EXHIBIT 4.3
XXXX XXXXXXX CORPORATION
STOCKHOLDERS' AGREEMENT
DATED AS OF MARCH 28, 2002
AS AMENDED AND RESTATED
AS OF MARCH 4, 2004
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND RELATED MATTERS 2
Section 1.1 Definitions............................................................................ 2
Section 1.2 Related Definitional Matters........................................................... 6
Section 1.3 Capital Stock Subject To Agreement..................................................... 7
ARTICLE II STOCKHOLDERS 7
Section 2.1 Stockholders........................................................................... 7
Section 2.2 Preemptive Rights For Equity Securities Issued By The Company.......................... 7
ARTICLE III RESTRICTIONS ON DISPOSITIONS OF CAPITAL STOCK 9
Section 3.1 Restrictions On Dispositions........................................................... 9
Section 3.2 Permitted Transfers................................................................... 11
Section 3.3 Notice Of Right Of First Refusal...................................................... 12
Section 3.4 Rights Of First Refusal For Series A Preferred Held By Non-Management Stockholders.... 12
Section 3.5 Rights Of First Refusal For Stock Held By Management Stockholders..................... 14
Section 3.6 Rights Of First Refusal For Series B Preferred........................................ 15
Section 3.7 Purchase Price........................................................................ 16
Section 3.8 Compliance Required................................................................... 16
Section 3.9 Certain Rights Of Inclusion........................................................... 16
Section 3.10 Drag-Along Rights..................................................................... 17
Section 3.11 Endorsement Of Stock Certificates..................................................... 20
Section 3.12 Specific Performance.................................................................. 21
Section 3.13 Government Compliance................................................................. 21
ARTICLE IV COMPANY RIGHTS AND OBLIGATIONS 21
Section 4.1 Vesting And Repurchase Of Management Stock............................................ 21
Section 4.2 Repurchase Option For Management Stock................................................ 23
Section 4.3 Buyback Of Certain Shares Of Stock.................................................... 26
Section 4.4 Financial Reports..................................................................... 27
ARTICLE V SPECIAL MANAGEMENT/GOVERNANCE PROVISIONS 29
Section 5.1 Certificate Of Incorporation: No Conflict With Agreement............................. 29
Section 5.2 Board Of Directors.................................................................... 29
Section 5.3 Removal............................................................................... 32
Section 5.4 Vacancies............................................................................. 32
Section 5.5 Covenant To Vote...................................................................... 33
Section 5.6 Designation Of Proxy.................................................................. 33
Section 5.7 Investor Stockholder Rights........................................................... 33
Section 5.8 Voting Rights......................................................................... 34
Section 5.9 VCOC Rights........................................................................... 35
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Section 5.10 Business Opportunities................................................................ 35
ARTICLE VI MISCELLANEOUS 36
Section 6.1 Manner Of Giving Notice............................................................... 36
Section 6.2 Waiver Of Notice...................................................................... 36
Section 6.3 Counterpart Signatures................................................................ 36
Section 6.4 Severability.......................................................................... 36
Section 6.5 Joinder Of Spouses.................................................................... 37
Section 6.6 Entire Agreement; Amendments; Agreement Controls...................................... 37
Section 6.7 Governing Law And Venue............................................................... 38
Section 6.8 Consent To Jurisdiction............................................................... 38
Section 6.9 Binding Effect; Assignment............................................................ 38
Section 6.10 Future Actions........................................................................ 39
Section 6.11 Headings; Exhibits.................................................................... 39
Section 6.12 Termination Of This Agreement......................................................... 39
Section 6.13 Adjustments for Stock Splits, Etc..................................................... 39
Section 6.14 Regulatory Matters.................................................................... 39
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STOCKHOLDERS' AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (the "Agreement") is made
and entered into as of March 4, 2004 to be effective as of the 28th day of
March, 2002, among Xxxx Xxxxxxx Corporation, a Delaware corporation (the
"Company"), and the stockholders of the Company whose names appear on the
signature page hereto (collectively, the "Stockholders").
WITNESSETH:
WHEREAS, the Company is incorporated under the laws of the State of
Delaware with an authorized capitalization of (i) 150,000,000 shares of common
stock, par value $0.001 per share (the "Common Stock"), 8,660,148 of which are
issued and outstanding as of the date hereof, and (i) 75,000,000 shares of
Preferred Stock, par value $0.001 per share (the "Preferred Stock"), of which
6,900,000 shares have been designated the Series A Preferred Stock (the "Series
A Preferred"), 6,258,994 of which are issued and outstanding as of the date
hereof, and 52,185,000 shares have been designated the Series B Preferred Stock
(the "Series B Preferred"), 49,205,500 of which are issued and outstanding as of
the date hereof; and
WHEREAS, certain of the Stockholders will be parties to the Stock Purchase
Agreement, among the Company and the investors listed on Annex A to such
agreement (the "Stock Purchase Agreement"), which is being executed and
delivered simultaneously with the execution and delivery by such Stockholders
and the Company of this Agreement; and
WHEREAS, certain of the Stockholders hold shares of Common Stock are
parties to a Stockholders' Agreement, dated as of January 31, 2002, by and among
the Company and such Stockholders (the "Founders Stockholders' Agreement") and
desire to terminate the Founders Stockholders' Agreement in full; and
WHEREAS, certain of the Stockholders hold shares of Series A Preferred
purchased pursuant to a private placement of shares as described in a
Confidential Private Placement Memorandum of the Company, dated February 11,
2002, as amended by Supplements dated February 26, 2002 and March 20, 2002, for
the offer and sale of 6,594,724 shares of Series A Preferred (the "A Round");
and
WHEREAS, each of the Stockholders is, or will be upon consummation of the
Closing (as defined in the Stock Purchase Agreement), the owner of the number of
shares of such issued and outstanding Common Stock, Series A Preferred or Series
B Preferred of the Company set forth opposite its name on Exhibit A which shall
be amended from time to time to reflect the shares of Common Stock, Series A
Preferred and Series B Preferred owned by the Stockholders, their Permitted
Transferees and additional stockholders hereunder; and
WHEREAS, the parties hereto deem it in their best interests and in the best
interests of the Company to set forth their respective rights and obligations in
connection with their investment in the Company; and
WHEREAS, the Board of Directors of the Company unanimously approved the
amendment of the Agreement as set forth in this Amended And Restated Agreement
and such amendment was approved by the requisite vote of the Stockholders, all
effective as of March 4, 2004; and
WHEREAS, the parties hereto also desire to restrict the sale, assignment,
transfer, encumbrance or other disposition of the shares of Common Stock, Series
A Preferred Stock and Series B Preferred, as well as shares of capital stock
that may be issued hereafter, and to provide for certain rights and obligations
in respect thereto as hereinafter provided.
NOW, THEREFORE, for and in consideration of the mutual agreements and
understandings set forth herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS AND RELATED MATTERS
SECTION 1.1 DEFINITIONS.
When used in this Agreement, the following terms shall have the
respective meanings set forth below:
"AFFILIATE" shall mean, when used with respect to a specified Person, any
Person which (a) directly or indirectly controls, is controlled by or is under
common control with such specified Person, (b) is an officer, director, general
partner, trustee or manager of such Person, or of a Person described in clause
(a) of this sentence or (c) is a Relative of such specified Person or of an
individual described in clauses (a) or (b) of this sentence. As used in this
definition, the term "control" means possession, directly or indirectly (through
one or more intermediaries), of the power to direct or cause the direction of
management and policies of a Person through an ownership of at least a majority
of the outstanding voting interests of such Person, or through the power to
appoint, elect or direct the vote of, a majority of the members of the governing
body of such Person whether by contract, voting trust or other agreement.
"Relative" shall mean, with respect to any individual, (i) such individual's
spouse, (ii) any direct descendent, parent, grandparent, great grandparent or
sibling (in each case, whether by blood or adoption) of such individual or such
individual's spouse, and (iii) any spouse of a person described in clause (ii)
of this sentence.
"A ROUND STOCKHOLDERS" shall mean the Stockholders designated as such on
Exhibit A.
"BYLAWS" shall mean the Company's bylaws, certified by the secretary of the
Company, a copy of which is attached hereto as Exhibit C, as may be amended from
time to time.
"CAUSE" shall mean discharge by the Company on the following grounds:
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(i) An employee's or director's conviction or plea of nolo
contendere in a court of law of any crime or offense, excluding traffic
violations and other minor offenses.
(ii) Willful misconduct which materially adversely affects the
reputation or business activities of the Company and which continues after
written notice thereof from the Board of Directors of the Company to such
employee or director stating with specificity the alleged dishonesty or
misconduct and, if requested by the employee within 10 days thereafter,
such employee is afforded a reasonable opportunity to be heard before the
Board of Directors of the Company.
(iii) Substance abuse, including abuse of alcohol or use of
illegal narcotics, and other drugs or substances, for which such employee
or director fails to undertake and maintain treatment after 15 days after
requested by the Company.
(iv) Misappropriation of funds or other material acts of
dishonesty involving the Company.
(v) Any employee's continuing material failure or refusal to
perform his duties or to carry out in all material respects the lawful
directives of the Board of Directors of the Company.
"CERTIFICATE OF INCORPORATION" shall mean the Company's Amended and
Restated Certificate of Incorporation, including all certificates of designation
with respect thereto, a copy of which is attached hereto as Exhibit B, as may be
amended from time to time.
"CHANGE OF CONTROL" shall mean (i) a consolidation or merger involving the
Corporation, (ii) the sale, lease, or transfer of all or substantially all of
the assets of the Corporation, or (iii) any other form of corporate
reorganization in which outstanding shares of the Corporation are exchanged for
or converted into cash, securities of another corporation or business
organization (including the surviving entity of a merger), or other property,
unless, in the case of clauses (i) or (iii), the holders of a majority of the
outstanding shares of Series B Preferred Stock have consented that such
transaction shall not constitute a Change of Control.
"CONVERSION RATIO" shall, with respect to any share of Series B Preferred,
have the meaning set forth in the Certificate of Incorporation.
"DEFAULTING STOCKHOLDER" shall have the meaning set forth in Section 4.2(a)
of the Stock Purchase Agreement.
"DISABILITY" shall mean a physical or mental infirmity which impairs the
Management Stockholder's ability to substantially perform his or her duties with
the Company for a period of one hundred eighty consecutive days and the
Management Stockholder has not returned to his or her full time employment prior
to the applicable date.
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"DISPOSITION" shall mean any sale, assignment, hypothecation, gift, inter
vivos transfer, pledge, hedge, mortgage or other encumbrance, or any other
disposition of capital stock of the Company whatsoever, whether voluntary or
involuntary, excluding, in the case of JPMP, any grant of a participation
interest as described in the Regulatory Sideletter.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended
from time to time and any successor statute thereto.
"INITIAL PUBLIC OFFERING" shall mean the registered public offering of
equity securities of the Company pursuant to a registration statement that has
been declared effective under the Securities Act.
"INVESTOR STOCKHOLDERS" shall mean the Stockholders designated as such on
Exhibit A.
"JPMP" means X.X. Xxxxxx Partners (BHCA), L.P., a Delaware limited
partnership, or its permitted successors and assigns that are Affiliates of X.X.
Xxxxxx Partners (BHCA), L.P.
"LIQUIDATION EVENT" shall have the meaning set forth in the Certificate of
Designations designating the Series B Preferred.
"MANAGEMENT STOCK" shall mean all shares of Common Stock now or hereafter
owned by any of the Management Stockholders that initially were purchased from
the Company at a split adjusted price of $.04412 per share on or about January
31, 2002 and any and all securities of any kind whatsoever of the Corporation
which may be issued on or after the date hereof in respect of, in exchange for,
or upon conversion of such shares of Common Stock pursuant to a merger,
consolidation, stock split, stock dividend, recapitalization of the Corporation
or otherwise.
"MANAGEMENT STOCKHOLDERS" shall mean the Stockholders designated as such on
Exhibit A.
"MARKETABLE SECURITIES" shall mean freely tradable common stock (with no
restrictions on disposition under applicable law or contract) approved for
listing on the New York Stock Exchange or admitted to trading and quoted in the
Nasdaq National Market system of a corporation with a market value of its
outstanding common stock owned by non-affiliates in excess of $50,000,000.
"NON-PARTICIPATING STOCKHOLDER" shall have the meaning set forth in Section
4.1 of the Stock Purchase Agreement.
"ORIGINAL COST" shall mean, with respect to a particular share of capital
stock of the Company, the amount originally paid to the Company to purchase such
share.
"PERMITTED TRANSFEREE" with respect to a transferor Stockholder means (i)
the spouse of the transferor Stockholder, (ii) a trust, or family partnership,
the sole beneficiary of which is the transferor Stockholder, the spouse of or,
any Person related by blood or adoption to,
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the transferor Stockholder, or (iii) the partners, the members or stockholders
or Affiliates of an Investor Stockholder; provided that a Permitted Transferee
under this clause (iii) may not compete with the Company directly or indirectly
or engage in any aspect of the oil and gas industry other than providing
financing to or investing in businesses within such industry; provided, however,
that any such transfers contemplated by (i) through (iii) do not conflict with
or constitute a violation of state or federal securities laws. For purpose of
clause (iii) above, an Affiliate of an investor shall not be deemed to be
competing with the Company if it, through its engagement in the private equity
business, owns, directly or indirectly, interests or securities in portfolio
companies that compete with the Company or engage in any aspect of the oil and
gas industry.
"PERSON" shall mean an individual, partnership, limited partnership,
limited liability company, foreign limited liability company, trust, estate,
corporation, custodian, trustee-executor, administrator, nominee or entity in a
representative capacity.
"PERSONAL REPRESENTATIVE" shall mean the executor, administrator, guardian,
or other personal representative of any natural person who has become deceased
or subject to disability, or any successor or assignee thereof whether by
operation of law or otherwise.
