Exhibit 4.1
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SHAREHOLDERS AGREEMENT
among
FINANCIAL PACIFIC COMPANY,
WINDWARD CAPITAL ASSOCIATES, L.P.,
WINDWARD/BADGER FPC, L.L.C.,
WINDWARD/MERCHANT, L.P.,
WINDWARD/MERBAN, L.P.
and
THE OTHER SHAREHOLDERS LISTED HEREIN
Dated as of January 23, 1998
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CONTENTS
Page
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SHAREHOLDERS AGREEMENT........................................................................... 1
BACKGROUND....................................................................................... 1
ARTICLE I
DEFINITIONS
1.1 Specific Definitions.................................................................... 4
1.2 Other Terms............................................................................. 16
ARTICLE II
CORPORATE GOVERNANCE
2.1 Voting Rights in Charter; Voting Matters Related to Charter Documents................... 17
2.2 Designation of Directors................................................................ 18
2.3 Replacement of Nominees................................................................. 19
2.4 Calling Special Meetings for the Removal of Nominees.................................... 19
2.5 Calling Special Meetings for the Enforcement of Corporate Governance Provisions......... 20
2.6 Removal for Cause....................................................................... 20
2.7 Grant of Proxies........................................................................ 20
ARTICLE III
RESTRICTIONS ON TRANSFER;
RIGHTS OF FIRST REFUSAL
3.1 Restrictions on Transfer................................................................ 21
3.2 Rights of First Refusal Generally....................................................... 23
3.3 Apportionment of Shares Among Shareholders in the Event of
Over-Subscription....................................................................... 24
3.4 Apportionment of Shares Among Shareholders in the Event of Failure to Purchase.......... 25
3.5 Transfer Mechanics...................................................................... 26
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3.6 Transfers to Third Parties after Shareholders Decline Rights of First Refusal........... 27
3.7 Exceptions to Rights of First Refusal................................................... 28
ARTICLE IV
TAG-ALONG RIGHTS
4.1 Tag-Along Rights Generally.............................................................. 28
4.2 Allocation of Shares of Tag-Along Stock................................................. 30
4.3 Transfer Mechanics...................................................................... 31
4.4 Transfers to Third Parties after Shareholders Decline Tag-Along Rights.................. 31
4.5 Exceptions to Tag-Along Rights.......................................................... 32
ARTICLE V
RIGHTS TO COMPEL SALE OR IPO EVENT
5.1 Rights to Compel Sale Generally......................................................... 32
5.2 Compelled Sale Pursuant to a Sale of Company Stock...................................... 33
5.3 Compelled Sale Other Than Pursuant to a Sale of Company Stock........................... 35
5.4 Cooperation in Connection with Compelled Sale........................................... 35
5.5 Notice of Consummation of Compelled Sale................................................ 36
5.6 Rights to Compel IPO Event.............................................................. 37
ARTICLE VI
PREEMPTIVE RIGHTS
6.1 Preemptive Rights....................................................................... 38
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ARTICLE VII
PUT AND CALL RIGHTS
7.1 Put and Call Rights..................................................................... 40
7.2 Obligation to Sell Several.............................................................. 45
7.3 Deferral of Purchases................................................................... 45
7.4 Payment for Stock....................................................................... 46
7.5 Miscellaneous........................................................................... 47
7.6 Proxy and Escrow of Company Stock....................................................... 47
ARTICLE VIII
COMPANY COVENANTS
8.1 Financial Reports....................................................................... 48
8.2 Access to Information................................................................... 48
8.3 FIRPTA Activities....................................................................... 48
ARTICLE IX
REGISTRATION RIGHTS
9.1 Demand Registration Rights.............................................................. 49
9.2 Piggyback Registration Rights........................................................... 52
9.3 Priority in Piggyback Registrations..................................................... 54
9.4 Expenses................................................................................ 56
9.5 Restrictions on Public Sale by Shareholders and Company................................. 56
9.6 Indemnification by the Company.......................................................... 57
9.7 Indemnification by the Shareholders and Underwriters.................................... 59
9.8 Notices of Claims, Etc.................................................................. 60
9.9 Other Indemnification................................................................... 61
9.10 Registration Procedure.................................................................. 61
9.11 Rule 144................................................................................ 65
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ARTICLE X
ADDITIONAL SHAREHOLDERS
10.1 Transferees of Shareholders or the Company.............................................. 66
10.2 New Shareholders........................................................................ 66
10.3 Supplemental Agreements................................................................. 67
ARTICLE XI
STOCK LEGENDS
11.1 Stock Certificate Legend................................................................ 67
ARTICLE XII
APPOINTMENT OF AGENTS
12.1 Appointment of Agent for Windward Group Matters......................................... 68
12.2 Appointment of Agent for the Majority Roll-Over Shareholders and Other Shareholders..... 72
ARTICLE XIII
TERM OF AGREEMENT
13.1 Term.................................................................................... 72
ARTICLE XIV
MISCELLANEOUS
14.1 Confidentiality......................................................................... 73
14.2 Specific Performance.................................................................... 74
14.3 Consent to Jurisdiction, Etc............................................................ 74
14.4 Attorneys' Fees......................................................................... 75
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14.5 Headings; No Third Party Beneficiaries.................................................. 75
14.6 Entire Agreement........................................................................ 75
14.7 Notices................................................................................. 76
14.8 Applicable Law.......................................................................... 77
14.9 Severability............................................................................ 78
14.10 Successors; Assigns; Transferees; Amendments; Waivers................................... 78
14.11 Defaults; No Circumvention of Agreement................................................. 79
14.12 Further Assurances...................................................................... 79
14.13 Counterparts............................................................................ 79
14.14 Recapitalization, etc................................................................... 79
Exhibit A - Form of Junior Subordinated Promissory Note
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SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT dated as of January 23, 1998 (the
"Agreement"), by and among Financial Pacific Company, a Washington corporation
(the "Company"), Windward Capital Associates, L.P., a Delaware limited
partnership ("Windward"), Windward/Badger FPC, L.L.C., a Delaware limited
liability company ("Windward/Badger"), Windward/Merban, L.P., a Delaware limited
partnership ("Windward/Merban"), Windward/Merchant, L.P., a Delaware limited
partnership ("Windward/Merchant"), the persons listed in the Schedule of
Majority Roll-Over Shareholders attached hereto (such persons and each of their
respective Permitted Transferees (as defined herein) are referred to herein,
collectively, as the "Majority Roll-Over Shareholders"), the persons listed in
the Schedule of Other Shareholders attached hereto (such persons and each of
their respective Permitted Transferees are referred to herein, collectively, as
the "Other Shareholders") and such other persons or entities who or which become
parties to this Agreement pursuant to the terms and conditions of this
Agreement. Windward, Windward/Badger, Windward/Merban and Windward/Merchant,
together with their respective Permitted Transferees, shall be referred to
collectively in this Agreement as the "Windward Group".
BACKGROUND
WHEREAS, pursuant to the terms and conditions of the
Recapitalization Agreement and Plan of Merger, dated as of December 5, 1997 (the
"Recapitalization Agreement"), by and among the Company, the Windward Group,
Windward/FPC Merger, L.P., a Delaware limited partnership ("Merger Sub."), and
certain shareholders of the Company set forth on the signature pages thereto,
among other things, (a) the limited partnership interests of Merger Sub. held by
the Windward Group (excluding Windward/Merchant and Windward/Merban) will be
converted into the right to receive from the Company 395,566.62574 shares of
Class A Common Stock, par value $1.00 per share, of the Company (the "Class A
Common Stock") (representing in the aggregate approximately 62.7% of the
Company's total outstanding capital stock (without giving effect to the exercise
of any outstanding options, the Mezzanine Warrants (as defined below) or other
similar securities)), (b) a
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portion of the limited partnership interests of Merger Sub. held by
Windward/Merchant and Windward/Merban will be converted into the right to
receive from the Company 114,834.90931 shares of Class B Common Stock, par value
$1.00 per share, of the Company (the "Class B Common Stock") (representing in
the aggregate approximately 18.2% of the Company's total outstanding capital
stock (without giving effect to the exercise of any outstanding options, the
Mezzanine Warrants (as defined below) or other similar securities)), (c) a
portion of the limited partnership interests of Merger Sub. held by
Windward/Merban will be converted into the right to receive from the Company
16,630.20545 shares of Class C Common Stock, par value $1.00 per share, of the
Company (the "Class C Common Stock") (representing in the aggregate
approximately 2.6% of the Company's total outstanding capital stock (without
giving effect to the exercise of any outstanding options, the Mezzanine Warrants
(as defined below) or other similar securities)), (d) a portion of the limited
partnership interests of Merger Sub. held by Windward/Merchant will be converted
into the right to receive from the Company 16,630.20545 shares of Class D Common
Stock, par value $1.00 per share, of the Company (the "Class D Common Stock"
and, together with the Class A Common Stock, the Class B Common Stock, the Class
C Common Stock and the Class E Common Stock, par value $1.00 per share, of the
Company (the "Class E Common Stock") the "Common Stock") (representing in the
aggregate approximately 2.6% of the Company's total outstanding capital stock
(without giving effect to the exercise of any outstanding options, the Mezzanine
Warrants (as defined below) or other similar securities)), (e) (i) the shares of
common stock of the Company (the "Existing Common Stock") outstanding
immediately prior to the Effective Time (as defined in the Recapitalization
Agreement) will be converted into the right to retain an aggregate of
70,264.86045 shares of such common stock, which will be redesignated as shares
of Class A Common Stock upon effectiveness of the Merger, (ii) and the shares of
Class A Preferred Stock of the Company (the "Existing Class A Stock")
outstanding immediately prior to the Effective Time, will be converted into the
right to receive from the Company an aggregate of 13,917.63088 shares of Class A
Common Stock (the shares of Class A Common Stock to be received or retained as
described in (i) and (ii) representing in the aggregate approximately 13.3% of
the Company's total outstanding capital
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stock (without giving effect to the exercise of any outstanding options, the
Mezzanine Warrants (as defined below) or other similar securities)) and (g) the
Company will sell to certain Employee Shareholders an aggregate of 3,177 shares
of Class A Common Stock;
WHEREAS, pursuant to the terms and conditions of the
Recapitalization Agreement, at the Closing (as defined in the Recapitalization
Agreement) the Company will enter into the Subordinated Note Agreement pursuant
to which the Company will issue to Windward/Merban and Windward/Badger, and
Windward/Badger and Windward/Merban will acquire from the Company, certain
warrants to acquire additional shares of Class A Common Stock and Class E Common
Stock, respectively (subject to the conditions set forth in such warrants) (such
warrants, as more fully described in the Subordinated Note Agreement, the
"Mezzanine Warrants");
WHEREAS, pursuant to the terms and conditions of the
Recapitalization Agreement, Merger Sub. will merge (the "Merger") with and into
the Company with the Company being the surviving business entity;
WHEREAS, after the Closing, the Company has agreed to grant
options to purchase additional shares of Class A Common Stock to certain
employees and directors of the Company and its subsidiaries, such options to be
subject to the terms (including performance criteria) set forth in the plan
governing such options and, upon exercise, such employees and directors will, to
the extent they are not otherwise parties hereto, become parties to this
Agreement pursuant to Article X hereof;
WHEREAS, after the Closing, the Company may offer and sell
additional shares of Common Stock to certain other persons and to employees of
the Company and such other persons and employees will, to the extent they are
not otherwise parties hereto, become parties to this Agreement pursuant to
Article X hereof;
WHEREAS, pursuant to and subject to the terms and conditions
of Article XII hereof, each of the members of the Windward Group have designated
and appointed Windward as its attorney-in-fact, agent and representative to act
on its
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behalf and on behalf of its Permitted Transferees in connection with this
Agreement (in such capacity, Windward, and any successor thereof appointed
pursuant to such Article XII, shall hereinafter be referred to as "the Windward
Agent"); and
WHEREAS, the Shareholders believe it to be in their best
interests and in the best interests of the Company that they enter into this
Agreement providing for certain rights and restrictions with respect to the
shares of Common Stock owned by them or their Permitted Transferees.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth in this Agreement, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Specific Definitions. As used in this Agreement, the
following terms shall have the meanings ascribed to them below (such terms to be
equally applicable to both singular and plural forms of the terms defined or
referred to):
(a) The term "Affiliate" or "affiliate" shall mean, with
respect to any specified person, (x) any director or officer of, or any person
that beneficially owns at least 5% of the capital stock or other equity
interests of, such specified person, or (y) any other person directly or
indirectly controlling, controlled by, or under common control with, such
specified person, at any time during the period for which the determination of
affiliation is being made; provided that in the case of a person who is an
individual, such terms shall also include members of such specified person's
immediate family (as defined in Instruction 2 of Item 404(a) of Regulation S-K
under the Securities Act).
(b) The term "Bankruptcy Law" shall mean Xxxxx 00, Xxxxxx
Xxxxxx Code, or any similar federal or state law for the relief of debtors.
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(c) The term "Board" shall mean the Board of Directors of
the Company.
(d) The term "Bona Fide Offer" shall mean any offer by a
Third Party in writing, setting forth a specific purchase price and a closing
date of no more than thirty days therefrom, which is fully financed and not
subject to any material conditions.
(e) The term "Book Value" shall mean, as to (x) each
share of Common Stock, the sum of (i) the price per share of Common Stock
effectively paid by the Windward Entities as a result of the Merger pursuant to
the Recapitalization Agreement and (ii) the increase (or minus the decrease) in
the book value per share of Common Stock (as determined in accordance with GAAP,
calculated on a Fully-Diluted Basis) for the period commencing on the first day
of the first fiscal quarter of the Company following the date hereof through and
until the last day of the fiscal quarter of the Company immediately preceding
the date on which book value shall be determined, and (y) as to each share of
Company Stock subject to an Option, the positive difference between the Book
Value as calculated pursuant to clause (x) of this definition and the applicable
exercise price per share of Company Stock of such Option.
(f) The term "Business Day" shall mean any calendar day
which is not a Saturday, Sunday or public holiday under the laws of the State of
New York.
(g) The term "Cause", used in connection with the
termination of employment of any Shareholder or any holder of an Option who is
or was an employee of the Company or a subsidiary of the Company (each, an
"Employee Shareholder") by the Company or any subsidiary of the Company, shall
mean a termination due to a finding by the Board in good faith that such
Employee Stockholder has (a) been engaged in an act or acts of dishonesty that
resulted directly or indirectly in more than an aggregate of $5,000 in gain or
personal enrichment to employee at the expense of the Company; (b) failed to
substantially perform employee's duties (as reasonably imposed by the Company)
(other than failure resulting from employee's Disability), persisting for a
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reasonable period following the delivery to employee of written notice
specifying the details of any alleged failure to perform; (c) violated or failed
to comply in any material respect with the Company's published rules,
regulations or policies, as currently in effect or as may be adopted from time
to time; (d) breached the applicable employment agreement, if any, in any
material respect; (e) been convicted of any felony offense or a misdemeanor
offense involving fraud, theft or dishonesty at any time; or (f) been
incarcerated for more than 10 days.
(h) The term "Change of Control" shall mean the
occurrence of any of the following events:
i) the sale, lease, transfer or other
disposition of all or substantially all of the assets of Company or its
subsidiaries (taken as a whole) to any person or related group of persons; and
ii) the merger or consolidation of the Company
with or into another corporation, or the merger of another corporation into the
Company, with the effect that persons other than the Shareholders (and their
Permitted Transferees or any "group" (as defined in the rules promulgated under
Section 13(d) of the Exchange Act) of which any Shareholder or any Permitted
Transferee is a member) hold more than 50% of the total voting power on a Fully
Diluted Basis entitled to vote in the election of directors, managers or
trustees of the surviving corporation of such merger or the corporation
resulting from such consolidation.
(i) The term "Common Stock" shall mean the capital stock
named as "Common Stock" in the second paragraph of this Agreement, and any and
all shares of capital stock or other securities of the Company or any successor
or assign of the Company (whether by merger, consolidation, sale of assets or
otherwise), which may be issued in respect of, in exchange for, or in
substitution for any shares of Common Stock, by reason of any stock dividend,
split, reverse split, combination, recapitalization, reclassification, merger,
consolidation or otherwise.
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(j) The term "Company" shall mean the person named as the
"Company" in the first paragraph of this Agreement, and any successor or assign
thereof.
(k) The term "Company Stock" shall mean the Common Stock
and any other capital stock of any class or series of the Company, and any
securities of the Company convertible into, or exercisable or exchangeable for,
any such Common Stock or other capital stock of the Company (including, without
limitation, (i) shares of Common Stock issued (or issuable) pursuant to the
Recapitalization Agreement, (ii) shares of Common Stock issued pursuant to the
Company Stock Option Plan or any other stock option plan or employee benefit or
other incentive plan presently in effect or which may be adopted by the Company
after the date hereof, (iii) shares of Common Stock issued (or issuable) upon
exercise of the Mezzanine Warrants, any other warrants or upon exercise of
preemptive rights granted by the Company, (iv) the Mezzanine Warrants and any
warrants or options to purchase Common Stock (the "Options"), and (v) shares of
Existing Common Stock and Existing Class A Stock issued and outstanding prior to
the date hereof). The term "Company Stock" shall include, except as otherwise
provided herein, any and all shares of capital stock or other securities of the
Company or any successor or assign of the Company (whether by merger,
consolidation, sale of assets or otherwise), which may be issued in respect of,
in exchange for, or in substitution for any shares of Company Stock, by reason
of any stock dividend, split, reverse split, combination, recapitalization,
reclassification, merger, consolidation or otherwise.
(l) The term "Company Stock Option Plan" shall mean the
Financial Pacific Company 1998 Stock Option Plan, adopted by the Company as of
the date hereof pursuant to the Recapitalization Agreement.
