed 180 days, in the event that it
participates in such public offering pursuant to "piggyback" registration rights
granted under any of the Registration Rights Agreements, and (y) not exceed 90
days, in the event that the Shareholder does not so participate in such public
offering. The Company and each Shareholder, as applicable, hereby agree to use
their best efforts to obtain a covenant from the managing underwriter in
connection with any underwritten public offering described in this Section 9.1
that provides that a waiver by such underwriter of a "holdback" covenant with
respect to any Shareholder shall apply equally to all Shareholders.
9.2. Adjustments.
-----------
In connection with an IPO initiated pursuant to a demand registration,
the Company agrees that it will take all reasonable steps necessary to effect a
subdivision or combination of shares if, with respect to any demand registration
request under any of the Registration Rights Agreements or any other
registration rights agreement between such Shareholder and the Company, in the
reasonable judgment of the managing underwriter for the offering in respect of
such demand registration, such subdivision or combination would enhance
33
the marketability of the securities proposed to be registered thereunder. Each
Shareholder agrees to vote all of its shares of capital stock in a manner, and
to take all other actions necessary, to permit the Company, to carry out the
intent of the preceding sentence including, without limitation, voting in favor
of an amendment to the Certificate in order to increase or decrease the number
of authorized shares of capital stock of the Company.
Section 10. Certain Covenants.
-----------------
10.1. Financial Statements and Other Information.
------------------------------------------
(a) Prior to an IPO, the Company shall deliver to each Shareholder
(so long as (i) such Shareholder and its Affiliates, in the aggregate, hold at
least 5% of the outstanding Common Stock (provided, however, that TCI and its
-------- -------
Affiliates need only hold, in the aggregate, at least 4% of the outstanding
Common Stock or 80% of the Common Stock (on an as-converted basis) purchased by
them pursuant to a Purchase Agreement) and Xxxxxxx and its Affiliates need only
hold, in the aggregate, at least 4% of the outstanding Common Stock or 20% of
the Common Stock (on an as-converted basis) purchased by them pursuant to a
Purchase Agreement) or (ii) such Shareholder or its Affiliate is entitled
hereunder to designate a director or (iii) with respect to Xxxx or SLI so long
as such party owns at least 50% of the Stock purchased thereby pursuant to a
Purchase Agreement):
(i) within 45 days after the end of each of the first three
quarterly accounting periods in each fiscal year, unaudited consolidating and
consolidated statements of income and cash flows of the Company for such fiscal
quarter, and unaudited consolidating and consolidated balance sheets of the
Company as of the end of such fiscal quarter, setting forth in each case
comparisons to the same quarter of the preceding fiscal year, all prepared in
accordance with GAAP, consistently applied, subject to the absence of footnote
disclosures and to normal year-end adjustments;
(ii) within 90 days after the end of each fiscal year, audited
consolidated statements of income and cash flows of the Company for such fiscal
year, and consolidated balance sheets of the Company as of the end of such
fiscal year, setting forth in each case comparisons to the preceding fiscal
year, all prepared in accordance with GAAP, consistently applied, and
accompanied by, with respect to the consolidated portions of such statements, an
opinion of a "Big Six" independent accounting firm that is unqualified with
respect to the scope of such firm's examination;
(iii) at least 30 days prior to the commencement of each fiscal year,
a business plan and quarterly operating budget approved by the Board for such
fiscal year;
(iv) promptly (but in any event within five business days) after the
end of each month, copies of all reports, financial statements, or other
information provided to the members of the Board and/or senior management of the
Company during such month;
34
(v) promptly (but in any event within five business days) after the
discovery or receipt of notice of any default under any material agreement to
which the Company and/or any of its Subsidiaries is a party, which default could
have a material adverse effect on the Company or any Subsidiary, a certificate
of an officer of the Company specifying the nature and period of existence
thereof and what actions the Company has taken and proposes to take with respect
thereto;
(vi) promptly (but in any event within three business days) after
transmission thereof, copies of all financial statements, proxy statements,
reports and any other general written communications that the Company sends to
its shareholders and copies of all registration statements and all regular,
special or periodic reports that it files, or any of its officers or directors
file with respect to the Company, with the Securities and Exchange Commission or
with any securities exchange on which any of its securities are then listed; and
(vii) with reasonable promptness, such other information and financial
data concerning the Company as any Person entitled to receive information under
this Section 10.1 may reasonably request;
provided, however, that the Company shall not be obligated to deliver or
-------- -------
otherwise disclose any information or materials to a Shareholder pursuant to
this Section 10.1(a) if and for so long as the disclosure or delivery of such
information or materials to such Shareholder would (x) breach or otherwise
violate a confidentiality agreement that governs the disclosure or delivery by
the Company of such information or materials or (y) result in the loss of
attorney-client privilege with respect to such information or materials.
(b) Each of the financial statements referred to in this Section
10.1 shall be true and correct in all material respects and shall fairly and
accurately reflect the financial condition and operating results of the Company
as of the dates and for the periods stated therein, subject in the case of the
unaudited financial statements to changes resulting from normal year-end
adjustments.
(c) As a condition to, and in consideration of, being furnished with
any information and/or materials described in Section 10.l(a) ("Confidential
------------
Information"), each Shareholder hereby agrees that the Confidential Information
-----------
is highly confidential and that unauthorized disclosure of Confidential
Information would be harmful to the Company and the other Shareholders. Any
Confidential Information provided to a Shareholder by the Company, its
directors, officers, Affiliates, advisers, agents or other representatives
(collectively, "Representatives") will be kept confidential by such Shareholder;
---------------
provided, however, that Confidential Information may be disclosed by such
-------- -------
Shareholder (i) to its Representatives who need to know such Confidential
Information acting in such capacity, so long as such Representatives agree to
abide by the terms hereof as if a party hereto, or (ii) if the Company consents
in writing. If a Shareholder is required by a court or administrative agency to
disclose any Confidential Information, such Shareholder shall promptly notify
the Company of such requirement so that the Company may oppose such requirement
or seek a protective order and
35
request confidential treatment of such information. If such Shareholder is
ultimately compelled by a court or administrative agency to disclose
Confidential Information, it may only disclose without liability hereunder
Confidential Information the disclosure of which is so compelled. In addition to
the foregoing, each Shareholder hereby acknowledges and agrees that its
unauthorized disclosure of Confidential Information or its use of Confidential
Information in trading in the securities of the Company may, under certain
circumstances, result in a violation of the federal securities laws, and such
Shareholder and its Representatives shall not take any action in respect of such
matters in violation of the federal securities laws. Notwithstanding anything in
this Section 10.1(c) to the contrary, Confidential Information shall not include
information that (i) has not been provided by the Company, has not been derived
from information constituting Confidential Information and has not otherwise
been acquired in violation of this Section 10.1(c) or any other applicable
confidentiality agreement, (ii) was publicly available at the time of disclosure
by such Shareholder or (iii) was known (but only to the extent of such
knowledge) by such Shareholder prior to disclosure as Confidential Information
to such Shareholder by the Company.
(b) If at any time after the date hereof a registration statement
under the Securities Act of 1933, as amended, relating to the Company's initial
public offering is declared effective by the Securities and Exchange Commission
(the date on which such registration statement is declared effective being
referred to herein as the "Effective Date"), which registration statement covers
--------------
the offer and sale of Common Stock for the account of the Company with an
initial public offering price to the public of less than two times the Series F
Conversion Price (as such term is defined in the Certificate) in effect
immediately prior to the Effective Date, then the Company shall, within two (2)
business days of the Effective Date, deliver to the transfer agent of the Series
F Preferred and to each of the holders of shares of Series F Preferred a written
notice describing such event and a certificate of adjustment (as described in
Section 3.6.11 of the Certificate).
