RESTRICTED STOCK SUBSCRIPTION AGREEMENT
This
RESTRICTED STOCK
SUBSCRIPTION AGREEMENT (this “Agreement”) dated as
of [_________ __], 2009 by and between [____________] (the “Investor”) and GenNx
GVI Holding, Inc., a Delaware corporation (“Holdings”).
WHEREAS,
the Investor is the Chief Executive Officer of GVI Security Solutions, Inc.
(“GVI”), a
wholly-owned subsidiary of Holdings; and
WHEREAS,
Holdings has determined that its interests will be advanced by the issuance to
the Investor of shares of its common stock, par value $0.001 per share (“Common Stock”) and
the Investor desires to acquire such shares of Common Stock.
It is
therefore agreed as follows:
1. Definitions. In
addition to the terms defined elsewhere in this Agreement, the following terms
have the following meanings:
(a) “Affiliate” means,
with respect to any Person, any (a) director, officer, limited or general
partner, member or shareholder holding 5% or more of the outstanding capital
shares or other Equity Securities of such Person, (b) spouse, parent, sibling or
descendant of such Person (or a spouse, parent, sibling or descendant of a
Person specified in clause (a) above relating to such Person) and (c) other
Person that, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, such
Person. The term “control” includes, without limitation, the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
(b) “Board” means the
Board of Directors of Holdings.
(c) “Charter” means the
Certificate of Incorporation of Holdings in effect at the time in question, as
the same may be amended, modified or supplemented from time-to-time after the
date hereof.
(d) “Employment Agreement”
means that certain Amended & Restated Employment Agreement, dated as of
[_________ __, 2009,] between the Investor and GVI, as the same may be amended,
modified or supplemented from time-to-time after the date hereof.
(e) “Equity Securities”
means the outstanding capital stock of Holdings, including, without limitation,
all securities convertible into or exchangeable for capital stock of Holdings,
and all options, warrants, and other rights to purchase or otherwise acquire
from Holdings capital stock of Holdings, including any share appreciation or
similar rights, contractual or otherwise.
(f) “GenNx” means GenNx360
Capital Partners, L.P.
(g) “GenNx Shares” means
all Equity Securities of Holdings held by GenNx or any of its
Affiliates.
(h) “Permitted Transfer”
means any Transfer by the Investor (i) to the spouse or any lineal descendant
(including adopted children) of such Person, (ii) to any trust solely for the
benefit of such Person and/or the spouse or lineal descendants (including
adopted children) of such Person, (iii) to a charitable foundation under the
control of such Person, (iv) to a family trust, partnership or limited liability
company under the control of such Person or established solely for the benefit
of such Person and/or such Person’s spouse or lineal descendants (including
adopted children) or for estate planning purposes provided such family trust,
partnership or limited liability company remains under the control of such
Person, (v) to the estate of such Person or (vi) that is consented to in writing
by the Board.
(i) “Permitted Transferee”
means any Person to whom a Permitted Transfer is made.
(j) “Person” shall be
construed as broadly as possible and shall include an individual or natural
person, a partnership (including a limited liability partnership), a
corporation, an association, a joint share company, a limited liability company,
a trust, a joint venture, an unincorporated organization and a governmental
entity.
(k) “Repurchase Notice”
shall mean the notice provided by Holdings to the Investor (or a Permitted
Transferee of the Investor) in connection with Holdings’ exercise of a
Repurchase Right.
(l) “Sale of the
Corporation” means (i) the sale of all or substantially all of Holdings’
assets, (ii) the sale or transfer of the outstanding Equity Securities, or (iii)
the merger or consolidation of Holdings with another person or entity, in each
case in clauses (ii) and (iii) above under circumstances in which the holders
(together with any Affiliates of such holders) of the voting power of
outstanding capital shares of Holdings, immediately prior to such transaction,
own less than 50% in voting power of the outstanding capital shares of Holdings
or the surviving or resulting corporation or acquirer, as the case may be,
immediately following such transaction. A sale (or multiple related
sales) of one or more Subsidiaries of Holdings (whether by way of merger,
consolidation, reorganization or sale of all or substantially all assets or
securities) which constitutes all or substantially all of the consolidated
assets of Holdings shall be deemed a Sale of the Corporation.
(m) “Subsidiary” means a
corporation that is a subsidiary corporation (within the meaning of § 424(f) of
the Code) of Holdings.
(n) “Transfer” means to
sell, transfer, assign, pledge, hypothecate or otherwise dispose of Equity
Securities, either voluntarily or involuntarily and with or without
consideration excluding by the Investor to Holdings upon a termination of
employment or resignation.
2. Acquisition of
Shares. Holdings hereby sells to the Investor and the Investor
hereby purchases from Holdings, the number of shares of Common Stock set forth
on Schedule 1 to this Agreement (the “Shares”). The
aggregate consideration for the Shares, receipt of which is hereby acknowledged
by Holdings, is amounts loaned by Holdings, as more specifically set forth on
Schedule 1, which Holdings acknowledges represents payment of the full fair
market value of the shares as of the date of this Agreement.