(m) The term "control", when used with respect to any
person, shall mean the power to direct the management and policies of such
person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
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(n) The term "Credit Agreements" shall mean the Credit
and Security Agreement, dated as of January 27, 1993, between U.S. Bank of
Washington, N.A. and the Company, and the 1996-1997 Credit Commitment and Loan
Agreement, dated as of February 21, 1996, between Seattle-First National Bank
and the Company, each as amended, and as each may be amended, restated,
supplemented, modified, restructured, extended, renewed, refinanced, replaced or
otherwise modified from time to time, in whole or in part.
(o) The term "Disability" shall mean the inability of the
Employee Shareholder to substantially render to the Company the services
required by the Company in accordance with his or her job for more than 60 days
out of any consecutive 120 day period because of mental or physical illness or
incapacity, as determined in good faith by the Board. The date of such
Disability shall be on the last day of such 60 day period.
(p) The term "Duly Endorsed" shall mean (i) duly endorsed
in blank by the person or persons in whose name a stock certificate or
certificate representing a debt security is registered or (ii) accompanied by a
duly executed stock or security assignment separate from the certificate, in
each case with the signature(s) thereon guaranteed by a commercial bank or trust
company or a member of a national securities exchange or of the National
Association of Securities Dealers, Inc.
(q) The term "EBT" shall mean the consolidated net income
(or loss) of the Company and its subsidiaries, excluding (to the extent net
income is reduced or increased or net loss is increased or reduced thereby),
without duplication, (a) provisions for taxes based on income, (b) extraordinary
gains or losses, (c) gains or losses on the sale or disposal of assets other
than in the ordinary course, (d) the cumulative effect of any changes in
accounting principles and (e) the granting or modification of options under
option (and similar) plans (other than legal and other costs incurred in
connection with the establishment and administration of such plan), in each case
as shown on the Company's unaudited (or audited, with respect to any four fiscal
quarters for which audited statements are otherwise available) consolidated
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financial statements for the four fiscal quarters of the Company ending
immediately prior to the particular date on which the EBT calculation is being
made, in each case calculated in accordance with GAAP.
(r) The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
(s) The term "Fair Market Value", used in connection with
the value of (x) a share of Company Stock, shall mean the quotient of (i) the
excess of (1) the product of (A) 7.0 multiplied by (B) the amount of EBT, as
shown on the Company's unaudited (or audited, with respect to any four fiscal
quarters for which audited statements are otherwise available) consolidated
financial statements for the four fiscal quarters of the Company ending
immediately prior to the particular date of termination of employment in
question (or, in the event that the periods during which the exercise of the
rights pursuant to Section 7.1 hereof are deferred pursuant to Section 7.3
hereof, immediately prior to the first date on which such periods recommence
pursuant to such Section 7.3), over (2) the aggregate liquidation preference of
any outstanding shares of Preferred Stock and any accumulated dividends in
connection therewith, divided by (ii) the total number of shares of Company
Stock (calculated on a Fully-Diluted Basis), and (y) a share of Company Stock
subject to an Option shall mean the positive difference between Fair Market
Value as calculated pursuant to clause (x) of this definition and the applicable
exercise price per share of Company Stock of such Option.
(t) The term "Financing Default" shall mean an event or
circumstance which would constitute (or with notice or lapse of time or both
would constitute) an event of default under either the Subordinated Note
Agreement or the Credit Agreements, or any other indebtedness incurred by the
Company ranking senior to or pari passu with the indebtedness incurred pursuant
to the Subordinated Notes, or any refunding, refinancing or extension of any of
the foregoing (including, without limitation, any debt offering pursuant to Rule
144A promulgated under the Securities Act), as such agreements may
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be amended from time to time, and which event or circumstance has not been
waived or cured.
(u) The term "Fully-Diluted Basis" shall mean, with
respect to any calculation of the outstanding number of shares of Company Stock
or the outstanding amount of common equity of the Company (as the case may be),
an amount equal to the total outstanding number of shares of Company Stock and
all other shares of common stock of the Company, calculated without duplication
and assuming the conversion of all outstanding shares of convertible capital
stock and securities of the Company and the exercise of all warrants, options
and other rights (including, without limitation, employee stock options pursuant
to the Company Stock Option Plan and the Mezzanine Warrants (except that, with
respect to such options and the Mezzanine Warrants, if any such options are
finally determined to be less than 100% vested or if any such Mezzanine Warrants
are finally determined to be less than 100% exercisable, only those shares of
Company Stock which may be exercised following such final determination shall be
included in such calculation)) to purchase shares of Company Stock or other
common stock of the Company.
(v) The term "GAAP" shall mean U.S. generally accepted
accounting principles, as in effect on the date any calculation thereunder is
made, applied on a basis consistent with prior periods.
(w) The term "IPO Event" shall mean an initial public
offering of capital stock by the Company involving the Registration and sale of
an aggregate of $25 million or more of common equity of the Company, whether
involving a primary offering or a combined primary and secondary offering, and
pursuant to which the Company becomes listed on a national securities exchange
or on the Nasdaq Stock Market or Nasdaq National Market.
(x) The term "Permitted Transferee" of a Shareholder
shall mean the Company and:
i) in the case of any member of the Windward
Group, (A) corporations, partnerships or other entities which are
Affiliates of any member (or any general or
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limited partner or equity holder of any member) of the Windward Group
(collectively, the "Windward Affiliates"), (B) any general partner,
limited partner, controlling shareholder, director, officer, managing
director or other employee of Windward or any Windward Affiliate
(collectively, the "Windward Associates"), (C) the lineal descendants,
heirs, executors, administrators, testamentary trustees, legatees or
beneficiaries of any Windward Associate, (D) any trust, the
beneficiaries of which, or corporation or partnership, the stockholders
or general or limited partners of which, include only a Windward
Associate, his or her spouse, members of his or her immediate family or
his or her lineal descendants, to which any such member of the Windward
Group, a Windward Affiliate or a Windward Associate has transferred
shares of Company Stock and (E) any Person to whom Windward/Badger
sells no more than $5 million worth of securities; and
ii) in the case of a Majority Roll-Over
Shareholder, (A) the lineal descendants, heirs, executors,
administrators, testamentary trustees, legatees or beneficiaries of any
Majority Roll-Over Shareholder and (B) any trust, the beneficiaries of
which, or a corporation, partnership, limited liability company or
comparable entity, the stockholders or general or limited partners or
applicable equity holders of which, include only a Majority Roll-Over
Shareholder, his or her spouse, members of his or her immediate family
or his or her lineal descendants, to which a Majority Roll-Over
Shareholder has transferred shares of Company Stock;
provided that in each case (1) each such transferor has obtained the prior
written consent of the Company (which consent shall not be withheld unless, in
the opinion of the Company, such transfer together with all other transfers of
Company Stock made after the Closing could result in or create a significant
risk (as defined below) that the Company may become subject to, or after any
Registration will continue to be subject to, the informational requirements of
the Exchange Act) and (2) each such transferee (other than the Company) has
agreed in writing, in accordance with Article X hereof, to be bound by the terms
and conditions of this Agreement to the
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same extent and in the same manner as the Shareholder transferring such shares
of Company Stock; provided further that the transfer to any such person is in
compliance with all applicable federal, state and foreign securities laws. For
the purposes of this Section 1.1(w), a "significant risk" shall be deemed to
arise when the number of "holders of record" (as determined in accordance with
the Exchange Act) is greater than 80% of the number of "holders of record" that
would cause the application or continued application of the informational
requirements of the Exchange Act under the then existing circumstances.
(y) The term "person" shall mean an individual,
partnership, corporation, limited liability company, business trust, joint stock
company, trust, unincorporated association, joint venture, or other entity of
whatever nature.
(z) The term "Piggyback Securities" shall mean those
Registrable Securities which are requested to be sold by any Shareholder
pursuant to Section 9.2 hereof.
(aa) The term "Registrable Securities" shall mean shares
of Common Stock (including, without limitation, shares of Common Stock issued
pursuant to the Recapitalization Agreement, shares of Common Stock issued
pursuant to the Company Stock Option Plan or any other stock option plan or
employee benefit or other incentive plan presently existing or which may be
adopted by the Company after the date hereof, shares of Common Stock issued upon
exercise of any warrants or options or upon exercise of preemptive rights
granted by the Company, and shares of Common Stock issued and outstanding prior
to the date hereof) and any other equity securities of the Company or any
successor corporation issued in exchange for or in respect of such shares of
Common Stock. As to any particular Registrable Securities, such securities shall
cease to be Registrable Securities when (i) such securities shall have been
registered under the Securities Act, the registration statement with respect to
the sale of such securities shall have become effective under the Securities Act
and such securities shall have been disposed of pursuant to such effective
registration statement, (ii) such securities shall have been distributed
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act,
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(iii) such securities shall have been otherwise transferred, if new certificates
or other evidences of ownership for them not bearing a legend restricting
further transfer and not subject to any stop transfer order or other
restrictions on transfer shall have been delivered by the Company and subsequent
disposition of such securities shall not require registration or qualification
of such securities under the Securities Act or any state securities laws then in
force or (iv) such securities shall cease to be outstanding.
(bb) The term "Registration" shall mean a bona fide public
offering of the Company's securities pursuant to an effective registration
statement under the Securities Act and in compliance with all applicable state
securities laws.
(cc) The term "Registration Expenses" shall mean all
expenses of the Company incident to the Company's performance of or compliance
with Article IX hereof, including, without limitation, all SEC and stock
exchange or National Association of Securities Dealers, Inc. ("NASD")
registration, filing and listing fees and expenses, fees and expenses of
compliance with securities or blue sky laws (including, without limitation,
reasonable fees and disbursements of counsel for the underwriters in connection
with blue sky qualifications of the Registrable Securities), rating agency fees,
all fees and expenses of the transfer agent and registrar for the Common Stock,
printing expenses, messenger and delivery expenses, the reasonable fees and
expenses incurred in connection with the listing of the securities to be
registered on each securities exchange or national market system on which
Registrable Securities are to be listed or on which similar securities issued by
the Company are to be listed in connection with such transaction, reasonable
fees and disbursements of counsel for the Company and all independent certified
public accountants for the Company (including the expenses of any annual audit,
special audit and "cold comfort" letters required in connection therewith or
incident thereto), securities laws liability insurance (if the Company so
desires or if the underwriters so desire), the reasonable fees and disbursements
of underwriters customarily paid by issuers or sellers of securities, all fees
and expenses of any qualified independent underwriter or any person acting in a
similar capacity under the rules of the
-13-
NASD, the reasonable fees and disbursements of one counsel retained in
connection with each such registration by the Shareholders who hold a majority
of the Registrable Securities being registered, the reasonable fees and expenses
of any special experts retained by the Company in connection with such
registration, and fees and expenses of other persons retained by the Company
(but not including any underwriting discounts or commissions or transfer taxes,
if any, attributable to the sale of Registrable Securities by the holders of
such Registrable Securities).
(dd) The term "Representative" shall mean, with respect to
a particular person, any director, officer, general partner, limited partner,
co-owner, member, nominee, managing director or controlling person of such
person.
(ee) The term "Retirement" shall mean, with respect to an
Employee Shareholder, the Employee Shareholder's retirement as an employee of
the Company or any subsidiary of the Company in accordance with the policies of
the Company or such subsidiary.
(ff) The term "Securities Act" shall mean the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(gg) The term "SEC" shall mean the United States
Securities and Exchange Commission.
(hh) The term "Shareholders" shall mean (i) each of the
members of the Windward Group, (ii) the Majority Roll-Over Shareholders, (iii)
the Other Shareholders, (iv) persons who or which have acquired shares of the
Company's capital stock from, and are Permitted Transferees of, any of them, and
any combination of them, and (v) such other persons who or which become parties
to this Agreement pursuant to the terms and conditions of this Agreement.
(ii) The term "Subordinated Notes" shall mean the 12%
Subordinated Notes in the aggregate principal amount of $10 million to be issued
by the Company to Northwestern and Windward/Merban pursuant to the Subordinated
Note Agreement, dated as of the date hereof, between the Company, Northwestern
-14-
and Windward/Merban (the "Subordinated Note Agreement"), as the same may be
amended from time to time.
(jj) The term "subsidiary" shall mean, with respect to any
person, a corporation or other entity (including a partnership or a limited
liability company) of which a majority of the capital stock or other voting
interests having voting power under ordinary circumstances to elect a majority
of the board of directors or otherwise control such corporation or other entity
is owned by (i) such person, (ii) such person and one or more of its
subsidiaries or (iii) one or more subsidiaries of such person.
(kk) The term "Third Party" shall mean, with respect to
any Shareholder, any person other than (i) such Shareholder's Permitted
Transferees and (ii) the Company.
(ll) The term "Transfer" shall mean any direct or indirect
sale, assignment, mortgage, transfer, pledge, gift, hypothecation or other
disposition of or transfer of capital stock (other than any bona fide pledge or
hypothecation of capital stock to a financial institution(s) in connection with
any loan from such financial institution(s)).
(mm) The term "Violation" shall mean, with respect to any
purchase of shares of Company Stock, any event or circumstance pursuant to which
the purchase of such shares (together with any other purchases of Company Stock
pursuant to this Agreement of which the Company has at such time been given or
has given notice) would (A) conflict with or result in a violation of or breach
(or any event which with lapse of time or the occurrence of any act or event or
otherwise would constitute or result in any of the foregoing) any law, statute,
rule, regulation, order, writ, injunction, decree or judgment promulgated or
entered by any federal, state, local or foreign court or governmental authority
applicable to the Company or its subsidiaries or any of their properties or
assets or (B) violate or conflict with or constitute a breach or default, or an
event creating rights of acceleration or termination (in each case, whether upon
lapse of time or the occurrence of any act or event or otherwise), under any
agreement to which the Company or any of its subsidiaries is a
-15-
party or by which any of their properties or assets may be bound.
(nn) The term "Voluntary Termination" shall mean the
voluntary termination by an Employee Shareholder of his or her employment with
the Company or any Company subsidiary by voluntary resignation or any other
means, other than (i) in connection with the Retirement, Disability or death of
such Employee Shareholder or (ii) simultaneous with or following termination for
Cause or at a time when there is in existence or outstanding any matter, event
or circumstance which if known to the Company at the time of such voluntary
termination by the Employee Shareholder of his or her employment would have
allowed and is likely to have caused the Company or any Company subsidiary to
have terminated the Employee Shareholder's employment for Cause (regardless of
whether the Company knew, or should have known, of such matter, event or
circumstance).
A Voluntary Termination shall be for "Good Reason" if it
follows, within a reasonable period of time thereafter, (x) a material breach of
the Company's obligations under the applicable employment agreement, if any,
with such Employee Shareholder, or (y) the Board, by vote in accordance with
Article II hereof, but excluding those directors who are officers or employees,
or former officers or employees, of the Company or its subsidiaries, determines
in its sole discretion that a Voluntary Termination by the Employee Shareholder
is for "Good Reason" under the circumstances then prevailing.
1.2 Other Terms. Other terms may be defined elsewhere in
the text of this Agreement (including the section entitled "Background") and,
unless otherwise indicated, shall have such meaning throughout this Agreement.
-16-
ARTICLE II
CORPORATE GOVERNANCE
2.1 Voting Rights in Charter; Voting Matters Related to
Charter Documents.
(a) The parties hereto acknowledge that the Company's
Articles of Incorporation (as amended as contemplated hereby, the "Articles")
and bylaws ("Bylaws") shall be amended and restated on the date hereof to
provide that in order for the Board (or any committee of the Board) to take any
action (except as specifically provided for herein), in addition to any other
requirements under the Washington Business Corporation Act of the State of
Washington, the approval of the members of the Board (or such committee of the
Board) that are Windward Nominees acting by majority vote (or by written
consent) would be required in order for the Company to take any action for which
Board approval would be required. Any committee of the Board established by the
Board in accordance with its Articles and Bylaws shall include at least one
Windward Nominee.
(b) From and after the Closing, each Shareholder shall
vote its shares of Company Stock (to the extent entitled to vote), at each
regular or special meeting of shareholders of the Company or in any written
consent executed in lieu of such a meeting of shareholders, and shall take all
actions reasonably necessary, to ensure that the Articles or Company's Bylaws
(x) are consistent with the provisions of Section 2.1(a) above and (y) do not,
at any time, conflict with the provisions of this Agreement. From and after the
Closing, each Shareholder shall use its reasonable best efforts to cause its
respective Nominees (as defined below), if any, to act in a manner consistent
with the provisions of this Agreement (including, without limitation, the
provisions of Section 2.1(a) above).
(c) Any act or action to be taken or permitted to be
taken by the Company pursuant to the terms of, or any amendment, modification,
or waiver of, (i) this Agreement, (ii) the Recapitalization Agreement (following
the closing thereunder), (iii) any ancillary agreement to the
-17-
Recapitalization Agreement, (iv) any employee stock, bonus or other incentive
plan or arrangement, or (v) any other agreement or arrangement contemplated
hereby or thereby, shall require approval or action by the Board in accordance
with the provisions of this Article II.