"PROPORTIONATE PERCENTAGE" shall mean, with respect to a Stockholder, a
fraction (expressed as a percentage) the numerator of which is the number of
shares of Common Stock, Series A Preferred and Series B Preferred held by such
Stockholder (calculated on the basis that all shares of Series B Preferred have
been converted at the Conversion Ratio, and all shares of Series A Preferred
have been converted at the "Conversion Ratio" as defined in the Certificate of
Designations for the Series A Preferred Stock) and the denominator of which is
(i) in a situation where the Proportionate Percentage is being calculated with
respect to all Stockholders, the total number of shares of Common Stock, Series
A Preferred and Series B Preferred (calculated on the basis that all shares of
Series B Preferred have been converted at the Conversion Ratio and all shares of
Series A Preferred have been converted at the "Conversion Ratio" as defined in
the Certificate of Designations for the Series A Preferred Stock) held by all
Stockholders at the time in question and (ii) in a situation where the
Proportionate Percentage is being calculated with respect to a particular group
of Stockholders, the total number of shares of Common Stock, Series A Preferred
and Series B Preferred (calculated on the basis that all shares of Series B
Preferred Stock have been converted at the Conversion Ratio and all shares of
Series A Preferred have been converted) held by the members of such group.
"REGULATORY SIDELETTER" means the Regulatory Sideletter dated as of the
date hereof between the Company and JPMP.
"QUALIFIED MERGER" shall mean a merger of the Company with another
corporation that is a Qualified Public Company, or a subsidiary of a Qualified
Public Company, in which the Current Market Value of the consideration received
for one share of Series B Preferred pursuant to paragraph 4 of the Certificate
of Designations for the Series B Preferred Stock is at least $7.50 per share and
which consideration consists of cash and/or Marketable Securities of such
Qualified Public Company.
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"QUALIFIED PUBLIC COMPANY" shall mean a corporation whose common stock is
authorized and approved for listing on the New York Stock Exchange or admitted
to trading and quoted in the Nasdaq National Market system and the market value
of the outstanding common stock of which corporation owned by non-affiliates of
such corporation is in excess of $50,000,000.
"QUALIFIED PUBLIC OFFERING" shall mean any firm commitment underwritten
offering of Common Stock to the public pursuant to an effective registration
statement under the Securities Act (i) for which the aggregate gross proceeds to
the Corporation are not less than fifty million dollars ($50,000,000), (ii) in
which each share of Series B Preferred converts pursuant to paragraph 5 of the
Certificate of Designations for the Series B Preferred Stock into shares of
Common Stock that have an aggregate value, based on the price to public in such
offering, of at least $7.50 per share, and (iii) pursuant to which shares of
Common Stock are authorized and approved for listing on the New York Stock
Exchange or admitted to trading and quoted in the Nasdaq National Market system.
"SALE OF THE COMPANY" means, in one or a series of related transactions,
sale of (i) all or substantially all the capital stock of the Company or (ii)
all or substantially all of the assets of the Company, determined on a
consolidated basis, in each case to a Person or group of Persons who are not
Affiliates of any Investor Stockholder, whether by way of merger, share
exchange, consolidation, sale of stock or assets, or otherwise.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended from
time to time and any successor statute thereto.
"SERIES A CONVERSION SHARES" shall mean those shares of Common Stock issued
upon conversion of the Series A Preferred.
"SERIES B CONVERSION SHARES" shall mean those shares of Common Stock issued
upon conversion of the Series B Preferred.
"UNVESTED SHARES" means shares of Management Stock that are not Vested
Shares.
"VESTED SHARES" means shares of Management Stock that have become vested
pursuant to Section 4.1 hereof due to both Dollar Vesting and Time Vesting.
SECTION 1.2 RELATED DEFINITIONAL MATTERS.
As used in this Agreement, pronouns in masculine, feminine and neuter
genders shall be construed to include any other gender, and words in the
singular form shall be construed to include the plural and vice versa, unless
the context clearly otherwise requires. As used in this Agreement, the term
"including" shall be construed to be expansive rather than limiting in nature
and to mean "including, without limitation," except where the context clearly
otherwise requires.
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SECTION 1.3 CAPITAL STOCK SUBJECT TO AGREEMENT.
Except as specifically provided otherwise in this Agreement, this
Agreement shall extend and apply to all shares of capital stock now owned by
each of the Stockholders and to all shares of capital stock of the Company as
may hereafter be acquired by any of the Stockholders, whether such shares
constitute the separate property or community property of any of the individual
Stockholders, and regardless of the capacity in which title to such shares is
held or taken. This Agreement shall also apply to all shares of capital stock of
the Company to which the spouse of any Stockholder is entitled by virtue of any
community property or any other laws.
ARTICLE II
STOCKHOLDERS
SECTION 2.1 STOCKHOLDERS.
The Stockholders of the Company and the number of shares of capital
stock of the Company held by each are set forth in Exhibit A as such exhibit may
be amended and updated from time to time.
SECTION 2.2 PREEMPTIVE RIGHTS FOR EQUITY SECURITIES ISSUED BY THE
COMPANY.
(a) Except in the case of Excluded Securities (as hereinafter
defined), the Company shall not, and shall cause its subsidiaries not to, issue,
sell or exchange, agree to issue, sell or exchange, or reserve or set aside for
issuance, sale or exchange any of the equity securities of the Company or any
subsidiary of the Company (including without limitation any shares of Common
Stock, Series A Preferred or Series B Preferred, or rights to acquire any such
shares, whether or not immediately exercisable and whether evidenced by an
option, warrant, convertible security or other instrument or agreement)
(collectively, "Stock"), unless in each case the Company shall have first
offered or caused such subsidiary to offer (the "Preemptive Offer") to sell such
Stock to the Investor Stockholders (the "Offered Securities") by delivery to
such Investor Stockholders of written notice of such offer stating the Company
or subsidiary, as the case may be, proposes to sell such Offered Securities, the
number or amount of the Offered Securities proposed to be sold, the proposed
purchase price therefor and any other terms and conditions of such offer. The
Preemptive Offer shall by its terms remain open and irrevocable for a period of
20 days from the date it is delivered by the Company (the "Preemptive Offer
Period").
(b) Each Investor Stockholder shall have the option,
exercisable at any time during the Preemptive Offer Period by delivering written
notice to the Company (a "Preemptive Offer Acceptance Notice"), to subscribe for
(i) the number or amount of such Offered Securities up to its Proportionate
Percentage (calculated with respect to the Investor Stockholders only) of the
total number or amount of Offered Securities proposed to be issued and (ii) up
to its Proportionate Percentage (calculated with respect to the Investor
Stockholders only) of the Offered Securities not subscribed for by other
Investor Stockholders as specified in its
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Preemptive Offer Acceptance Notice. Any Offered Securities not subscribed for by
an Investor Stockholder shall be deemed to be re-offered to and accepted by the
Investor Stockholders exercising their options specified in clause (ii) of the
immediately preceding sentence with respect to the lesser of (A) the amount
specified in their respective Preemptive Offer Acceptance Notices and (B) an
amount equal to their respective Proportionate Percentages (calculated with
respect to the Investor Stockholders only) with respect to such deemed offer.
Such deemed offer and acceptance procedures described in the immediately
preceding sentence shall be deemed to be repeated until either (x) all of the
Offered Securities are accepted by the Investor Stockholders or (y) no Investor
Stockholder desires to subscribe for more Offered Securities. The Company shall
notify each Investor Stockholder within five days following the expiration of
the Preemptive Offer Period of the number or amount of Offered Securities which
such Investor Stockholder has subscribed to purchase.
(c) If Preemptive Offer Acceptance Notices are not given by
the Investor Stockholders for all the Offered Securities, the Company shall have
45 days from the expiration of the Preemptive Offer Period to sell all or any
part of such Offered Securities as to which Preemptive Offer Acceptances Notices
have not been given by the Investor Stockholders (the "Refused Securities") to
any other Persons, but only upon terms and conditions in all material respects,
including price, which are no more favorable, in the aggregate, to such other
Persons or less favorable to the Company than those set forth in the Preemptive
Offer. Upon the closing, which shall include full payment to the Company, of the
sale to such other Persons of all the Refused Securities, the Investor
Stockholders shall purchase from the Company, and the Company shall sell to the
Investor Stockholders, the Offered Securities with respect to which Preemptive
Offer Acceptance Notices were delivered by the Investor Stockholders, at the
terms specified in the Preemptive Offer. In each case, any Offered Securities
not purchased by the Investor Stockholders or any other Persons in accordance
with this Section 2.2 may not be sold or otherwise disposed of until they are
again offered to the Investor Stockholders under the procedures specified in
this Section 2.2.
(d) The preemptive rights of the Investor Stockholders under
this Section 2.2 shall not apply to the following Securities (the "Excluded
Securities"):
(i) up to 7,850,000 shares of Common Stock issued to
officers, employees or directors of, or consultants to, the Company or its
subsidiaries pursuant to the terms of any stock option or similar stock
incentive plan (including the Company's 2002 Stock Option Plan, as amended,
and 2003 Stock Option Plan) adopted by the Board of Directors of the
Company, including a majority of the Investor Nominees;
(ii) Stock issued as consideration to the sellers in
connection with an acquisition by the Company in a bona fide arms length
transaction, the terms of which have been approved by a majority of the
Investor Nominees (as defined below) or Stock issued in connection with the
transactions contemplated by that certain Letter of Intent, dated as of
March 11, 2002 by and between the Company and the Crow Tribe and related
letters;
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(iii) Stock issued upon the exercise or conversion of
any Stock issued in compliance with this Section 2.2;
(iv) Stock issued in a Qualified Public Offering;
(v) Stock issued as a stock dividend or upon any stock
split or other pro-rata subdivision or combination of the Stock;
(vi) Stock issued to any Person that is not a
Stockholder or an Affiliate of any Stockholder, so long as holders of
shares representing 60% of the outstanding shares of Series B Preferred
have approved the waiver of the pre-emptive rights with respect to such
issuance;
(vii) Stock issued at any time after a Qualified Public
Offering;
(viii) Stock held by a subsidiary of the Company which
stock is transferred to the Company by such subsidiary;
(ix) Up to 455,635 shares of Series A Preferred that
may be issued pursuant to that certain Convertible Promissory Note, dated
as of March 27, 2002, by and between the Company and Hennie L.J.M. Gieskes;
(x) Shares of Series B Preferred issued pursuant to the
Stock Purchase Agreement and shares of Common Stock issued upon the
Conversion of those shares of Series B Preferred;
(xi) Up to 200,000 shares of Series B Preferred that
may be issued pursuant to the Company's 2003 Employee Restricted Stock
Purchase Plan and 2004 Employee Restricted Stock Purchase Plan (the
"Purchase Plans");
(xii) Up to 200,000 shares of Series B Preferred that
may be issued to Xxxxxx X. Xxxxx, Xx. ("Xxxxx") upon the exercise of an
option to purchase such shares for $5.00 per share until July 3, 2003
granted to Xxxxx (the "Xxxxx Option Shares"); and
(xiii) Up to 50,000 shares of Series B Preferred that
may be issued to Xxxxxxx X. Xxxxxx ("Xxxxxx") upon the exercise of an
option to purchase such shares for $5.00 per share until March 31, 2004
granted to Xxxxxx (the "Xxxxxx Option Shares").
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ARTICLE III
RESTRICTIONS ON DISPOSITIONS OF CAPITAL STOCK
SECTION 3.1 RESTRICTIONS ON DISPOSITIONS.
(a) No Stockholder, any spouse of any Stockholder, any
Personal Representative of any Stockholder, or any legal representative, agent
or assignee of any Stockholder, as the case may be, shall make any Disposition
of any shares of capital stock of the Company, except as provided in this
Article III. The parties agree that the restrictions contained in this Agreement
are fair and reasonable and in the best interests of the Company and the
Stockholders.
(b) Anything in this Agreement to the contrary
notwithstanding, no Disposition of capital stock of the Company otherwise
permitted or required by this Agreement shall be made unless such Disposition is
in compliance with federal and state securities laws, including without
limitation the Securities Act and the rules and regulations thereunder. If any
such Disposition is made pursuant to an exemption from such laws, rules and
regulations, such Disposition shall be made only upon the Stockholder first
having delivered to the Company a favorable written opinion of counsel,
reasonably satisfactory in form and substance to the Company, to the effect that
the proposed sale or transfer is exempt from registration under the Securities
Act and any applicable state securities laws; provided, however, that no such
opinion of counsel shall be required for (A) a transfer by a Stockholder to a
Permitted Transferee if, in each case, the Permitted Transferee agrees in
writing to be subject to the terms and conditions hereof to the same extent as
if such Permitted Transferee were an original Stockholder hereunder, or (B) a
sale duly made in compliance with Rule 144 promulgated under the Securities Act,
or any successor or analogous rule to Rule 144, or if the Stockholder would be
permitted to transfer the securities pursuant to paragraph (k) of Rule 144 (it
being agreed that the Company shall have the right to receive evidence
satisfactory to it regarding compliance with such Rule or any successor or
analogous rule prior to the registration of any such transfer), or (C) a
Disposition pursuant to an effective registration statement.
(c) Anything in this Agreement to the contrary
notwithstanding, unless otherwise agreed to in writing by the Company and each
of the Stockholders, no Disposition of capital stock otherwise permitted or
required by this Agreement shall be effective unless and until any transferee
who is not already a party to this Agreement (and such transferee's spouse, if
applicable) shall execute and deliver to the Company an Addendum Agreement in
the form attached hereto as Exhibit D in which such transferee (and such
transferee's spouse, if applicable) agrees to be bound by this Agreement and to
observe and comply with this Agreement and with all obligations and restrictions
imposed on Stockholders hereby; each person to whom a Disposition of capital
stock is permitted by this Agreement who receives a Disposition of capital stock
during the period when this Agreement is in effect, and who agrees in writing to
be bound by the provisions hereof, shall thereafter become a "Stockholder" for
all purposes of this Agreement. Such transferee shall become a Management
Stockholder if the transferor was a Management Stockholder or an Investor
Stockholder if the transferor was an Investor Stockholder; provided, however,
that each transferee who receives a Disposition of
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capital stock that is an Affiliate of or is then (i) an Investor Stockholder,
shall become or remain an Investor Stockholder for all purposes of this
Agreement and (ii) a Management Stockholder or spouse thereof, shall become or
remain a Management Stockholder for all purposes of this Agreement.