10.2. Restrictions.
------------
Prior to a Qualified IPO, the Company shall not, directly or
indirectly, and shall not permit any of its Subsidiaries to, take any of the
following actions without the prior written consent of Beacon (as long as Beacon
holds, directly or indirectly, at least 5% of the outstanding Common Stock) and
Conning (as long as Conning holds, directly or indirectly, at least 5% of the
outstanding Common Stock):
(a) consolidate or merge with or into any Person or enter into any
similar business combination transaction (including a sale of substantially all
of its assets) or effect any transaction or series of transactions in which more
than 33-1/3% of its voting securities are transferred to another Person, except
a Qualified IPO or any such transaction or series of transactions, as the case
may be, involving only wholly-owned Subsidiaries of the Company;
(b) amend or repeal any provisions of, or add any provisions to, the
Certificate or the By-laws;
36
(c) alter or change the preferences, rights, privileges or powers of
the Preferred Stock so as to affect adversely the Series B Preferred or Series C
Preferred (which requires Beacon's consent only) or the Series D Preferred
(which requires Conning's consent only);
(d) create or designate, authorize the issuance of, or issue or sell,
any new series or class of securities (or warrants, options or convertible into
or exchangeable securities) or increase the authorized number of, authorize the
issuance of, or issue, any additional shares of Common Stock or Preferred Stock,
except (i) pursuant to a Qualified IPO, (ii) as consideration for an acquisition
approved by the Board and which securities are valued at less than $1,000,000,
or (iii) pursuant to transactions described in subparagraph (o);
(e) increase the number of authorized members of the Board above ten,
except for an increase to eleven if a Qualified IPO has not closed before July
31, 2000;
(f) voluntarily liquidate, dissolve or wind up;
(g) pay, declare or set aside any sums for the payment of any
dividends, or make any distributions, on any shares of its capital stock or
other equity securities except as required by the terms of the Preferred Stock;
(h) redeem, repurchase or otherwise acquire, any of its capital stock
or other equity securities (including, without limitation, warrants, options and
other rights to acquire any of its capital stock or other equity securities
directly or indirectly) or redeem, purchase or make any payments with respect to
any stock appreciation rights, phantom stock plans or similar rights or plans
relating to the Company or its Subsidiaries, except for (i) redemptions or
repurchases of Preferred Stock permitted under the Certificate, (ii) cashless
exercises of options or warrants, (iii) repurchases of Stock from departing or
terminated consultants, directors or employees of the Company pursuant to the
terms (including price) of pre-existing agreements approved by the Board with
such terminated consultants, directors and employees (not to exceed $1 million,
in the aggregate), (iv) repurchases of Stock from X'Xxxxxxx or his Affiliates
solely from the proceeds of life insurance on the life of X'Xxxxxxx pursuant to
this Agreement, (v) repurchases of Stock from Xxxxx Xxxxxxxx or his Affiliates
approved by the Board (including by way of the Board approving an agreement to
repurchase such Stock) and funded solely from the proceeds of life insurance on
the life of Xxxxx Xxxxxxxx and (vi) foreclosure upon or payment of the loan to
X'Xxxxxxx described in Section 5.6(m);
(i) purchase, acquire or obtain any capital stock or other
proprietary interest, directly or indirectly, in any other entity or all or
substantially all of the business or assets of another Person for consideration
(including assumed liabilities) in excess of $250,000;
(j) enter into or commit to enter into any joint ventures (other than
in the ordinary course of business) or partnerships or establish any non-wholly-
owned Subsidiaries, in
37
each case, where the contributions or investments by the Company exceed $400,000
in cash or assets;
(k) sell, lease, transfer or otherwise dispose of any asset or group
of assets, for consideration in an annual aggregate amount (as to the Company
and any and all of its Subsidiaries), in excess of $500,000;
(l) create, incur or assume any indebtedness of the Company or any
of its Subsidiaries for borrowed money (which shall include for purposes hereof
capitalized lease obligations and guarantees or other contingent obligations for
indebtedness for borrowed money) in an annual aggregate net incurred amount (as
to the Company and all of its Subsidiaries) in excess of $1,000,000, excluding
indebtedness that exists as of the date hereof;
(m) mortgage, encumber, create or incur liens on its assets, in an
annual aggregate amount (as to the Company and all of its Subsidiaries) in
excess of $1,000,000, excluding liens on assets that exist as of the date
hereof;
(n) in the case of the Company's executive officers, amend, modify
or grant any waiver under any material provisions of any employment agreement or
under any non-competition provision or agreement to which the Company is a party
or is bound;
(o) create or issue any stock options, warrants or other securities
convertible into, or exchangeable or exercisable for shares of the Company's
Common Stock, other than (i) options issued pursuant to any stock option or
similar plan (or shares of the Company's Common Stock issuable thereunder)
approved by the Board, (ii) shares of the Company's Common Stock issuable upon
conversion, exchange or exercise of any securities convertible into, or
exchangeable or exercisable for shares of the Company's Common Stock, or modify,
amend or grant any waiver of any provision of, any stock options, warrants or
other Common Stock Equivalents outstanding as of the date hereof, (iii) pursuant
to transactions described in subparagraph (d) of this Section, (iv) pursuant to
the Purchase Agreement or Exchange Agreement; and (v) pursuant to a Series A PIK
Election, Series B PIK Election, Series C PIK Election, Series D PIK Election,
Series E PIK Election, or Series F PIK Election, each as defined in the
Certificate; or
(p) agree or otherwise commit to take any actions set forth in the
foregoing subparagraphs (a) through (o).
10.3. Reservation of Common Stock.
---------------------------
The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
issuance upon the conversion of the Preferred Stock and upon exercise of the
Warrants, such number of shares of Common Stock issuable upon the conversion of
all outstanding shares of the Preferred Stock and upon exercise of the Warrants.
All shares of Common Stock that are so issuable shall, when issued, be duly
38
and validly issued, fully paid and nonassessable and free from all taxes, liens
and charges. The Company shall take all such actions as may be necessary to
assure that all such shares of Common Stock may be so issued without violation
of any applicable law or governmental regulation or any requirements of any
domestic securities exchange upon which shares of Common Stock may be listed
(except for official notice of issuance that shall be immediately transmitted by
the Company upon issuance).
10.4. Public Disclosures.
------------------
The Company shall not, nor shall it permit any of its Subsidiaries to,
disclose any Shareholder's name or identity as an investor in the Company or any
material information related to this Agreement in any press release or other
public announcement or in any document or material filed with any governmental
entity, without the prior written consent of such Shareholder, unless such
disclosure is required by applicable law or governmental regulations or by order
of a court of competent jurisdiction, in which case prior to making such
disclosure the Company shall give written notice to such Shareholder describing
in reasonable detail the proposed content of such disclosure and shall permit
such Shareholder to review and comment upon the form and substance of such
disclosure.
Section 11. Conflicting Agreements.
----------------------
Each Shareholder represents and warrants that such Shareholder has not
granted and is not a party to any proxy, voting trust or other agreement that is
inconsistent with or conflicts with any provision of this Agreement, and no
holder of Stock shall grant any proxy or become party to any voting trust or
other agreement that is inconsistent with or conflicts with any provision of
this Agreement.
Section 12. Legend.