- 2
-
3. Deliveries. Simultaneously
herewith, and as a condition to the effectiveness of this Agreement, the
Investor is (i) delivering a secured limited recourse promissory note for the
amount shown as “loaned” on Schedule 1 (the “Note”), substantially
in the form attached hereto as Exhibit A, and (ii)
delivering a Pledge Agreement, dated as of the date hereof, between Holdings and
the Investor (the “Pledge Agreement”),
substantially in the form attached hereto as Exhibit B, together
with an undated security transfer power duly executed in blank to secure the
obligations under the Note.
4. Representations and
Warranties of the Investor.
The
Investor hereby represents and warrants to Holdings as follows:
(a) The
Investor is purchasing the Shares for investment, and has not previously
solicited the transfer, resale or disposal of the Shares and presently does not
have a view to, or the purpose of, engaging in a distribution thereof or of any
interest therein in any transaction that would be in violation of the securities
laws of the United States or any state thereof.
(b) The
Investor understands that the Shares have not been registered under the
Securities Act of 1933, as amended (the “Act”), and will be
“restricted securities” within the meaning of the regulations under the Act, and
by reason of the foregoing the Shares may not be resold in the absence of an
effective registration statement under, or applicable exemption from, the Act,
and that the following restrictive legend will be affixed to the Shares upon
issuance to the Investor:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH
A VIEW TO DISTRIBUTION OR RESALE. THESE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH SECURITIES
UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR THE
AVAILABILITY, IN THE OPINION OF COUNSEL, OF AN EXEMPTION FROM REGISTRATION
THEREUNDER.”
(c) The
Investor understands that there are substantial restrictions on the
transferability of the Shares, including without limitation those referred to in
Section 4(b), Section 11 (Sale of the Corporation), Section 12 (Co-Sale Right)
and Section 13 (Permitted Transfers). Accordingly, the Investor may
have to hold the Shares indefinitely and it may not be possible for the Investor
to liquidate his investment in the Shares.
- 3
-
(d) The
Investor is a senior executive of GVI, and has full knowledge of the operations
of GVI. The Investor has had an opportunity to ask questions and
receive answers concerning Holdings and to obtain such additional information as
the Investor has requested. The Investor is knowledgeable,
sophisticated and experienced in business and financial matters and with respect
to securities similar to the Shares, and is capable of evaluating the merits and
risks of purchasing the Shares. The Investor is able to bear the
economic risk of his investment in the Shares and is able to afford the complete
loss of such investment. The Investor has relied solely on the
representations and warranties contained herein and the Investor’s own knowledge
about GVI in making his decision to acquire the Shares. The “Investor” is an “Accredited
Investor” within the meaning of Rule 501(a) of Regulation D under the
Act.
(e) The
Investor acknowledges having an opportunity to obtain any further information
the Investor may have requested regarding his investment in
Holdings.
5. Representations and
Warranties of Holdings.
Holdings
hereby represents and warrants to the Investor as follows:
(a) Holdings
has been duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to carry on its business as presently
conducted.
(b) Holdings
has all requisite corporate power and authority to enter into, deliver and
perform its obligations under this Agreement. This Agreement has been
duly authorized, executed and delivered by Holdings, and all legally required
corporate proceedings by Holdings in connection with the execution and delivery
thereof have been taken.
(c) The
authorized capital stock of Holdings consists of [_________] shares of all
classes of stock consisting of (i) [_________] shares of Common Stock, of which
[_________] shares are issued and outstanding and [_______] shares are reserved
for issuance pursuant to the Holdings’ 2009 Stock Incentive Plan (the “2009 Plan”) and (ii)
[_______] shares of Holdings’ Preferred Stock of which (x) [_______] shares are
Holdings’ Series A Redeemable Preferred Stock, par value [$0.001] per share, all
of which are issued and outstanding and (y) [_______] shares are
available for designation in one or more classes or series. Except
(i) as may have been or may be issued under the 2009 Plan (including any
agreements or instruments implementing the issuances therein disclosed, as the
same may be amended from time to time) and (ii) as described on Schedule 2, there are
no outstanding subscriptions, options, rights, warrants, convertible securities
or other agreements, or calls, demands or commitments of any kind relating to
the issuance, sale or transfer of any capital stock or other equity securities
of Holdings, whether directly or upon exercise or conversion of other securities
or pursuant to the terms and conditions of any instrument evidencing
indebtedness of Holdings. The Shares, when issued and delivered to
the Investor, will be duly authorized, validly issued, fully paid and
nonassessable.
- 4
-
(d) The
execution, delivery and performance by Holdings of this Agreement, including the
issuance and delivery of the Shares to the Investor, will not (i) require
Holdings to obtain any consent, approval, authorization or other order of, or to
make any filing, registration or qualification with any court, regulatory body,
administrative agency or other governmental body (except such as may have
previously been obtained, filed or made or are permitted to be, and will be,
filed or made promptly following the date hereof), (ii) conflict with or
constitute a violation of any provision of the Charter or Bylaws of Holdings, or
(iii) breach, constitute a default under, or result in the imposition of a lien
or encumbrance on any material properties of Holdings pursuant to any bond,
debenture, note or other evidence of indebtedness of Holdings or any indenture
or other material agreement to which it is a party or by which it is bound or to
which any material property of Holdings may be subject; provided that the
representations in clause (i) of this paragraph are made in reliance upon the
representations and warranties of the Investor in Section 4 of this
Agreement.