2.2 Designation of Directors.
From and after the Closing, each of the Shareholders shall
vote its shares of Company Stock (to the extent entitled to vote), at each
regular or special meeting of the shareholders of the Company called for the
purpose of filling positions on the Board, or in any written consent executed in
lieu of such a meeting of shareholders, and shall take all actions reasonably
necessary, to ensure the election to the Board of the following individuals: (i)
six (6) individuals (the "Windward Nominees") selected by the Windward Agent who
may be affiliated with Windward, one of whom shall be the Company's then current
chief executive officer and who shall otherwise initially be Xxxxxxx X. Xxxxx;
(ii) one (1) individual selected by the holders of a majority of the percentage
interests (the "Majority WB Holders") in Windward/Badger (the "Windward/Badger
Nominee"), who shall initially be Xxxx Xxxxxxx, provided, however, that in the
event that at the end of any thirty consecutive day period in which the Majority
WB Holders shall have failed to select the Windward/Badger Nominee, then the
Windward Agent shall select the Windward/Badger Nominee to serve until such time
as the Majority WB Holders shall select an individual to serve as the
Windward/Badger Nominee (at which time the individual appointed by the Windward
Agent to serve as the Windward/Badger Nominee shall resign and be replaced by
the individual selected by the Majority WB Holders in accordance with Article II
hereof); and (iii) so long as the Majority Roll-Over Shareholders and their
Permitted Transferees continue to hold 5% of the outstanding shares of Common
Stock, one (1) individual (the "Majority Roll-Over Shareholders Nominee")
selected by the Majority Roll-Over Shareholders, who shall initially be Xxxxxxx
Xxxxxx. To effectuate the provisions of this Section 2.2, the Secretary of the
Company, or if there be no Secretary such other officer of the Company as the
Board may appoint to fulfill the duties of Secretary (the "Secretary"), shall
not record, and the Company shall not
-18-
give effect to, any vote or consent contrary to, or inconsistent with, the terms
of this Section 2.2. The Windward Nominees, the Windward/Badger Nominee and the
Majority Roll-Over Shareholders Nominee are sometimes collectively referred to
herein as the "Nominees" and individually as a "Nominee".
2.3 Replacement of Nominees. If, prior to his election to
the Board pursuant to Section 2.2 hereof, any Nominee shall be unable or
unwilling to serve as a director of the Company, the Shareholder or Shareholders
who nominated any such Nominee shall be entitled to nominate a replacement who
shall then be a Nominee for purposes of this Article II. If, following election
to the Board pursuant to Section 2.2 hereof, any Nominee shall resign, die or be
removed or be unable to serve for any reason prior to the expiration of his term
as a director of the Company, the Shareholder or Shareholders who nominated such
Nominee shall within 30 days of such event, notify the Board in writing of a
replacement Nominee, and all Shareholders shall vote their shares of Company
Stock (to the extent entitled to vote), at any regular or special meeting called
for the purpose of filling positions on the Board, or in any written consent
executed in lieu of such a meeting of shareholders, and shall take all actions
necessary, to ensure the election to the Board of such replacement Nominee to
fill the unexpired term of the Nominee whom such new Nominee is replacing;
provided that no person may be selected by a Shareholder or group of
Shareholders as a Nominee if such person previously served as a director of the
Company and was previously removed for Cause in accordance with Section 2.6
hereof. If a Shareholder or Shareholders shall fail to so notify the Board, the
Board may, in the event that there is an insufficient number of directors to
constitute a quorum or otherwise conduct any business before the Board, nominate
any other person to fill the vacancy.
2.4 Calling Special Meetings for the Removal of Nominees.
Each Shareholder hereby agrees to use such Shareholder's best efforts to call,
or cause the appropriate officers and directors of the Company to call, a
special meeting of shareholders of the Company and to vote all of the shares of
Company Stock (to the extent entitled to vote) owned or held of record by such
Shareholder for, or to take all
-19-
actions by written consent in lieu of any such meeting necessary to cause, the
removal (with or without Cause) of any director if the persons designating such
director pursuant to Section 2.2 hereof request, in a writing signed by the
holders of a majority of the Company Stock owned by such Shareholders, his
removal for any reason (with or without Cause (as set forth in Section 2.6),
notwithstanding the provisions of Section 2.6). Except for any action taken in
accordance with the previous sentence of this Section 2.4 or with respect to the
removal of a director for Cause, each Shareholder further agrees to take no
action, whether by voting of shares of Common Stock or otherwise, with respect
to the removal of any director that was not designated by such Shareholder
pursuant to Section 2.2 hereof.
2.5 Calling Special Meetings for the Enforcement of
Corporate Governance Provisions. In order to effectuate the provisions of this
Article II, each Shareholder hereby agrees that when any action or vote is
required to be taken by such Shareholder pursuant to this Agreement, such
Shareholder shall use its best efforts to call, or cause the appropriate
officers and directors of the Company to call, a special or annual meeting of
shareholders of the Company, as the case may be, or execute or cause to be
executed a consent in writing in lieu of any such meetings to effectuate such
shareholder action.
2.6 Removal for Cause. Each Shareholder hereby agrees
that, subject to the requirements of applicable law and the Articles, no
director shall be removed without Cause (except as provided in Section 2.4
hereof). For the purposes of Section 2.4 and this Section 2.6, "Cause" shall
mean the commission of an act of fraud or embezzlement against the Company or
any of its subsidiaries or any conviction or guilty plea for a felony (or a plea
of nolo contendere thereto).
2.7 Grant of Proxies. In order to effectuate the
provisions of this Article II and in addition to and not in lieu of Sections 2.1
through 2.6 hereof, (i) the Windward Agent hereby grants to Xx. Xxxxx X.
Xxxxxxxxx, or if Xx. Xxxxxxxxx shall cease to be a managing director, officer,
director, affiliate or associate (as such terms are defined in the rules and
regulations under the Exchange Act) of the
-20-
Windward Agent or of any member of the Windward Agent or any of its affiliates
or associates, to his successor, who shall be a managing director, officer,
director, affiliate or associate of the Windward Agent or of any member of the
Windward Agent or any of its affiliates or associates and shall be selected by
the Windward Agent, and (ii) the Majority Roll-Over Shareholders hereby grant to
Xxxxxxx Xxxxxx, or such other person who is selected by the Majority Roll-Over
Shareholders, a proxy to vote at any annual or special meeting of shareholders,
or to take action by written consent in lieu of such meeting with respect to,
all of the shares of Company Stock owned or held of record by such Shareholder
solely for (x) the election of directors designated in accordance with Section
2.2 hereof, (y) the removal of directors in accordance with Sections 2.4 and 2.5
hereof, and (z) the election of a director to fill any vacancy on the Board in
accordance with Section 2.3 hereof. The proxies granted pursuant to this Section
2.7 shall terminate on the ten-year anniversary of the date hereof, unless
terminated prior to such date.
ARTICLE III
RESTRICTIONS ON TRANSFER;
RIGHTS OF FIRST REFUSAL
3.1 Restrictions on Transfer.
(a) No Company Stock now or hereafter owned by any
Shareholder or any interest therein may be Transferred prior to the expiration
of the second anniversary of the date hereof (the "Restricted Period"), except
(i) for the sale by the Windward Group to a Third Party of all (subject to any
percentage reduction arising as a result of the exercise of any "tag-along"
rights pursuant to Article IV hereof) of its equity interests in the Company,
(ii) for any sale of shares in connection with the exercise by the Windward
Group of its rights under Sections 5.1 through 5.6 hereof, (iii) upon the
exercise by the Company (or its designee) of any "call" rights or any Employee
Shareholder of its "put" rights provided for in Article VII hereof or (iv)
Transfers to or from a Permitted Transferee. Notwithstanding the foregoing, in
no event shall any Shareholder transfer any Company Stock prior to the first
-21-
anniversary of the date hereof, except to a Permitted Transferee with the
consent of the Board (which consent shall not be unreasonably withheld).
(b) After the Restricted Period, no Company Stock now or
hereafter owned by any Shareholder or any interest therein may be Transferred,
except (i) pursuant to any Transfer which complies with the provisions of
Articles III or IV hereof (provided that during the period in which any Employee
Shareholder and its Permitted Transferees are subject to the "put" and "call"
provisions of Article VII hereof (including, without limitation, any period
following any termination of the Employee Shareholder's employment with the
Company and its subsidiaries up until the expiration of the Company's put and
call periods set forth in Sections 7.1 and 7.3 hereof), no such Employee
Shareholder and its Permitted Transferees shall be permitted to Transfer any
shares of Company Stock pursuant to either the provisions of Article III hereof
or the "tag-along" provisions of Article IV hereof, except for Transfers to the
Permitted Transferees of such Employee Shareholder), (ii) pursuant to any
Registration contemplated in connection with the provisions of Article IX hereof
(provided that, prior to an IPO Event, no Majority Roll-Over Shareholder and its
Permitted Transferees shall be permitted to Transfer any shares of Company Stock
pursuant to the provisions of Article IX hereof), (iii) for the sale by the
Windward Group to a Third Party of all (subject to any percentage reduction
arising as a result of the exercise of any "tag-along" rights pursuant to
Article IV hereof) of its equity interests in the Company, (iv) for any sale of
shares in connection with the exercise by the Windward Group of its rights under
Sections 5.1 through 5.6 hereof, (v) upon the exercise by the Company (or its
designee) of any "call" rights or any Employee Shareholder of its "put" rights
provided for in Article VII hereof or (vi) Transfers to or from a Permitted
Transferee.
(c) Any Transfer of Company Stock made pursuant to this
Section 3.1 to a Permitted Transferee shall be effective only if such Permitted
Transferee shall agree in writing to be bound by the terms and conditions of
this Agreement pursuant to the provisions of Article X hereof. No Transfer of
Company Stock in violation of this Agreement shall be made or recorded
-22-
on the books of the Company and any such Transfer shall be void and of no
effect.
3.2 Rights of First Refusal Generally.
(a) Subject to the restrictions of Section 3.1 hereof and
the limitations of Section 3.7 hereof, and prior to the application of any of
the provisions of Article IV hereof, if, at any time during the term of this
Agreement, any Shareholder (the "Offering Shareholder") receives a Bona Fide
Offer which such Shareholder wishes to accept (a "Transfer Offer") from any
Third Party (the "Offeror") to purchase Company Stock (the "Transfer Stock")
then owned by such Shareholder, the Offering Shareholder shall cause the
Transfer Offer to be reduced to writing and shall provide a written notice (the
"Right of First Refusal Notice") of such Transfer Offer to the Company, and the
Company shall provide written notice of such Transfer Offer to each of the other
Shareholders (the "Shareholder Offerees" and, together with the Company, the
"Transfer Offerees") in the manner set forth in Section 14.7 hereof. The Right
of First Refusal Notice shall also contain an irrevocable offer to sell the
Transfer Stock to the Transfer Offerees (in the manner set forth below) at the
same price and upon substantially the same terms and conditions as the terms and
conditions contained in the Transfer Offer and shall be accompanied by a true
and correct copy of the Transfer Offer (which shall identify the Offeror, the
Transfer Stock, the price contained in the Transfer Offer and all the other
terms and conditions of the Transfer Offer); provided that (x) the Right of
First Refusal Notice may be combined with a Tag-Along Notice, (y) any such
combined Tag-Along Notice/Right of First Refusal Notice may state that in the
event that the offer(s) to sell the Transfer Stock to the Transfer Offerees are
not accepted in full in accordance with this Section 3.2, then such notice shall
constitute an offer with respect to Tag-Along Stock in accordance with Section
4.1 hereof and (z) references herein to a Right of First Refusal Notice shall be
deemed to include any such combined Tag-Along Notice/Right of First Refusal
Notice.
(b) The Transfer Offerees shall have the right and
option, within 30 days after the date the Right of First Refusal Notice is
received by such Transfer Offerees, to
-23-
accept irrevocably such offer (subject to the priorities and pro rata
adjustments set forth in Sections 3.3 and 3.4 below), in the aggregate, as to
all, but not less than all (unless otherwise consented to by the relevant
Offering Shareholders and Offerors), shares of Transfer Stock. Each Transfer
Offeree which desires to exercise such option shall provide the Offering
Shareholder with written notice (specifying the number of shares of the Transfer
Stock as to which each Transfer Offeree is accepting the offer) within such 30
day period. Unless the relevant Offering Shareholders and Offerors shall have
otherwise consented to the purchase of less than all of the shares of Transfer
Stock, no Transfer Offeree shall have the right to acquire such shares of
Transfer Stock unless all such shares are being acquired by Transfer Offerees
pursuant to the provisions of this Article III.
(c) Notwithstanding anything to the contrary contained in
this Article III, there shall be no liability on the part of the Offering
Shareholder to any Shareholder in the event that the sale of Transfer Stock
contemplated pursuant to this Article III is not consummated for any reason
whatsoever. Whether a sale of Transfer Stock contemplated pursuant to this
Article III is effected by the Offering Shareholder is in the sole and absolute
discretion of the Offering Shareholder.
3.3 Apportionment of Shares Among Shareholders in the
Event of Over-Subscription.
(a) If the aggregate number of shares of Transfer Stock
as to which notices of acceptance are provided by all Transfer Offerees exceeds
the number of shares of Transfer Stock, the right to purchase the Transfer Stock
shall be allocated (i) first, to the Shareholder Offerees and; (ii) second, to
the Company with respect to any shares of Transfer Stock as to which notices of
acceptance have not been provided by the Shareholder Offerees.
(b) Notwithstanding the provisions of paragraph (a)
above, if the aggregate number of shares of Transfer Stock as to which notices
of acceptance are provided by the Shareholder Offerees exceeds the number of
shares of Transfer Stock, then (i) each Shareholder Offeree which provided a
notice of
-24-
acceptance shall first be allocated the lesser of (A) the number of shares of
Transfer Stock which such Shareholder Offeree agreed to purchase and (B) the
number of shares of Transfer Stock as is equal to the full number of shares of
Transfer Stock offered in the Right of First Refusal Notice multiplied by a
fraction, (1) the numerator of which shall be the number of shares of Common
Stock held or deemed to be held by such Shareholder Offeree as of the date of
the Right of First Refusal Notice (for the purpose of such calculation, a
Shareholder Offeree shall be deemed to hold the number of shares of Common Stock
which would be issuable, as of the date of the Right of First Refusal Notice, to
such Shareholder Offeree upon conversion, exercise or exchange of all securities
then held by such Shareholder Offeree that are then convertible, exercisable or
exchangeable (but excluding any unvested options) into or for (whether directly
or indirectly) shares of Common Stock) and (2) the denominator of which shall be
the aggregate number of shares of Common Stock (calculated as aforesaid) held or
deemed to be held on such date by all Shareholder Offerees who accepted the
offer contained in the Right of First Refusal Notice, and (ii) the balance of
the shares of Transfer Stock (if any) offered shall be reallocated among the
Shareholder Offerees accepting the offer contained in the Right of First Refusal
Notice in the same proportion as set forth in the preceding clause (i)(B)
(provided that no Shareholder Offeree shall be obligated to purchase more than
the number of shares of Transfer Stock which such Shareholder Offeree initially
agreed to purchase) in continuous reallocations until all such remaining shares
have been reallocated fully among such Shareholder Offerees; provided that all
allocations referred to herein shall be determined in good faith by the Company
in accordance with the provisions of this Section 3.3 and any share amounts so
determined shall be rounded to avoid fractional shares.
3.4 Apportionment of Shares Among Shareholders in the
Event of Failure to Purchase. If any shares of Transfer Stock are not purchased
by a Shareholder Offeree who or which previously delivered a written notice of
acceptance relating thereto (collectively, the "Transfer Default Stock"), such
shares of Transfer Default Stock may be purchased by the other Shareholder
Offerees purchasing Transfer Stock (the "Default Offerees"), allocated among
such Default Offerees in propor-
-25-
tion to the number of shares of Transfer Stock otherwise being purchased by
those of such Default Offerees who agree to purchase Transfer Default Stock;
provided that, if the Default Offerees do not purchase all the Transfer Default
Stock, the Company may purchase the remaining Transfer Default Stock; provided
further that the provisions of this Section 3.4 shall not excuse the failure by
any such Shareholder Offeree to purchase the shares of Transfer Default Stock
with respect to which it previously delivered a written notice of acceptance
relating thereto; provided further that all allocations referred to herein shall
be determined in good faith by the Company in accordance with the provisions of
this Section 3.4 and any share amounts so determined shall be rounded to avoid
fractional shares. The provisions of the last sentence of Section 3.2(b) shall
apply if the Default Offerees and the Company do not in the aggregate purchase
all of the Transfer Default Stock.
3.5 Transfer Mechanics. The closing of the purchase of
the Transfer Stock by the Transfer Offerees who have exercised the option
pursuant to Section 3.2 hereof shall take place at the principal executive
offices of the Company on the 45th Business Day after the expiration of the
30-day period after the giving of the Right of First Refusal Notice (or such
other date as may be mutually agreed to by the parties to such transaction). At
such closing, each Transfer Offeree shall deliver to the Offering Shareholder
the appropriate per share consideration (which, in the event that the Transfer
Offer set forth in the Right of First Refusal Notice contemplated the payment by
the Offeror of non-cash consideration, shall be paid in cash in an amount equal
to the fair market value of such non-cash consideration, as determined in
accordance with the provisions of the last sentence of this Section 3.5)
pursuant to a bank, cashier's or certified check or by wire transfer of
immediately available funds (unless otherwise specified in the Right of First
Refusal Notice provided to the Transfer Offerees), against delivery of
certificates representing the Transfer Stock so purchased Duly Endorsed. For
purposes of this Section 3.5, the value of non-cash consideration shall be the
fair market value of the aggregate consideration (whether such consideration is
in the form of cash, securities, other assets or the assumption of liabilities,
or any combination thereof)
-26-
to be paid (without assigning any value to the non-economic terms of the
particular transaction (e.g., representations, warranties, covenants,
conditions, indemnification, etc. or the tax treatment of the particular
transaction), as determined by the Windward Agent in its reasonable discretion.
Any transfer (other than to a Third Party) pursuant to this Article III shall be
made without any representations, warranties, covenants or indemnities; except,
that, each transferor shall be deemed to have represented that (i) the transfer
has been duly authorized by it, (ii) that it has the capacity, power and
authority to transfer such shares and (iii) that the acquiror shall obtain good
title to such shares, free and clear of any defects, encumbrances and adverse
interests (other than as provided for in this Agreement).