(d) Dispositions of capital stock may only be made in strict
compliance with all applicable terms of this Agreement, and any purported
Disposition of capital stock that does not so comply with all applicable
provisions of this Agreement shall be null and void and of no force or effect,
and the Company shall not recognize or be bound by any such purported
Disposition and shall not effect any such purported Disposition on the stock
transfer books of the Company.
(e) All shares of Common Stock, Series A Preferred, and Series
B Preferred held by the Company, as treasury stock or otherwise, or any
subsidiary thereof shall not be deemed outstanding for any purpose under this
Agreement or the Bylaws of the Company.
(f) Prior to the consummation of an Initial Public Offering,
all newly issued shares of capital stock of the Company shall only be issued to
Persons who become party to this Agreement; provided however, that each
transferee who (i) is an employee or consultant of the Company shall become a
Management Stockholder for all purposes of this Agreement, and (ii) is not an
employee or consultant of the Company shall have such designation, if any, as
shall be determined by the Board of Directors of the Company, with the
concurrence of a majority of the Investor Nominees.
(g) No transfer of Management Stock or Series A Preferred or
Series B Preferred held by Management Stockholders may be made pursuant to this
Article III by a Management Stockholder prior to March 28, 2007, or such earlier
date that such Management Stockholder reaches the age of 75; provided however,
that a Management Stockholder may transfer or make a Disposition otherwise in
compliance with the provisions of this Article III with respect to an aggregate
number of shares of Series A Preferred equal to up to an aggregate of 8% of such
Management Stockholder's initial purchases of Series A Preferred in March 2002
and such Management Stockholder's aggregate purchases of Series B Preferred
initially issued pursuant to the Purchase Plan at any time on or before March
28, 2003, an aggregate of 16% of such shares on or before March 28, 2004, an
aggregate of 24% of such shares on or before March 28, 2005, an aggregate of 32%
of such shares on or before March 28, 2006, and an aggregate of 40% of such
shares on or before March 28, 2007; and further provided, however that Xxxxxxx
X. Xxxxxxx may transfer up to 400,000 shares of Management Stock to Xxxxx and
Xxxx X. Xxxxxx may transfer an aggregate of 226,654 shares of Management Stock
to his children, which transfers shall not be subject to the provisions of
Sections 3.3 or 3.5 of this Agreement.
SECTION 3.2 PERMITTED TRANSFERS.
(a) Subject to the provisions of Section 3.1, an A Round
Holder or its Personal Representative may at any one time prior to the time that
the Company's Common Stock is registered (an "Exchange Act Registration")
pursuant to Section 12(b) or 12(g) under the Exchange Act, or any successor
provision, transfer any or all of his or its shares of capital stock
11
to any person who is a Permitted Transferee with respect to the transferor
Stockholder, and such Permitted Transferee shall not be entitled to make any
transfers or Dispositions prior to Exchange Act Registration. Subject to the
provisions of Section 3.1, a Stockholder (other than an A Round Stockholder) or
his Personal Representative may at any time or times and, following Exchange Act
Registration, an A Round Holder may transfer any or all of his or its shares of
capital stock to any Person who is a Permitted Transferee with respect to the
transferor Stockholder.
(b) A transfer or Disposition of any kind or character
otherwise prohibited by this Agreement may be permitted if approved by the
holders of shares representing 60% or more of the outstanding shares of Series B
Preferred.
(c) Any transfer to a Permitted Transferee made pursuant to
this Section 3.2 shall not be subject to the terms of Sections 3.3 through 3.9
hereof.
(d) Notwithstanding the provisions of this Section 3.2, a
Stockholder may not make a Disposition of capital stock of the Company to a
Permitted Transferee if such Disposition has as a purpose the avoidance of
restrictions on Dispositions in this Agreement (it being understood that, solely
for such determination, at a minimum, the Permitted Transferee shall have
subsequently ceased to be a Permitted Transferee of the Stockholder that made
such Disposition to such Permitted Transferee).
SECTION 3.3 NOTICE OF RIGHT OF FIRST REFUSAL.
In the event that an A Round Stockholder, an Investor Stockholder or a
Management Stockholder (subject to the restrictions in Section 3.1(g)) receives
a bona fide written offer (a "Third Party Offer") for the purchase of all or a
part of his or its capital stock (or any rights or interests therein) of the
Company that such A Round Stockholder, Investor Stockholder or Management
Stockholder desires to accept, such A Round Stockholder, Investor Stockholder or
Management Stockholder (the "Offeror Stockholder") agrees to give written notice
of such Third Party Offer (the "Notice of Right of First Refusal") to the
Secretary of the Company and, within five business days after receipt of the
Notice of Right of First Refusal by the Company, the Company will send a copy of
the Notice of Right of First Refusal to the other Stockholders (the "Other
Stockholders") specified below in this Article III. The notice must set forth
the name of the proposed transferee (the "Third Party"), the number and class of
shares to be transferred (the "Offered Stock"), the price per share (the "Offer
Price"), all details of the payment terms and all other terms and conditions of
the proposed transfer. A Third Party Offer may not contain provisions related to
any property other than the capital stock of the Company held by the Offeror
Stockholder, and the Offer Price shall be expressed only in terms of cash or
credit terms contained in the proposed transfer. The Offeror Stockholder shall
deliver such Notice of Right of First Refusal to the parties noted above
promptly upon receiving such Third Party Offer, but in any event not less than
thirty (30) days prior to the date of the proposed transfer.
The last date that the Notice of Right of First Refusal is received by
the applicable Other Stockholders shall constitute the "First Refusal Notice
Date." The Company shall be
12
obligated to promptly determine the First Refusal Notice Date following its
receipt of a Notice of Right of First Refusal, and such date shall be promptly
communicated in writing by the Company to all applicable Other Stockholders
within five (5) business days of the determination of such date.
SECTION 3.4 RIGHTS OF FIRST REFUSAL FOR SERIES A PREFERRED HELD BY
NON-MANAGEMENT STOCKHOLDERS.
(a) Primary Right Of First Refusal. The Company shall have the
sole and exclusive option for a period of ten (10) days following the First
Refusal Notice Date to acquire, on the terms specified in the Notice of Right of
First Refusal, any Offered Stock that is Series A Preferred held by an Offeror
Stockholder other than a Management Stockholder. The Company may exercise such
option by giving written notice of exercise to the Offeror Stockholder and to
all Investor Stockholders prior to the termination of the Company's option
period. Such notice of exercise shall refer to the Notice of Right of First
Refusal and shall set forth the number of shares of capital stock to be acquired
by the Company and a reasonable place and time within 20 days after the date
thereof for the closing of the purchase and sale of the Offered Stock.
(b) Secondary Right of First Refusal. In the event that the
Company elects to purchase less than all the Offered Stock that is Series A
Preferred held by an Offeror Stockholder other than a Management Stockholder,
the Investor Stockholders shall have the exclusive option from the 11th to the
30th day following the First Refusal Notice Date to acquire all or any portion
of the Offered Stock in accordance with the provisions of the Notice of Right of
First Refusal. The Investor Stockholders may, by agreement, allocate among
themselves the right to acquire such part of the Offered Stock. In the absence
of such an agreement among the Investor Stockholders, each Investor Stockholder
will be entitled to give written notice to the Offeror Stockholder, to the
Company and to the Investor Stockholders, from the eleventh day to the twentieth
day following the First Refusal Notice Date, of such Investor Stockholder's
election ("Election Notice") to acquire all or any part of its Proportionate
Percentage (calculated solely with respect to the Investor Stockholders) of the
Offered Stock that is not being acquired by the Company or the Investor
Stockholders including a statement of the maximum number of shares of Offered
Stock that such Investor Stockholder is willing to purchase.
(c) Any Offered Stock not subscribed for pursuant to Section
3.4(b) by the Investor Stockholders shall be deemed to be re-offered to and
accepted by the Investor Stockholders exercising their rights to purchase
Offered Stock with respect to the lesser of (A) the amount specified in their
respective Election Notices and (B) an amount equal to their respective
Proportionate Percentages (calculated solely with respect to the Investor
Stockholders) with respect to such deemed offer. Such deemed offer and
acceptance procedures described in the immediately preceding sentence shall be
deemed to be repeated until either (x) all of the Offered Stock is accepted by
the Investor Stockholders or (y) no Investor Stockholder desires to subscribe
for more Offered Stock. The Company shall notify each Investor Stockholder
within five days following the expiration of the period described in Section
3.4(b) of the number or amount of Offered Stock which such Stockholder has
subscribed to purchase and shall set a
13
reasonable place and time from the date thereof for the closing of the purchase
and sale of the Offered Stock.
(d) If the Company and the Investor Stockholders do not
purchase all of the Offered Stock, the remaining Offered Stock (or any portion
thereof) may be sold by the Offeror Stockholder at any time within ninety (90)
days after the date of the Third Party Offer, subject to the provisions of
Section 3.1 hereof. Any such sale shall not be at less than the price or upon
terms and conditions more favorable to the purchaser than those specified in the
Third Party Offer.
SECTION 3.5 RIGHTS OF FIRST REFUSAL FOR STOCK HELD BY MANAGEMENT
STOCKHOLDERS.
(a) Primary Right Of First Refusal. The Management
Stockholders (the "Other Management Stockholders") other than an Offeror
Stockholder that is a Management Stockholder shall have the sole and exclusive
option for a period of ten (10) days following the First Refusal Notice Date to
acquire, on the terms specified in the Notice of Right of First Refusal, any
Offered Stock held by an Offeror Stockholder that is a Management Stockholder.
The Other Management Stockholders may, by agreement, allocate among themselves
the right to acquire such part of the Offered Stock. In the absence of such an
agreement among the Other Management Stockholders, each Other Management
Stockholder will be entitled to give written notice to the Offeror Stockholder,
to the Company and to the Other Management Stockholders, on or before the
eleventh day following the First Refusal Notice Date, of such Other Management
Stockholder's election ("Election Notice") to acquire all or any part of its
Proportionate Percentage (calculated solely with respect to the Other Management
Stockholders) of the Offered Stock, including a statement of the maximum number
of shares of Offered Stock that such Other Management Stockholder is willing to
purchase. Any Offered Stock not subscribed for pursuant to this Section 3.5(a)
by the Other Management Stockholders shall be deemed to be re-offered to and
accepted by the Other Management Stockholders exercising their rights to
purchase Offered Stock with respect to the lesser of (A) the amount specified in
their respective Election Notices and (B) an amount equal to their respective
Proportionate Percentages (calculated solely with respect to the Other
Management Stockholders) with respect to such deemed offer. Such deemed offer
and acceptance procedures described in the immediately preceding sentence shall
be deemed to be repeated until either (x) all of the Offered Stock is accepted
by the Other Management Stockholders or (y) no Other Management Stockholder
desires to subscribe for more Offered Stock. The Company shall notify each Other
Management Stockholder within five days following the expiration of the period
described in this Section 3.5(a) of the number or amount of Offered Stock which
such Stockholder has subscribed to purchase and shall set a reasonable place and
time from the date thereof for the closing of the purchase and sale of the
Offered Stock.
(b) Secondary Right of First Refusal. In the event that the
Other Management Stockholders elect to purchase less than all the Offered Stock
pursuant to Section 3.5(a), the Investor Stockholders shall have the exclusive
option from the 11th to the 30th day following the First Refusal Notice Date to
acquire all or any portion of the Offered Stock in accordance with the
provisions of the Notice of Right of First Refusal. The Investor
14
Stockholders may, by agreement, allocate among themselves the right to acquire
such part of the Offered Stock. In the absence of such an agreement between the
Investor Stockholders, each Investor Stockholder will be entitled to give a
written Election Notice to the Offeror Stockholder, to the Company and to the
other Investor Stockholders, from the eleventh day to the twentieth day
following the First Refusal Notice Date, of such Investor Stockholder's election
to acquire all or any part of its Proportionate Percentage (calculated solely
with respect to the Investor Stockholders) of the Offered Stock that is not
being acquired by the Other Management Stockholders or the Investor Stockholders
including a statement of the maximum number of shares of Offered Stock that such
Investor Stockholder is willing to purchase.
(c) Any Offered Stock not subscribed for pursuant to Section
3.5(b) by the Investor Stockholders shall be deemed to be re-offered to and
accepted by the Investor Stockholders exercising their rights to purchase
Offered Stock with respect to the lesser of (A) the amount specified in their
respective Election Notices and (B) an amount equal to their respective
Proportionate Percentages (calculated solely with respect to the Investor
Stockholders) with respect to such deemed offer. Such deemed offer and
acceptance procedures described in the immediately preceding sentence shall be
deemed to be repeated until either (x) all of the Offered Stock is accepted by
the Investor Stockholders or (y) no Investor Stockholder desires to subscribe
for more Offered Stock. The Company shall notify each Investor Stockholder
within five days following the expiration of the period described in Section
3.5(b) of the number or amount of Offered Stock which such Stockholder has
subscribed to purchase and shall set a reasonable place and time from the date
thereof for the closing of the purchase and sale of the Offered Stock.
(d) If the Other Management Stockholders and the Investor
Stockholders do not purchase all of the Offered Stock, the remaining Offered
Stock (or any portion thereof) may be sold by the Offeror Stockholder at any
time within ninety (90) days after the date of the Third Party Offer, subject to
the provisions of Section 3.1 hereof. Any such sale shall not be at less than
the price or upon terms and conditions more favorable to the purchaser than
those specified in the Third Party Offer.
SECTION 3.6 RIGHTS OF FIRST REFUSAL FOR SERIES B PREFERRED.