6. Legend. Each
certificate representing Shares shall bear a legend substantially in the
following form:
“THIS
CERTIFICATE IS SUBJECT TO, AND IS TRANSFERABLE ONLY UPON COMPLIANCE WITH, THE
PROVISIONS OF A RESTRICTED STOCK SUBSCRIPTION AGREEMENT, DATED [_____________]
[__], 2009 AMONG HOLDINGS AND CERTAIN OF ITS STOCKHOLDERS.”
7. Custody
Arrangements.
(a) The
Shares are being pledged by the Investor to Holdings pursuant to the terms and
subject to the conditions of the Pledge Agreement to secure the
Note.
(b) No
certificates evidencing the Shares (“Share Certificates”)
shall be delivered to the Investor. All Share Certificates shall be
deposited with Holdings as custodian pursuant to this Section
7. Holdings shall act as custodian of all Share Certificates
deposited with it, and shall hold and safeguard such Share Certificates pursuant
to the terms and conditions hereof and of the Pledge
Agreement. Holdings’ duties under this Section 7 shall cease upon the
release of such Share Certificates to or at the direction of the Investor or its
Permitted Transferees in accordance with the Pledge Agreement.
(c) Holdings
shall provide to the Investor or any Permitted Transferee of the Shares (the
“Holder”), or
his or her legal or financial representatives so designated in writing, upon
request a copy of any Share Certificate deposited with Holdings
hereunder.
(d) Nothing
in this Section 7 shall be deemed to transfer legal title of the Shares to
Holdings or otherwise to impair a Holder’s title to that Holder’s Shares, or
otherwise to modify, enhance or limit the rights of any of the parties set forth
in the Charter or Bylaws of Holdings or in any similar document or
agreement.
(e) Holdings
undertakes to perform only such duties as custodian of the Shares as are
expressly set forth herein. Holdings shall not be liable for any
action taken by it in good faith and believed by it to be authorized or within
the rights or powers conferred upon it by this Agreement, and may consult with
counsel of its own choice and shall have full and complete authorization and
protection for any action taken or suffered by it hereunder in good faith and in
accordance with the opinion of such counsel. Holdings may rely and
shall be protected in acting or refraining from acting upon any written notice,
instruction or request furnished to it hereunder and believed by it to be
genuine and to have been signed or presented by the proper party or
parties. Holdings undertakes to safeguard the Share Certificates to
the same extent and in the same manner as it would safeguard similar property of
its own. Holdings shall not be responsible for any loss or
destruction of the Share Certificates except to the extent caused by the gross
negligence or willful misconduct of Holdings or its agents; provided, however, that
Holdings agrees to replace such Share Certificates at its cost.
- 5
-
(f) Holdings
shall have the right to terminate the custody arrangements under this Section 7
at any time upon 30 days’ written notice to each of the Holders whose Stock
Certificates remain in the custody of Holdings and the return of the Share
Certificates to such Holders.
(g) All
dividends or other distributions hereinafter declared on or payable with respect
to the Shares during the term of the Pledge Agreement shall be immediately paid
to the Investor to the extent such dividends or distributions are being paid in
respect to Vested Shares (as defined below), and shall be paid to the Company to
be held in escrow pursuant to this custody arrangement to the extent such
dividends and distributions are being paid in respect of Unvested Shares, with
any such escrowed amounts immediately released and paid to the Investor at such
time as the Unvested Shares become Vested Shares. So long as the
Investor owns the Shares, the Investor shall be entitled to vote any Shares
subject to the Pledge Agreement.
8. Vesting.
(a) Subject
to the acceleration provisions and other limitations contained herein, 25% of
the Shares shall vest on the first anniversary of the date hereof and thereafter
the remaining 75% of the Shares shall vest ratably over 36 months on a monthly
basis, with vesting occurring on the first day of each calendar
month.
(b) As
used herein, “Vested
Shares” means, as of any date of determination, all Shares that have
vested in accordance with this Section 8, and “Unvested Shares”
means, as of any date of determination, all Shares that have not so
vested.
(c) The
vesting of the Shares requires continued employment or service of the Investor
with GVI (or one of its Subsidiaries or Affiliates) through and including each
applicable vesting date as a condition to the vesting of the applicable
installment of the Shares and the rights and benefits under this
Agreement. For purposes of vesting, the Investor shall be deemed to
be continuously employed during any time that he is an employee or service
provider of GVI or any Subsidiary, including during any period that he is on
approved leave of absence and vesting shall continue to be credited during any
such periods of absence. Notwithstanding the above, if the Investor
is terminated from employment without Cause, resigns for Good Reason, dies or is
terminated from employment because of a Disability (as all of these capitalized
terms are defined in the Employment Agreement), then any remaining Unvested
Shares that would vest if the Investor was to remain an employee of GVI through
the end of the twelve month period following such termination date shall
immediately vest and become Vested Shares.