3.6 Transfers to Third Parties after Shareholders Decline
Rights of First Refusal. If at the end of the 30-day period following the giving
of the Right of First Refusal Notice, the Transfer Offerees (including, without
limitation, the Company) shall not have collectively accepted the offer
contained in such notice as to all shares of Transfer Stock covered thereby
(unless otherwise consented to by the relevant Offering Shareholders and
Offerors), the Offering Shareholder shall have 60 days in which to sell the
Transfer Stock to the Offeror, at a price not less than that contained in the
Right of First Refusal Notice and on terms and conditions not more favorable to
the Offeror than were contained in the Right of First Refusal Notice. No sale
may be made to any Offeror unless such Offeror agrees in writing to be bound by
the terms and conditions of this Agreement pursuant to the provisions of Article
X hereof. Promptly after any sale pursuant to this Section 3.6, the Offering
Shareholder shall notify the Company of the consummation thereof and shall
furnish such evidence of the completion (including time of completion) of such
sale and of the terms and conditions thereof as the Company may reasonably
request. If, at the end of such 60 day period, the Offering Shareholder has not
completed the sale of the Transfer Stock, such Shareholder shall no longer be
permitted to sell such shares pursuant to this Section 3.6 without again fully
complying with the provisions of this Article III and all the restrictions on
Transfer contained in this Agreement
-27-
shall again be in effect with respect to all such person's shares of Company
Stock, including the Transfer Stock.
3.7 Exceptions to Rights of First Refusal. The provisions
of this Article III shall not be applicable to any Transfer of Company Stock (a)
from any Shareholder to any Permitted Transferee, or from any Permitted
Transferee of such Shareholder to such Shareholder, provided that in any
Transfer to a Permitted Transferee such Permitted Transferee (other than the
Company) must agree in writing to be bound by the terms and conditions of this
Agreement pursuant to the provisions of Article X hereof, (b) made pursuant to a
public offering of Company Stock in connection with the exercise by any
Shareholder of its rights pursuant to Article IX hereof or in connection with
the exercise by the Windward Agent of its rights pursuant to Section 5.6 hereof,
(c) made in connection with the exercise by the Windward Group of a Compelled
Sale Right, (d) by any Tag-Along Offeree pursuant to Article IV hereof (provided
that the rights of Tag-Along Offerees pursuant to Article IV hereof shall only
apply after application of the provisions of this Article III), or (e) between
the Company (or its designee), on the one hand, and any Employee Shareholder or
employee of the Company and its subsidiaries, on the other, pursuant to Articles
VII or X hereof.
ARTICLE IV
TAG-ALONG RIGHTS
4.1 Tag-Along Rights Generally.
(a) Subject to the restrictions on Transfer set forth in
Section 3.1 hereof, and subject to the prior application of the right of first
refusal provisions of Sections 3.2 through 3.7 hereof, any Shareholder or
Shareholders may, individually or collectively, in any one transaction or any
series of similar transactions, Transfer any shares of Company Stock to any
Third Party, but only if the Shareholder or Shareholders desiring to so transfer
their Company Stock (collectively, the "Transferor") first offer to each of the
other Shareholders (the "Tag-Along Offerees") to
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include, at the option of each Tag-Along Offeree, in the sale or other
disposition to the Third Party, such number of shares of Company Stock
(collectively, the "Tag-Along Stock") as shall be determined in accordance with
this Article IV.
(b) Upon the receipt by any Transferor or Transferors of
a Bona Fide Offer or Offers to purchase or otherwise acquire shares of its or
their Company Stock from a Third Party (other than a Transfer which pursuant to
Section 4.5 hereof would not be subject to the provisions of Sections 4.1
through 4.4 hereof) which such Transferor or Transferors desire to accept, such
Transferors shall cause the Third Party's offer to be reduced to writing and
shall provide a copy of such written notice of such Third Party's offer (the
"Tag-Along Notice") to the Company, and the Company shall provide a copy of the
Tag-Along Notice to each of the Tag-Along Offerees in the manner set forth in
Section 14.7 hereof. The Tag-Along Notice must contain an offer to purchase or
otherwise acquire shares of Tag-Along Stock from the Tag-Along Offerees
according to the terms and conditions of this Article IV and upon substantially
the same terms and conditions as the terms and conditions contained in the Third
Party's offer and shall be accompanied by a true and correct copy of the Third
Party's offer; provided that (x) the Tag-Along Notice may be combined with a
Right of First Refusal Notice, (y) the offer by a Third Party with respect to
Tag-Along Stock set forth in any such combined Tag-Along Notice/Right of First
Refusal Notice may be conditioned on the offer(s) with respect to the purchase
in accordance with Article IV of the Transfer Stock set forth therein not being
accepted and (z) references herein to a Tag-Along Notice shall be deemed to
include any such combined Tag-Along Notice/Right of First Refusal Notice.
(c) At any time within 10 Business Days after its receipt
of the Tag-Along Notice (or 30 days after its receipt of a combined Tag-Along
Notice/Right of First Refusal Notice), each of the Tag-Along Offerees may
irrevocably accept the Third Party offer included in the Tag-Along Notice for up
to such number of shares of Tag-Along Stock as is determined in accordance with
the provisions of this Article IV by furnishing written notice of such
acceptance to the Transferor and such Third Party; such written notice of
acceptance must be accompanied by the certificate or certificates representing
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the shares of Tag-Along Stock (which shall be free and clear of liens), Duly
Endorsed, to be sold or otherwise disposed of pursuant to such offer by such
Tag-Along Offeree, together with a limited power-of-attorney authorizing the
Transferor to sell or otherwise dispose of such shares of stock pursuant to the
terms and conditions of such Third Party's offer and the terms and conditions of
this Article IV.
(d) Notwithstanding anything to the contrary contained in
this Article IV, there shall be no liability on the part of the Transferor to
any Shareholder in the event that the sale of Company Stock to the Third Party
contemplated pursuant to this Article IV is not consummated for any reason
whatsoever. Whether a sale of Company Stock to the Third Party contemplated
pursuant to this Article IV is effected is in the sole and absolute discretion
of the Transferor.
4.2 Allocation of Shares of Tag-Along Stock. Each
Tag-Along Offeree shall have the right to sell pursuant to the Third Party's
offer a number of shares of Tag-Along Stock up to the product of (x) the total
number of shares to be acquired by the Third Party as set forth in the Tag-Along
Notice (or such higher number of shares as such Third Party may agree to), times
(y) a fraction, (1) the numerator of which shall be the number of shares of
Common Stock held or deemed to be held by such Tag-Along Offeree as of the date
of the Tag-Along Notice (for the purpose of such calculation, a Tag-Along
Offeree shall be deemed to hold the number of shares of Common Stock which would
be issuable, as of the date of the Tag-Along Notice, to such Tag-Along Offeree
upon conversion, exercise or exchange of all securities then held by such
Tag-Along Offeree that are then convertible, exercisable or exchangeable (but
excluding any unvested options) into or for (whether directly or indirectly)
shares of Common Stock) and (2) the denominator of which shall be the aggregate
number of shares of Common Stock (calculated as aforesaid) held or deemed to be
held on such date by all Shareholders; provided that all allocations referred to
herein shall be determined in good faith by the Company in accordance with the
provisions of this Section 4.2 and any share amounts so determined shall be
rounded to avoid fractional shares.
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4.3 Transfer Mechanics. The purchase from the Tag-Along
Offerees pursuant to this Article IV shall be on the same terms and conditions,
including any representations, warranties, covenants and indemnities and the per
share price (which, in the event of cash consideration, shall be paid by bank,
cashier's or certified check or by wire transfer of immediately available funds,
unless otherwise specified in the Tag-Along Notice provided to the Tag-Along
Offerees by the Company) and the date of sale or other disposition, as are
received by the Transferor and stated in the Tag-Along Notice provided to the
Tag-Along Offerees by the Company. As promptly as practicable (but in no event
later than 5 days) after the consummation of the sale or other disposition of
Company Stock of the Transferor and Tag-Along Stock of the Tag-Along Offerees to
the Third Party pursuant to the Third Party's offer, the Transferor shall notify
the Tag-Along Offerees thereof, shall remit to each Tag-Along Offeree who
accepted the Third Party's offer in accordance with the provisions of this
Article IV the total sales price of the shares of Tag-Along Stock of such
Tag-Along Offeree sold or otherwise disposed of pursuant thereto (together with
any excess shares of Tag-Along Stock of such Tag-Along Offeree which are not
sold or otherwise disposed of pursuant thereto), and shall furnish such other
evidence of the completion and time of completion of such sale or other
disposition and the terms and conditions thereof as may be reasonably requested
by the Tag-Along Offerees.
4.4 Transfers to Third Parties after Shareholders Decline
Tag-Along Rights. If within 10 Business Days after the receipt of the Tag-Along
Notice (or 30 days after its receipt of a combined Tag-Along Notice/Right of
First Refusal Notice), any Tag-Along Offeree has not accepted the offer
contained in the Tag-Along Notice, such Tag-Along Offeree will be deemed to have
waived any and all rights with respect to the sale or other disposition of
Tag-Along Stock described in the Tag-Along Notice and the Transferor shall have
60 days in which to sell or otherwise dispose of the shares of Company Stock
described in the Third Party's offer, on terms and conditions not more favorable
to the Transferor than were set forth in the Tag-Along Notice. If, at the end of
60 days following the receipt of the Tag-Along Notice, the Transferor has not
completed the sale or other disposition of Company
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Stock of the Transferor and Tag-Along Stock of any Tag-Along Offeree in
accordance with the terms and conditions of the Third Party's offer, the
Transferor shall return to such Tag-Along Offeree all certificates representing
shares of Tag-Along Stock which such Tag-Along Offeree delivered for sale or
other disposition pursuant to this Article IV, and all the restrictions on
Transfer contained in this Agreement with respect to Company Stock owned by the
Transferor shall again be in effect.
4.5 Exceptions to Tag-Along Rights. The provisions of
this Article IV shall not be applicable to any Transfer of Company Stock (a)
from any Shareholder to any Permitted Transferee, or from any Permitted
Transferee of such Shareholder to such Shareholder, provided that in any
Transfer to a Permitted Transferee such Permitted Transferee (other than the
Company) must agree in writing to be bound by the terms and conditions of this
Agreement pursuant to the provisions of Article X hereof, (b) made pursuant to a
public offering of Company Stock in connection with the exercise by any
Shareholder of its rights pursuant to Article IX hereof or in connection with
the exercise by the Windward Group of its rights pursuant to Section 5.6 hereof,
(c) made in connection with the exercise by the Windward Group of a Compelled
Sale Right or (d) between the Company (or its designee), on the one hand, and
any Employee Shareholder or employee of the Company and its subsidiaries, on the
other, pursuant to Articles VII or X hereof.
ARTICLE V
RIGHTS TO COMPEL SALE OR IPO EVENT
5.1 Rights to Compel Sale Generally. The Windward Group
shall have the right (the "Compelled Sale Right") to cause the sale of all or
substantially all of the Company to a Third Party (the "Third Party Purchaser"),
whether pursuant to a sale of Company Stock, merger, consolidation, stock swap,
business combination, sale of assets or similar transaction (any such sale, the
"Compelled Sale"); provided that the Windward Group gets treated no more
favorably as to the terms and conditions of the Compelled Sale than the other
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Shareholders (other than with respect to any transaction fee arrangements
entered into by the Company and Windward (or any of its Affiliates) in
connection with a Compelled Sale, provided that such fees are consistent with
market practice for transactions of a similar type and size). If the Windward
Group proposes to exercise its Compelled Sale Right, the Windward Agent shall
send written notice of the exercise of its Compelled Sale Right to each of the
remaining Shareholders, setting forth the consideration to be paid by the Third
Party Purchaser and the other terms and conditions of such transaction (such
notice, the "Compelled Sale Notice").
5.2 Compelled Sale Pursuant to a Sale of Company Stock.
(a) In the event that the Windward Group determines to
exercise its Compelled Sale Right pursuant to a sale of Company Stock to the
Third Party Purchaser, then the Windward Agent may, at its option, require the
remaining Shareholders and their respective Permitted Transferees to sell all
Company Stock (along with all rights to acquire Company Stock and similar
interests) held by them to the Third Party Purchaser for the same consideration
per share (appropriately adjusted in the case of securities such as options and
warrants) and otherwise on the same terms and conditions upon which the Windward
Group sells its shares of Company Stock (along with all rights to acquire
Company Stock and similar interests). Within 10 days following the date on which
the Windward Agent delivers the Compelled Sale Notice, each of the remaining
Shareholders shall deliver to a representative of the Windward Agent designated
in the Compelled Sale Notice, certificates representing all shares of Company
Stock (along with all rights to acquire Company Stock and similar interests)
held by such Shareholder, Duly Endorsed, together with all other documents
required to be executed in connection with such transaction; provided that in
the event that the Windward Group does not anticipate consummating such
Compelled Sale within 30 days after the date of delivery of the Compelled Sale
Notice, the Windward Group shall subsequently notify the remaining Shareholders
of the anticipated date of consummation of such Compelled Sale and such
remaining Shareholders shall thereupon deliver to such designated representative
of the
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Xxxxxxxx Xxxxx, within 5 days prior to such anticipated date of consummation,
such certificates and documents.
(b) In the event that a remaining Shareholder and its
Permitted Transferees should fail to deliver such certificates and documents to
the Windward Agent, then (i) the Company shall cause the books and records of
the Company to show that such shares are bound by the provisions of this Article
V and that such shares may be transferred only to the Third Party Purchaser and
(ii) such remaining Shareholder and each of its Permitted Transferees (A) shall
not be entitled to the consideration it is to receive under this Section 5.2
until it cures such failure (provided that after curing such failure it shall be
so entitled to such consideration without interest), (B) shall for all purposes
be deemed no longer to be a shareholder of the Company and have no voting rights
with respect to such shares of Company Stock, (C) shall not be entitled to any
dividends or other distributions with respect to the shares of Company Stock
held by it, (D) shall have no other rights or privileges granted to shareholders
under this or any other agreement and (E) in the event of liquidation of the
Company, shall have rights subordinate to the rights of any equity holder with
respect to any consideration it would have received if it had complied with this
Section 5.2, if any, until it cures such failure (provided that after curing
such failure it shall be so entitled to such consideration without interest). If
any party so fails to deliver such certificates and documents as so required it
shall execute, acknowledge and deliver all such further agreements and take all
such further actions as may be reasonably necessary or desirable to give effect
to the provisions of this Section 5.2.
(c) If, within one year after the Windward Agent gives
such notice, the Windward Group has not completed the sale of all the shares of
Company Stock (along with all rights to acquire Company Stock and similar
interests) of the Shareholders in accordance herewith, the Windward Agent shall
return to each of the remaining Shareholders all certificates representing
shares of Company Stock that such Shareholder delivered for sale pursuant hereto
and that were not purchased pursuant to this Article V.
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(d) Shareholders who deliver to the Windward Agent
certificates representing shares of Company Stock in accordance with this
Section 5.2 or otherwise pursuant to a Compelled Sale shall retain full voting
control (to the extent such shares are entitled to vote) and any other rights
and incidents of ownership associated with such Shareholder's ownership of such
shares until the applicable Compelled Sale has been completed or such shares
have been returned in accordance with the provisions of this Article V and such
shares will be held by the Windward Agent for the benefit of such Shareholder
until such time.
5.3 Compelled Sale Other Than Pursuant to a Sale of
Company Stock. In the event that the Windward Group determines to exercise its
Compelled Sale Right pursuant to a merger, consolidation, stock swap, business
combination, sale of assets or similar transaction, then the Windward Agent may,
at its option, require the remaining Shareholders and their respective Permitted
Transferees to vote in favor of such transaction. In particular, in the event of
any such proposed transaction, upon any request by the Windward Agent, each of
the Shareholders shall use its respective best efforts (i) to call, or cause the
appropriate officers and directors of the Company to call, a special meeting of
shareholders of the Company to consider approval of such proposed transaction,
and (ii) vote in favor of such proposed transaction all of the shares of Company
Stock owned or held of record by such Shareholder (to the extent entitled to
vote), at each regular or special meeting of the shareholders of the Company
called for the purpose of voting on such matter, or in any written consent
executed in lieu of such a meeting of shareholders, and shall take all actions
reasonably necessary, to ensure that all necessary shareholder approvals for
such transaction are obtained.
5.4 Cooperation in Connection with Compelled Sale. Each
Shareholder shall cooperate with the Windward Agent and the other members of the
Windward Group in the event that the Windward Group determines to exercise its
Compelled Sale Right pursuant to this Article V and shall take all necessary and
appropriate actions in connection with any such Compelled Sale as may be
reasonably requested by the Windward Agent (including, without limitation,
entering into such agreements
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and instruments in connection with any such Compelled Sale as may be requested
by the Windward Agent (subject to the provisions of the next sentence)). Without
limitation to the foregoing provisions, each Shareholder hereby covenants and
agrees that, at the request of the Windward Agent, it will promptly enter into
any agreements and instruments (which may include such representations,
warranties, covenants and indemnities as may be negotiated by the Windward
Agent) with a Third Party Purchaser relating to any Compelled Sale that is
negotiated by the Windward Agent; provided, however, that, unless each of the
Majority Roll-Over Shareholders and Other Shareholders shall otherwise agree,
all such representations, warranties and indemnities shall be several and not
joint as between the Majority Roll-Over Shareholders and the Other Shareholders,
on the one hand, and the Windward Group, on the other hand, and as among each of
the Majority Roll-Over Shareholders and the Other Shareholders, and shall apply
uniformly to all the Shareholders; provided, further, with respect to the
Windward Group, liability for representations, warranties, agreements, covenants
and indemnities made jointly shall be in proportion to the proceeds received
from any such sale. The liability of any Shareholder selling in such sale shall
be limited to the proceeds thereof received by such Shareholder and no
Shareholder shall be liable for the intentional fraud (including but not limited
to fraudulent concealment) or the intentional fraudulent conduct of any other
Shareholder.