(a) Primary Right Of First Refusal. The Investor Stockholders
other than an Offeror Stockholder that is an Investor Stockholder (the "Other
Investor Stockholders") shall have the sole and exclusive option for a period of
ten (10) days following the First Refusal Notice Date to acquire, on the terms
specified in the Notice of Right of First Refusal, any Offered Stock that is
Series B Preferred held by an Offeror Stockholder that is an Investor
Stockholder. The Other Investor Stockholders may, by agreement, allocate among
themselves the right to acquire such part of the Offered Stock. In the absence
of such an agreement among the Other Investor Stockholders, each Other Investor
Stockholder will be entitled to give a written Election Notice to the Offeror
Stockholder, to the Company and to the remaining Other Investor Stockholders, on
or before the eleventh day following the First Refusal Notice Date, of such
Other Investor Stockholder's election to acquire all or any part of its
Proportionate Percentage (calculated solely with respect to the Other Investor
Stockholders) of the Offered Stock that is not being acquired by the Other
Investor Stockholders including a statement of the maximum
15
number of shares of Offered Stock that such Other Investor Stockholder is
willing to purchase. Any Offered Stock not subscribed for pursuant to this
Section 3.6(a) by the Other Investor Stockholders shall be deemed to be
re-offered to and accepted by the Other Investor Stockholders exercising their
rights to purchase Offered Stock with respect to the lesser of (A) the amount
specified in their respective Election Notices and (B) an amount equal to their
respective Proportionate Percentages (calculated solely with respect to the
Other Investor Stockholders) with respect to such deemed offer. Such deemed
offer and acceptance procedures described in the immediately preceding sentence
shall be deemed to be repeated until either (x) all of the Offered Stock is
accepted by the Other Investor Stockholders or (y) no Other Investor Stockholder
desires to subscribe for more Offered Stock. The Company shall notify each Other
Investor Stockholder within five days following the expiration of the period
described in this Section 3.6(a) of the number or amount of Offered Stock which
such Stockholder has subscribed to purchase and shall set a reasonable place and
time from the date thereof for the closing of the purchase and sale of the
Offered Stock.
(b) Secondary Right of First Refusal. In the event that the
Other Investor Stockholders elect to purchase less than all the Offered Stock
pursuant to Section 3.6(a), the Company shall have the exclusive option from the
11th to the 30th day following the First Refusal Notice Date to acquire all or
any portion of the Offered Stock in accordance with the provisions of the Notice
of Right of First Refusal by giving a written Election Notice to the Offeror
Stockholder and to the Other Investor Stockholders, from the eleventh day to the
twentieth day following the First Refusal Notice Date, of the Company's election
to acquire all or any part of the Offered Stock that is not being acquired by
the Other Investor Stockholders.
(c) If the Other Investor Stockholders and the Company do not
purchase all of the Offered Stock, the remaining Offered Stock (or any portion
thereof) may be sold by the Offeror Stockholder at any time within ninety (90)
days after the date of the Third Party Offer, subject to the provisions of
Section 3.1 and Section 3.9 hereof. Any such sale shall not be at less than the
price or upon terms and conditions more favorable to the purchaser than those
specified in the Third Party Offer. In the event the Third Party Offeror will
only purchase all of the Offered Stock after taking into consideration the
rights set forth in Section 3.9, the Offeror Stockholder may rescind the
Election Notices of the Investor Stockholders and the Company, if such Election
Notices are, in the aggregate, for less than all the Offered Stock.
SECTION 3.7 PURCHASE PRICE.
The total purchase price (the "Purchase Price") for all the capital
stock to be purchased pursuant to Section 3.4, 3.5 and/or 3.6 will be the total
purchase price for the proposed transfer, and upon the same terms and
conditions, as set forth in the Third Party Offer.
SECTION 3.8 COMPLIANCE REQUIRED.
Any Disposition described in Sections 3.3 through 3.7 hereof of a
Stockholder's capital stock without complying with the giving of a Notice of
Right of First Refusal and the Right of First Refusal provisions of this Article
III shall be void, and the Company shall issue a Notice of Right of First
Refusal upon discovery of such transfer, a copy of which shall be sent to
16
the person or entity making such transfer, his or its transferee, and the
Company. The duty of the Company to see to the issuance of such Notice of Right
of First Refusal shall not be considered to be elective, but shall be mandatory.
Upon the giving of the Notice of Right of First Refusal, the time period for the
exercise of the options specified in Sections 3.4, 3.5 and 3.6 shall commence
running.
SECTION 3.9 CERTAIN RIGHTS OF INCLUSION.
(a) If all or any part of the shares of Series B Preferred
proposed to be transferred by an Investor Stockholder to a proposed transferee
have not been purchased pursuant to Section 3.6 hereof, the Offeror Stockholder
shall not, individually or collectively, in any transaction, sell or otherwise
dispose of shares of Series B Preferred held by such Stockholder to a third
party, other than to a Permitted Transferee, unless the terms and conditions of
the Third Party Offer include an offer, at the Offer Price and on the same terms
as the offer to the selling Investor Stockholders, to each of the other Investor
Stockholders (the "Offerees"), to include at the option of each Offeree, in the
sale or other disposition to the Third Party, a number of shares of Series B
Preferred owned by each Offeree determined in accordance with this Section 3.9.
(b) The Investor Stockholder that receives the Third Party
Offer (the "Selling Stockholder") shall cause the Third Party Offer to be
reduced to writing (which writing shall include an offer to purchase or
otherwise acquire shares of Series B Preferred from the Offerees as required by
this Section 3.9 and a time and place designated for the closing of such
purchase, which time shall not be less than 20 days after delivery of such
notice and no more than 60 days after such delivery date) and shall send written
notice of the Third Party Offer together with a copy of the Third Party Offer
(the "Inclusion Notice") to each of the Offerees in the manner specified in
Section 6.1 hereof.
(c) Each Offeree shall have the right (an "Inclusion Right"),
exercisable by delivery of notice to the Selling Stockholder at any time within
twenty (20) calendar days after delivery of the Inclusion Notice, to sell
pursuant to the Third Party Offer a number of such Offeree's shares of Series B
Preferred equal to his or its Proportionate Percentage (based on the shares held
by the selling Stockholder and Offerees exercising their Inclusion Rights).
(d) The Offerees and the Selling Stockholder shall sell to the
proposed transferee all, or at the option of the proposed transferee, any part
of the shares of Series B Preferred proposed to be transferred by them at not
less than the price and upon the terms and conditions, if any, not more
favorable to the proposed transferee than those in the Inclusion Notice at the
time and place provided for the closing in the Inclusion Notice, or at such
other time and place as the Offerees, the Selling Stockholder, and the proposed
transferee shall agree.
SECTION 3.10 DRAG-ALONG RIGHTS.
(a) If the Board of Directors, including a majority of the
Investor Nominees, or holders of 70% of the outstanding shares of Series B
Preferred, votes in favor of a Sale of the Company (an "Approved Sale"), all
Stockholders shall consent to and raise no
17
objections against the Approved Sale, and if the Approved Sale is structured as
(A) a merger, share exchange or consolidation of the Company, or a sale of all
or substantially all of the assets of the Company, each Stockholder shall vote
in favor of the Approved Sale and shall waive any dissenters rights, appraisal
rights or similar rights in connection with such merger, consolidation or asset
sale, or (B) a sale of all the capital stock of the Company, the Stockholders
shall agree to sell all their shares of Common Stock, Series A Preferred, Series
A Conversion Shares, Series B Preferred, and Series B Conversion Shares which
are the subject of the Approved Sale, on the terms and conditions of such
Approved Sale. The Stockholders shall take all necessary and desirable actions
in connection with the consummation of the Approved Sale, including using their
reasonable best efforts to obtain Board of Directors' consent to the Approved
Sale and the execution of such agreements and such instruments and other actions
reasonably necessary to (1) provide customary representations, warranties,
indemnities, and escrow arrangements relating to such Approved Sale and (2)
effectuate the allocation and distribution of the aggregate consideration upon
the Approved Sale as set forth in Section 3.10(c) below. The Stockholders shall
be permitted to sell their shares of capital stock pursuant to an Approved Sale
without complying with any other provisions of Article III of this Agreement.
(b) The Investor Stockholders that have initiated an Approved
Sale pursuant to Section 3.10(a) (whether directly or through the action of
their respective Investor Nominees), shall represent and warrant, severally and
not jointly, to the other Stockholders that no direct or indirect collateral
benefit or supplemental consideration (whether or not in the nature of a
tangible or intangible asset, money, property, security or other tangible
benefits or opportunities) has been or is to be paid by such prospective
purchaser or any other person to such Investor Stockholder or its Affiliates, in
connection with the Approved Sale, and that such Approved Sale is not made as
part of or in connection with any other transaction pursuant to which such
Investor Stockholder will receive any additional benefit or consideration, based
on such Investor Stockholder's ownership of capital stock of the Company
(excluding any reasonable fees or commissions paid for consulting, advisory or
other services). The foregoing provision shall not be deemed to prohibit a sale
of the Company to any Person merely because such Person has, is currently having
or intends to have a business relationship with one or more Stockholders.
(c) The obligations of the Stockholders pursuant to this
Section 3.10 are subject to the satisfaction of the following conditions:
(i) upon the consummation of the Approved Sale, each
Stockholder shall receive the same proportion of the aggregate
consideration from such Approved Sale that such holder would have received
if such aggregate consideration had been distributed by the Company in
complete liquidation pursuant to the rights and preferences set forth in
the Certificate of Incorporation of the Company as in effect immediately
prior to such Approved Sale (giving effect to applicable orders of
priority);
(ii) if any Stockholders of a class are given an option
as to the form and amount of consideration to be received, all Stockholders
will be given the same option;
18
(iii) (A) all holders of options, warrants or similar
rights to acquire capital stock of the Company ("Stock Equivalents") that
are then currently exercisable will be given an opportunity to exercise
such rights prior to the consummation of the Approved Sale (but only to the
extent such Stock Equivalents are then vested or would be vested on an
accelerated basis pursuant to the terms of their issuance) and participate
in such sale as Stockholders, (B) all options issued under stock options
plans of the Company that are then vested or would be vested on an
accelerated basis pursuant to the terms of their issuance, but have not
been exercised prior to the consummation of the Approved Sale, will be
cancelled and the holders thereof will be entitled to receive in
consideration therefor, at the election of the Company in the form of cash
or securities that are distributed to stockholders pursuant to this Section
3.10, with a value (as determined pursuant to Section 3.10(c)(vi)) in an
amount equal to the aggregate value of the Common Stock acquirable upon
exercise of such options (with the value of such Common Stock being the
value attributed to Common Stock pursuant to Section 3.10(c)(i) above) less
the aggregate proceeds that would be payable by the option holders upon the
exercise of all such options (without regard to any net exercise or
cashless exercise basis), and (C) all options issued under stock option
plans of the Company that are not then vested and would not be vested on an
accelerated basis on the terms of their issuance will be cancelled without
consideration;
(iv) no Stockholder shall be obligated to make any
out-of-pocket expenditure prior to the consummation of the Approved Sale
(excluding modest expenditures for postage, copies, etc.) and no
Stockholder shall be obligated to pay any portion (or shall be entitled to
be reimbursed by the Company for that portion paid) that is more than its
pro rata share (based upon the amount of consideration received) of
reasonable expenses incurred in connection with a consummated Approved
Sale, to the extent such costs are incurred for the benefit of all
Stockholders, and are not otherwise paid by the Company or the acquiring
party (costs incurred by or on behalf of a Stockholder for its sole benefit
will not be considered costs of the transaction hereunder), provided that a
Stockholder's liability for such expenses shall be capped at the total
purchase price received by such Stockholder for its shares of capital
stock, plus Stock Equivalents;
(v) no Stockholder shall be required to provide any
representations, warranties or indemnities (other than pursuant to an
escrow of consideration proportionate to the amount receivable under this
Section 3.10) in connection with the Approved Sale, other than those
required to be made pursuant to Section 3.10(b) to other Stockholders and
those representations, warranties and indemnities concerning each
Stockholder's valid ownership of shares of capital stock and Stock
Equivalents, free of all liens and encumbrances (other than those arising
under applicable securities laws), and each Stockholder's authority, power,
and right to enter into and consummate such purchase or merger agreement
without violating any other agreement to which such Stockholder is a party
or its assets are bound; and
19
(vi) if some or all of the consideration received in
connection with the Approved Sale is other than cash, then the valuation of
such assets shall be deemed to have a dollar value equal to the fair market
value of such assets as determined by the unanimous resolution of all
directors of the Board of Directors of the Company; provided that if the
Board of Directors of the Company does not or is unable to make such a
determination of fair market value, such determination of fair market value
shall be made by an investment banking firm of recognized national standing
selected by a majority of the Investor Nominees, which firm shall be
reasonably acceptable to a majority of the directors of the Board of
Directors of the Company, and such firm shall be engaged and paid by the
Company. The determination of fair market value of such investment banking
firm (or, if such investment bank determines a range of fair market values,
the mid-point of such range) shall be final and binding on all parties.
(d) If the Company and any of the Stockholders or their
representatives, enter into any negotiation or transaction for which Rule 506
under the Securities Act (or any similar rule then in effect) may be available
with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), each Stockholder who is not an
accredited investor (as such term is defined in Rule 501 under the Securities
Act) will, at the request of the Company or the Investor Stockholders, appoint a
purchaser representative (as such term is defined in Rule 501 under the
Securities Act) reasonably acceptable to the Company or such Stockholders.
(e) The Persons initiating an Approved Sale shall have the
right to require the Company to cooperate fully with potential acquirors of the
Company in a prospective Sale of the Company by taking all customary and other
actions reasonably requested by such Persons or such potential acquirors,
including without limitation, making the Company's properties, books and
records, and other assets available for inspection by such potential acquirors
and making its employees available for interviews.
SECTION 3.11 ENDORSEMENT OF STOCK CERTIFICATES.