------
12.1. Legend.
------
Each Shareholder and the Company shall take all such action necessary
(including exchanging with the Company certificates representing shares of Stock
issued prior to the date hereof) to cause each certificate representing
outstanding shares of Stock to bear a legend containing the following words:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED, SOLD, PLEDGED, EXCHANGED, TRANSFERRED OR
OTHERWISE DISPOSED OF (i) UNLESS (A) REGISTERED UNDER SUCH ACT AND ANY
APPLICABLE STATE SECURITIES AND "BLUE SKY" LAWS OR (B) AN OPINION OF COUNSEL
SATISFACTORY TO INTEK INFORMATION, INC. (THE "COMPANY") THAT SUCH REGISTRATION
IS NOT NECESSARY HAS BEEN DELIVERED TO THE
39
COMPANY OR (ii) UNLESS SOLD PURSUANT TO AND IN COMPLIANCE WITH RULE 144 OF SUCH
ACT AND APPLICABLE SECURITIES OR "BLUE SKY" LAWS."
"IN ADDITION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
RESTRICTIONS ON TRANSFER AND TO THE VOTING AGREEMENTS SET FORTH IN THE AMENDED
AND RESTATED SHAREHOLDERS' AND VOTING AGREEMENT DATED AS OF JANUARY __, 2000, AS
AMENDED FROM TIME TO TIME BY THE COMPANY AND THE PARTIES THERETO, A COPY OF
WHICH IS ON FILE IN THE OFFICE OF THE COMPANY."
12.2. Termination of Legend.
---------------------
The requirement that the above securities legend be placed upon
certificates evidencing shares of Stock shall cease and terminate upon the
earliest of the following events: (i) when such shares are transferred in an
underwritten public offering, (ii) when such shares are transferred pursuant to
Rule 144 under the Securities Act or (iii) when such shares are transferred in
any other transaction if the seller delivers to the Company an opinion of its
counsel, which counsel and opinion shall be reasonably satisfactory to the
Company to the effect that such legend is no longer necessary in order to
protect the Company against a violation by it of the Securities Act upon any
sale or other disposition of such shares without registration thereunder. The
requirement that the above legend regarding this Agreement be placed upon
certificates evidencing shares of Stock shall cease and terminate upon the sale
of such shares of Stock pursuant to a Public Sale. Upon the consummation of any
event requiring the removal of a legend hereunder, the Company, upon the
surrender of certificates containing such legend, shall, at its own expense,
deliver to the holder of any such shares as to which the requirement for such
legend shall have terminated, one or more new certificates evidencing such
shares not bearing such legend.
Section 13. Representations and Warranties.
------------------------------
13.1. Representations and Warranties of Each Party.
--------------------------------------------
Each party hereto represents and warrants to the other parties hereto
as follows:
(a) It has full power and authority to execute, deliver and perform
its obligations under this Agreement.
(b) This Agreement has been duly and validly authorized, executed
and delivered by it and constitutes a valid and binding obligation of it,
enforceable against it in accordance with its terms except to the extent that
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally.
(c) The execution, delivery and performance of this Agreement by it
does not (i) violate, conflict with or constitute a breach of or default under
its organizational documents, if
40
any, or any material agreement to which it is a party or by which it is bound or
(ii) violate any law, regulation, order, writ, judgment, injunction or decree
applicable to it.
(d) Except as set forth in Schedule 13.1(d), no consent or
----------------
approval of, or filing with, any governmental or regulatory body is required to
be obtained or made by it in connection with the transactions contemplated
hereby.
(e) It is not a party to any agreement that is inconsistent with
the rights of any party hereunder or otherwise conflicts with the provisions
hereof.
13.2. Representations and Warranties to Conning and Beacon.
----------------------------------------------------
Each Shareholder (but limited to Shareholders who are signatories
hereto as to changes from the Schedules 13.2(a) or 13.2(b) to the February 3,
1997 Shareholders' and Voting Agreement which is superseded by this Agreement
(other than Conning, Beacon, Xxxx and SLI)) severally but not jointly represents
and warrants to each of Conning and Beacon as follows:
(a) Schedule 13.2(a) hereto sets forth a list of all securities
of the Company (including, without limitation, shares of capital stock,
convertible securities, debentures, etc.) held of record or beneficially owned
by it immediately after the date hereof. All such securities are free and clear
of any liens, encumbrances, rights of first refusal or other rights of third
parties of any nature with respect thereto other than those set forth in
Schedule 13.2(b).
(b) Except as set forth on Schedule 13.2(b) hereto and other than
this Agreement it is not a party to any contract or agreement written or oral,
(i) with respect to the securities of the Company (including, without
limitation, any voting agreement, voting trust, stockholder's agreement,
registration rights agreement, etc.) or (ii) otherwise with or relating to the
Company, except for employment agreements entered into in the ordinary course of
business.
Section 14. Duration of Agreement.
---------------------
The rights and obligations of a Shareholder under this Agreement
shall terminate at such time as such Shareholder no longer is the beneficial
owner of any shares of Stock. Except as provided below in this Section 14, this
Agreement shall terminate upon the consummation of an IPO, except that the terms
of Sections 3.1(b) to 3.11, 9, 10.3, 10.4, 12, 16, 17, 24 and 30 shall survive
until, by their respective terms, they are no longer operative. NOTWITHSTANDING
ANY OTHER PROVISION OF THIS AGREEMENT, INCLUDING PROVISIONS WHICH STATE THAT
THEY APPLY AFTER AN IPO OR QUALIFIED IPO, IF A QUALIFIED IPO CLOSES BEFORE JULY
31, 2000, THIS AGREEMENT SHALL TERMINATE IN ITS ENTIRETY. HOWEVER, AFTER
TERMINATION THE COMPANY SHALL NEVERTHELESS REMOVE LEGENDS ON CERTIFICATES AS
PROVIDED IN SECTION 12.2
Section 15. Further Assurances.
------------------
41
At any time or from time to time after the date hereof the parties
agree to cooperate with each other, and at the request of any other party, to
execute and deliver any further instruments or documents and to take all such
further action as the other party may reasonably request in order to evidence or
effectuate the consummation of the transactions contemplated hereby and to
otherwise carry out the intent of the parties hereunder.
Section 16. Increased Authorized Stock
--------------------------
Each Shareholder hereby agrees, upon such matters being submitted by
the Board to a vote or consent of the stockholders of the Company, to vote (or
execute a consent with respect to) the Shareholder's Voting Shares (and other
securities issued by the Company, if necessary) in favor of any amendment to the
Company's Certificate (or other governing document) so that there is a
sufficient number authorized of each type of security to be issued upon exercise
of a Series A PIK Election, Series B PIK Election, Series C PIK Election, Series
D PIK Election, Series E PIK Election, Series F PIK Election, Series F
Additional Adjustments, or Warrants (as each such term is defined in the
Certificate) (or conversion or exercise of a security issuable upon such an
exercise). Each Shareholder hereby grants an irrevocable proxy to the Board
solely to vote the Shareholder's securities in favor of such an amendment. The
proxies and powers granted by each Shareholder pursuant to this Section 16 are
coupled with an interest and are given to secure the performance of each of the
Shareholders' respective obligations to the various Shareholders and the Company
under this Section 16. Such proxies and powers shall survive the death,
incompetency and disability of each Shareholder. Such proxies and powers will be
effective until a Qualified IPO, at which time such proxies and powers shall
terminate.
Section 17. Amendment and Waiver.