5.5 Notice of Consummation of Compelled Sale. Promptly
after the consummation of any sale transaction contemplated pursuant to Section
5.1 hereof, the Windward Agent shall give notice thereof to the remaining
Shareholders, shall remit to each of the remaining Shareholders the total
transaction proceeds to which such Shareholders are entitled pursuant thereto,
and shall furnish such other evidence of the completion and time of completion
of such sale or other disposition and the terms and conditions thereof as may be
reasonably requested by such Shareholders.
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5.6 Rights to Compel IPO Event.
(a) The Windward Agent may, on behalf of the Windward
Group, at any time, in its sole discretion, cause the Company to effect an IPO
Event (which may include, at the Windward Agent's option, the secondary sale of
shares of Company Stock then held by the Windward Group).
(b) In the event that the Windward Agent, on behalf of
the Windward Group, elects to exercise its rights pursuant to Section 5.6(a)
above, the Windward Agent shall have the right to designate all of the material
terms of such IPO Event (e.g., the underwriters, if any, to be retained by the
Company in connection therewith, the securities exchanges or national market
systems, if any, where the Company's equity would be listed for trading, the
price, timing and other terms of the proposed public offering, etc.). In
addition, in the event that the Windward Agent elects to exercise the rights of
the Windward Group contemplated pursuant to Section 5.6(a) above, then the
Windward Agent may, at its option, require the remaining Shareholders and their
respective Permitted Transferees to vote in favor of any amendment(s) to the
Articles and Bylaws which are reasonably requested by any underwriter retained
in connection with such IPO Event. In particular, in the event of any such
proposed IPO Event, upon any request by the Windward Agent, each of the
Shareholders shall use its respective best efforts (i) to call, or cause the
appropriate officers and directors of the Company to call, a special meeting of
shareholders of the Company to consider approval of such proposed amendment(s),
and (ii) vote in favor of such proposed amendment(s) all of the shares of
Company Stock owned or held of record by such Shareholder (to the extent
entitled to vote), at each regular or special meeting of the shareholders of the
Company called for the purpose of voting on such matter, or in any written
consent executed in lieu of such a meeting of shareholders, and shall take all
actions reasonably necessary, to ensure that all necessary shareholder approvals
for such amendment(s) and such IPO Event are obtained.
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ARTICLE VI
PREEMPTIVE RIGHTS
6.1 Preemptive Rights.
(a) The Company hereby grants to each Shareholder who is
a member of the Windward Group or a Majority Roll-Over Shareholder (and their
respective Permitted Transferees) (each, a "Preempting Shareholder") a right of
first refusal to purchase, with respect to the issuance by the Company of new or
additional equity securities for cash, that portion of such new or additional
equity securities as may be necessary in order to permit such Shareholder to
maintain their relative ownership of the aggregate amount of the Company's total
common equity (calculated on a Fully-Diluted Basis). Such right of first refusal
would be offered to each Preempting Shareholder (such offer, the "Preemptive
Rights Offer") pursuant to a written notice from the Company offering each
Preempting Shareholder such securities on the same terms and conditions as
offered to the other offeree(s) (such written notice, the "Preemptive Rights
Notice"). Each Preempting Shareholder would have 15 days from the date of the
Company's delivery of the Preemptive Rights Notice to notify the Company in
writing of its binding acceptance of such Preemptive Rights Offer with respect
to all (but not less than all) equity securities which are offered to such
Preempting Shareholder pursuant to such Preemptive Rights Offer.
(b) If a Preempting Shareholder accepts the Preemptive
Rights Offer in accordance with the provisions of the preceding sentence, the
Company and any such accepting party shall have 30 days in which to consummate
such binding agreement. In the event that a Preempting Shareholder does not
accept the Preemptive Rights Offer within such 15-day period in accordance with
the provisions of the preceding sentence or fails to consummate any such
purchase within such 30-day period, the Company would have the right, subject to
the provisions of Section 12.1(f) but not the obligation to issue such
securities on terms and conditions in the aggregate no more favorable to the
other offeree(s) than those set forth in the Preemptive Rights Notice, pursuant
to a definitive
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agreement to be entered into no later than 120 days after such date.
(c) Notwithstanding anything to the contrary contained
herein, no rights of first refusal pursuant to Section 6.1(a) above would apply
in the event of (i) any issuances or grants of equity securities to the
officers, directors or employees of the Company or any of its subsidiaries, (ii)
the exercise of any employee or director options or the exercise or conversion
of any options, warrants or convertible securities in existence as of the date
of the Closing or issued pursuant to or in connection with the Recapitalization
Agreement, or the issuance of any securities to the employees or directors of
the Company or its subsidiaries pursuant to any restricted stock or other
incentive plan of the Company or any of its subsidiaries or the issuance upon
the conversion or exercise of convertible securities or warrants the issuance of
which was subject to this Article VI, (iii) the issuance of equity securities,
either directly or indirectly, in connection with the acquisition, strategic
business combination or investment by the Company in any party which is not
prior to such transaction an Affiliate of either the Company or any of the
Shareholders (whether by merger, consolidation, stock swap, sale of assets or
securities, or otherwise), except for the issuance of equity securities for cash
issued in connection with the financing for any such transaction, (iv) the
issuance of securities (including any convertible securities or options and the
conversion or exercise thereof) to any third party which is at such time a
creditor of the Company, in connection with the refinancing or restructuring of
the indebtedness owed to such third party, (v) an issuance of securities by the
Company in connection with an IPO Event or any other Registration, (vi) an
issuance of securities by the Company in connection with any Compelled Sale
Right, (vii) the distribution by the Company of its securities to all of its
shareholders on a pro rata basis, (viii) any issuance of securities by the
Company pursuant to the Recapitalization Agreement or (ix) the issuance of
equity securities (including any convertible securities or options and the
conversion or exercise thereof) associated with any other form of financing.
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ARTICLE VII
PUT AND CALL RIGHTS
7.1 Put and Call Rights.
(a) Termination Without Cause. (i) If, prior to an IPO
Event, an Employee Shareholder's employment with the Company and its
subsidiaries is terminated (x) by the Company and its subsidiaries for any
reason other than Cause or other than in connection with the Retirement,
Disability or death of such Employee Shareholder, or (y) by reason of Voluntary
Termination for Good Reason, then the Company (or its designee) shall have the
right, for 90 days following the date of termination of such employment and
subject in each case to the provisions of Section 7.3 hereof, upon the approval
of at least 75% of the members of the Board, to purchase from such Employee
Shareholder and his or her Permitted Transferees, and such Employee Shareholder
and his or her Permitted Transferees shall be required to sell on one occasion
to the Company (or its designee), all Company Stock then held by such person(s)
at a price equal to (A) 90% of the Fair Market Value in the case of any Employee
Shareholder other than Xxxxxxx X. Xxxxx and (B) 100% of the Fair Market Value in
the event of a termination before the second anniversary of the date hereof and
90% of the Fair Market Value in the event of a termination on or after the
second anniversary of the date hereof in the case of Xxxxxxx X. Xxxxx; provided,
however, that in the event of such "call", if prior to 90 days after the
consummation of such call, the Company shall have entered into a definitive
agreement with respect to a Change of Control, then the Company shall pay to
such Employee Shareholder upon consummation of the Change of Control, (x) the
positive difference, if any, between (i) the price per share of Company Stock
paid to Shareholders in connection with the Change of Control and (ii) the
purchase price per share of Company Stock paid to the Employee Shareholder in
such call event, multiplied by (y) the number of shares of Company Stock sold in
such call event; provided, further, that the Company shall not be entitled to
exercise such "call" right with respect to shares of Company Stock owned by
Xxxxxxx X. Xxxxx or Xxxxx Xxxxxxxxx issued pursuant to the Merger or purchased
by Xxxxxxx X. Xxxxx or Xxxxx Xxxxxxxxx simultaneously with the
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Closing (as defined in the Recapitalization Agreement) of the Merger.
(ii) If, prior to an IPO Event, an Employee Shareholder's
employment with the Company and its subsidiaries is terminated (x) by the
Company and its subsidiaries for any reason other than Cause or other than in
connection with the Retirement, Disability or death of such Employee
Shareholder, or (y) by reason of Voluntary Termination for Good Reason, then,
subject in each case to the provisions of Section 7.3 hereof, such Employee
Shareholder and all of his or her Permitted Transferees shall have the right,
for 90 days following the date of termination of such employment, to sell to the
Company (or its designee), and the Company (or its designee) shall be required
to purchase on one occasion from such Employee Shareholder and his or her
Permitted Transferees, all shares of Company Stock held by all such person(s) at
a price equal to (A) 90% of the Fair Market Value in the case of any Employee
Shareholder other than Xxxxxxx X. Xxxxx and (B) 100% of the Fair Market Value in
the event of a termination before the second anniversary of the date hereof and
90% of the Fair Market Value in the event of a termination on or after the
second anniversary of the date hereof in the case of Xxxxxxx X. Xxxxx; provided,
however, that neither Xxxxxxx X. Xxxxx nor Xxxxx Xxxxxxxxx shall be entitled to
exercise such "put" right with respect to shares of Company Stock owned by
Xxxxxxx X. Xxxxx or Xxxxx Xxxxxxxxx issued pursuant to the Merger or purchased
by Xxxxxxx X. Xxxxx or Xxxxx Xxxxxxxxx simultaneously with the Closing of the
Merger.
(b) Termination Upon Disability, Death or Retirement. (i)
If, prior to an IPO Event, an Employee Shareholder's employment with the Company
and its subsidiaries is terminated due to the Retirement, Disability or death of
the Employee Shareholder, then the Company (or its designee) shall have the
right, for 90 days following the date of termination of such employment and
subject in each case to the provisions of Sections 7.3 hereof, to purchase from
such Employee Shareholder (or the personal representatives of such deceased
Employee Shareholder, as the case may be) and his or her Permitted Transferees,
and such Employee Shareholder (or the personal representatives of such deceased
Employee Shareholder, as the case may be) and his or her Permitted
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Transferees shall be required to sell on one occasion to the Company (or its
designee), all Company Stock then held by such person(s) at a price equal to
100% of the Fair Market Value; provided, however, that in the event of such
"call", if prior to 90 days after the consummation of such call, the Company
shall have entered into a definitive agreement with respect to a Change of
Control, then the Company shall pay to such Employee Shareholder upon
consummation of such Change of Control (x) the positive difference, if any,
between (i) the price per share of Company Stock paid to Shareholders in
connection with the Change of Control and (ii) the purchase price per share of
Company Stock paid to the Employee Shareholder in such call event, multiplied by
(y) the number of shares of Company Stock sold in such call event; provided,
further, that the Company shall not be entitled to exercise such "call" right
with respect to shares of Company Stock owned by Xxxxxxx X. Xxxxx or Xxxxx
Xxxxxxxxx issued pursuant to the Merger or purchased by Xxxxxxx X. Xxxxx or
Xxxxx Xxxxxxxxx simultaneously with the Closing of the Merger.
(ii) If, prior to an IPO Event, an Employee Shareholder's
employment with the Company and its subsidiaries is terminated due to the
Retirement, Disability or death of the Employee Shareholder, then, subject in
each case to the provisions of Section 7.3 hereof, such Employee Shareholder (or
the personal representatives of such deceased Employment Shareholder, as the
case may be) and all of his or her Permitted Transferees shall have the right,
for 90 days following the date of termination of such employment, to sell to the
Company (or its designee), and the Company (or its designee) shall be required
to purchase on one occasion from such Employee Shareholder and his or her
Permitted Transferees, all shares of Company Stock held by all such person(s) at
a price equal to 100% of the Fair Market Value; provided, however, that neither
Xxxxxxx X. Xxxxx nor Xxxxx Xxxxxxxxx shall be entitled to exercise such "put"
right with respect to shares of Company Stock owned by Xxxxxxx X. Xxxxx or Xxxxx
Xxxxxxxxx issued pursuant to the Merger or purchased by Xxxxxxx X. Xxxxx or
Xxxxx Xxxxxxxxx simultaneously with the Closing of the Merger.
(c) Voluntary Termination. If, prior to an IPO Event,
with respect to any Employee Shareholder other than
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Xxxxxxx X. Xxxxx and Xxxxx Xxxxxxxx, such Employee Shareholder's employment with
the Company and its subsidiaries is terminated by reason of Voluntary
Termination (other than Voluntary Termination for Good Reason), then the Company
(or its designee) shall have the right, for 90 days following the date of
termination of such employment and subject in each case to the provisions of
Section 7.3 hereof, to purchase from such Employee Shareholder and his or her
Permitted Transferees, and such Employee Shareholder and his or her Permitted
Transferees shall be required to sell on one occasion to the Company (or its
designee), all Company Stock then held by such person(s) at a price equal to 75%
of the Fair Market Value. For purposes of this Section 7.1(c) and Section
7.1(d), the termination of the employment of an Employee Shareholder who is a
party to an employment or consulting contract or agreement with the Company or
its subsidiaries by reason of Voluntary Termination (other than Voluntary
Termination for Good Reason) shall be deemed to be a termination for Cause and
such Shareholder shall be subject to the provisions of Section 7.1(d).
(d) Termination for Cause. (i) If, prior to an IPO Event,
(x) an Employee Shareholder's employment with the Company and its subsidiaries
is terminated for Cause (or is deemed terminated for Cause pursuant to Section
7.1(c)) or (y) an Employee Shareholder voluntarily terminates his or her
employment simultaneous with or following termination for Cause or an event
which if known to the Company at the time of such voluntary termination by the
Employee Shareholder of his or her employment would allow the Company and its
subsidiaries to terminate the Employee Shareholder's employment for Cause, then
the Company (or its designee) shall have the right, for 90 days following the
date of termination of such employment and subject in each case to the
provisions of Section 7.3 hereof, to purchase from such Employee Shareholder and
his or her Permitted Transferees, and such Employee Shareholder and his or her
Permitted Transferees shall be required to sell on one occasion to the Company
(or its designee), all shares of Company Stock then held by such person(s) at a
price equal to (A) in the case of Xxxxxxx X. Xxxxx and Xxxxx Xxxxxxxx, 75% of
the Fair Market Value and (B) in the case of all other Employee Shareholders,
the lower of cost, Book Value or 75% of the Fair Market Value.
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(ii) If, prior to an IPO Event, Xxxxxxx X. Xxxxx'x or
Xxxxx Xxxxxxxx'x employment with the Company and its subsidiaries is terminated
for Cause, then, subject in each case to the provisions of Section 7.3 hereof,
such Employee Shareholder (or the personal representatives of such deceased
Employee Shareholder, as the case may be) and all of his Permitted Transferees
shall have the right, for 90 days following the date of termination of such
employment, to sell to the Company (or its designee), and the Company (or its
designee) shall be required to purchase on one occasion from such Employee
Shareholder and his Permitted Transferees, all shares of Company Stock held by
all such person(s) at a price equal to 75% of the Fair Market Value.
(e) Notice of Exercise; Closing. (i) If the Company (or
its designee) desires to exercise its option to purchase shares of Company Stock
pursuant to its rights under this Section 7.1, the Company (or its designee)
shall, not later than the expiration date of the 90-day call period referred to
in clauses (a)(i), (b)(i), (c) and (d)(i) above (as it may be extended pursuant
to the provisions of Section 7.3 hereof), send written notice of its intention
to purchase all of the shares of Company Stock held by such Employee Shareholder
and his or her Permitted Transferees pursuant to this Section 7.1. Subject in
each case to the provisions of Section 7.3 hereof, the closing of the purchase
shall take place at the principal office of the Company on the tenth day
following the giving of such notice or as soon thereafter as practicable but in
no event later than twenty days after the giving of such notice. The purchase
price shall be paid in accordance with Section 7.4 hereof.
(ii) Each Employee Shareholder (and the Permitted
Transferees thereof) which desires to sell all of its shares of Company Stock
pursuant to its rights under this Section 7.1 shall, not later than the
expiration date of the 90-day put period referred to in clauses (a)(ii), (b)(ii)
and (d)(ii) above, send a written, irrevocable notice of its intention to sell
all of its shares of Company Stock pursuant to this Section 7.1. Subject in each
case to the provisions of Section 7.3 hereof, the closing of the purchase shall
take place at the principal office of the Company on the tenth day
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following the giving of such notice. The purchase price shall be paid in
accordance with Section 7.4 hereof.
7.2 Obligation to Sell Several. In the event that any
Employee Shareholder has transferred any shares of Company Stock to any
Permitted Transferees, the failure of any one member of such group to perform
its obligations hereunder shall not excuse or affect the obligations of any
other member thereof, and the closing of the purchases from such other members
by the Company (or its designee) shall not excuse, or constitute a waiver of the
Company's rights against, the defaulting member(s).
7.3 Deferral of Purchases.
(a) Events of Deferral. The Company (and its designee)
shall not be obligated to purchase any shares of Company Stock, at any time
pursuant to this Article VII, regardless of whether it has in the case of
Section 7.1 hereof delivered a notice of its election to purchase any such
shares, (x) to the extent that the purchase of such shares would give rise to or
result in a Violation or (y) if immediately prior to the time of purchase there
exists, or if immediately after giving effect to such purchase there would
exist, a Financing Default.
(b) Extension of Put and Call Periods. The period during
which the Company (or its designee) shall have the right or obligation to
purchase shares of Company Stock pursuant to the exercise of any "put" rights
pursuant to Section 7.1 (a "Put Right") or pursuant to the exercise of any right
to purchase shares of Company Stock pursuant Section 7.1 hereof (a "Call
Right"), shall, except with respect to the Call Right contemplated by Section
7.1, be extended in the event the Board in good faith determines that any
Violation or Financing Default exists or would result as a result of any
purchase of Company Stock pursuant to this Article VII until 90 days (in the
event of the exercise of any Put Rights), or 120 days (in the event of the
exercise of any Call Rights), as the case may be, after the Board determines
that such is no longer the case; provided that, in order to exercise such
rights, (i) the Employee Shareholder (or the personal representatives of such
deceased Employee Shareholder, as the
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case may be) exercising any Put Rights must have given notice of its intention
to exercise its Put Rights within 90 days from the date the Employee
Shareholder's termination of employment, and (ii) the Company (or its designee)
must have given notice of its intention to exercise its Call Rights within 120
days from the date of the Employee Shareholder's termination of employment.