(a) Conformed copies of this Agreement shall be filed with the
Secretary of the Company and kept with the records at its principal office. An
officer of the Company shall endorse each certificate representing the shares of
capital stock of the Company heretofore or hereafter issued by the Company to
the Stockholders by causing to be placed on the face thereof the following:
TRANSFER IS SUBJECT TO RESTRICTIVE STOCK LEGENDS ON BACK
and by causing to be placed on the back thereof the legend in substantially
the following form:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS OF A STOCKHOLDERS' AGREEMENT DATED AS OF MARCH 28, 2002, BY AND AMONG
THE COMPANY AND
20
CERTAIN OTHER PERSONS, WHICH AGREEMENT CONTAINS, AMONG OTHER PROVISIONS,
RESTRICTIONS ON THE TRANSFER, SALE OR OTHER DISPOSITION OF THE SHARES OF
STOCK REPRESENTED BY THIS CERTIFICATE. A COPY OF SUCH STOCKHOLDERS'
AGREEMENT HAS BEEN FILED, AND IS AVAILABLE FOR REVIEW BY THE RECORD HOLDER
OF THIS CERTIFICATE, AT THE PRINCIPAL OFFICE OF THE COMPANY.
(b) In addition to the legend required under Section 3.11(a)
above, each Stockholder agrees that each certificate representing the shares of
capital stock of the Company heretofore or hereafter issued by the Company shall
also bear such other legends as required pursuant to the Stock Purchase
Agreement. Any such legend shall be removed by the Company upon the request
(which shall include customary representations and opinions of counsel if
reasonably requested by the Company) of a Stockholder when such legend is no
longer applicable.
SECTION 3.12 SPECIFIC PERFORMANCE.
Each of the parties to this Agreement acknowledges that it shall be
impossible to measure in money the damage to the Company or the Stockholder(s),
if any of them or any transferee or any legal representative of any party hereto
fails to comply with any of the restrictions or obligations imposed by this
Article III, that every such restriction and obligation is material, and that in
the event of any such failure, the Company or the Stockholder(s) shall not have
an adequate remedy at law or in damages. Therefore, each party hereto consents
to the issuance of an injunction or the enforcement of other equitable remedies
against him at the suit of an aggrieved party without the posting of any bond or
other security, to compel specific performance of all of the terms of this
Article III and to prevent any disposition of shares of capital stock in
contravention of any terms of this Article III, and waives any defenses thereto,
including, without limitation, the defenses of: (i) failure of consideration;
(ii) breach of any other provision of this Agreement; and (iii) availability of
relief in damages.
SECTION 3.13 GOVERNMENT COMPLIANCE.
In connection with any closing of a Disposition pursuant to this
Article III, each of the parties to this Agreement shall (i) take all steps
necessary and desirable to obtain all required third-party, governmental and
regulatory consents and approvals to facilitate the consummation of such
Disposition, and (ii) use reasonable efforts to delay any closing dates pursuant
to this Article III to the extent required to allow any party to take such
actions.
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ARTICLE IV
COMPANY RIGHTS AND OBLIGATIONS
SECTION 4.1 VESTING AND REPURCHASE OF MANAGEMENT STOCK.
(a) The Company and the Management Stockholders hereby agree
to be bound by the provisions of this Section 4.1 during the term of this
Agreement notwithstanding (i) the provisions of Section 3 of the Subscription
Agreements, dated as of January 31, 2002, by and between the Company and each of
the Management Stockholders, or (ii) the provisions of the Founders
Stockholders' Agreement. The Company and the Management Stockholders hereby
agree that the Founders' Stockholders' Agreement is terminated in its entirety
as of the date hereof. Each Management Stockholder's shares of Management Stock
will become vested in accordance with the schedule set forth in this Section
4.1(a), if, as of each applicable date, the Management Stockholder is still
employed by either the Company or any of its subsidiaries (or the Management
Stockholder's employment was terminated due to death or Disability). The
Management Stock will also become vested at the rate of one share for every
$30.40549 received and accepted by the Company pursuant to the Stock Purchase
Agreement ("Dollar Vesting"). Dollar Vesting shall apply ratably over all shares
of Management Stock held by Management Stockholders based on the Proportionate
Percentage of Management Stock owned by each Management Stockholder. The
Management Stock that is not vested as a result of Dollar Vesting on or before
January 31, 2007, or the earlier occurrence of a Liquidation Event, a Qualified
Public Offering or a transaction pursuant to Section 3.10, shall be forfeited
and cancelled on the stock transfer records of the Company without payment
therefor to the holder and the holder shall immediately upon the request of the
Company after the occurrence of such an event deliver the certificates
representing those shares to the Company for cancellation. In addition to the
Dollar Vesting of the Management Stock, the Management Stock will also become
vested at the earlier to occur of the holder's having reached the age of 75 or
satisfaction of the following vesting schedule (the "Time Vesting"):
% Vested
---------
Date of Purchase (January 31, 2002) 20%
First Anniversary Date of Purchase (January 31, 2003) 40%
Second Anniversary Date of Purchase (January 31, 2004 60%
Third Anniversary Date of Purchase (January 31, 2005) 80%
Fourth Anniversary Date of Purchase (January 31, 2006) 100%
The Management Stock will become Vested Shares on the date on which both Dollar
Vesting and Time Vesting have occurred.
(b) If a Management Stockholder ceases to be employed by the
Company or any of its subsidiaries on any date other than an anniversary date of
the date of purchase, the percentage of Management Stock to become Time Vested
during the period from the most recent January 31 will be determined on a pro
rata basis for the current year according to the number of full calendar months
elapsed since the most recent January 31.
22
(c) Subject to Section 4.1(a), upon the occurrence of the
earlier of a Liquidation Event, or a transaction pursuant to Section 3.10, then
all shares of Management Stock which have vested pursuant to Dollar Vesting but
have not yet become vested due solely to Time Vesting shall become Vested Shares
at the time of such event if the Management Stockholder is still employed at the
time of such event by either the Company or any of its subsidiaries (or the
Management Stockholder's employment was terminated due to death or disability)
and all shares of Management Stock for which Dollar Vesting has not occurred
shall be forfeited and cancelled on the stock transfer records of the Company
without payment therefor to the holder.
(d) Upon the closing of a Qualified Public Offering, (i) all
Management Stock that is Vested Shares because both Dollar Vesting and Time
Vesting have occurred shall be retained by the Management Stockholders, (ii) all
Management Stock for which Dollar Vesting has not occurred shall automatically
and without any action on the part of the holder thereof or the Company
terminate and convert solely into the right to receive the Management
Stockholder's Original Cost for such shares from the Company, and (iii) all
Management Stock for which Dollar Vesting has occurred but for which Time
Vesting has not yet occurred shall be retained by the Management Stockholders
and shall not vest until Time Vesting has occurred. Each holder of any
Management Stock terminated pursuant to (ii) above shall return all applicable
stock certificates to the Company for termination (provided that the failure to
so deliver such shares shall in no way effect the termination thereof).
SECTION 4.2 REPURCHASE OPTION FOR MANAGEMENT STOCK.
(a) Subject to the remaining provisions of this Section 4.2,
shares of Management Stock (the "Available Shares"), including both Vested
Shares and Unvested Shares (whether held by the Management Stockholder or one or
more of the Management Stockholder's Permitted Transferees), are subject to
repurchase by the other Management Stockholders (the "Non-Terminating Management
Stockholders") and the Company in the event such Management Stockholder ceases
to be employed by the Company and its subsidiaries on or before January 31, 2007
as follows:
(i) If the Management Stockholder ceases to be employed
by the Company or any of its subsidiaries by reason of death or Disability,
no shares of Management Stock, whether Vested Shares or Unvested Shares,
owned by such Management Stockholder shall be subject to repurchase
pursuant to this Section 4.2(a).
(ii) If the Management Stockholder ceases to be
employed by the Company or any of its subsidiaries by reason of voluntary
resignation or by reason of termination without Cause, all of such
Management Stockholder's Unvested Shares shall be subject to repurchase,
and the purchase price of each such share subject to repurchase pursuant to
this Section 4.2 shall be the Management Stockholder's Original Cost for
such share.
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(iii) If the Management Stockholder ceases to be
employed by the Company or any of its subsidiaries by reason of termination
with Cause, that Management Stockholder's Unvested Shares and Vested Shares
shall be subject to repurchase and the purchase price for each Unvested
Share and Vested Share of Management Stock subject to repurchase pursuant
to this Section 4.2 shall be the Management Stockholder's Original Cost for
such share.
(b) On or before the 30th day (the "Available Shares Notice
Date") after the occurrence of termination of the employment of a Management
Stockholder as described in the preceding subsections of this Section 4.2, the
Company shall give the Non-Terminating Management Stockholders notice (the
"Available Shares Notice") of the termination indicating the number of Available
Shares available for repurchase pursuant to this Section 4.2, and the Company
shall deliver a copy of the Available Shares Notice to each holder of Available
Shares. The Available Shares Notice will set forth the number of Available
Shares that may be acquired from the Management Stockholder or his Permitted
Transferee, as the case may be, and the aggregate consideration to be paid for
such shares. Subject to Section 4.2(f), the Non-Terminating Management
Stockholders as a group and the Company shall each have the option for a period
of 30 days following the Available Shares Notice Date to acquire 50% of the
Available Shares in accordance with the procedure described in this Section 4.2.
On or before the expiration of such 30-day period, each of the Non-Terminating
Management Stockholders and the Company shall give written notice to each holder
of the Available Shares and each Non-Terminating Management Stockholder and the
Company of its election to acquire all or any part or the Available Shares and
the number of Available Shares which the Company or such Non-Terminating
Management Stockholders elect not to acquire (the "Remaining Available Shares").
From the date of the last such notice by the Non-Terminating Management
Stockholders and the Company until the 45th day after the Available Shares
Notice Date, the Non-Terminating Management Stockholders shall have the sole and
exclusive option to acquire the Remaining Available Shares from the Company's
50% allocation of the Available Shares and the Company shall have the sole and
exclusive option to acquire the Remaining Available Shares from the
Non-Terminating Management Stockholders as a group's 50% allocation of Available
Shares in accordance with the procedures described in this Section 4.2. The
Non-Terminating Management Stockholders may, by agreement, allocate among
themselves the right to acquire such part of the Available Shares and/or the
Remaining Available Shares that will be acquired by the Non-Terminating
Management Stockholders. In the absence of such an agreement among the
Non-Terminating Management Stockholders, each Non-Terminating Management
Stockholder will be entitled to give written notice (the "Available Shares
Election Notice") to each holder of Available Shares, to the Company and to the
Non-Terminating Management Stockholders, on or before the 45th day after the
Available Shares Notice Date, of such Non-Terminating Management Stockholder's
election to acquire all or any part of its Proportionate Percentage of the
Available Shares plus all or part of its Proportionate Percentage of the
Remaining Available Shares that are not being acquired by the Non-Terminating
Management Stockholders, including a statement of the maximum number of
Remaining Available Shares that such Non-Terminating Management Stockholder is
willing to purchase. Any Remaining Available Shares not subscribed for pursuant
to the prior sentence by the Non-Terminating Management Stockholders shall be
deemed to be re-offered to and accepted by the Non-Terminating Management
24
Stockholders exercising their rights to purchase Remaining Available Shares with
respect to the lesser of (A) the amount specified in their respective Available
Shares Election Notices and (B) an amount equal to their respective
Proportionate Percentages with respect to such deemed offer. Such deemed offer
and acceptance procedures described in the immediately preceding sentence shall
be deemed to be repeated until either (x) all of the Remaining Available Shares
are accepted by the Non-Terminating Management Stockholders or (y) no
Non-Terminating Management Stockholders desires to subscribe for more Remaining
Available Shares. The Company shall give written notice (a "Repurchase Notice")
to each Non-Terminating Management Stockholder and the holders of the Available
Shares within five days following the expiration of the periods described in
this Section 4.2(b) of the number or amount of Available Shares that have been
elected to be purchased by the Company and the Non-Terminating Management
Stockholders, and the Company shall set a reasonable place and time from the
date thereof for the closing of the purchase and sale of the Available Shares.
The number of Available Shares to be repurchased shall first be satisfied to the
extent possible from the Available Shares held by the Management Stockholder at
the time of delivery of the Repurchase Notice. If the number of Available Shares
then held by the Management Stockholder is less than the number of Available
Shares that the Non-Terminating Management Stockholders and the Company have
elected to purchase, the Non-Terminating Management Stockholders and the Company
shall purchase the remaining Available Shares (by class) elected to be purchased
from the Permitted Transferees of such Management Stockholder under this
Agreement pro rata, determined in each case according to the number of Available
Shares (by class) held by such Permitted Transferees at the time of delivery of
such Repurchase Notice (determined as nearly as practicable to the nearest whole
share).
(c) The closing of the purchase of Available Shares pursuant
to this Section 4.2 shall take place on the date designated by the Company in
the Repurchase Notice, which date shall not be more than 60 days nor less than
five days after the delivery of the Repurchase Notice. The Other Management
Stockholders and/or the Company will pay for Available Shares to be purchased
pursuant to this Section 4.2 by delivery of, in the case of the Other Management
Stockholders, a check or wire transfer of funds and, in the case of the Company,
(i) a check or wire transfer of funds, (ii) in the event the Company is
prohibited by the Company's Certificate of Incorporation, Bylaws, or applicable
statutory or contractual provisions, a subordinated promissory note or notes
payable on commercially reasonable terms if the use of such a promissory note is
not prohibited, or (iii) both (i) and (ii) in the aggregate amount of the
purchase price for such shares. Any notes issued by the Company pursuant to this
Section 4.2(c) shall be subject to any restrictive covenants (including
limitations or restrictions on the payment of interest) to which the Company is
subject at the time of such purchase. The purchasers of any Available Shares
hereunder will be entitled to require all of the signatures of each seller of
such Available Shares to be notarized and to receive representations and
warranties from each such seller regarding (A) such seller's power, authority
and legal capacity to enter into such sale and to transfer valid right, title
and interest in such Available Shares, (B) such seller's ownership of such
Available Shares and the absence of any liens, pledges, and other encumbrances
on such Available Shares, and (C) the absence of any violation, default, or
acceleration of any agreement or instrument pursuant to which such seller or the
assets of such seller are bound as the result of such sale.