--------------------
Except as otherwise provided herein, no modification, amendment or
waiver of any provision of this Agreement shall be effective against the Company
or any Shareholder unless such modification, amendment or waiver is approved in
writing by the Company, Shareholders holding at least a majority of the
outstanding Common Stock, and, (a) so long as Conning holds 5% or more of the
outstanding Common Stock, by Conning, (b) so long as Beacon holds 5% or more of
the outstanding Common Stock, by Beacon, (c) so long as RBC has the right to
designate an RBC Director, by RBC, and (d) so long as X'Xxxxxxx has the right to
designate an X'Xxxxxxx Director, by X'Xxxxxxx; provided, however, that the
-------- -------
addition of new parties in accordance with the provisions of the Purchase
Agreement among the Company, USITF, Encompass, TCI and certain other parties
dated April 16, 1999 herewith and pursuant to the Xxxxxxx Purchase Agreement
shall not be deemed an amendment hereof and shall not require the consent of any
party hereto. The failure of any party to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and shall
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
42
Section 18. Severability.
------------
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
Section 19. Entire Agreement.
----------------
Except as otherwise expressly set forth herein, this Agreement and the
other documents dated the date hereof embody the complete agreement and
understanding among the parties hereto with respect to the subject matter hereof
and supersede and pre-empt any prior understandings, agreements or
representations by or among the parties, written or oral, that may have related
to the subject matter hereof in any way, including, without limitation, that
certain Shareholders' Agreement made as of August 2, 1996, by and between the
Company, X'Xxxxxxx, RBC and certain other stockholders of the Company. Without
limiting the generality of the foregoing, to the extent that any of the terms
hereof are inconsistent with the rights or obligations of any Shareholder under
any other agreement with the Company, the terms of this Agreement shall govern.
Section 20. Successors and Assigns.
----------------------
Except as otherwise provided herein, this Agreement shall bind and
inure to the benefit of and be enforceable by the Company and its successors and
assigns and each Shareholder and their respective successors, assigns, heirs and
personal representatives, so long as they hold Stock and are or become parties
to this Agreement. Except pursuant to a Transfer of Stock in compliance with
Section 4, no Shareholder shall have the right to assign its rights and
obligations under this Agreement without the consent of (i) the Shareholders who
hold a majority of the shares of the then outstanding Common Stock, (ii) Beacon
(so long as Beacon is a Shareholder) and (iii) Conning (so long as Conning is a
Shareholder).
Section 21. Counterparts.
------------
This Agreement may be executed in separate counterparts each of which
shall be an original and all of which taken together shall constitute one and
the same agreement.
Section 22. Remedies.
--------
Each Shareholder shall be entitled to enforce its rights under this
Agreement specifically to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights existing in their
favor. The parties hereto agree and acknowledge that
43
money damages may not be an adequate remedy for any breach of the provisions of
this Agreement and that each party may in its sole discretion apply to any court
of law or equity of competent jurisdiction for specific performance and/or
injunctive relief (without posting a bond or other security) in order to enforce
or prevent any violation of the provisions of this Agreement.
Section 23. Notices.
-------
Any notice provided for in this Agreement shall be in writing and
shall be either personally delivered, or mailed first class mail (postage
prepaid) or sent by reputable overnight courier service (charges prepaid) to the
Company at the address set forth below and to any other recipient at the address
indicated on Schedule 23 hereto and to any subsequent holder of Stock subject to
-----------
this Agreement at such address as indicated by the Company's records, or at such
address or to the attention of such other person as the recipient party has
specified by prior written notice to the sending party. Notices will be deemed
to have been given hereunder when delivered personally, three days after deposit
in the U.S. mail and one day after deposit with a reputable overnight courier
service. The Company's address is:
Intek Information, Inc.
0000 XXX Xxxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
with a copy to:
Xxxxxxxx, Xxxxx & Xxxxxxx, P.C.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: G. Xxxxx Xxxxxxxx, Jr.
Section 24. Governing Law; Consent to Jurisdiction.
--------------------------------------
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Delaware without giving effect to the
principles of conflicts of law. Each of the parties hereto hereby irrevocably
and unconditionally consents to submit to the exclusive jurisdiction of the
courts of the State of Delaware, the State of New York and of the United States
of America, in each case located in either the County of New Castle, Delaware or
the County of New York, New York for any action, proceeding or investigation in
any court or before any governmental authority ("Litigation") arising out of or
----------
relating to this Agreement and the transactions contemplated hereby (and agrees
not
44
to commence any Litigation relating thereto except in such courts). Each of
the parties hereto hereby irrevocably and unconditionally waives any objection
to the laying of venue of any Litigation arising out of this Agreement or the
transactions contemplated hereby in the courts of the State of Delaware, the
State of New York or the United States of America, in each case located in
either the County of New Castle, Delaware or the County of New York, New York
and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such Litigation brought in any such
court has been brought in an inconvenient forum. Each of the parties
irrevocably and unconditionally waives, to the fullest extent permitted by
applicable law, any and all rights to trial by jury in connection with any
Litigation arising out of or relating to this Agreement or the transactions
contemplated hereby.
Section 25. Miscellaneous.
-------------
The descriptive headings of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement. This Agreement
is intended to be a voting agreement among stockholders as permitted by Section
218(c) of the Delaware General Corporation Law.
Section 26. Construction.
------------
Where specific language is used to clarify by example a general
statement contained herein, such specific language shall not be deemed to
modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
Section 27. Pledges of Shares.
-----------------
Any Shareholder exercising his, her or its right under Sections 5
and/or 8 may, in connection with obtaining financing therefor pursuant to a bona
fide recourse loan from a bank or similar financial institution approved by
Beacon and Conning (which approval will not be unreasonably withheld), pledge
some or all of such Shareholder's Stock as collateral for such financing;
provided that, to the extent the lenders secured by such pledge have rights in
--------
the Stock (including, without limitation, upon foreclosure), such lender agrees
in writing to be bound by this Agreement in its entirety and that the foregoing
is incorporated into the agreements governing such financing and pledge.
Section 28. X'Xxxxxxx Life Insurance; Use of Proceeds.
-----------------------------------------
As soon as reasonably practicable following the Closing, the Company
shall purchase (if it has not already done so) a term life insurance policy
providing for a $20,000,000 payment to the Company (as the named beneficiary of
such policy) if X'Xxxxxxx dies, and the Company shall thereafter keep such
policy in effect. The first $10,000,000 of proceeds of such insurance shall,
first, be used to repurchase shares of Stock, valued on a per share as-converted
-----
basis, from X'Xxxxxxx'x estate and, second (to the extent any proceeds of the
------
first $10,000,000 of
45
such insurance remain after repurchasing all of the capital stock of the Company
held by X'Xxxxxxx'x estate at such time), be distributed to X'Xxxxxxx'x estate.
With respect to the foregoing, if, within 10 days following receipt of such
insurance proceeds by the Company, the repurchase price of each share of Common
Stock cannot be agreed upon among Conning, Beacon, RBC and, with respect to
X'Xxxxxxx and his Affiliates, the Person (the "X'Xxxxxxx Representative") that
------------------------
has voting control with respect to the largest portion of the Stock owned by
X'Xxxxxxx and his Affiliates, then (w) each of Conning, Beacon, RBC and the
X'Xxxxxxx Representative shall select an independent appraiser skilled in such
valuations, (x) the Company shall make all books, records and other data and
documents available to such appraisers, (y) such appraisers shall simultaneously
render their reasoned written appraisals within 30 days after their selection,
and (z) the mathematical average of the four appraisals, stated on a per share
as-converted basis taking into account all of the outstanding Common Stock,
shall establish the repurchase price of each share of Common Stock. For the
purposes of this Section 28, the determination of the repurchase price of each
share of Common Stock shall not include a discount for a minority position or
liquidity, shall value the Company as a going concern and shall be based upon
the equity value of the Company. Repurchases of Stock and any distributions from
insurance proceeds as contemplated by this Section 28 shall be made promptly
after the later of the date such proceeds are received by the Company and the
date the reasoned written appraisals are provided to the Company pursuant to
clause (y) of the foregoing sentence.