7.4 Payment for Stock. The purchase price of shares of
Company Stock to be purchased by the Company (or its designee) pursuant to this
Article VII will be paid by (a) at the Company's option, the cancellation of
indebtedness owing from the Employee Shareholder to the Company or any of its
subsidiaries, if any, and (b) then by the Company's delivery of a bank cashier's
check or certified check for the remainder of the purchase price, if any,
against delivery of the certificates or other instruments representing the
Company Stock so purchased, Duly Endorsed; provided that, in the event (x) that
the Company does not have sufficient cash flow to finance the payment of such
purchase price referred to in clause (b) above, as determined in good faith the
Board, or (y) that the Company is not permitted, pursuant to the provisions of
either the Credit Agreement or the Subordinated Notes, or any refinancing,
refunding or amendment thereof (after seeking in good faith to obtain from the
lenders thereunder a consent reasonably acceptable to the Company with respect
to effecting a cash repurchase), to pay cash in payment of such purchase price
referred to in clause (b) above, but is permitted, pursuant thereto and pursuant
to all other credit obligations of the Company to issue an Employee Repurchase
Note, then, in any of such events, the Company (or its designee) may, at its
option, pay for such purchase price with the delivery of a junior, subordinated
promissory note bearing interest at an eight percent (8%) annual rate of
interest, due on the fifth anniversary of the date of issuance thereof (or such
later date as may be required by any financing agreement to which the Company is
a party) and substantially in the form attached hereto as Exhibit A for the
remainder of the purchase price, if any (such promissory note, the "Employee
Repurchase Note"). In the event that the Company (or its designee) intends to
deliver an Employee Repurchase Note upon the exercise of any Put Right or any
Call Right, the Company (or its designee) shall notify the intended
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recipient thereof prior to the delivery thereof. The Company (or its designee)
shall have the rights set forth in subsections (a) and (b) of the first sentence
of this Section 7.4 whether or not any Permitted Transferee(s) of the Employee
Shareholder owing amounts to the Company or its subsidiaries, if applicable, is
itself an obligor of the Company or its subsidiaries.
7.5 Miscellaneous. Notwithstanding anything to the
contrary set forth in this Agreement, (a) the Company shall be permitted to
reach any agreement with any Employee Shareholder (or his estate, as the case
may be) concerning the purchase of such Employee Shareholder's shares of Company
Stock, and (b) the Company, in its sole discretion, shall have the right, but
not the obligation, to assign any of its rights, and delegate any of its
obligations, to purchase any shares of Common Stock of any Employee Shareholder
(or his estate, as the case may be) pursuant to Article VII hereof to any
employee stock ownership plan or similar compensation or benefit plan that the
Company may have, or to any subsidiary or employee of the Company (or any
combination of the foregoing).
7.6 Proxy and Escrow of Company Stock.
(a) In the event that the Company (or its designee) does
not exercise its rights under Section 7.1 to purchase all shares of Company
Stock held by an Employee Shareholder, the Company may, at its option, require
such Employee Shareholder to execute and deliver to the Secretary irrevocable
proxies (which proxies shall be deemed to be coupled with an interest and which
shall terminate upon an IPO Event) in such form and as the Company may from time
to time prescribe, in favor of such person as the Board may from time to time
prescribe, entitling such person to vote such shares, if at all, on matters in
direct proportion to the affirmative and negative votes and abstentions of all
other voting securities then outstanding.
(b) Each Employee Shareholder agrees that he or she will,
upon termination of such Employee Shareholder's employment for any reason, or
prior to termination at the request of the Company, deliver to the Secretary, to
be held by the Secretary for the benefit of such Employee Shareholder,
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the certificates representing all shares of Company Stock of such Employee
Shareholder.
ARTICLE VIII
COMPANY COVENANTS
8.1 Financial Reports. The Company shall prepare and
distribute to each of the Shareholders audited annual financial reports of the
Company and its consolidated subsidiaries (including consolidated balance sheets
and consolidated statements of income and cash flow) as soon as reasonably
practicable after the end of the applicable financial period (but in no event
later than 90 days after the end of any fiscal year of the Company).
8.2 Access to Information. Subject to the provisions of
Section 14.1 hereof, the Company shall provide to the Shareholder Representative
(as defined in the Recapitalization Agreement) access to the books and records
of the Company and its subsidiaries during the regular business hours of the
Company and such subsidiaries, following the Company's receipt of a written
notice from the Shareholder Representative requesting such access.
8.3 FIRPTA Activities. The Company agrees that it will
not, without first obtaining the prior written consent of the Windward Agent,
take any actions that would result in the Company becoming a United States real
property holding company within the meaning of section 897(c)(2) of the Code (or
any successor statutory or regulatory provision of similar effect).
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ARTICLE IX
REGISTRATION RIGHTS
9.1 Demand Registration Rights.
(a) Upon written notice from a Shareholder entitled to
request Registration pursuant to Section 9.1(c) below (the "Requesting
Shareholder"), the Company shall use its best efforts to effect at the earliest
possible date and maintain the registration under the Securities Act of offers
and sales of Common Stock by the Requesting Shareholder (and, except as
otherwise provided herein, no offers and sales of any other securities by any
other person shall be registered with such Common Stock of the Requesting
Shareholder without the Requesting Shareholder's prior consent), its Permitted
Transferees and any underwriter with respect to such stock, in accordance with
the intended method or methods of disposition specified by the Requesting
Shareholder (including, but not limited to, an offering on a delayed or
continuous basis pursuant to Rule 415 (or any successor rule) promulgated under
the Securities Act); provided that if, after a Registration request pursuant to
this Section 9.1 has been made, the outside legal counsel of the Company has
determined in good faith that the filing of a Registration request would require
the disclosure of material information which the Company has a bona fide
business purpose for preserving as confidential, the Company shall not be
obligated to effect a Registration pursuant to this Section 9.1 until the
earlier of (A) the date upon which such material information is disclosed to the
public or ceases to be material, or (B) 45 days after such outside legal counsel
of the Company first makes such good faith determination; provided further that
no Requesting Shareholder may request any such Registration pursuant to this
Section 9.1 (x) until at least six (6) months after the anniversary of the
closing of the last Registration and sale of Company securities and (y) unless
the Registrable Securities sought to be registered has a Fair Market Value of at
least $10 million; provided, however, that the Requesting Shareholder shall not
have the right to utilize the services of an underwriter unless the Fair Market
Value of the Company Stock to be offered exceeds $25 million. The Requesting
Shareholder(s) requesting a Registration under this
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Section 9.1 may, at any time prior to the effective date of the registration
statement relating to such Registration, revoke such request by providing
written notice thereof to the Company.
(b) In connection with any Registration requested
pursuant to this Section 9.1, (i) the Requesting Shareholder shall have the
right, subject to the penultimate sentence of Section 9.1(a), to designate the
managing underwriter(s) and (ii) the Company shall take such other actions,
including, without limitation, listing such shares for trading on any securities
exchange or national market system and registering or qualifying such shares
under state securities laws, as may be reasonably requested by the Requesting
Shareholder. If the Requesting Shareholder consents to the inclusion of offers
and sales of any other securities in a Registration of Common Stock by the
Requesting Shareholder pursuant to this Section 9.1 and the underwriter(s)
retained in connection with such Registration advise the Company in writing that
such offering would be materially and adversely affected by the inclusion of
such securities, the Requesting Shareholder may in its sole discretion exclude
all or some of such securities from such offering; provided, however, that if
the Requesting Shareholder is the Windward Group, the Requesting Shareholder
shall exclude such shares on a pro rata basis among the entities comprising the
Windward Group whose shares were included in such requested Registration.
(c) After the occurrence of an IPO Event:
(i) the Windward Agent, on behalf of the Windward Group,
will have the right to request Registration of Company Stock of the
Windward Group as a Requesting Shareholder pursuant to this Section 9.1
an aggregate of four (4) times; provided that if the Windward Group had
elected, pursuant to Section 5.6 hereof, to cause the Company to effect
the IPO Event, such election will not be a request for Registration of
Company Common Stock for purposes of this Section 9.1(c); and
(ii) Xxxxxxx Xxxxxx, on behalf of the Majority Roll-Over
Shareholders upon the request of holders of a majority of the shares of
Common Stock held by Majority
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Roll-Over Shareholders at such time, will have the right to request
Registration of Company Stock of the Majority Roll-Over Shareholders
pursuant to this Section 9.1 an aggregate of two (2) times; provided,
that, prior to such time, the Windward Group shall have effected one
Registration pursuant to Section 9.1(c)(i); provided, further, that in
the event Xxxxxxx Xxxxxx, on behalf of the Majority Roll-Over
Shareholders, requests Registration pursuant to this Section
9.1(c)(ii), the Company shall notify the Windward Agent in writing of
such request and the Windward Agent may elect, in its sole discretion
(the "Windward Election"), within 15 days of receipt of such written
notice, to request Registration pursuant to Section 9.1(c)(i) in which
case the Majority Roll-Over Shareholders shall be entitled to
contribute up to 50% of the Registrable Securities included in such
Registration; however, the Windward Agent shall only be allowed to make
one Windward Election and after such election may no longer make a
Windward Election unless the requested Registration pursuant to the
Windward Election is not deemed effective (as set forth below), in
which case such election shall not be deemed to be the Windward
Election;
provided further that any Registration requested by any Requesting Shareholder
pursuant to this Section 9.1 shall not be deemed to have been effected (and,
therefore, not requested for purposes of this Section 9.1(c)), (i) unless it has
become effective, provided that a registration which does not become effective
after the Company has filed a registration statement with respect thereto solely
by reason of the refusal to proceed by the Requesting Shareholder (other than a
refusal to proceed based upon the advice of counsel relating to a matter with
respect to the Company) shall be deemed to have been effected by the Company at
the request of such Requesting Shareholder unless the Requesting Shareholder
shall have elected to pay all Registration Expenses in connection with such
registration, (ii) if after it has become effective such Registration is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court for any reason other than a
misrepresentation or an omission by the Requesting Shareholder and, as a result
thereof, the Common Stock requested to be registered cannot be
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completely distributed in accordance with the plan of distribution set forth in
the related registration statement or (iii) if the closing pursuant to the
purchase agreement or underwriting agreement entered into in connection with
such Registration does not occur. Any Registration effected pursuant to Section
9.2 shall not be deemed to have been requested by a Requesting Shareholder for
purposes of this Section 9.1(c).
9.2 Piggyback Registration Rights. If at any time
following the completion of an IPO Event the Company proposes to effect another
Registration, whether or not for sale for its own account and (subject to the
provisions of Section 9.1 above) whether or not pursuant to the exercise of any
of the demand registration rights referred to in Section 9.1 hereof, in a manner
which would permit Registration of Registrable Securities for sale to the public
under the Securities Act, it will each such time, subject to the provisions of
Sections 9.1 and 9.2(c) hereof, give prompt written notice to all Shareholders
of record of Registrable Securities of its intention to do so and of such
Shareholders' rights under this Article IX, at least 25 days prior to the
anticipated filing date of the registration statement relating to such
Registration. Such notice shall offer all such Shareholders the opportunity to
include in such registration statement such number of Registrable Securities as
each such Shareholder may request. Upon the written request of any such
Shareholder made within 10 days after the receipt of the Company's notice (which
request shall specify the number of Registrable Securities intended to be
disposed of by such Shareholder and the intended method of disposition thereof),
the Company will use its best efforts to effect the Registration under the
Securities Act and the qualification under any applicable state securities or
Blue Sky laws of all Registrable Securities which the Company has been so
requested to register by the Shareholders thereof, to the extent required to
permit the disposition (in accordance with such intended methods thereof) of the
Registrable Securities so requested to be registered; provided that:
(a) if such Registration involves an underwritten public
offering, all Shareholders requesting that their Registrable Securities be
included in the Company's
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Registration must, upon request by the underwriter(s), sell their Registrable
Securities to such underwriter(s) selected by the Company (or the Requesting
Shareholders in accordance with Section 9.1, as the case may be) on the same
terms and conditions as apply to the Company or any selling securityholder (or
on equivalent terms and conditions, in the event that such requesting
Shareholders hold different securities from those being sold by the Company or
such selling securityholder), including, without limitation, executing and
delivering such underwriting agreements or other related agreements to which the
Company or any such selling securityholder has agreed to execute and deliver;
(b) if, at any time after giving written notice of its
intention to register any securities pursuant to this Section 9.2 and prior to
the effective date of the registration statement filed in connection with such
Registration, the Company shall determine for any reason not to register such
securities, the Company shall give written notice to all Shareholders of
Registrable Securities and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such Registration
(without prejudice, however, to the rights, if any, of the Shareholders
immediately to request that such registration be effected as a Registration
under Section 9.1);
(c) if a Registration pursuant to this Section 9.2
involves an underwritten public offering, any Shareholder of Registrable
Securities requesting to be included in such Registration may elect, in writing
at least 10 days prior to the effective date of the registration statement filed
in connection with such Registration, not to register such securities in
connection with such Registration;
(d) the Company shall not be required to effect any
Registration of Common Stock under this Section 9.2 incidental to the
registration of any of its securities in connection with mergers, acquisitions,
exchange offers, subscription offers, dividend reinvestment plans or stock
option or other executive or employee benefit or compensation plans (including,
without limitation, any registration of securities on a Form S-4 or S-8
registration statement or any successor or similar forms); and
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(e) no Registration of Common Stock effected under this
Section 9.2 shall relieve the Company of its obligation to effect a Registration
of shares of Common Stock pursuant to Section 9.1.
9.3 Priority in Piggyback Registrations.
(a) If at any time following an IPO Event the Company
proposes to effect another Registration in connection with an underwritten
offering (other than any Registration pursuant to the exercise of any of the
demand registration rights referred to in Section 9.1 hereof or any demand
registration rights which specify a priority for "piggyback" registration rights
which is the same as set forth in Section 9.3(b) below (such latter form of
demand registration rights, the "Permitted Demand Registration Rights")),
including any Registration for the Company's account, and the managing
underwriter(s) advise the Company in writing that, in its or their judgement,
the number of shares of equity securities of the Company (including all shares
of Registrable Securities) which the Company, the Shareholders and any other
persons intend to include in such Registration exceeds the largest number of
securities which can be sold without having an adverse effect on such offering,
including the price at which such securities can be sold, the Company shall
include in such Registration: (i) first, all securities the Company proposes to
sell for its own account (the "Company Securities"), (ii) second, to the extent
that the number or dollar amount of the Company Securities to be offered by the
Company is less than the number of shares of securities which the Company has
been advised can be sold in such offering without having the adverse effect
referred to above, the number of Piggyback Securities requested to be sold by
any Shareholder who is a member of the Windward Group or a Majority Roll-Over
Shareholder (provided that if the number of the Company Securities and Piggyback
Securities exceeds the number of shares of securities which the Company has been
advised can be sold in such offering without having the adverse effect referred
to above, the number of such Piggyback Securities to be included in such
offering shall be allocated pro rata among all holders of such Piggyback
Securities on the basis of the relative number or amount of Piggyback Securities
each such holder has requested to be included in such Registration), and
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(iii) third, to the extent that the number of Company Securities and Piggyback
Securities held by Shareholders is less than the number of shares of securities
which the Company has been advised can be sold in such offering without having
the adverse effect referred to above, the equity securities requested to be sold
for the account of any other persons (allocated among the persons holding such
other securities in such proportions as such persons and the Company may agree).
(b) If at any time following an IPO Event the Company
proposes to effect another Registration in connection with an underwritten
offering pursuant to the exercise of any of the demand registration rights
referred to in Section 9.1 hereof or any Permitted Demand Registration Rights,
and the managing underwriter(s) advise the Company in writing that, in its or
their judgement, the number of shares of equity securities of the Company
(including all shares of Registrable Securities) which the Company, the
Shareholders and any other persons intend to include in such Registration
exceeds the largest number of securities which can be sold without having an
adverse effect on such offering, including the price at which such securities
can be sold, the Company shall include in such Registration: (i) first, all
securities which are held by the Shareholders or other persons who are
exercising the demand registration rights referred to in Section 9.1 hereof or
any Permitted Demand Registration Rights (the "Demand Securities"), (ii) second,
to the extent that the number or dollar amount of the Demand Securities to be
offered by the Company is less than the number of shares of Demand Securities
which the sellers thereof have been advised can be sold in such offering without
having the adverse effect referred to above, the number of Piggyback Securities
requested to be sold by any Shareholder who is a member of the Windward Group or
a Majority Roll-Over Shareholder (provided that if the number of the Demand
Securities and Piggyback Securities exceeds the number of shares of securities
which the Company has been advised can be sold in such offering without having
the adverse effect referred to above, the number of such Piggyback Securities to
be included in such offering shall be allocated pro rata among all holders of
such Piggyback Securities on the basis of the relative number or amount of
Piggyback Securities each such holder has requested to be included in such
Registration), and (iii) third, to the extent that the number
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of Demand Securities and Piggyback Securities held by Shareholders is less than
the number of shares of securities which the Company has been advised can be
sold in such offering without having the adverse effect referred to above, the
equity securities requested to be sold for the account of the Company and any
other persons (allocated among the Company and the persons holding such other
securities in such proportions as such persons and the Company may agree).