25
(d) The right of the Other Management Stockholders and the
Company to repurchase Available Shares pursuant to this Section 4.2 shall
terminate upon the 125th calendar day following the date on which such Available
Shares first became subject to repurchase pursuant to this Section 4.2.
(e) In the event that Available Shares are repurchased
pursuant to this Section 4.2, the holders of such Available Shares will take all
steps necessary and desirable to obtain all required third-party, governmental
and regulatory consents and approvals and take all other actions necessary and
desirable to facilitate consummation of such repurchase(s) in a timely manner.
(f) If the Company purchases any Available Shares pursuant to
this Section 4.2, the compensation committee of the Company shall promptly meet
to discuss, and shall use its reasonable business judgment to determine, an
allocation of such shares among employees and potential employees of the
Company. If requested by any Management Stockholder, the compensation committee
shall allow such Management Stockholder to provide suggestions and comments
concerning such allocation and shall consult with such Management Stockholder
concerning the allocation.
SECTION 4.3 BUYBACK OF CERTAIN SHARES OF STOCK.
(a) Upon the occurrence of an Event of Default, as described
in Section 4.2(a) of the Stock Purchase Agreement (an "Event"), the Company
shall have the right to repurchase, for a purchase price equal to 50% of the
Original Cost, up to the total number of shares of Series B Preferred and Series
B Conversion Shares owned by such Defaulting Stockholder (as such term is
defined in the Stock Purchase Agreement), or his Permitted Transferees, as the
case may be. Any Series B Conversion Shares or shares of Series B Preferred
available for repurchase under this Section 4.3(a) shall be referred to herein
as "Eligible Shares." The Company may exercise this right upon the vote of a
majority of the Board of Directors excluding the appointee of the Defaulting
Shareholder, if any.
(b) The Company may elect to purchase all or any portion of
the Eligible Shares by delivering written notice (the "Eligibility Notice") to
the holder or holders of Eligible Shares. The Eligibility Notice will set forth
the number of Eligible Shares to be acquired from each holder, the aggregate
consideration to be paid for such shares and the time and place for the closing
of the transaction.
(c) If, for any reason, the Company shall be prohibited from
purchasing or shall otherwise decline to purchase all of the Eligible Shares
pursuant to this Section 4.3, the Company may permit all Investor Stockholders
(other than the Investor Stockholder whose Series B Conversion Shares and shares
of Series B Preferred have become Eligible Shares) to purchase such unpurchased
Eligible Shares in accordance with their Proportionate Percentage (calculated
solely with respect to the Investor Stockholders). As soon as practicable after
the Company has determined that it will not purchase all of the Eligible Shares,
but in any event within 10 days after the delivery of the Eligibility Notice,
the Company shall give written notice (the "Further Eligibility Notice") to such
other Investor Stockholders
26
setting forth the number of remaining Eligible Shares and the aggregate purchase
price for such shares. Such other Investor Stockholders may elect to purchase
any or all of the remaining Eligible Shares by delivering written notice (the
"Eligibility Election Notice") to the Company within 30 days after receipt of
the Further Eligibility Notice from the Company. As soon as practicable, and in
any event within 15 days after receipt of the Eligibility Election Notice, the
Company shall notify the Defaulting Stockholder as to the number of Eligible
Shares being purchased from such holder by such other Investor Stockholders (the
"Supplemental Eligibility Notice").
(d) The closing of the purchase of Eligible Shares pursuant to
this Section 4.3 shall take place on the date designated by the Company in the
Eligibility Notice or Supplemental Eligibility Notice, which date shall not be
more than 60 days nor less than five days after the delivery of the later of the
Eligibility Notice or Supplemental Eligibility Notice. The Company and/or the
electing Investor Stockholders will pay for Eligible Shares to be purchased
pursuant to this Section 4.3 by delivery of, in the case of the Investor
Stockholders, a check or wire transfer of funds and, in the case of the Company,
(i) a check or wire transfer of funds, (ii) a subordinated note or notes bearing
interest at a rate of 7% per annum and otherwise payable on or prior to the
earlier of an Initial Public Offering or Change of Control or 10 years from the
date of issue, or (iii) both (i) and (ii) as the Company may, in its sole
discretion, determine in the aggregate amount of the purchase price for such
Eligible Shares. Any notes issued by the Company pursuant to this Section 4.3(d)
shall be subject to any restrictive covenants (including limitations or
restrictions on the payment of interest) to which to Company is subject at the
time of such purchase. The purchasers of any Eligible Shares hereunder will be
entitled to require all of the signatures of each seller of such Eligible Shares
to be notarized and to receive representations and warranties from each such
seller regarding (A) such seller's power, authority and legal capacity to enter
into such sale and to transfer valid right, title and interest in such Eligible
Shares, (B) such seller's ownership of such Eligible Shares and the absence of
any liens, pledges and other encumbrances on such Eligible Shares, and (C) the
absence of any violation, default or acceleration of any agreement or instrument
pursuant to which such seller or the assets of such seller are bound as the
result of such sale.
(e) The right of the Company and the Investor Stockholders to
repurchase Eligible Shares pursuant to this Section 4.3 shall terminate upon the
91st calendar day following the date on which such Eligible Shares first became
subject to repurchase pursuant to this Section 4.3.
(f) In the event that Eligible Shares are repurchased from an
Investor Stockholder pursuant to this Section 4.3, such Investor Stockholder
will take all steps necessary and desirable to obtain all required third-party,
governmental and regulatory consents and approvals and take all other actions
necessary and desirable to facilitate consummation of such repurchase(s) in a
timely manner.
SECTION 4.4 FINANCIAL REPORTS.
(a) The Company shall furnish the following to each Investor
Stockholder who holds more than two percent (2%) of the Company's outstanding
Common
27
Stock (calculated based on the fully diluted Common Stock equivalent percentage
ownership, as if all shares of Series A Preferred have been converted into
shares of Common Stock at the "Conversion Ratio" for such shares (as defined in
the Certificate of Designations for the Series A Preferred) and all shares of
Series B Preferred had been converted into shares of Common Stock at the
Conversion Ratio:
(i) Within 45 days after the end of each fiscal month,
a report estimating oil and gas production for such month, which report is
used by the Company for internal control purposes, and a statement of
income and cash flows for such fiscal month, together with a comparison of
such statements to the annual budget of the Company for such periods;
(ii) Within 45 days after the end of each fiscal
quarter, an unaudited balance sheet as of the end of such quarter and an
unaudited related income statement, statement of stockholders equity and
statement of cash flows for such quarter including any footnotes thereto
(if any) prepared in accordance with generally accepted accounting
principles, consistently applied, together with a comparison of such
statements to the annual budget of the Company for such periods;
(iii) Within 90 days after the end of each fiscal year,
an audited balance sheet as of the end of such fiscal year and the related
income statement, statement of stockholders equity and statement of cash
flows for such fiscal year prepared in accordance with generally accepted
accounting principles, consistently applied and a signed audit letter from
the Company's auditors who shall be selected from among the "Big 4"
nationally recognized accounting firms;
(iv) Within 90 days after the end of each fiscal year,
a reserve report prepared by a reservoir engineer acceptable to the Board
of Directors;
(v) Within 30 days before the end of each fiscal year,
a consolidated annual budget approved by the Board of Directors of the
Company, together with a consolidated annual capital expenditure forecast,
including estimated Capital Calls (as defined in the Stock Purchase
Agreement);
(vi) Within 30 days after the occurrence of any
material event, notice of such event together with a summary describing the
nature of the event and its impact on the Company; and
(vii) Such other information to the Stockholders
entitled to receive information pursuant to this Section 4.4 as such
Stockholders or their advisors may reasonably request.
28
(b) Notwithstanding anything to the contrary contained in
Section 6.12, the obligations of the Company to furnish information pursuant to
this Section 4.4 shall cease upon the closing of a Qualified Public Offering.
(c) The Company shall use its best efforts to cause the Board
of Directors to hold meetings no less frequently than quarterly, and at such
meetings the Company shall report to the Board of Directors on, among other
things, its business activities, prospects, and financial position.
(d) The Company shall permit any Investor Stockholder or its
representatives to visit and inspect any of the properties of the Company,
including its books of account and other records (and make copies of and take
extracts from such books and records), and to discuss its affairs, finances, and
accounts with the Company's officers and its independent public accountants, all
at such reasonable times during the Company's usual business hours and as often
as any such person may reasonably request.
ARTICLE V
SPECIAL MANAGEMENT/GOVERNANCE PROVISIONS
SECTION 5.1 CERTIFICATE OF INCORPORATION: NO CONFLICT WITH AGREEMENT.
Attached hereto as Exhibits B and C are copies of the Certificate of
Incorporation and Bylaws, respectively, of the Company which are in effect as of
the date hereof. Each Stockholder shall vote his shares of capital stock, and
shall take all the actions necessary, to ensure that the Certificate of
Incorporation and Bylaws of the Company do not, from time to time, conflict with
the provisions of this Agreement; provided, however, that nothing in this
Section 5.1 shall be interpreted as restricting in any respects the ability of
the Investor Stockholders to amend the Certificate of Incorporation in
accordance with the procedures established in this Agreement and the Certificate
of Incorporation for such amendment, and in the event of a conflict between any
such amendment and the provisions of this Agreement, the Certificate of
Incorporation shall control.
SECTION 5.2 BOARD OF DIRECTORS.
(a) From and after the date hereof and until the consummation
of a Qualified Public Offering, subject to Section 5.8, the Company shall
exercise all authority under applicable law, and the Stockholders and their
assigns shall vote their shares of capital stock, at any regular or special
meeting of stockholders called for the purpose of filling positions on the Board
of Directors of the Company, or in any written consent executed in lieu of such
meeting of stockholders and shall take all the actions necessary, to ensure that
the Board of Directors shall consist of eight members and to ensure the election
to the Board of Directors of the Company of eight individuals: (i) two of which
shall be designated from among the officers of the Company (other than the chief
executive officer) by the Management Stockholders holding a majority of the
shares of Common Stock held by all Management Stockholders (the initial nominees
being J. Xxxxx Xxxxxx and Xxxxxxxx X. Xxxxxxx) and one of which shall be the
chief executive officer of
29
the Company (collectively, the "Management Nominees"), (ii) one of which shall
be designated by Warburg Pincus Private Equity VIII, L.P. or its assignees who
are Affiliates (the "Warburg Nominee") (the initial Warburg Nominee being
Xxxxxxx X. Xxxxxx), (iv) one of which shall be designated by GS Capital Partners
2000, L.P. or its assignees who are Affiliates (the "Goldman Nominee") (the
initial Goldman Nominee being Xxxxx Xxxxxxx), (v) one of which shall be
designated by X.X. Xxxxxx Partners (BHCA), L.P. or its assignees who are
Affiliates (the "XX Xxxxxx Nominee", and collectively with the Warburg Nominee
and the Goldman Nominee, the "Investor Nominees") (the initial XX Xxxxxx Nominee
being Xxxxxxxxxxx Xxxxxxx), and (vi) two of which shall be appointed upon the
affirmative vote of at least 75% of the remaining directors (the "Independent
Nominees") (one of the initial Independent Nominees being Xxxxxxxx Xxxxxxxxx and
the other of which shall be designated after the date hereof). The parties agree
to cause their director nominees to take all actions necessary to elect (i)
Xxxxxxx Xxxxxxx as the Chairman of the Board of Directors during such time as
Xxxxxxx Xxxxxxx is serving as a Director of the Company, and (ii) the chief
executive officer of the Company as the Chairman of the Board of Directors
during such time as Xxxxxxx Xxxxxxx is not serving as a Director of the Company.
(b) Each Investor Nominee shall have the right to bring one
observer (each, an "Observer") and any other person approved by the chief
executive officer of the Company to each meeting of the Board of Directors and
any committee thereof. The Chief Financial Officer of the Company shall have the
right to be an additional Observer. Each Investor Nominee and each Investor
Nominee's Observer shall be full-time employees or partners of such Investor
Stockholder or any of its Affiliates.
(c) The Company shall have an audit committee (the "Audit
Committee"), a compensation committee (the "Compensation Committee") and such
other committees established by the Board of Directors in accordance with the
Certificate of Incorporation and the Bylaws of the Company, each such committee
to be composed or at least three (3) members, and such greater number of
Directors as shall be established by the Board of Directors. The Audit Committee
and the Compensation Committee shall each include the three Investor Nominees as
members. The three Investor Nominees shall each have the right to be appointed
to any other committees that the Board of Directors may establish.
(d) None of the Management Nominees or the Investor Nominees,
or the Observers appointed by the Investor Nominees, will be paid any fee for
serving on the Board of Directors. All of the Directors will be entitled to
reimbursement for reasonable out-of-pocket expenses in attending meetings of the
Board of Directors.
(e) The Company shall not do any of the following, or agree to
do any of the following, without the prior affirmative vote of a majority of the
Board of Directors, which majority shall include a majority of the Investor
Nominees:
(i) sell, merge (including pursuant to a Qualified
Merger), consolidate or consummate any similar transaction or engage in a
Sale of the Company; provided however, that after March 28, 2009, any such
transaction may be approved by a simple majority of the Board of Directors
if such transaction results in the holders of the Series B Preferred
receiving an amount
30
equal to the greater of the Accreted Value per share (as defined in the
Certificate of Incorporation) or the amount that would be received by such
holders of Series B Preferred upon liquidation in accordance with the terms
of such Series B Preferred.