Section 29. Rule Against Perpetuities.
-------------------------
The term of this Agreement shall be 21 years from February 3, 1997,
unless terminated earlier.
Section 30. Spider Technologies, Inc. Spin Off.
-----------------------------------
30.1 No Application to Spider.
-------------------------
The Company, as of November 5, 1999, distributed capital stock (the
"Spider Spin Off") of its wholly owned subsidiary, Spider Technologies, Inc., a
---------------
Delaware corporation ("Spider") to holders of capital stock of the Company. This
Agreement and the Registration Rights Agreements have no application to
securities issued by Spider.
30.2 Unwind.
------
Notwithstanding the intended simultaneous effectiveness of this
Agreement and the Spider Spin Off, if for any reason the Spider Spin Off does
not occur on or before November 30, 1999, or is unwound before January 1, 2000,
each Shareholder shall vote all its Stock and other Voting Shares in favor of
amendments to this Agreement, the Certificate, and such other agreements and
documents which were entered into in contemplation of the Spider Spin Off, so
that each will read as it would have in the absence of the Spider Spin Off. The
PIK Election Dividend and liquidation preference (other than adjustments to the
fixed dollar amount of the liquidation preference) are not dependent on the
Spider Spin Off.
46
30.3 Effect on Liquidation Preference.
---------------------------------
30.3.1 If subsequent to the Spider Spin Off, Spider (which term
for purposes of this Section 30.3 includes the successors and assigns of Spider)
engages in a "Liquidation" (for purposes of this Section 30 "Liquidation" means
-----------
a distribution of the proceeds of a sale or lease of assets of Spider
outside the ordinary course of business, a liquidation, winding up or
dissolution as provided in Section 3.1.4 of the Certificate of Incorporation of
Spider as first amended to create the Series A Preferred Stock of Spider and
excluding later amendments, or an exchange or sale of 90% or more of the capital
stock of Spider to accomplish an acquisition of Spider in a single or related
transaction, [any sale, lease, exchange, merger or consolidation as provided in
such Section, or an exchange or sale of 90% or more of the capital stock of
Spider to accomplish an acquisition of Spider in a single or related transaction
is deemed a Liquidation even if holders of Spider capital stock elect, waive, or
vote to not treat it as a Liquidation]), or an initial public offering of its
equity securities which is registered pursuant to the Securities Act ("Spider
------
IPO") then the Shareholders shall vote all their Stock and other Voting
---
Shares in favor of an amendment to the Certificate (and amend such other
agreements and documents as appropriate) to accomplish the following:
(a) The Series A Redemption Price and Series A Liquidation Value,
and the Series A Original Purchase Price solely for the purpose of computing the
amount of the dividend thereon pursuant to Section 3.1.3.(b) of the Certificate,
will be reduced by an amount equal to the Spider Excess Preferred Distribution
and increased by an amount equal to a Spider Deficit Distribution, in respect of
a share of Spider Series A Preferred issued pursuant to the Spin Off and Spider
securities issued in respect of such share of Spider Series A Preferred Stock by
way of exchange, exercise, conversion, stock split, stock dividend, distribution
or otherwise (collectively "Series A Spin Off Securities").
----------------------------
(b) The Series B Redemption Price and Series B Liquidation Value,
and the Series B Stated Value solely for the purpose of computing the amount of
the dividend thereon pursuant to Section 3.2.3.(a) of the Certificate, will be
reduced by an amount equal to the Spider Excess Preferred Distribution and
increased by an amount equal to a Spider Deficit Distribution, in respect of a
share of Spider Series A Preferred issued pursuant to the Spin Off and Spider
securities issued in respect of such share of Spider Series A Preferred Stock by
way of exchange, exercise, conversion, stock split, stock dividend, distribution
or otherwise (collectively "Series B Spin Off Securities").
----------------------------
(c) The Series C Redemption Price and Series C Liquidation Value,
and the Series C Stated Value solely for the purpose of computing the amount of
the dividend thereon pursuant to Section 3.3.3.(a) of the Certificate, will be
reduced by an amount equal to the Spider Excess Preferred Distribution and
increased by an amount equal to a Spider Deficit Distribution, in respect of a
share of Spider Series A Preferred issued pursuant to the Spin Off and Spider
securities issued in respect of such share of Spider Series A Preferred Stock by
way of exchange,
47
exercise, conversion, stock split, stock dividend, distribution or otherwise
(collectively "Series C Spin Off Securities").
----------------------------
(d) The Series D Redemption Price and Series D Liquidation Value,
and the Series D Stated Value solely for the purpose of computing the amount of
the dividend thereon pursuant to Section 3.4.3.(a) of the Certificate, will be
reduced by an amount equal to the Spider Excess Preferred Distribution and
increased by an amount equal to a Spider Deficit Distribution, in respect of a
share of Spider Series A Preferred issued pursuant to the Spin Off and Spider
securities issued in respect such share of Spider Series A Preferred Stock by
way of exchange, exercise, conversion, stock split, stock dividend, distribution
or otherwise (collectively "Series D Spin Off Securities").
----------------------------
(e) The Series E Redemption Price and Series E Liquidation Value,
and the Series E Stated Value solely for the purpose of computing the amount of
the dividend thereon pursuant to Section 3.5.3.(a) of the Certificate, will be
reduced by an amount equal to the Spider Excess Preferred Distribution and
increased by an amount equal to a Spider Deficit Distribution, in respect of a
share of Spider Series A Preferred issued pursuant to the Spin Off and Spider
securities issued in respect of such share of Spider Series A Preferred Stock by
way of exchange, exercise, conversion, stock split, stock dividend, distribution
or otherwise (collectively "Series E Spin Off Securities").
----------------------------
Equitable adjustments to the foregoing will be made in the event that
prior to a Liquidation or a Spider IPO and the making of the adjustments
provided for in Section 30.3.1.( a) through (e) dividends or distributions are
made by Spider on or in respect of Series A Spin Off Securities, Series B Spin
Off Securities, Series C Spin Off Securities, Series D Spin Off Securities, or
Series E Spin Off Securities (collectively "Spin Off Securities").
-------------------
The parties recognize that the foregoing adjustments in this Section
30.3.1 will not affect the amount receivable by a holder of Preferred Stock in
respect of shares of Common Stock received on conversion of Preferred Stock to
Common Stock prior to a Liquidation.
No such adjustments shall be made in respect of the Series F Preferred
as Spin Off Securities were not issued in respect of Series F Preferred.
No adjustments shall be made pursuant to this Section 30.3 in respect
of any Preferred stock that converts to Common Stock prior to either a
Liquidation or a Spider IPO.