9.4 Expenses. The Company will pay all Registration
Expenses in connection with each Registration of Registrable Securities
requested pursuant to this Article IX (including any Registration deemed not to
be "effected" under Section 9.1(c) or not consummated as contemplated by Section
9.2(b)) and any other actions that may be taken in connection with any such
Registration as contemplated by this Article IX; provided that the Company will
not be obligated to pay any underwriting discounts or commissions or transfer
taxes, if any, relating to the sale or disposition of shares sold by persons
other than the Company pursuant to any such Registration.
9.5 Restrictions on Public Sale by Shareholders and
Company.
(a) In connection with any offering of securities of the
Company, including, without limitation, any offering contemplated by this
Article IX, each Shareholder agrees that, whether or not such Shareholder's
Registrable Securities are included in such Registration, it will consent and
agree to comply with any "hold back" restriction, relating to Common Stock or
any other securities of the Company then owned by such holder, that may be
reasonably requested by the underwriter(s) or placement or other selling
agent(s) of such offering. Without limitation to the foregoing, each Shareholder
shall, upon request by such underwriter(s) or agent(s), agree not to effect any
public sale or distribution, including any sale pursuant to Rule 144 under the
Securities Act, of any Registrable Securities, and not to effect any such public
sale or distribution of any other equity security of the Company or of any
security convertible into or exchangeable or exercisable for any equity security
of the Company (in each case, other than as part of such underwritten
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public offering) during the 30 days prior to, and during the 180 day period
beginning on, the effective date of such registration statement (except as part
of such Registration).
(b) If any Registration of Registrable Securities
pursuant to Article IX shall be in connection with an underwritten public
offering, the Company agrees, if requested by the underwriter(s) or placement or
other selling agent(s), (i) not to effect any public sale or distribution of any
of its equity securities or of any security convertible into or exchangeable or
exercisable for any equity security of the Company (other than any such sale or
distribution of such securities in connection with any merger or consolidation
by the Company or a subsidiary of the Company or in connection with the purchase
of all or substantially all the assets of any other person or in connection with
an employee stock option or other benefit plan) during the 30 days prior to, and
during the 180 day period beginning on, the effective date of such registration
statement (except as part of such Registration) and (ii) that any agreement
entered into after the date of this Agreement pursuant to which the Company
issues or agrees to issue any privately placed equity securities shall contain a
provision under which holders of such securities agree not to effect any public
sale or distribution of any such securities during the period referred to in the
foregoing clause (i) or during any of the periods referred to in Section 9.5(a)
above, including any sale pursuant to Rule 144 under the Securities Act (except
as part of such Registration, if permitted).
(c) In connection with any offering of securities of the
Company contemplated by this Article IX, the Company shall take such other
actions in connection therewith as may be necessary or appropriate, including,
without limitation, entering into customary underwriting arrangements and
agreeing to indemnify any Requesting Shareholder or any other Shareholder
selling Common Stock in such offering.
9.6 Indemnification by the Company. In the event of any
Registration of any securities of the Company under the Securities Act pursuant
to Article IX, the Company will, and it hereby does, indemnify and hold
harmless, to the full extent permitted by law, each of the Shareholders holding
any
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Registrable Securities covered by such registration statement, its
Representatives, each other person who participates as an underwriter in the
offering or sale of such securities and each other person, if any, who controls,
is controlled by or is under common control with such Shareholder or any such
underwriter within the meaning of the Securities Act, against any and all
losses, claims, damages or liabilities, joint or several, and expenses
(including any amounts paid in any settlement effected with the Company's
consent, which consent shall not be unreasonably withheld) to which such
Shareholder, any such Representative or any such underwriter or controlling
person may become subject under the Securities Act, state securities or blue sky
laws, common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) or expenses arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary, final or
summary prospectus contained therein, or any amendment or supplement thereto,
(ii) any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or (iii) any violation by the Company of any federal, state or common law rule
or regulation applicable to the Company and relating to action required of or
inaction by the Company in connection with any such Registration, and the
Company will reimburse such Shareholder and each such Representative or
underwriter and controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending such
loss, claim, liability, action or proceeding; provided that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expenses arises out of
or is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement or amendment or supplement
thereto or in any such preliminary, final or summary prospectus in reliance upon
and in conformity with written information furnished to the Company through an
instrument duly executed by such Shareholder or any such Representative or
underwriter specifically stating that it is for use in the preparation thereof.
Such indemnity shall
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remain in full force and effect regardless of any investigation made by or on
behalf of such Shareholder or any such Representative or underwriter and shall
survive the transfer of such securities by such Shareholder.
9.7 Indemnification by the Shareholders and Underwriters.
The Company may require, as a condition to including any Registrable Securities
in any registration statement filed in accordance with Article IX, that the
Company shall have received an undertaking reasonably satisfactory to it from
the Shareholders of such Registrable Securities and any underwriter, to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 9.6) the Company and its Representatives and all other
prospective sellers and their respective Representatives, and their respective
controlling persons with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary,
final or summary prospectus contained therein, or any amendment or supplement
thereto, if such statement or alleged statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to the Company or its representatives through an instrument duly executed by or
on behalf of such Shareholder or underwriter, as the case may be, specifically
stating that it is for use in the preparation of such registration statement,
preliminary, final or summary prospectus or amendment or supplement thereto, or
a document incorporated by reference into any of the foregoing. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Company or any of the Shareholders, underwriters or any of
their respective Representatives or controlling persons and shall survive the
transfer of such securities by such Shareholder; provided that no such
Shareholder shall be liable under this Section 9.7 for any amounts exceeding the
product of the purchase price per Registrable Security and the number of
Registrable Securities being sold pursuant to such registration statement or
prospectus by such Shareholder (net of any underwriters' or placement agents'
fees, discounts or commissions related thereto and net, in the case of the
members of the Windward Group, of the purchase price paid by such member
pursuant to the Recapitalization Agreement).
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9.8 Notices of Claims, Etc. Promptly after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Article IX, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, promptly give written
notice to the latter of the commencement of such action; provided, however, that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subsections of this Article IX, except to the extent that the indemnifying party
is actually materially prejudiced by such failure to give notice. In case any
such action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
will be entitled to participate in and, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, to the extent that it
may wish, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defense thereof, and the indemnifying party will not be subject to any liability
for any settlement made without its consent (which consent shall not be
unreasonably withheld). No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties
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with respect to such claim, in which event the indemnifying party shall be
obligated to pay the fees and expenses of such additional counsel or counsels.
9.9 Other Indemnification. Indemnification similar to
that specified in the preceding Sections of this Article IX (with appropriate
modifications) shall be given by the Company and each Shareholder of Registrable
Securities with respect to any required Registration or other qualification of
securities under any federal or state law or any regulation of a governmental
authority other than arising under the Securities Act.
9.10 Registration Procedure.
(a) If and whenever the Company is required to effect or
cause the Registration of any Registrable Securities pursuant to this Article
IX, the Company will, as expeditiously as possible:
(1) Prepare in cooperation with the sellers
(and, in the event of an underwritten public offering, with the
underwriter(s)), and file with the SEC, in a manner consistent with the
provisions of this Article IX, a registration statement with respect to
such Registrable Securities on any form for which the Company then
qualifies or which counsel for the Company shall deem appropriate as
the case may be, and which form shall be available for the sale of the
Registrable Securities in accordance with the intended methods of
distribution thereof, and use its best efforts to cause such
registration statement to become and remain effective; provided that
before filing with the SEC a registration statement or prospectus or
any amendments or supplements thereto, the Company will (i) furnish to
one counsel selected by the Requesting Shareholder(s), in the event of
a Registration effected pursuant to Section 9.1 hereof, or selected by
the holders of a majority of the Registrable Securities covered by such
registration statement, in the event of any other Registration, copies
of all such documents proposed to be filed, which documents will be
subject to the timely review of such counsel, and (ii) notify each
holder of Registrable
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Securities covered by such registration statement of any stop order
issued or threatened by the SEC and take all reasonable actions
required to prevent the entry of such stop order or to remove it if
entered.
(2) Prepare and file with the SEC such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective for a period of not less than 120
days or such shorter period which will terminate when all Registrable
Securities covered by such registration statement have been sold (but
not before the expiration of the 90-day period referred to in Section
4(3) of the Securities Act and Rule 174 thereunder, if applicable) and
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such
registration statement.
(3) Furnish to each holder of Registrable
Securities covered by the registration statement and to each
underwriter, if any, of such Registrable Securities, such number of
copies of such registration statement, each amendment and supplement
thereto (in each case including all exhibits thereto), and the
prospectus included in such registration statement (including each
preliminary prospectus), and such other documents, as such person may
reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities owned by such holder.
(4) Use its best efforts to register or qualify
such Registrable Securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions as
any holder, and underwriter, if any, of Registrable Securities covered
by such registration statement shall reasonably request, and do any and
all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such seller;
provided
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that the Company shall not for any such purpose, be required to (A)
qualify to do business as a foreign corporation in any jurisdiction
where, but for the requirements of this Section 9.10, it is not then so
qualified, (B) subject itself to taxation in any such jurisdiction, or
(C) take any action which would subject it to consent to general or
unlimited service or process not then so subject.
(5) Use its best efforts to cause such
Registrable Securities covered by such registration statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and
operations of the Company to enable the seller or sellers thereof to
consummate the disposition of such Registrable Securities.
(6) Immediately notify each seller of
Registrable Securities covered by such registration statement, at any
time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event which comes to
the Company's attention if as a result of such event the prospectus
included in such registration statement, as then in effect, includes
any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading
and at the request of any such seller, deliver a reasonable number of
copies of an amended or supplemental prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not include any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(7) Otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC and make available
to its security holders, in each case as soon as practicable, an
earnings statement covering a period of at least 12 months, beginning
with the first
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month after the effective date of the registration statement (as the
term "effective date" is defined in Rule 158(c) under the Securities
Act), which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act including, at the option of the Company,
Rule 158 thereunder.
(8) Use its best efforts to cause all such
Registrable Securities to be listed on such national securities
exchange or the National Association of Securities Dealers National
Market System as may be reasonably requested by the Requesting
Shareholder, and if any similar securities issued by the Company are
then listed on any securities exchanges or national market systems, to
also list all such Registrable Securities on such securities exchanges
or national market systems, and enter into such customary agreements
including a listing application and indemnification agreement in
customary form, provided that the applicable listing requirements are
satisfied, and to provide a transfer agent and registrar for such
Registrable Securities covered by such registration statement no later
than the effective date of such registration statement.
(9) Use its best efforts to obtain a "cold
comfort" letter from the independent public accountants for the Company
in customary form and covering matters of the type customarily covered
by such letters as may be reasonably requested by the Requesting
Shareholder(s), in the event of a Registration effected pursuant to
Section 9.1 hereof, or by the holders of a majority of the Registrable
Securities covered by such registration statement, in the event of any
other Registration.
(10) Execute and deliver all instruments and
documents (including in an underwritten offering an underwriting
agreement in customary form) and take such other actions and obtain
such certificates and opinions as sellers of a majority of the
Registrable Securities being sold reasonably request in order to effect
an underwritten public offering of such Registrable Securities. The
Company may require each holder of Registrable Securities as to which
any Registration is
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being effected to furnish to the Company such information regarding
such holder and the distribution of such Registrable Securities as the
Company may from time to time reasonably request in writing in
connection with effecting such offering.
(b) Each holder of Registrable Securities will, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 9.10(a)(6), forthwith discontinue disposition of the
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 9.10(a)(6), and, if
so directed by the Company, such holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in such
holder's possession, of the prospectus covering such Registrable Securities at
the time of receipt of such notice.
9.11 Rule 144. If the Company shall have filed a
registration statement pursuant to the requirements of Section 12 of the
Exchange Act or a registration statement pursuant to the requirements of the
Securities Act, the Company covenants that it will file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, if the Company is not required to
file such reports, it will, upon the request of any holder of Registrable
Securities, make publicly available other information), and it will take such
further action as any holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holder to sell
shares of Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by (i) Rule 14.4 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of any
holder of Registrable Securities, the Company will deliver to such holder a
written statement as to whether it has complied with such requirements.
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ARTICLE X
ADDITIONAL SHAREHOLDERS
10.1 Transferees of Shareholders or the Company. No
Transfers of shares of Company Stock may be made (and shall not be effective) to
a Permitted Transferee or to any Third Party, unless in each case prior to such
Transfer any such transferee agrees in writing to be bound (to the same extent
as contemplated with respect to the Shareholder (or the Permitted Transferee(s)
thereof) transferring such shares of Company Stock) by the terms and conditions
of this Agreement pursuant to a supplementary agreement reasonably satisfactory
in form and substance to the Company. The Company may, as a condition to any
original issuance of Company Stock to a person who or which is not at such time
a Shareholder, require that such person agree in writing to be bound by the
terms and conditions of this Agreement pursuant to a supplementary agreement
reasonably satisfactory in form and substance to the Company. Upon entering into
such supplementary agreement, such transferee or purchaser of Company Stock
shall be deemed to be a Shareholder for all purposes of this Agreement. The
provisions of this Section 10.1 shall not apply to any Transfer (a) made
pursuant to a public offering of Company Stock, including in connection with the
exercise by any Shareholder of its rights pursuant to Article IX hereof or in
connection with the exercise by the Windward Agent of its rights pursuant to
Section 5.6 hereof, or (b) made in connection with the exercise by the Windward
Group of a Compelled Sale Right.
10.2 New Shareholders. Each member of management or other
employee of the Company or any of its subsidiaries who becomes a holder of
Company Stock after the date hereof shall be deemed, upon the execution of a
supplementary agreement described below, to have the same rights and obligations
as a Shareholder for purposes of this Agreement. The Company shall not issue
Company Stock to any member of management or other employee of the Company or
any of its subsidiaries unless the person to whom the Company Stock is to be
issued or transferred agrees in writing to be bound by the terms and conditions
of this Agreement pursuant to a supplementary agreement reasonably satisfactory
in form and substance to the
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Company; upon entering into such agreement, such member of management or other
employee of the Company or any of its subsidiaries shall be deemed to be an
Employee Shareholder for all purposes of this Agreement. The parties hereto
acknowledge and agree that the Company Stock Option Plan (or the agreements
entered into in connection therewith) shall provide that optionholders
thereunder will be required to become parties to this Agreement upon any
exercise of Options granted thereunder, as a condition to the exercise of such
Options.
10.3 Supplemental Agreements. Each supplementary agreement
referred to in Sections 10.1 and 10.2 above shall become effective upon its
execution by the Company and the new holder of Company Stock, and it shall not
require the signatures or the consent of the other Shareholders (or their
respective Permitted Transferees). The supplementary agreement between the
Company and any new holder of Company Stock may modify some of the terms and
conditions of this Agreement as they affect the rights and obligations of the
new holder of Company Stock, provided that the modified terms and conditions
shall be no less favorable to the other Shareholders (or their respective
Permitted Transferees) than the terms and conditions set forth in this
Agreement.
ARTICLE XI
STOCK LEGENDS
11.1 Stock Certificate Legend. A copy of this Agreement
shall be filed with the Secretary of the Company and kept with the records of
the Company. Each of the Shareholders agrees that the following two legends
shall be placed on the certificates representing any shares of Company Stock
owned by them:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AND CERTAIN OTHER CONDITIONS, AS
SPECIFIED IN A SHAREHOLDERS AGREEMENT DATED AS OF JANUARY 23,
1998 (COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF
FINANCIAL PACIFIC COMPANY (TOGETHER WITH ITS SUCCESSORS, THE
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"COMPANY") AND WHICH WILL BE MAILED TO A SHAREHOLDER WITHOUT
CHARGE WITHIN FIVE DAYS AFTER RECEIPT BY THE COMPANY OF A
WRITTEN REQUEST THEREFOR FROM SUCH SHAREHOLDER). THE HOLDER OF
THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO
BE BOUND BY ALL OF THE PROVISIONS OF SUCH SHAREHOLDERS
AGREEMENT.
NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY BE MADE EXCEPT PURSUANT TO THE PROVISIONS OF SUCH
SHAREHOLDERS AGREEMENT AND, EXCEPT AS OTHERWISE PROVIDED IN
SUCH AGREEMENT, (a) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933 AND THE RULES AND
REGULATIONS IN EFFECT THEREUNDER AND ALL APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS (SUCH FEDERAL AND STATE LAWS,
THE "SECURITIES LAWS") OR (b) IF THE COMPANY HAS BEEN
FURNISHED WITH AN OPINION OF COUNSEL FOR THE SHAREHOLDER,
WHICH OPINION AND COUNSEL SHALL BE REASONABLY SATISFACTORY TO
THE COMPANY, TO THE EFFECT THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
LAWS."
All Shareholders shall be bound by the requirements of such
legends to the extent that such legends are applicable. Upon a Registration of
any shares of Company Stock, the certificate representing such shares shall be
replaced, at the expense of the Company, with certificates bearing only the
first of the two legends referred to above.