- 6
-
9. Tax Election; Tax
Determinations.
(a) THE
INVESTOR ACKNOWLEDGES THAT IT IS THE INVESTOR’S SOLE RESPONSIBILITY, AND NOT
HOLDINGS’, TO DECIDE IF AN ELECTION UNDER SECTION 83(B) OF THE INTERNAL REVENUE
CODE SHOULD BE MADE AND TO FILE TIMELY SUCH ELECTION, SUBSTANTIALLY IN THE FORM
OF EXHIBIT C
ATTACHED HERETO, EVEN IF THE INVESTOR REQUESTS HOLDINGS OR ITS REPRESENTATIVES
TO MAKE THIS FILING ON HIS BEHALF.
(b) Notwithstanding
anything in this Agreement or any other agreement between the Investor and
Holdings (or any of its Subsidiaries) to the contrary, in the event that the
provisions of the Deficit Reduction Act of 1984 (“DEFRA”) and Section 280G of
the Internal Revenue Code of 1986, as amended (the “Code”) relating to “excess
parachute payments” (as defined in the Code) shall be applicable to any payment
or benefit received or to be received by the Investor (collectively, the “Payments”), then (i)
at the Investor’s request, the Company and/or Holdings, as applicable, agrees to
submit any such Payments as may be requested by the Investor to a shareholder
vote in accordance with the provisions of Section 280G(b)(5) of the Code, or
(ii) in the event that the Investor does not request a shareholder vote as set
forth above, then any such payments or benefits shall be equal to the “Reduced Amount,”
where the Reduced Amount is (a) the largest portion of the Payments that will
result in no portion of such Payments being subject to the excise tax imposed by
Section 4999 of the Code, or (b) the entire amount of the Payments otherwise
scheduled to be paid (without reduction), whichever of the foregoing amounts
after taking into account all applicable federal, state, and local employment
taxes, income taxes and the excise tax under Section 4999 of the Code (all
computed at the highest applicable merged rate, net of the maximum reduction in
federal income taxes which could be obtained from a deduction of all state and
local taxes), resulting in the Investor’s receipt, on an after-tax basis, of the
greatest amount of Payments.
Due to
the complexity in the application of 280G of the Code, it is possible that
payments made or benefits received hereunder should not have been made under
this Section 9(b) (an “Overpayment”). If
it is determined by Holdings’ outside auditors in their reasonable good faith
judgment or by any court of competent jurisdiction that an Overpayment has been
made resulting in an “excess parachute payment” a defined in Section 280G of the
Code, then any such Overpayment shall promptly be returned to
Holdings.
10. Effect of Termination;
Repurchase Right.
(a) If
the Investor’s employment is terminated (including by death or Disability (as
defined in the Employment Agreement)) or the Investor resigns, Holdings shall
surrender the Note to the Investor for cancellation. Upon surrender
and cancellation of the Note pursuant to this Section 10(a), the Investor shall
make and deliver a new secured limited recourse promissory note in the principal
sum equal to the product of the number of Vested Shares as of the date of
termination or resignation and the Purchase Price (as defined
below). Any Unvested Shares as of such date of termination or
resignation shall be immediately and automatically forfeited and cancelled
except as provided in Section 8(c), to the extent applicable. As used
herein, “Purchase
Price” shall mean [$___]1 per Share, as
appropriately adjusted by the Board of Directors of Holdings for any change
after the date hereof in the number of Shares resulting from any stock split,
reverse stock split, stock dividend or similar corporate event.
- 7
-
(b) If
the Investor’s employment with GVI is terminated (including by death or
Disability) or the Investor resigns, Holdings (or its designee) shall have the
right (but not the obligation), upon delivery of a Repurchase Notice to the
Investor within ninety (90) days of such termination or resignation, to
repurchase from the Investor (and each of the Investor’s Permitted Transferees)
all or any part of the Vested Shares owned by the Investor (and each of the
Investor’s Permitted Transferees) (the “Repurchase
Right”). Notwithstanding the foregoing, the Repurchase Right
shall terminate on the earlier to occur of (i) a Sale of the Corporation, (ii)
consummation of the first firm commitment underwritten public offering of
Holding’s securities pursuant to an effective registration statement filed on
Form S-1 (or other similar form) under the Securities Act of 1933, as amended or
Holding’s Common Stock otherwise becomes publicly traded (an “IPO”), or (iii) the
termination of the Repurchase Right in accordance with this clause
(b).