30.3.2. "Spider Excess Preference Distribution", subject to
---------------------------------------
Section 30.3.4., means an amount equal to: (A) in the case of a Liquidation, the
amount by which (i) the Fair Market Value (as defined below) of the amount
received by the holders of Spin Off Securities (in respect of one share of
Spider Series A Preferred and all other Spin Off Securities issued in respect
thereof) pursuant to the Liquidation in respect of the applicable Spin Off
Securities exceeds (ii) $.13; or (B) in the case of a Spider IPO, the amount by
which (i) eighty-two and one-half percent (82.5%) of the average closing price
(or if no closing price is reported, the
48
average of the last reported bid and ask prices) per share of Spider common
stock on the principal United States exchange or market on which Spider's common
stock is then traded, for the thirty (30) trading days commencing 180 calendar
days after the Spider IPO (or the 30 [or fewer if there has been fewer than 30]
trading days preceding a redemption of a majority [calculated as a single class
on an as converted to common basis] of the Series A Preferred, Series B
Preferred, Series C Preferred, Series D Preferred and Series E Preferred), (ii)
exceeds $.13. The end of such 30 trading day period for purposes of this
definition and the definition of Spider Deficit Distribution is referred to as
the "Trading Period End."
-------------------
30.3.3. "Spider Deficit Distribution," subject to Section 30.3.4.,
----------------------------
means an amount equal to: (A) in the case of a Liquidation, the amount by which
(i) the Fair Market Value (as defined below) of the amount received by the
holders of Spin Off Securities (in respect of one share of Spider Series A
Preferred and all other Spin Off Securities issued in respect thereof) pursuant
to the Liquidation in respect of the applicable Spin Off Securities is less than
(ii) $.13; or (B) in the case of a Spider IPO, the amount by which (i) eighty-
two and one-half percent (82.5%) of the average closing price (or if no closing
price is reported, the average of the last reported bid and ask prices) per
share of Spider common stock on the principal United States exchange or market
on which Spider's common stock is then traded, for the thirty (30) trading days
commencing 180 calendar days after the Spider IPO (or the 30 [or fewer if there
has been fewer than 30] trading days preceding a redemption of a majority
[calculated as a single class on an as converted to common basis] of the Series
A Preferred, Series B Preferred, Series C Preferred, Series D Preferred and
Series E Preferred), is less than (ii) $.13. In the case of a Liquidation, the
Spider Deficit Distribution will be calculated only upon a Liquidation in which
all remaining Spider assets are directly or indirectly transferred (including by
merger, consolidation or stock exchange).
30.3.4. The calculation of Spider Excess Preferred Distribution or
Spider Deficit Distribution, including the $.13 amount referenced in this
Section 30, shall be equitably adjusted for stock splits, stock dividends other
than PIK Election dividends (except as PIK Election dividends are addressed in
the following portions of this Section 30.3.4), stock combinations, and
recapitalizations of Spin Off Securities, Spider common stock, and Preferred
Stock. No further calculation of Spider Excess Preference Distribution or Spider
Deficit Distribution shall be made after a Liquidation (other than a Liquidation
consisting only of a partial distribution of the assets of Spider) or the
Trading Period End, whichever occurs first. The calculation of the Spider Excess
Preference Distribution shall be equitably adjusted to take into account stock
received pursuant to dividends, stock splits, stock combinations and
recapitalizations so that the aggregate decrease in the Series A Original
Purchase Price, Redemption Price, Liquidation Value, and Stated Value, of all
Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred,
and Series E Preferred does not exceed the difference between: (i) the
$4,901,925.70 amount of the adjustment in respect of the Spider Spin Off as of
the date of the Spider Spin Off and (ii) the aggregate amount received in
respect of Spin Off Securities excluding Spin Off Securities issued pursuant to
a Series A PIK Election, Series B PIK Election, Series C PIK Election, Series D
PIK Election or Series E PIK Election.
49
For example, using hypothetical numbers, assume that: (i) there were
50,000,000 shares of Series A Preferred Stock outstanding on the date of the
Liquidation of Spider (10,000,000 of which had been received upon a PIK
Election); (ii) the Spider Series A Preferred Stock received $.20 per share in
the Liquidation; (iii) the Liquidation Value of the Spider Series A Preferred
Stock was $.13 per share; and (iv) at the time of the Spider Liquidation there
were a total of 70,000,000 shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock outstanding. The aggregate excess would be 50,000,000 x $.07 =
$3,500,000, not 40,000,00 x $.07 ($2,800,000) plus 10,000,000 x $.20
($2,000,000) = $4,800,000. The $3,500,000 aggregate would then be allocated
among the 70,000,000 shares of Intek for a per share adjustment of $.05
($3,500,000 / 70,000,000 = $.05). Subject to the $.13 per share limitation of
Section 30.3.5, the same equitable adjustment principles shall apply in the case
of a Spider Deficit Distribution.
30.3.5 In no event shall the adjustments provided for in this Section
30.3 result in an increase in the Series A Redemption Price, Series A
Liquidation Value, Series A Original Purchase Price, Series B Redemption Price,
Series B Liquidation Value, Series B Stated Value, Series C Redemption Price,
Series C Liquidation Value, Series C Stated Value, Series D Redemption Price,
Series D Liquidation Value, Series D Stated Value, Series E Redemption Price,
Series E Liquidation Value, or Series E Stated Value of more than $.13, subject
to adjustment as to such $.13 for stock splits, stock dividends, stock
combinations and recapitalizations of Series A Preferred, Series B Preferred,
Series C Preferred, Series D Preferred or Series E Preferred.
30.3.6 The "Fair Market Value" of any amount received other than in
----------------------
the form of immediately available funds is: (i) if a security traded on the New
York Stock Exchange, American Stock Exchange, NASDAQ National Market System, or
a foreign exchange of prominence similar to the foregoing, the average closing
price (or if not so quoted the average of the last quoted bid and ask prices)
during the fifteen (15) trading days preceding the closing of the transaction
whereby the Shareholders receive such security; and, otherwise (ii) the fair
market value of such other property as determined by mutual agreement among
X'Xxxxxxx, the Company, and the holders of not less than 50% of the Series B
Preferred, Series C Preferred and Series D Preferred, each treated as a separate
class on an as-converted basis, or, if the parties are unable to agree, as
determined based upon what a seller under no compulsion to sell would receive
from a willing buyer by a nationally recognized independent investment banking
firm selected by mutual agreement among X'Xxxxxxx, the Company and the holders
of not less than 50% of the Series B Preferred (including in such as converted
amount Common Stock issuable on the exercise of the Series NB Warrant), Series C
Preferred and Series D Preferred, each treated as a separate class on an as-
converted basis.
30.3.7. Except in the case of a Spider Deficit Distribution, this
Section 30 shall not reduce the amount receivable by holders of Common Stock,
including Common Stock issued upon conversion of Preferred Stock, in a
liquidation of the Corporation. If a Liquidation of Spider or Trading Period End
has not then occurred, this Section 30 shall terminate upon the earlier of a
dissolution, liquidation or winding up of the Corporation or an initial public
offering
50
of the Corporation's Common Stock pursuant to which all Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred and Series E
Preferred is converted to Common Stock.
30.3.8. For purposes of Sections 30.3.2(a) and 30.3.6., when referring
to Intek, the terms "dissolution," "liquidation," and "winding up" are used as
such terms are used in Sections 3.1.4, 3.2.4, 3.3.4, 3.4.4., and 3.5.4. of the
Certificate and the term "redemption" refers to a redemption pursuant to
Sections 3.1.6(c), 3.2.6, 3.3.6., 3.4.6 or 3.5.6. of the Certificate.
This Amended and Restated Shareholders' and Voting Rights Agreement
shall become effective upon execution by those persons whose execution is
required by Section 17 of the Original Agreement (as this Agreement has the
effect of an amendment thereof), notwithstanding that all current shareholders
of the Company are listed below as signatories hereto.