ARTICLE XII
APPOINTMENT OF AGENTS
12.1 Appointment of Agent for Windward Group Matters.
(a) Each member of the Windward Group hereby irrevocably
(subject to the provisions of paragraph (e) below) designates and appoints
Windward as its attorney-in-fact, agent and representative, to act on its behalf
and on behalf
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of its Permitted Transferees, (i) in connection with exercising any of its
rights hereunder, performing any of its duties or obligations hereunder or
enforcing any claims or rights on its behalf under this Agreement, (ii) to
investigate, contest, litigate, demand, xxx for, collect, recover and receive
all claims, debts, monies and other amounts whatsoever which may hereafter
become due to the members of the Windward Group in connection with this
Agreement (including, without limitation, instituting any action, suit or legal
proceeding to enforce any of its rights hereunder) and to make, execute and
deliver receipts, releases, settlements, adjustments and other discharges
therefor, (iii) to defend, settle, adjust, submit to arbitration or compromise
all actions, suits, accounts, reckonings, claims and demands that may be brought
against the members of the Windward Group in connection with this Agreement
(including, without limitation, defending, or settling any claims brought by the
Company, the Majority Roll-Over Shareholders, any Other Shareholders or any of
the other parties hereto in connection with this Agreement), (iv) to amend,
supplement or grant any waiver under, this Agreement or any other agreement or
document contemplated hereby, (v) to vote at any annual or special meeting of
shareholders, or to take action by written consent in lieu of such meeting with
respect to, all of the shares of Company Stock owned or held of record by such
Shareholder, but only for (1) the election of directors designated in accordance
with Section 2.2 hereof, (2) the removal of directors in accordance with
Sections 2.4 and 2.5 hereof, and (3) the election of a director to fill any
vacancy on the Board in accordance with Section 2.3 hereof, (vi) in executing,
acknowledging, verifying and/or delivering any and all agreements, certificates
and instruments in connection with taking any of the actions referred to in
clauses (i), (ii), (iii), (iv) and (v) above, and (vii) in doing, executing and
performing any other act, deed, matter or thing, of any kind or nature
whatsoever, that is necessary, appropriate or advisable to enforcing any claims
or rights under this Agreement or performing any of its duties or obligations
hereunder or otherwise representing its interests hereunder; all of the
foregoing actions may be taken in such manner as Windward determines in its sole
discretion to be appropriate, advisable or necessary.
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(b) The designation and appointment of Windward referred
to in the previous paragraph (a) shall be deemed to be irrevocable (subject to
the provisions of paragraph (c) below) and coupled with an interest and shall
survive the death, dissolution, bankruptcy, incompetency or legal disability of
any member of the Windward Group. Without limitation to the foregoing and
notwithstanding anything to the contrary contained in this Agreement, if any
payments or other amounts are received by Windward on behalf of the members of
the Windward Group from the Company, the Majority Roll-Over Shareholders, any
Other Shareholders or any of the other parties hereto in connection with this
Agreement, Windward shall, after deducting any expense reimbursement amounts
with which it may be entitled, distribute such amounts to the various members of
the Windward Group in such manner as Windward deems reasonably appropriate in
light of each member's relevant interests and the particular circumstances.
(c) Each of the parties to this Agreement acknowledges
and agrees that, notwithstanding anything in this Agreement to the contrary, the
provisions of this Section 12.1 may be amended, modified or supplemented by the
members of the Windward Group holding a majority in dollar amount of the Company
Stock held by all the members of the Windward Group (such majority in number of
members, the "Requisite Members"); provided that (i) such amendment,
modification or supplement is in writing and copies thereof are provided to the
other parties to this Agreement within a reasonable period following the date of
such amendment, modification or supplement and (ii) such amendment, modification
or supplement does not adversely affect any of the rights, duties or obligations
of any party to this Agreement (other than the members of the Windward Group).
Other than Windward (or any successor thereof appointed pursuant to Section
12.1(e) hereof) and other than any actions taken at the request or with the
consent of Windward or such successor, each of the members of the Windward Group
agrees that it will not take any action, nor institute any actions or
proceedings, against the Company, the Majority Roll-Over Shareholders, the Other
Shareholders or any of the other parties hereto (other than another member of
the Windward Group) in connection with this Agreement or with respect to any
matters referred to in this Agreement, except with the prior written consent of
the Requisite Members.
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(d) Windward (or any successor thereof appointed pursuant
to this Section 12.1(e)) may resign from the performance of all its functions
and duties as agent on behalf of the Windward Group under this Agreement at any
time by giving at least 30 Business Days' prior written notice to the other
parties to this Agreement. Such resignation shall take effect upon the
acceptance by a successor agent of its appointment pursuant to this Section
12.1(e). Upon any such notice of resignation by Windward (or any such successor
thereof), the Requisite Members shall appoint a successor agent. If a successor
agent shall not have been so appointed within said 30 Business Day period,
Windward (or any duly appointed successor thereof) shall then appoint a
successor who shall serve as agent on behalf of the Windward Group under this
Agreement until such time, if any, as the Requisite Members appoint a successor
agent as provided in this Section 12.1(e). Windward (or any successor thereof
appointed pursuant to this Section 12.1(e)) may be removed by the Requisite
Members and replaced with another person, at any time and for any reason, upon
ten (10) days prior written notice given by the Requisite Members to the agent
then in effect and all other parties to this Agreement. Upon the appointment of
a successor agent hereunder, references in this Agreement to Windward, acting in
its role as agent for the Windward Group, shall, for all purposes of this
Agreement, thereafter mean such successor agent.
(e) In the event that any member of the Windward Group
does not opt to purchase its allocable share of Company Stock pursuant to the
exercise of any preemptive rights pursuant to Article VI hereof or the right of
first refusal in Article III, or sell its allocable shares pursuant to the
"tag-along" rights in Article IV, Windward (or any successor thereof appointed
pursuant to Section 12.1(e) above) may reallocate such shares among the
remaining members of the Windward Group on a pro rata basis and, in the event
that any of the remaining members of the Windward Group does not opt to so
purchase its pro rata amount of shares of Company Stock, in such manner as it
deems reasonably appropriate in light of each member's relevant interests and
the particular circumstances.
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12.2 Appointment of Agent for the Majority Roll-Over
Shareholders and Other Shareholders. Each Majority Roll-Over Shareholder hereby
irrevocably designates and appoints Xxxxxxx Xxxxxx as its attorney-in-fact,
agent and representative, to act on its behalf and on behalf of its Permitted
Transferees in connection with exercising any of its rights, performing any of
its duties or obligations or enforcing any claims or rights on its behalf,
arising pursuant to Article IX of this Agreement.
ARTICLE XIII
TERM OF AGREEMENT
13.1 Term. This Agreement shall terminate, and be of no
further force or effect, automatically without any further action on the part of
any parties hereto, upon the earlier of (a) the ten (10) year anniversary of the
date hereof, (b) an IPO Event, (c) a sale of all or substantially all of the
assets or equity interests in the Company to a Third Party (whether by merger,
consolidation, sale of assets or securities or otherwise), (d) approval by the
Windward Agent and by those Majority Roll-Over Shareholders who hold at least a
majority of the total amount of the then-outstanding Company Stock held by
Majority Roll-Over Shareholders at such time, or (e) the Windward Group
(together with its Permitted Transferees) ceases to own at least five percent
(5%) of the total outstanding number of shares of Company Stock (calculated on a
Fully-Diluted Basis), unless such reduction is the result of any Transfers to
Permitted Transferees in accordance with this Agreement; provided that, in the
event of an IPO Event, the provisions of Articles VIII, IX, X, XI, XII, XIII and
XIV (other than Section 14.1) of this Agreement shall continue in full force and
effect until the earliest to occur of the events set forth in clauses (a), (c),
(d) or (e).
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ARTICLE XIV
MISCELLANEOUS
14.1 Confidentiality. Except with the prior written
consent of the Company (which consent may not be unreasonably withheld) and
except as otherwise required by law or the listing requirements of any
securities exchange on which the securities of such Shareholder are then traded,
each Shareholder shall, and shall cause each of its Representatives to (a) hold
in strict confidence all confidential, proprietary or other non-public
information or trade secrets relating to the Company or its subsidiaries or
their respective assets or operations (the "Confidential Information"), and (b)
not release or disclose in any manner whatsoever to any other person any such
Confidential Information; provided that (i) the foregoing provisions shall not
apply to any disclosure, to the extent reasonably required, to (A) those of such
Shareholder's auditors, attorneys and other representatives who agree to be
bound by the provisions of this Section 8.1 and (B) any other persons in
connection with any actions to be taken pursuant to Article V of this Agreement,
(ii) the foregoing provisions shall not apply where such Shareholder or any of
its Representatives is compelled to disclose such Confidential Information, by
judicial or administrative process or, in the reasonable opinion of its counsel,
by other requirements of law (provided that prior written notice of such
disclosure is given to the Company and any such disclosure is limited to only
that portion of the Confidential Information which such person is compelled to
disclose), (iii) the term "Confidential Information" shall not include
information (A) which is or becomes generally available to the public other than
as a result of disclosure of such information by such Shareholder or any of its
Representatives, (B) becomes available to the recipient of such information on a
non-confidential basis from a source which is not, to the recipient's knowledge,
bound by a confidentiality or other similar agreement, or by any other legal,
contractual or fiduciary obligation which prohibits disclosure of such
information to the other parties hereto, or (C) which can be demonstrated to
have been developed independently by the representatives of such recipient which
representatives have not had any access to any information which would otherwise
be
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deemed to be "Confidential Information" pursuant to the provisions of this
Section 8.1, and (iv) each of the Shareholders acknowledges and agrees that any
information they may receive from the Company in its reports to shareholders is
confidential, proprietary and non-public in nature.
14.2 Specific Performance. Each of the Shareholders
acknowledges and agrees that in the event of any breach of this Agreement, the
non-breaching party or parties would be irreparably harmed, no adequate remedy
at law would exist and damages would be difficult to determine. It is
accordingly agreed that (x) in the event of a breach of any provision of this
Agreement, the aggrieved party shall be entitled to specific performance of this
Agreement and to enjoin any continuing breach of this Agreement (without the
necessity of proving actual damages and without posting bond or other security),
in addition to any other remedy to which such aggrieved party may be entitled at
law or in equity, and (y) the Shareholders will waive the defense in any action
for specific performance or other equitable relief that a remedy at law would be
adequate.
14.3 Consent to Jurisdiction, Etc. Each of the parties
hereto irrevocably and unconditionally (a) agrees that all suits, actions or
other legal proceedings arising out of this Agreement or any of the transactions
contemplated hereby (a "Suit") shall be brought and adjudicated solely in the
United States District Court in the State of New York, or, if such courts will
not accept jurisdiction, in any court of competent civil jurisdiction sitting in
the State of New York, (b) submits to the exclusive jurisdiction of any such
court for the purpose of any such Suit and (c) waives and agrees not to assert
by way of motion, as a defense or otherwise in any such Suit, any claims that it
is not subject to the jurisdiction of the above courts, that such Suit is
brought in an inconvenient forum or that the venue of such Suit is improper.
Each of the parties hereto also irrevocably and unconditionally consents to the
service of any process, summons, pleadings, notices or other papers in a manner
permitted by the notice provisions of Section 14.7 hereof and agrees that any
such form of service shall be effective in connection with any such Suit;
provided that nothing contained herein shall affect the right of any party to
serve process,
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pleadings, notices or other papers in any other manner permitted by applicable
Law. Each of the parties hereto also agrees that any final and unappealable
judgment against a party hereto in any Suit shall be conclusive and binding on
such party and that such judgment may be enforced in any other jurisdiction,
either within or outside of the United States, by suit on the judgment, a
certified or exemplified copy of which shall be conclusive evidence of the fact
and amount of such judgment.
14.4 Attorneys' Fees. In any legal action or proceeding
(including, without limitation, any arbitration proceeding) brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, or because of an alleged dispute, breach or default in
connection with any of the provisions of this Agreement, the successful or
prevailing party or parties shall be entitled to recover reasonable attorneys'
fees and other costs incurred in that action or proceeding, in addition to any
other available remedy or relief to which such party or parties may be entitled.
14.5 Headings; No Third Party Beneficiaries. The headings
and captions contained herein are for convenience of reference only and shall
not control or affect the meaning or construction of any of the provisions
hereof. Except as otherwise expressly provided herein, the covenants, agreements
and other provisions contained in this Agreement are for the sole benefit of the
parties hereto and their permitted successors and assigns, and they shall not be
construed as conferring, and are not intended to confer, any rights, remedies or
other benefits hereunder on any other persons. Neither this Agreement nor any
purchase or sale of Company Stock shall create, or be construed or deemed to
create, any right to employment in favor of any Shareholder or any other person
by the Company or any subsidiary of the Company.
14.6 Entire Agreement. This Agreement constitutes the
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein, and there are no restrictions, promises,
representations, warranties, covenants or undertakings with respect to the
subject matter hereof, other than those expressly set forth or referred to
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herein. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
14.7 Notices. All notices, requests, instructions or and
other communications to be given hereunder by any party hereto to another party
hereto shall be in writing and, unless otherwise provided herein, shall be
deemed duly given if delivered personally, telecopied (which is confirmed) or
sent by registered or certified mail (postage prepaid, return receipt requested)
or by Federal Express or other similar courier service (i) to the Company or any
member of the Windward Group at the addresses set forth below, (ii) in the case
of a Permitted Transferee, to the address set forth in the written agreement
executed pursuant to Article X hereof, (iii) if to a Majority Roll-Over
Shareholder or an Other Shareholder, at the address set forth below, or (iv) in
the case of any member of management or other employee of the Company or any of
its subsidiaries who becomes a holder of Company Stock or options to acquire
Company Stock after the date hereof, to the address set forth in the written
agreement executed pursuant to Article X hereof:
If to the Company, to it at:
Financial Pacific Company
0000 Xxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, President
Fax:
With a copy to:
Xxxxxxx Coie
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
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If to Windward or any member
of the Windward Group, to:
Windward Capital Partners, L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
00xx xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx and Xxxx Xxxxxx
Fax: (000) 000-0000
With a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
If to a Majority Roll-Over Shareholder or an Other
Shareholder, to:
c/o Xxxxxxx Xxxxxx
00000 Xxxxxxxx Xxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Fax:
; provided that in the event any of the parties referred to above desires to
designate another address to which such notices should be sent to such party,
such party may designate such other address by giving notice to the other
parties hereto in writing as set forth in this Section 14.7 (provided that any
change of address shall be effective only upon receipt thereof).
14.8 Applicable Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THE PARTIES SUBJECT HERETO SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES
THEREOF.
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14.9 Severability. The invalidity or unenforceability of
any provision of this Agreement in any jurisdiction shall not affect the
validity, legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
14.10 Successors; Assigns; Transferees; Amendments;
Waivers.
(a) The provisions of this Agreement shall be binding
upon and accrue to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. Notwithstanding the foregoing, this Agreement
may not be amended, modified or supplemented, no waivers of, consents to or
departures from the provisions hereof may be given, and neither this Agreement
nor any right, remedy, obligation or liability arising hereunder or by reason
hereof shall be assignable by the Company or any Shareholder without the prior
written consent of (i) each of the Company and the Windward Agent (and their
respective Permitted Transferees) and (ii) the Majority Roll-Over Shareholders
owning a majority of the shares of Common Stock which are owned by all the
Majority Roll-Over Shareholders; provided that this Agreement may be amended,
modified or supplemented by the Company, and waivers of, consents to or
departures from the provisions hereof may be given by the Company, in order to
cure any ambiguity, defect or inconsistency in this Agreement, so long as (x)
such action does not adversely affect the rights of any Shareholder in any
material respect and (y) the Company promptly notifies each Shareholder in
accordance with the provisions of Section 14.7 hereof of such action.
(b) The rights and remedies of the Shareholders and the
Company under this Agreement shall be cumulative and not exclusive of any rights
or remedies which either would otherwise have hereunder or at law or in equity
or by statute, and no failure or delay by either party in exercising any right
or remedy shall impair any such right or remedy or operate as a waiver of such
right or remedy, nor shall any
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single or partial exercise of any power or right preclude such party's other or
further exercise or the exercise of any other power or right.
14.11 Defaults; No Circumvention of Agreement. A default by
any party to this Agreement in such party's compliance with any of the
conditions or covenants hereof or performance of any of the obligations of such
party hereunder shall not constitute a default by any other party. No
Shareholder or any of its Permitted Transferees may do indirectly, through the
sale of capital stock of its or their subsidiaries or otherwise, that which is
not permitted by this Agreement (including, without limitation, the provisions
of Articles III, IV and V hereof).
14.12 Further Assurances. Each party hereto or person
subject hereto shall do and perform or cause to be done and performed all such
further acts and things and shall execute and deliver all such other agreements,
certificates, instruments and documents as any other party hereto or person
subject hereto may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
14.13 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same Agreement.
14.14 Recapitalization, etc. Except as otherwise provided
in this Agreement, the provisions of this Agreement shall apply to any and all
shares of capital stock or other securities of the Company or any successor or
assign of the Company (whether by merger, consolidation, sale of assets, or
otherwise) which may be issued in respect of, in exchange for, or in
substitution of, any shares of Company Stock by reason of any reorganization,
any recapitalization, reclassification, merger, consolidation, partial or
complete liquidation, sale of assets, spin-off, stock dividend, split,
distribution to shareholders or combination of the shares of Company Stock or
any other change in the Company's capital structure, in order to preserve fairly
and equitably as far as practicable, the original rights and obligations of the
parties hereto under this Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed by each of
the parties hereto as of the date first written above.
FINANCIAL PACIFIC COMPANY
By: /s/ XXXXXXX X. XXXXX
----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
WINDWARD CAPITAL ASSOCIATES, L.P.
By: Windward Capital
Associates, Inc.,
its general partner
By: /s/ XXXXX XXXXX XXXXXXXXX
----------------------------------
Name: Xxxxx Xxxxx Xxxxxxxxx
Title: Authorized Signatory
WINDWARD/BADGER FPC, L.L.C.
By: Windward Capital Associates,
Inc., its manager
By: /s/ XXXXX XXXXX XXXXXXXXX
----------------------------------
Name: Xxxxx Xxxxx Xxxxxxxxx
Title: Authorized Signatory
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WINDWARD/MERBAN, L.P.
By: Windward Capital
Associates, Inc.,
its general partner
By: /s/ XXXXX XXXXX XXXXXXXXX
----------------------------------
Name: Xxxxx Xxxxx Xxxxxxxxx
Title: Authorized Signatory
WINDWARD/MERCHANT, L.P.
By: Windward Capital
Associates, Inc.,
its general partner
By: /s/ XXXXX XXXXX XXXXXXXXX
----------------------------------
Name: Xxxxx Xxxxx Xxxxxxxxx
Title: Authorized Signatory
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