(ii) repurchase or issue any capital stock or
equity-linked securities of the Company or any subsidiary of the Company
other than (A) pursuant to the Company's 2002 Stock Option Plan as in
effect on the date hereof (and as amended in the manner contemplated by
Section 5.2(e)(xii)) and the Company's 2003 Stock Option Plan as in effect
on the date hereof, (B) pursuant to the Purchase Plan, (C) pursuant to the
Xxxxx Option, (D) pursuant to the Xxxxxx Option, and/or (E) Series B
Preferred pursuant to the Stock Purchase Agreement;
(iii) declare or pay any dividends or distributions on
the Company's capital stock other than pursuant to paragraphs 4 or 5 of the
Series B Certificate of Designations;
(iv) approve the Company's annual budget;
(v) make expenditures during the fiscal year covered by
the Company's annual budget approved in accordance with (iv) above, other
than for acquisitions of oil and gas producing and nonproducing properties
and leasehold interests, of amounts that in the aggregate exceed the
aggregate amounts approved for all expenditures in the annual budget by 5%
of such approved amounts, or $5,000,000, whichever is greater;
(vi) make any acquisitions during any fiscal year that,
in the aggregate, exceed $25,000,000;
(vii) incur (A) any single indebtedness in excess of
$25,000,000, or (B) after March 28, 2003, aggregate indebtedness in excess
of an amount equal to two times the Company's earnings before interest,
taxes, depletion, depreciation and amortization (EBITDA) for the prior four
fiscal quarters, on a pro forma basis with respect to any acquisitions;
(viii) divest itself of assets for an aggregate amount
of $80,000,000 or more, or assets representing 25% or more of the Company's
total assets;
(ix) issue any capital stock of the Company that is on
parity with, or senior to, the Series B Preferred;
(x) amend (by merger or otherwise) the Company's
Certificate of Incorporation (including all certificates of designation
with respect thereto) or Bylaws;
31
(xi) enter into any material transaction with any
officers, directors, employees or Affiliates of the Company, including
issuances of management stock options other than those issued pursuant to
the Company's 2002 Stock Option Plan; or
(xii) (1) during the Takedown Period (as defined in the
Stock Purchase Agreement), in the aggregate issue options pursuant to the
Company's 2002 Stock Option Plan (A) to purchase an aggregate number of
shares that exceeds the lesser of 5,500,000 shares or 8.340066% of the then
outstanding Common Stock on a fully diluted basis excluding Management
Stock that has not vested as a result of Dollar Vesting (calculated on the
basis that all shares of Series B Preferred have been converted at the
Conversion Ratio and all shares of Series A Preferred have been converted
at the "Conversion Ratio" as defined in the Certificate of Designations for
the Series A Preferred Stock), with an exercise price of less than $6.50
per share, (B) to purchase an aggregate number of shares that exceeds the
lesser of 2,150,000 shares or 3.30769% of the then outstanding Common Stock
on a fully diluted basis excluding Management Stock that has not vested as
a result of Dollar Vesting (calculated on the basis that all shares of
Series B Preferred have been converted at the Conversion Ratio and all
shares of Series A Preferred have been converted at the "Conversion Ratio"
as defined in the Certificate of Designations for the Series A Preferred
Stock), with an exercise price of less than $0.04412 per share, (C) with a
vesting schedule more favorable than the Time Vesting for Management Stock
contained in Section 4.1 of this Agreement, or (D) with a term of more than
10 years, or (2) at any time, issue any options pursuant to any form of
stock option agreement that has not been approved by a majority of the
Investor Nominees (which form of agreement shall include a provision
providing for the cancellation of such stock options in the manner
contemplated by Section 3.10 and a provision providing that the value upon
cancellation or otherwise shall be based on paragraph 4 of the Certificate
of Designations for the Series B Preferred Stock) or pursuant to the
Company's 2002 Stock Option Plan until such plan has been amended or
amended and restated in a form approved by a majority of the Investor
Nominees.
SECTION 5.3 REMOVAL.
(a) If during the term of a director designated by the
Management Stockholders pursuant to Section 5.2, holders of a majority of the
capital stock held by the Management Stockholders request that such director be
removed (with or without Cause) by written notice to the Investor Stockholders,
then such director may be removed, with or without Cause, upon the affirmative
vote of holders of a majority of the outstanding shares of capital stock, and
each Stockholder hereby agrees to vote all shares of capital stock owned or held
of record to effect such removal or consent in writing to effect such removal
upon such request. An Investor Nominee may be removed during his or her term of
office, with or without cause, only by the Person entitled to designate such
Investor Nominee pursuant to Section 5.2(a) or Section 5.8. If an Investor
Stockholder becomes a Defaulting Stockholder or Non-Participating Stockholder at
such time as the Investor Stockholder has a representative serving on the Board
of
32
Directors as an Investor Nominee, each Stockholder hereby agrees to vote all
shares of capital stock owned or held of record to effect the removal of such
Investor Nominee or consent in writing to effect such removal upon such request
if such Investor Nominee fails to resign.
(b) No director shall be removed without Cause except as
provided in Section 5.3(a) hereof, provided, however, any director shall be
removed for Cause if the holders of a majority of the outstanding shares of
capital stock consent in writing to such removal, and provided further that any
Management Nominee may be removed without Cause if the holders of 60% or more of
the outstanding shares of Series B Preferred consent in writing to such removal.
Each Management Stockholder that is a member of the Board of Directors agrees to
resign as a member of the Board of Directors upon the termination of his
employment (for any reason) with the Company.
SECTION 5.4 VACANCIES.
In the event that a vacancy is created on the Board of Directors by
the death, disability, retirement, resignation or removal (with or without
Cause) of a director, each Stockholder will vote for, and cause the directors
designated by it to vote for, the individual designated to fill such vacancy by
whichever of the Stockholders designated (pursuant to Section 5.2 hereof) the
director whose death, disability, retirement, resignation or removal (with or
without Cause) resulted in such vacancy on the Board (in the manner set forth in
Section 5.2) and the Company shall exercise all authority under applicable law
to give effect to this Section 5.4; provided, however, that such other
individual so designated may not previously have been a director of the Company
who is removed for Cause from the Board of Directors, and provided further,
however, that any Non-Participating Stockholder and Defaulting Stockholder shall
lose its right, if any, to designate a director. In the event that a vacancy is
created on the Board of Directors as a result of the removal of a director
designated by a Stockholder who has become a Non-Participating Stockholder or a
Defaulting Stockholder, such vacancy shall be filled as provided in Section 5.8
hereof.
SECTION 5.5 COVENANT TO VOTE.
Each Stockholder hereby agrees to take all actions necessary to call,
or cause the Company and the appropriate officers and directors of the Company
to call, a special or annual meeting of the stockholders of the Company and to
vote all shares of the capital stock owned or held of record by such Stockholder
at any such annual or special meeting in favor of, or take all actions by
written consent in lieu of any such meeting necessary to cause, the election as
members of the Board of Directors of those individuals so designated in
accordance with, and otherwise to effect the intent of Article V. In addition,
each Stockholder agrees to vote the shares of capital stock owned by such
Stockholder upon any other matter arising under this Agreement submitted to a
vote of the Stockholders in a manner that will implement the terms of this
Agreement.
33
SECTION 5.6 DESIGNATION OF PROXY.
In order to effectuate the provisions of this Article V and in
addition to and not in lieu of Sections 5.2 through 5.5 hereof, each of the
Management Stockholders hereby grants to Xxxxxxx X. Xxxxxxx a proxy to vote at
any meeting of Stockholders or take any action by written consent in lieu of
such meeting with respect to, all of the shares of Common Stock owned or held of
record by such Management Stockholders solely for (i) the election of directors
designated in accordance with Section 5.2 hereof, and (ii) the election of a
director to fill any vacancy on the Board of Directors in accordance with
Section 5.4 hereof. Such proxy to vote is coupled with an interest and is
therefore irrevocable.
SECTION 5.7 INVESTOR STOCKHOLDER RIGHTS.
(a) At any time when shares of Series B Preferred Stock are
outstanding, and in addition to any other vote required by law, the Certificate
of Incorporation or certificates of designation with respect thereto, the
Corporation shall, upon notice of the approval of the holders of at least sixty
percent (60%) of the then outstanding shares of Series B Preferred Stock given
in writing or by vote at a meeting, consenting or voting (as the case may be)
separately as a series, undertake to cause (i) the removal of any or all of the
Management Nominees and/or the termination of any employees, (ii) the
termination of the Takedown Period with respect to Capital Calls, as such terms
are defined in the Stock Purchase Agreement, (iii) an Initial Public Offering,
or (iv) a Qualified Merger.
(b) At any time when shares of Series B Preferred Stock are
outstanding, and in addition to any other vote required by law, the Certificate
of Incorporation or certificates of designation with respect thereto, the
Corporation shall, upon the written election of the holders of at least seventy
percent (70%) of the then outstanding shares of Series B Preferred Stock or by
vote at a meeting, consenting or voting (as the case may be) separately as a
series, use all commercially reasonable efforts to negotiate and enter into a
business transaction or series of related transactions involving the sale of the
assets or capital stock of the Company that would result in a Change of Control.
(c) Each Stockholder hereby covenants and agrees that it shall
vote its shares of Common Stock, Series A Preferred and Series B Preferred to
enforce compliance with Section 5.7(a) and (b), including without limitation,
voting to remove any director who fails to comply with a request properly made
under Section 5.7(a) and (b). Any Change of Control or Qualified Merger shall be
subject to the satisfaction of the conditions set forth in Section 3.10(c) as if
such transaction were an Approved Sale.
(d) Each Investor Stockholder hereby covenants and agrees that
it shall give the chief executive officer of the Company at least five (5)
business days written notice prior to the taking of any action by written
consent, including without limitation, any action permitted under Section 5.7(a)
hereof, and furthermore shall give the chief executive officer the opportunity
to meet with the Investor Stockholders to discuss any such action proposed to be
taken by written consent prior to the execution thereof.
34
SECTION 5.8 VOTING RIGHTS.
(a) From and after the date that an Investor Stockholder
becomes a Non-Participating Stockholder or a Defaulting Stockholder, such
Investor Stockholder shall forfeit the right to (i) vote on any matters as are
expressly required or permitted in the Certificate of Incorporation, the Bylaws,
this Agreement or the Stock Purchase Agreement to be voted on by the Series B
Preferred as a separate class, except to the extent prohibited by law or
expressly provided herein or therein, and all such shares held by such
Non-Participating or Defaulting Stockholder shall be deemed to be not
outstanding for all such purposes, and (ii) appoint a nominee to the Board of
Directors pursuant to Section 5.2 hereof. Such Non-Participating Stockholder or
Defaulting Stockholder shall cause its Investor Nominee, if any, to resign if
requested by the Company. In the event an empty Board of Directors seat is
created pursuant to this Section 5.8, such seat shall be filled by the nominee
of the Investor Stockholder who holds the largest number of shares of Series B
Preferred and that does not have a nominee on the Board of Directors and is not
itself a Non-Participating Stockholder or a Defaulting Stockholder or, if such
next largest Investor Stockholder does not desire to or cannot appoint a
nominee, by the Investor Stockholder who holds the next largest number of shares
of Series B Preferred and who does not otherwise have a nominee on the Board of
Directors and is not itself a Defaulting Stockholder or, if no such Investor
Stockholder exists or is willing or able to appoint such a nominee, by the
Investor Stockholder holding the largest number of shares of Series B Preferred
Stock who is not a Defaulting Stockholder or Non-Participating Investor.
(b) From and after the date that an Investor Stockholder
becomes a Non-Participating Stockholder or a Defaulting Stockholder, such
Investor Stockholder hereby agrees to grant to the chief executive officer of
the Company a proxy (such proxy to be coupled with an interest and therefore
irrevocable) to vote such shares of Common Stock and Series B Preferred owned by
such Non-Participating Stockholder or Defaulting Stockholder, as the case may
be; provided, however, that such proxy will not be in effect for any votes that
(i) are required by law to be voted by such Non-Participating Stockholder or
Defaulting Stockholder, as the case may be, (ii) are expressly required or
permitted in the Certificate of Incorporation, the Bylaws, the Stock Purchase
Agreement or this Agreement to be voted by such Non-Participating Stockholder or
Defaulting Stockholder, as the case may be, and (iii) for any vote pertaining to
any amendment, modification, or waiver that would adversely affect the rights of
such Non-Participating Stockholder or Defaulting Stockholder, as the case may
be, in its capacity as a Stockholder, without similarly affecting the rights of
all Stockholders of the same class or series, in their capacity as Stockholders
of such class or series. The chief executive officer will, pursuant to such
proxy, vote such shares of Common Stock and Series B Preferred owned by such
Non-Participating Stockholder or Defaulting Stockholder, as the case may be, in
the same manner (i.e., in favor, abstain or against) and in the same proportion
as all votes cast by the other Stockholders.
SECTION 5.9 VCOC RIGHTS.
Certain rights set forth in this Article V are, in part, intended to
satisfy the requirement of contractual management rights for purposes of
qualifying the ownership interests of each of certain Investor Stockholders in
the Company as venture capital investments for
35
purposes of the Department of Labor's "plan assets" regulations ("Contractual
Management Rights"), and in the event such rights are not satisfactory for such
purpose or are lost by reason of the operation of this Agreement, the Company
and each of such Investor Stockholders shall reasonably cooperate in good faith
to agree upon mutually satisfactory Contractual Management Rights which satisfy
such regulations.
SECTION 5.10 BUSINESS OPPORTUNITIES.
As soon as practicable after the date hereof, the Company shall amend
its Certificate of Incorporation to include the provisions attached as Exhibit E
and shall keep such provisions in the Certificate of Incorporation of the
Company and any successor Person at all times while any Investor Stockholder
holds shares of capital stock of the Company. Each Stockholder hereby agrees to
take all actions necessary or desirable to effect the foregoing sentence,
including voting for or consenting to amendments to the Certificate of
Incorporation.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 MANNER OF GIVING NOTICE.
All notices required to be given hereunder shall be in writing and
shall be deemed to be duly given if personally delivered, telecopied and
confirmed, or mailed by certified mail, return receipt requested, or overnight
delivery service with proof of receipt maintained, at the following address (or
any other address that any such party may designate by written notice to the
other parties):
Xxxx Xxxxxxx Corporation
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
If to any Stockholder, at his address as set forth on Exhibit A of
this Agreement.