51
IN WITNESS WHEREOF, the parties hereto have executed Intek Information,
Inc.'s Amended and Restated Shareholders' and Voting Agreement on the day and
year first above written.
/s/ Xxxxxxx X. X'Xxxxxxx /s/ Xxxxxxxx X. Xxxxxxxx
---------------------------- ------------------------------------
Xxxxxxx X. X'Xxxxxxx* Xxxxxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. X'Xxxx
____________________________ ------------------------------------
Xxxx X. Xxxxxx Xxxxxxx X. X'Xxxx, on behalf of Eden
Financial Group, Inc., Capital Accumulation
and Profit Sharing Plan FBO
____________________________ Xxxxxxx X. X'Xxxx
Xxxxx X. Xxxxxx
/s/ Xxxxxxx X. X'Xxxx
____________________________ ------------------------------------
Xxxx X. Xxxxxx Xxxxxxx X. X'Xxxx
____________________________ ____________________________________
Xxxxxxx X. Xxxxxxx Xxxxxxx X. Xxxx
____________________________ ____________________________________
Xxxxxx X. Xxxxx Xxxx Xxxxxxx
____________________________ ____________________________________
Xxxxx Xxxxxx Xxxxxxx X. Xxxxx
____________________________ ____________________________________
Xxxxxxx Xxxxxx, Trustee Xxxxxx Xxxxxxx
The Xxxxxxx X. Xxxxxx
Revocable Trust Dated
June 14, 1994
____________________________ ____________________________________
Lock W. Ireland Xxxxxx X. Xxxxxxx
____________________________ ____________________________________
X. Xxxxxxx Xxxxxxxx, Jr. Xxxxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxx
---------------------------- ____________________________________
Xxxxxxx X. Xxxx Xxxxxxx Xxxxx
____________________________ ____________________________________
Xxxxxxxx X. Xxxxxxxxx, as JTWROS Xxxxx X. Xxxxxxx, as JTWROS
with Xxxxx X. Xxxxxxx and with Xxxx X. Xxxxxxx and
Xxxx X. Xxxxxxx Xxxxxxxx X. Xxxxxxxxx
52
________________________________ ____________________________________
Xxxxxxxx Xxxxx Xxxx X. Xxxxxxx, as JTWROS
with Xxxxxxxx X. Xxxxxxxxx and
Xxxxx X Xxxxxxx
________________________________ ____________________________________
Xxxx X. Xxxxxxxxx, JTWROS Xxxx X. Xxxxxxxxx, JTWROS
with Xxxx X. Xxxxxxxxx with Xxxx X. Xxxxxxxxx
/s/ Xxxx X. Xxxxxx
-------------------------------- ____________________________________
Xxxx X. Xxxxxx Xxxxxxxx X. Xxxxxx
________________________________ ____________________________________
Xxxx X. Xxxxxx Xxxxxxx X. Xxxxxx
XXXX & COMPANY, INC.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------- ____________________________________
Name: Xxxxx X. Xxxxxxxx Xxxxxxx X. Xxxxxx
Title: Finance Director
SQUAM LAKE INVESTORS II, L.P.
By: GPI, Inc., its managing general
partner
By: Xxxxx X. Xxxxxxxx
----------------------------- ____________________________________
Name: Xxxxx X. Xxxxxxxx Xxxx Xxxxxxx
Title: President of GPI, Inc.
Managing General Partner
RESOURCE BANCSHARES CORPORATION*
By: /s/ X. X. Xxxxxxx
----------------------------- ____________________________________
Name: X. X. Xxxxxxx Xxx Xxxx
Title: President and C.E.O.
Address: 0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000 ____________________________________
Xxxxx Xxxx
INTEK INFORMATION, INC.*
By: /s/ Xxxxxxx X. X'Xxxxxxx
------------------------------ ____________________________________
Xxxxxxx X. X'Xxxxxxx Xxxxxx X. Xxxxxx
Chief Executive Officer and
President
Amended and Restated Shareholders' and Voting Agreement
53
CONNING CAPITAL* PARTNERS V, L.P.
By: Conning Investment Partners V, LLC, its General Partner
By: Conning & Company, its Manager Member
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Title: Vice President
---------------------------------
Address: City Place II, 000 Xxxxxx Xxxxxx,
Xxxxxxxx XX 00000-0000
THE BEACON GROUP III - FOCUS VALUE FUND, L.P.*
By: Focus Value GP, Inc., its member
By: Beacon Focus Value Investors, LLC, its general partner
By: /s/ Xxxx Xxxxxxxxx
------------------------------------
Title: Managing Director
---------------------------------
Address: 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000
U.S. INFORMATION TECHNOLOGY FINANCING, L.P.*
By: /s/ Xxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxx
----------------------------------
Title: Managing Director
---------------------------------
Address: 000 000/xx/ Xxxxxx XX, Xxxxx 0000
Xxxxxxxx, XX 00000
ENCOMPASS GROUP, INC.*
By: /s/ Xxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxx
----------------------------------
Title: Chairman
---------------------------------
Address: 000 000/xx/ Xxxxxx XX, Xxxxx 0000
Xxxxxxxx, XX 00000
TRANS COSMOS USA, INC.*
By: /s/ Xxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxx
----------------------------------
Title: Chairman
---------------------------------
Address: 000 000/xx/ Xxxxxx XX, Xxxxx 0000
Xxxxxxxx, XX 00000
Amended and Restated Shareholders' and Voting Agreement
54
BVCF IV, L.P. *
By: X.X. Path Associates, LLC,
its General Partner
By: Xxxxxxx Venture Management, LLC,
its Attorney-in-fact
By: Xxxxxxx Partners, Inc.,
its Managing Member
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
Executive Director
Address: 000 X. XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
SONY ELECTRONICS, INC.
By: /s/ XXXXXXX XXXXXX
----------------------------------
Vice President, Sony Electronics, Inc.
Address: 00000 X. Xxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
PROSPERO HOLDINGS, LLC
By: ________________________________
Name: ________________________________
Xxx Xxxxxxx
Title: ________________________________
Address: 000 Xxxxx Xxxx Xxxxxx
Xxxxxx, XX 00000
______________________________________
Xxxx Xxxxxxx Xxxxx
00000 Xxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
55
CBJ HOLDINGS FIVE, LLC
By: ________________________________
Name: ________________________________
Xxxxx X. Xxxx
Title: ________________________________
Address: 0000 00/xx/ Xxxxxx
Xxxxxxx, XX 00000
XXXXXXXXX ENTERPRISES, INC.