(i) If
the Investor’s employment with GVI is terminated without Cause (as defined in
the Employment Agreement), is terminated due to death or Disability, the
Investor resigns for Good Reason, or the Investor terminates employment after a
non-renewal of the Employment Agreement by GVI, then the purchase price payable
by Holdings upon exercise of the Repurchase Right (the “Without Cause Repurchase
Price”) resulting from Section 10(b) shall be the fair market value of
the Vested Shares subject to the Repurchase Right on the date of termination or
resignation of the Investor as determined in good faith by the
Board. If the Investor disagrees with the Board’s determination of
fair market value, the Investor shall have the right to demand an appraisal of
the fair market value of the Shares performed by an independent, third-party
valuation firm selected by mutual agreement of Holdings and the Investor, with
the cost of such appraisal to be borne equally by the Investor and
Holdings. Holdings and the Investor shall select an outside valuation
firm within ten (10) days after the Investor’s request, and thereafter Holdings
shall reasonably cooperate with the valuation firm to provide all financial and
corporate information required to complete the valuation. It is
expected that the outside valuation will be completed within thirty (30) days
after the parties have selected an appraisal firm, and both parties shall use
commercially reasonable efforts to cause the valuation firm to complete its
valuation within that time period. If the parties are unable to agree
on a valuation firm, the matter shall be submitted to arbitration in accordance
with the Employment Agreement. If a valuation firm is retained, then
the Repurchase Price for the Vested Shares shall be the price determined by such
firm.
(ii) If
the Investor’s employment is terminated by GVI for Cause or the Investor resigns
other than for Good Reason, the purchase price payable by Holdings upon exercise
of the Repurchase Right (the “For Cause Repurchase
Price” and collectively with the Without Cause Repurchase Price, each the
“Repurchase
Price”) resulting from Section 10(b) shall be the lesser of (i) the fair
market value of the Vested Shares subject to the Repurchase Right on the date of
termination or resignation of the Investor as determined in good faith by the
Board and (ii) the Purchase Price of such Vested Shares.
- 8
-
(iii) The
closing of the repurchase shall occur no later than ninety (90) days following
the delivery of the Repurchase Notice, or, if applicable, thirty (30) days after
the receipt of the valuation report from the outside valuation firm (the “Repurchase
Date”). The Repurchase Price, less any applicable withholding
taxes, shall be paid in cash (subject to the limitations set forth in Section
10(b)(v)); provided,
however, Holdings shall
have the option, in its sole discretion, to pay the Repurchase Price by issuing
to the Investor an unsecured subordinated promissory note in lieu of cash, the
terms and conditions of which shall be determined in good faith by the Board
(the “Repurchase
Note”), but notwithstanding the above, in all circumstances Holdings must
make an initial cash payment equal to the lesser of (i) the Repurchase Price and
(ii) $100,000, and any Repurchase Note shall have a term of no longer than 36
months after the Repurchase Date, and shall provide for a commercially
reasonable rate of interest and other customary terms.
(iv) On
the Repurchase Date, the Investor shall transfer the Vested Shares subject to
the Repurchase Notice to Holdings, free and clear of all liens and encumbrances,
by delivering to Holdings the Shares Certificates, duly endorsed for transfer to
Holdings or accompanied by a stock transfer power duly executed in blank and
Holdings shall pay to the Investor the Repurchase Price as provided in clause
(iii) above.
(v) Notwithstanding
anything to the contrary herein, in the event that Holdings shall not be
permitted to purchase any Vested Shares upon exercise of the Repurchase Right or
pay any amounts due to the Investor under the Repurchase Note, as applicable,
because: (A) the purchase of the Vested Shares would render Holdings or its
Subsidiaries unable to meet their obligations in the ordinary course of
business; (B) Holdings is prohibited from purchasing the Vested Shares by
applicable law restricting the purchase by a corporation of its own shares or
would cause or make it likely that Holdings would become the subject of any
bankruptcy proceeding or would otherwise cause Holdings to become insolvent; or
(C) the purchase of the Vested Shares would constitute a breach of, default, or
event of default under, or is otherwise prohibited by, the terms of any loan
agreement or other agreement or instrument to which Holdings or any of its
Subsidiaries is a party or Holdings is not able to obtain the requisite consent
of any of its lenders to the purchase of the Shares (each of the events
described in (A) through (C) above being a “Repurchase
Disability”), then Holdings shall provide written notice to the Investor
specifying the nature of the Repurchase Disability. Holdings shall
thereafter repurchase the Vested Shares described in the Repurchase Notice, or
pay any amounts then due to the Investor under the Repurchase Note, as soon as
reasonably practicable after all Repurchase Disabilities cease to exist and the
date of such repurchase shall be the Repurchase Date.
11. Sale of the
Corporation.
(a) Upon
the consummation of a Sale of the Corporation, and provided that the Investor is
employed by GVI (or one of its Subsidiaries or Affiliates) at the time of the
Sale of the Corporation, any and all conditions to the vesting of the Shares
shall automatically be deemed 100% satisfied and all Shares shall thereafter be
Vested Shares.
- 9
-
(b) If
within six (6) months following the termination of the Investor’s employment by
GVI (or one of its Subsidiaries or Affiliates) without Cause or the resignation
of the Investor for Good Reason, there is a Sale of the Corporation, (i) any
Unvested Shares that were forfeited and cancelled pursuant to Section 10(a)
shall automatically be deemed Vested Shares held by the Investor and (ii) in the
event Holdings exercised the Repurchase Right in accordance with Section 10(b),
Holdings shall pay to the Investor the difference, if any, between the
Repurchase Price paid to the Investor and the amount the Investor would have
received for his Vested Shares upon the Sale of the Corporation if Holdings had
not exercised its Repurchase Right, and the Repurchase Note (if any) shall be
paid in full.