Any such notice shall, if delivered personally, be deemed received
upon delivery; shall, if delivered by telecopy, be deemed received on the first
business day following confirmation; shall, if delivered by overnight delivery
service, be deemed received the first business day after being sent; and shall,
if delivered by mail, be deemed received upon the earlier of actual receipt
thereof or five business days after the date of deposit in the United States
mail.
SECTION 6.2 WAIVER OF NOTICE.
Whenever any notice is required to be given to any Stockholder of the
Company under the provisions of this Agreement, a waiver thereof in writing
signed by the person or persons entitled to such notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of such
notice. Attendance of a Stockholder at a meeting of the Stockholders shall
constitute a waiver of notice of such meeting, except where a Stockholder
36
attends a meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or convened.
SECTION 6.3 COUNTERPART SIGNATURES.
This Agreement may be executed in any number of counterparts, all of
which together shall constitute a single instrument. It shall not be necessary
that any counterpart be signed by each of the Stockholders so long as each
counterpart shall be signed by one or more of the Stockholders and so long as
the other Stockholders shall sign at least one counterpart which shall be
delivered to the Company.
SECTION 6.4 SEVERABILITY.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term of this
Agreement, such provision shall be fully severable; this Agreement shall be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part of this Agreement; and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance from this
Agreement. Furthermore, in lieu of each such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement a
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
SECTION 6.5 JOINDER OF SPOUSES.
The spouses of all married Stockholders have joined in the execution
of this Agreement in order to evidence their agreement and consent to be bound
by the terms and conditions hereof as to their interest, whether as community
property or otherwise, if any, in the shares of capital stock owned by their
respective spouses.
SECTION 6.6 ENTIRE AGREEMENT; AMENDMENTS; AGREEMENT CONTROLS.
(a) This Agreement, together with the Regulatory Sideletter,
supersedes all prior agreements among the parties with respect to the subject
matter hereof. The provisions of this Agreement may only be amended, modified,
waived or terminated with the prior written consent of the holders of at least
60% of the outstanding Series B Preferred and the holders of shares representing
a majority of the outstanding Common Stock held by the Stockholders (calculated
on the basis that all shares of Series A Preferred and Series B Preferred have
been converted); provided, however, that (A) any such amendment, modification,
or waiver (but not any termination) that would adversely affect the rights
hereunder of any Stockholder, in its capacity as a Stockholder, without
similarly affecting the rights hereunder of all Stockholders of the same class,
in their capacities as Stockholders of such class, that would affect a
Stockholder's right to place an individual on the Board of Directors pursuant to
Section 5.2 or exercise its preemptive rights pursuant to Section 2.2 or that
would impose any material obligation on any Stockholder, shall not be effective
as to such Stockholder without its prior written consent, (B) Exhibit A to this
Agreement shall be deemed to be automatically amended
37
from time to time to reflect issuances and transfers of shares of Common Stock,
Series A Preferred and Series B Preferred made in compliance with this Agreement
and the Stock Purchase Agreement without requiring the consent of any party, and
the Company will, from time to time, distribute to the Stockholders a revised
Exhibit A to reflect any such changes, and (C) any amendment, modification or
waiver of Section 6.14 or the Regulatory Sideletter shall be subject to the
approval of JPMP.
(b) No waiver of any provision hereof by any party shall be
deemed a waiver by any other party nor shall any such waiver by any party be
deemed a continuing waiver of any matter by such party.
(c) No amendment, modification, supplement, discharge or
waiver hereof or hereunder shall require the consent of any person not a party
to this Agreement.
SECTION 6.7 GOVERNING LAW AND VENUE.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York, without regard to the conflicts of law principles
of such state.
SECTION 6.8 CONSENT TO JURISDICTION.
(a) The parties hereto hereby irrevocably submit to the
exclusive jurisdiction of the courts of the State of New York and the federal
courts of the United States of America located in New York, and appropriate
appellate courts therefrom, over any dispute arising out of or relating to this
Agreement or any of the transactions contemplated hereby, and each party hereby
irrevocably agrees that all claims in respect of such dispute or proceeding may
be heard and determined in such courts. The parties hereby irrevocably waive, to
the fullest extent permitted by applicable law, any objection which they may now
or hereafter have to the laying of venue of any dispute arising out of or
relating to this Agreement or any of the transactions contemplated hereby
brought in such court or any defense of inconvenient forum for the maintenance
of such dispute. Each of the parties hereto agrees that a judgment in any such
dispute may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided bylaw. This consent to jurisdiction is being given solely
for purposes of this Agreement and is not intended to, and shall not, confer
consent to jurisdiction with respect to any other dispute in which a party to
this Agreement may become involved.
(b) Each of the parties hereto hereby consents to process
being served by any party to this Agreement in any suit, action, or proceeding
of the nature specified in subsection (a) above by the mailing of a copy thereof
in the manner specified by the provisions of Section 6.1.
(c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS AGREEMENT.
38
SECTION 6.9 BINDING EFFECT; ASSIGNMENT.
This Agreement shall be binding upon and shall inure to the benefit of
the Company and each Stockholder and his respective heirs, permitted successors,
permitted assigns, permitted distributees and legal representatives, and by
their signatures hereto, the Company and each Stockholder intends to and does
hereby become bound. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person other than the parties hereto
and their respective permitted successors and assigns any legal or equitable
right, remedy or claim under, in or in respect of this Agreement or any
provision herein contained. Notwithstanding anything herein to the contrary, the
rights under this Agreement may be assigned by a Stockholder to a transferee of
all or a portion of such Stockholder's shares provided such shares are
transferred in accordance with the terms of this Agreement; provided, that the
right to designate an Investor Nominee may not be transferred or assigned except
to an Affiliate of such Investor.
SECTION 6.10 FUTURE ACTIONS.
The Company and the Stockholders shall execute and deliver all such
future instruments and take such other and further action as may be reasonably
necessary or appropriate to carry out the provisions of this Agreement and the
intention of the parties as expressed herein, including if necessary any action
required to authorize and direct the officers and directors of the Company to
amend the Company's Certificate of Incorporation so that this Agreement is
enforceable under the laws of the state in which the Company is incorporated.
SECTION 6.11 HEADINGS; EXHIBITS.
All Article and Section headings herein are for convenience of
reference only and are not part of this Agreement, and no construction or
inference shall be derived therefrom. The Exhibits attached hereto and referred
to herein are a part of this Agreement as if fully set forth herein. All
references to Sections and Exhibits shall be deemed references to such parts of
this Agreement, unless the context shall otherwise require.
SECTION 6.12 TERMINATION OF THIS AGREEMENT.
Except as provided herein, this Agreement shall immediately and
automatically terminate, without any further action by any party, upon any of
the following: (i) pursuant to Section 6.6, or (ii) the dissolution, bankruptcy,
receivership or insolvency of the Company, or (iii) upon the closing of a
Qualified Public Offering or a Qualified Merger (provided that Sections 3.1(b),
4.1, 4.2 and 4.3 shall survive a Qualified Public Offering or a Qualified
Merger).
SECTION 6.13 ADJUSTMENTS FOR STOCK SPLITS, ETC.
Wherever in this Agreement there is a reference to a specific number
of shares of stock of the Company of any class or series, or a price per share
of such stock, or consideration received in respect of such stock, then, upon
the occurrence of any subdivision, combination, or stock dividend of such class
or series of stock, the specific number of shares or the price so referenced in
this Agreement shall automatically be proportionally adjusted to reflect the
effect
39
on the outstanding shares of such class or series of stock by such subdivision,
combination, or stock dividend.
SECTION 6.14 REGULATORY MATTERS.
(a) Cooperation Of Other Stockholders. Each Stockholder agrees
to cooperate with the Company in all reasonable respects in complying with the
terms and provisions of the letter agreement between the Company and Investor
(as defined in the Regulatory Sideletter), a copy of which is attached hereto as
Exhibit D, regarding regulatory matters (the "Regulatory Sideletter"), including
without limitation, voting to approve amending the Company's certificate of
incorporation, the Company's by-laws or this Agreement in a manner reasonably
acceptable to the Stockholders and Investor or any Affiliate (as defined in the
Regulatory Sideletter) of Investor entitled to make such request pursuant to the
Regulatory Sideletter in order to remedy a Regulatory Problem (as defined in the
Regulatory Sideletter). Anything contained in this Section 6.14 to the contrary
notwithstanding, no Stockholder shall be required under this Section 6.14 to
take any action that would adversely affect in any material respect such
Stockholder's rights under this Agreement or as a stockholder of the Company.
(b) Covenant Not To Amend. The Company and each Stockholder
agree not to amend or waive the voting or other provisions of the Company's
certificate of incorporation, the Company's by-laws or this Agreement if such
amendment or waiver would cause Investor or any of its Affiliates to have a
Regulatory Problem (as defined in the Regulatory Sideletter). Investor agrees to
notify the Company as to whether or not it would have a Regulatory Problem
promptly after Investor has notice of such amendment or waiver.
40
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day, month and year first above written.
COMPANY:
XXXX XXXXXXX CORPORATION
By: /s/ J. Xxxxx Xxxxxx
-----------------------------------
Name: J. Xxxxx Xxxxxx
Title: Chief Operating Officer
INVESTOR STOCKHOLDERS:
INVESTOR STOCKHOLDER:
COLORADO PUBLIC EMPLOYEE
RETIREMENT ASSOCIATION
By: /s/ Xxxxxx Xxxxxxxx
-----------------------------------------
Xxxxxx Xxxxxxxx
Deputy Executive Director of Investments
INVESTOR STOCKHOLDER:
GS CAPITAL PARTNERS 2000, L.P.
BY: GS Advisors 2000, L.L.C.,
its General Partner
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
INVESTOR STOCKHOLDER:
GSCP 2000 OFFSHORE BBOG HOLDING, L.P.
BY: GS Capital Partners 2000 Offshore, L.P.,
its General Partner
BY: GS Advisors 2000, L.L.C.,
its General Partner
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
INVESTOR STOCKHOLDER:
GSCP 2000 GMBH BBOG HOLDING, L.P.
BY: GSCP 2000 GmbH BBOG Holding I,
its General Partner
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
INVESTOR STOCKHOLDER:
GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P.
BY: GS Employee Funds 2000 GP, L.L.C.,
its General Partner
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
INVESTOR STOCKHOLDER:
STONE STREET FUND 2000, L.P.
BY: Stone Street 2000, L.L.C.,
its General Partner
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
INVESTOR STOCKHOLDER:
STONE STREET BBOG HOLDING
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
INVESTOR STOCKHOLDER:
XXXXXXX XXXXX DIRECT INVESTMENT FUND 2000, L.P.
BY: GS Employee Funds 2000 GP, L.L.C.,
its General Partner
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
INVESTOR STOCKHOLDER:
X.X. XXXXXX PARTNERS (BHCA), L.P.
BY: JPMP MASTER FUND MANAGER, L.P.,
ITS GENERAL PARTNER
BY: JPMP CAPITAL CORP.,
ITS GENERAL PARTNER
By: /s/ Xxxxxxxxxxx Xxxxxxx
-----------------------------------------
Xxxxxxxxxxx Xxxxxxx
Managing Director
INVESTOR STOCKHOLDER:
PALANTIR PARTNERS LP
BY: PALANTIR ASSOCIATES LLC
its General Partner
By: /s/ Xxxxx Xxxxxx
-----------------------------------------
Xxxxx Xxxxxx
President
INVESTOR STOCKHOLDER:
THE DOSHAY FAMILY TRUST OF 1999
By: /s/ Xxxxx Xxxxxx
-----------------------------------------
Xxxxx Xxxxxx
Trustee
INVESTOR STOCKHOLDER:
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
By: /s/ Xxxx Xxxxxxx
-----------------------------------------
Xxxx Xxxxxxx
Vice President - Common Stocks
By: /s/ Xxxx Xxxxxxxx
-----------------------------------------
Xxxx Xxxxxxxx
Assistant Secretary
INVESTOR STOCKHOLDER:
WARBURG PINCUS PRIVATE EQUITY VIII, L.P.
BY: WARBURG PINCUS & CO.,
AS GENERAL PARTNER
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxx, Partner
MANAGEMENT STOCKHOLDERS:
/s/ Xxxxxxx X. Xxxxxxx /s/ Xxxx X. Xxxxxx
------------------------------- ----------------------------------
Xxxxxxx X. Xxxxxxx Xxxx X. Xxxxxx
/s/ Xxxxxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxx
----------------------------------- ----------------------------------
Xxxxxxxx X. Xxxxxxx Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxx Trust The Xxxxxxxx-Xxxxxx Trust 6/7/00
dated August 2, 2001
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxx Xxxxxxxx
-------------------------- --------------------------
Signature Signature
/s/ Xxxxxx X. Xxxxxx, Trustee /s/ Xxxx Xxxxxxxx, Trustee
------------------------------ ------------------------------
Printed Name and Title Printed Name and Title
/s/ Xxxx X. Xxxxxxxx /s/ Xxxxx Xxxxx
----------------------------------- ----------------------------------
Xxxx X. Xxxxxxxx Xxxxx Xxxxx
/s/ Xxxxxxxxx X. Xxx /s/ Xxxxxxxx X. Xxxxxxx
----------------------------------- ----------------------------------
Xxxxxxxxx X. Xxx Xxxxxxxx X. Xxxxxxx
Huntington X. Xxxxxx and Xxxxx X. Xxxxxx,
tenants-in-common
/s/ Huntington X. Xxxxxx /s/ Xxxxxxx X. Xxxx
------------------------------ ----------------------------------
Huntington X. Xxxxxx Xxxxxxx X. Xxxx
/s/ Xxxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxx
------------------------------ ----------------------------------
Xxxxx X. Xxxxxx Xxxxx Xxxxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxx Xxxxxx
----------------------------------- ----------------------------------
Xxxxxxx X. Xxxxxx XX Xxxxx Xxxxxx
/s/ Xxxxxx X. Xxxxx, Xx. /s/ Xxxxxxx Xxxxxx
----------------------------------- ----------------------------------
Xxxxxx X. Xxxxx, Xx. Xxxxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
[Additional stockholder signatures on file]