By: ________________________________
Name: ________________________________
X.X. Xxxxxxxxx
Title: ________________________________
Address: 000 00/xx/ Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
THE XXXXXXXX COMPANIES, LLC
By: ________________________________
Name: ________________________________
Xxxxxxxx X. Xxxxxxxx
Title: ________________________________
Address: 0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
_______________________________________
Xxxxxxx X. Xxxxxxxxx
0000 Xxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
MARKET STREET PARTNERS
By: _________________________________
Name: _________________________________
Title: ________________________________
Address: 0000 00/xx/ Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
________________________________________
Xxxxx Xxxxx
00 Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
Amended and Restated Shareholders' and Voting Agreement
56
SCHEDULE 13.1(d)
CONSENTS REQUIRED BY SHAREHOLDER
57
SCHEDULE 13.2(a)
CAPITALIZATION TABLE LISTING SECURITYHOLDERS
(Attached)
58
SCHEDULE 13.2(b)
The Registration Rights Agreements
The agreements referred to in sections 5.6(h), (i), (k), (l) and (m)
59
SCHEDULE 23
ADDRESS FOR SHAREHOLDERS NOTICES IF NOT ON SIGNATURE PAGE
Xxxxxxx X. X'Xxxxxxx Xxxxxxx X. Xxxxx
Intek Information, Inc. 0000 Xxxxxxxxx Xxxx
0000 XXX Xxxxxxx, 00/xx/ Xxxxx Xxxxxxx, XX 00000
Xxxxxxxxx, XX 00000
Xxxx Xxxxxxx
Xxxxx X. Xxxxxxxx 0000 Xxxxxx Xxxxxx
Intek Information, Inc. Xxxxxxxx, XX 00000
0000 XXX Xxxxxxx, 00/xx/ Xxxxx
Xxxxxxxxx, XX 00000 Xxxxx Xxxxxx
000 Xxxxx Xxx Xxxxx
Xxxx X. Xxxxxx Xxxxxxxxxx, XX 00000
000 Xxxxxxx Xxxxxx Xxxx. XXX#000
Xxxxxxx Xxxx, XX 00000 Xxxxxxx X. Xxxxx
0000 Xxxxxx Xxxx
Xxxxxxx X. X'Xxxx Xxxxxxx Xxxxx, XX 00000
Intek Information, Inc.
0000 XXX Xxxxxxx, 00/xx/ Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000 67 Glenmoor
Xxxxxxxxx, XX 00000
Xxxxxxx X. X'Xxxx, on behalf
of Eden Financial Group, Inc. Xxxxxx X. Xxxxxx
0000 Xxxxx Xxxx 000 Xxxxxxx Xxxx
Xxxxxx, XX 00000 Xxxxxxx, XX 00000
Xxxx X. and Xxxxx X. Xxxxxx Xxxxxx Xxxxxxx
0000 Xxxxxx Xxxxx c/o Laureate Capital Corporation
Xxxxxxxxxx, XX 00000 000 X. Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxxx
0000 Xxxxxxxxx Xxx Xxxx X. Xxxxxxx and Xxxx X. Ireland
Xxxxxxxxxx, XX 00000 0000 Xxxxxx Xxxx
Xxxxxxxx Xxxxx, XX 00000
Xxxxxxx X. Xxxx
000 Xxxxxx Xxxxxx Xxxxxx X. Xxxxxxx
Xxxxxx, XX 00000 c/o Laureate Capital Corp.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx X. Xxxxx Xxxxxxxxx, XX 00000
0000 X. Xxxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000 Xxxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxxxx
Xxxxx Xxxxx, XX 00000
60
Xxxxxx Xxxx
IG Ventures, Ltd. Xxxxxxx X. and Xxxxxxx X. Xxxxxx
00 Xxxxxxxxx Xxxxxx 000 Xxxxxx Xxx
Xxxxxxxx Xxxxxxx, XX 00000 Xxxxxxxxxxxxx, XX 00000
X. Xxxxxxx Xxxxxxxx, Jr. Xxxx X. Xxxxxx
and Xxxxx X. Xxxxxxxx Intek Information, Inc.
c/o Resource Bancshares Corp. 0000 Xxxxxx Xx., Xxxxx 000
0000 Xxxx Xxxxxx, Xxxxx 000 Xxx Xxxxx, XX 00000
Xxxxxxxx, XX 00000
XXXX & COMPANY, INC.
Xxxxxxxx X. Xxxxxxxxx Xxxx Xxxxxxxxx, Treasurer
0000 XxxXxxxxx Xxxxxxx 0 Xxxxxx Xxxxx
Xxxx, XX 00000 Xxxxxx, XX 00000
Xxxxx X. Xxxxxxx SQUAM LAKE INVESTORS II, L.P.
00000 Xxxxxx Xxxxxx Xxxx By: GPI, Inc., its managing general partner
Xxxxxx Xxxxx, XX 00000 c/o Bain & Company, Inc.
Attn: Xxxx Xxxxxxxxx, Treasurer
Xxxx X. Xxxxxxx 0 Xxxxxx Xxxxx
00000 Xxxxxx Xxxxxx Xxxx Xxxxxx, XX 00000
Xxxxxx Xxxxx, XX 00000
RESOURCE BANCSHARES CORPORATION
Xxxxxxxx X. Xxxxx X.X. Xxxxxxx, Chairman and CEO
000 X. 00/xx/ Xxxxxx, #000 0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000 Xxxxxxxx, XX 00000
Xxxx X. and Xxxx X. Xxxxxxxxx INTEK INFORMATION, INC.
000 Xxxx Xxxx Xxxxxxx X. X'Xxxxxxx, President
Xxxxxx Xxxxxx, XX 00000 0000 XXX Xxxxxxx, 00/xx/ Xxxxx
Xxxxxxxxx, XX 00000
Xxxx Xxxxxxx
0000 0/0 Xxxxxx Xxxxxx CONNING CAPITAL PARTNERS V, L.P.
Xxx Xxxxx, XX 00000 Attn: Xxxxx Xxxxxx
Xxxx Xxxxx XX, 0/xx/ Xxxxx
Xxxxx Xxxx 185 Asylum Street,
0000 Xxxxxxxxx Xxxx. Xxxxxxxx XX 00000-0000
Xxxxxx Xxxxxx, XX 00000
THE BEACON GROUP III - FOCUS VALUE FUND, L.P.
Xxx Xxxx Attn: Xxxxxx (Xxx) Xxxx
0000 X. Xxxxxxx Xxx 000 Xxxx Xxxxxx
Xxxxxx, XX 00000 Xxx Xxxx, XX 00000
Xxxx X. Xxxxxx U.S. Information Technology Financing, L.P.
0000 Xxxxxxxx Xxxxx Xxxx: Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000 000 000/xx/ Xxxxxx XX, Xxxxx 0000
Xxxxxxxx, XX 00000
Xxxxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxxx, Xxx. 0X
Xxx Xxxx, XX 00000
61
CBJ Holdings Five, LLC
Encompass Group, Inc. c/o Xxxxx X. Xxxx
Attn: Xxxxxxx Xxxxxx 1900 00/xx/ Xxxxxx
000 000/xx/ Xxxxxx XX, Xxxxx 0000 Xxxxxxx, XX 00000
Xxxxxxxx, XX 00000
Xxxxxxxxx Enterprises, Inc.
Trans Cosmos USA, Inc. c/o X.X. Xxxxxxxxx
Attn: Xxxxxxx Xxxxxx 000 00/xx/ Xxxxxx, Xxxxx 0000
777 000/xx/ Xxxxxx XX, Xxxxx 0000 Xxxxxx, XX 00000
Xxxxxxxx, XX 00000
The Xxxxxxxx Companies, LLC
BVCF IV, L.P. c/o Xxxxxxxx X. Xxxxxxxx
Attn: Xxxxxx Xxxxxx 0000 Xxxxxxxx, Xxxxx 0000
000 X. XxXxxxx XxxxxxXxxxxxx, XX 00000 Xxxxxx, XX 00000
Prospero Holdings, LLC Xxxxxxx X. Xxxxxxxxx
Attn: Xxx Xxxxxxx 0000 Xxxxxxx Xxxxxx
000 Xxxxx Xxxx Xxxxxx Xxx Xxxxx, XX 00000
Xxxxxx, XX 00000
Market Street Partners
Xxxx Xxxxxxx Xxxxx 0000 00/xx/ Xxxxxx, Xxxxx 000
00000 Xxxxxxxx Xxxxx Xxxxxx, XX 00000
Xxx Xxxxx, XX 00000
62