(c) At
any time that the holders of a majority of all then outstanding GenNx Shares
shall approve a Sale of the Corporation to one or more third parties (an “Approved Sale”), the
Investor shall consent to and raise no objections against the Approved Sale, and
if the Approved Sale is structured as (A) a merger or consolidation of Holdings,
the Investor shall, and hereby does, waive any dissenter’s rights, appraisal
rights or similar rights in connection with such merger or consolidation and
hereby instructs the Board to vote in favor of such Approved Sale, or (B) a sale
of Equity Securities, the Investor shall, and hereby does, agree to sell his
Equity Securities on the terms and subject to the conditions approved by
GenNx. The Investor shall take all necessary and desirable actions in
connection with the consummation of the Approved Sale, including, without
limitation, the execution of such agreements and such instruments and other
actions reasonably necessary to (1) provide the representations, warranties,
indemnities, covenants, conditions, escrow agreements and other provisions and
agreements relating to such Approved Sale; provided that the Investor shall only
be required to provide any representations, warranties, indemnities, covenants,
conditions, escrow agreements and other provisions and agreements relating to
such Approved Sale to the extent that they are provided by all of the other
holders of Equity Securities, other than reasonable covenants relating to
non-competition and non-solicitation; provided further that any indemnification
provided by the Investor shall not exceed the total consideration received by
the Investor and shall be on a several (and not joint and several) basis, and
shall be in accordance with its pro-rata share of the proceeds received by the
Investor; and (2) to effectuate the allocation and distribution of the aggregate
consideration upon the Approved Sale as set forth below.
(d) Holdings
shall provide the Investor with written notice of any Approved Sale at least ten
(10) days prior to the consummation thereof setting forth in reasonable detail
the terms (including price, time and form of payment) of any Approved
Sale.
(e) The
Investor hereby grants an irrevocable proxy and power of attorney to any nominee
of the majority of all the outstanding GenNx Shares (the “GenNx Nominee”) to
take all necessary actions and execute and deliver all documents deemed
necessary and appropriate by such Person to effectuate the consummation of any
Approved Sale. The Investor hereby agrees to indemnify, defend and
hold the GenNx Nominee harmless (severally in accordance with his pro rata share
of the consideration received in any such Approved Sale) against all liability,
loss or damage, together with all reasonable costs and expenses (including
reasonable legal fees and expenses), relating to or arising from its exercise of
the proxy and power of attorney granted hereby; provided that the Investor’s
obligation to indemnify and hold the GenNx Nominee harmless shall not extend to
any fraud or willful misconduct on the part of the GenNx
Nominee.
- 10
-
(f) In
the event that Holdings (or one of its subsidiaries) registers any securities
for sale pursuant to a registration statement filed under the Securities Act (an
“Offering”),
the Investor agrees that, during the period of duration specified by the
managing underwriter, if any, of the Offering (the “Managing
Underwriter”), or Holdings, as the case may be, following the date of the
first sale of such securities to the public pursuant to such registration
statement, it shall not, to the extent requested by the Managing Underwriter, if
any, or Holdings, as applicable, directly or indirectly, sell, offer to sell,
contract to sell (including any short sale), hedge, grant any option to purchase
or otherwise transfer or dispose of any Shares subject to this Agreement for a
period not to exceed 180 days. In furtherance of the foregoing
obligations, if requested by the Managing Underwriter, the Investor agrees to
execute a separate, written agreement setting forth the foregoing covenant, in
form satisfactory to the Managing Underwriter.
12. Co-Sale
Right.
(a) At
least twenty (20) days prior to any proposed Transfer by GenNx of shares of
Common Stock or securities convertible into Common Stock, GenNx shall give
notice (the “Transfer
Notice”) to the Investor setting forth (i) the number of shares of Common
Stock or securities convertible into Common Stock proposed to be transferred or
sold by GenNx (the “Offered Securities”),
(ii) the anticipated date of the proposed Transfer and the names and addresses
of the proposed transferees and (iii) the material terms of the proposed
Transfer, including the cash and/or other consideration to be received in
respect of such Transfer.
(b) Upon
receipt of a Transfer Notice, the Investor may elect to participate in the
contemplated Transfer by delivering written notice to GenNx within ten (10) days
after the date of such Transfer Notice (the “Offering
Period”). The Investor will be entitled to sell in the
contemplated Transfer, at the same price and on the same terms as specified in
the Transfer Notice (but after giving effect to any unpaid accrued dividend on
the Offered Securities that are not Common Stock), a number of shares of Common
Stock equal to the product obtained by multiplying (i) the quotient obtained by
dividing (x) the number of shares of Common Stock held by the Investor, by (y)
the aggregate number of shares of Common Stock held by all holders of Common
Stock (assuming conversion of all outstanding shares of securities convertible
into Common Stock) by (ii) the number of Offered Securities (on an as converted
basis). GenNx may, after the expiration of the Offering Period,
transfer the Offered Securities to the transferee(s) identified in the Transfer
Notice at a price and on the terms no more favorable to GenNx than specified in
the Transfer Notice.
13. Permitted
Transfers.
No
Transfer of any Equity Securities by the Investor shall be effective unless such
Transfer is a Permitted Transfer. Upon such Transfer the Permitted
Transferee shall be bound by, and entitled to the benefits of, this Agreement
with respect to the transferred Equity Securities in the same manner as the
Investor. The provisions regarding Transfers of Equity Securities
contained in this Section 13 shall apply to all Equity Securities now owned or
hereafter acquired by the Investor; provided, however, the provisions of
this Section 12 shall not apply following an IPO. Any Transfer of
Equity Securities by the Investor not made in accordance with this Section 13
shall be void ab
initio.
- 11
-
14. Anti-Dilution
Protection.
If
Holdings issues (i) additional shares of Common Stock and/or (ii) the right to
acquire, whether or not such right is immediately exercisable, Common Stock,
whether evidenced by an option, restricted stock grant, warrant,
convertible security or other instrument or agreement (each, a “Common Stock
Equivalent”), other than pursuant to the terms of the Plan, as of the
date of each such issuance, the Company shall take such actions such that the
Shares and all other Equity Securities owned by the Investor continue to
represent three percent (3%) of the outstanding equity of Holdings on a fully
diluted, as-converted to Common Stock basis (the “Anti-Dilution
Protection”); provided,
however, the Anti-Dilution Protection shall only apply if the Investor
maintains employment with GVI at the time of such issuance and the Investor
delivers either a secured limited recourse promissory note or cash in an amount
equal to the fair market value of the additional Shares
issued. Alternatively, the Executive may elect to receive from
Holdings Non-Qualified Stock Options to purchase that number of shares of Common
Stock pursuant to the 2009 Plan that would preserve the
Executive’s three percent (3%) ownership of the outstanding equity of
Holdings on a fully diluted basis, as-converted to Common Stock
basis. It is anticipated that Holdings will serve as a platform to
acquire additional companies or businesses in the future, or may establish
subsidiaries or other affiliated entities for that purpose. The
intent of this Section is to preserve the right of the Investor to maintain his
ownership stake in Holdings going forward.
15. Notices.
All
notices and other communications provided for or permitted hereunder shall be in
writing and shall be deemed to have been duly given (w) when delivered, if
personally delivered or transmitted by electronic mail, with receipt
acknowledgment by the recipient by return electronic mail, (x) when sent if sent
by facsimile, with a confirmation promptly sent by way of one of the methods
permitted in this Section or by U.S. mail, postage prepaid, (y) the day after
deposit with an overnight courier service marked for overnight delivery, or if
deposited with an overnight courier service marked for non-overnight delivery,
the number of days after delivery as specified to such courier service or (z)
five (5) days after mailing if sent by registered or certified mail (return
receipt requested) postage prepaid, in each case to the parties at the following
addresses and/or telecopier numbers (or such other address or telecopier number
for any party as shall be specified by like notice, provided that notices of a
change of address shall be effective only upon receipt thereof).
If to
Holdings:
GenNx GVI
Holding, Inc.
x/x
XxxXx000 Xxxxxxx Xxxxxxxx, X.X.
000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx Xxxx,
XX 00000
Attention: Xxxxxxx
Xxxxxxxx
Facsimile: (000)
000-0000
E-mail: xxxxxxxxx@xxxxx000.xxx
- 12
-
with
copies to:
Xxxxx
Peabody LLP
000
Xxxxxxx Xxxxxx
Xxx Xxxx,
XX 00000
Attention: Xxxxxxx
X. Xxxxxx, Esq.
Facsimile: (000)
000-0000
E-mail:
xxxxxxx@xxxxxxxxxxxx.xxx
|
|
(ii)
|
If
to the Investor:
|
At the
address shown on Schedule 1 attached hereto.
16. Choice of Law;
Jurisdiction.
(a) This
Agreement shall be governed by the laws of the State of New York applicable to
agreements made and to be performed therein.
(b) Any
action or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought only in the Supreme Court of the
State of New York, New York County, and each of the parties hereto consent to
the jurisdiction of such court (and of the appropriate appellate courts) in any
such action or proceeding and waive any objection to venue laid
therein.
17. Transfer and
Assignment.
This
Agreement shall be binding upon and inure to the benefit of the Investor and
Holdings and their respective permitted successors and assigns.
18. Waiver of Jury
Trial.
THE
PARTIES FURTHER AGREE THAT TO THE FULLEST EXTENT ALLOWED BY LAW, EACH PARTY
EXPRESSLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY A JURY IN
CONNECTION WITH ANY CONTROVERSY, CLAIM OR DISPUTE (A “CONTROVERSY”) BETWEEN
THE PARTIES ARISING FROM OR RELATING TO THIS AGREEMENT OR ANY ACTUAL OR ALLEGED
BREACH THEREOF. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS VOLUNTARILY
MADE BY IT AND THAT IT IS INFORMED AS TO AND UNDERSTANDS THE CONSEQUENCES
THEREOF AND THAT EACH PARTY EXPECTS, IN THE EVENT OF SUCH CONTROVERSY, THAT THE
OTHER PARTY WILL SEEK TO ENFORCE THIS WAIVER.
19. Miscellaneous.
(a) This
Agreement, together with the Pledge Agreement and the Note, is a complete
statement of the agreement between the parties with respect to the matters
provided for and there are no agreements, promises, warranties, covenants or
undertakings other than as expressly set forth in this Agreement. This Agreement
cannot be changed or terminated except in writing signed by both
parties. The headings in this Agreement are for convenience of
reference only and shall not affect the meaning of any provision of this
Agreement.
- 13
-
(b) Nothing
contained in this Agreement constitutes an employment or service commitment by
GVI (or one of its Subsidiaries), affects the Investor’s status as an employee
at will who is subject to termination without Cause (as defined in the
Employment Agreement), confers upon the Investor any right to remain employed by
GVI (or one of its Subsidiaries), interferes in any way with the right of GVI
(or one of its Subsidiaries) to terminate such employment, or affects the right
of GVI (or one of its Subsidiaries) to increase or decrease the Investor’s other
compensation or benefits.
20. Counterparts; Facsimile
Signature.
This
Agreement may be executed in more than one counterpart, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same instrument. Execution and delivery of
this Amendment by electronic exchange bearing the copies of a party’s signature
shall constitute a valid and binding execution and delivery of this Amendment by
such party. Such electronic copies shall constitute enforceable original
documents.
[signature
page follows]
- 14
-
IN WITNESS WHEREOF, each of
Holdings and the Investor has caused this Agreement to be executed as of the
date first written above.
|
GENNX
GVI HOLDING, INC.
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
INVESTOR
|
|
|
|
|
|
[______________]
|
|
|
(solely
with respect to Section 12 hereof)
|
|
|
GENNX360
CAPITAL PARTNERS, L.P.
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
Signature
Page to Subscription Agreement
EXHIBIT
A
Note
EXHIBIT
B
Pledge
Agreement
EXHIBIT
C
Form
of 83(b) Election
ELECTION
TO INCLUDE VALUE OF RESTRICTED PROPERTY
IN
GROSS INCOME IN YEAR OF TRANSFER
UNDER
CODE SECTION 83(b)
The
undersigned (the “Employee”) hereby
elects pursuant to Section 83(b) of the Internal Revenue Code of 1986, as
amended, and Treasury Regulations Section 1.83-2 thereunder with respect to the
property described below and supplies the following information in accordance
therewith:
1. The
name, address and taxpayer identification number of the Employee
are:
[____________]
[____________]
[____________]
Social
Security No: _____________
2. Description
of the property with respect to which this election is being made:
[______]
shares of common stock, par value [$0.001] per share (the “Shares”),
of [GVI Holdings, Inc.], a Delaware corporation (the “Company”). Employee
is an employee of GVI Security Solutions, Inc. (the “Employer”), a
wholly-owned subsidiary of the Company.
3. The
date on which the Shares were transferred to the Employee is [________] [__],
2009. The taxable year to which this election relates is calendar
year 2009.
4. Pursuant
to a Restricted Stock Subscription Agreement, dated as of [________] [__], 2009
(the “Subscription Agreement”) between the Employee and the Company, the Shares
are subject to vesting pursuant to Section 8 of the Subscription
Agreement.
5. Fair
market value:
The fair
market value of the Shares at time of transfer (determined without regard to any
“lapse restrictions”, as defined in Treasury Regulation Section 1.83-3(i)) of
the Shares to the Employee was [$___] per Share.
6. Amount
paid for the property:
The
amount paid by the Employee for the Shares was [$___] per
Share.
7. Copies
Furnished:
A copy of
this statement has been furnished to the Company and the Employer.
8. The
undersigned understand that the foregoing election may not be revoked except
with the consent of the Commissioner.
Dated: ______________
|
____________________________
|
|
[_______________]
|
Schedule
1
Date:
[_________ __], 2009
|
Investor Name & Address:
|
[____________]
|
|
|
[____________]
|
||
|
[____________]
|
||
|
Facsimile: [(___)___-____]
|
||
|
|
Email: [_____________]
|
Common Stock
Acquired:
Number of
Shares: [_____]
Total Purchase
Price: $[_______]
Amount of
Purchase Price loaned by Holdings: $[_______]
¨ Check
here if the Investor is an “Accredited Investor” of Holdings within the meaning
of Rule 501(a) of Regulation D under the Act. (Unless the Investor is
an Executive Officer within the meaning of Rule 501(f) of Regulation D under the
Act, a copy of a completed Accredited Investor Questionnaire should be
attached.)
Schedule
2
Common
Stock Issued on [________ __,] 2009
|
Investor
|
Shares of Common Stock
|
|
|
Xxxxxx
X. Xxxxx
|
||
|
Xxxxxx
Xxxxxxx
|
