SHAREHOLDERS’ AGREEMENT dated as of March 8, 2005 among SMART MODULAR TECHNOLOGIES (WWH), INC., MODULAR, L.L.C. and CERTAIN OTHER PERSONS NAMED HEREIN
Exhibit 4.8
SHAREHOLDERS’ AGREEMENT
dated as of
March 8, 2005
among
SMART MODULAR TECHNOLOGIES (WWH), INC.,
MODULAR, L.L.C.
and
CERTAIN OTHER PERSONS NAMED HEREIN
Table of Contents
Page | ||||
ARTICLE 1 |
||||
Definitions |
||||
Section 1.01. Definitions |
1 | |||
ARTICLE 2 |
||||
Corporate Governance |
||||
Section 2.01. Composition of the Board |
4 | |||
Section 2.02. Removal |
5 | |||
Section 2.03. Vacancies |
6 | |||
Section 2.04. Action by the Board |
6 | |||
Section 2.05. Conflicting Charter Provisions |
8 | |||
Section 2.06. Subsidiary Governance |
8 | |||
ARTICLE 3 |
||||
Restrictions
on Transfer |
||||
Section 3.01. General |
9 | |||
Section 3.02. Legends |
9 | |||
Section 3.03. Restrictions on Transfer |
10 | |||
Section 3.04. Permitted Transferees |
10 | |||
ARTICLE 4 |
||||
Certain
Covenants and Agreements |
||||
Section 4.01. Information |
10 | |||
Section 4.02. Reports |
11 | |||
Section 4.03. Cooperation in Refinancing |
11 | |||
Section 4.04. Appointment of Shareholder Representative |
12 | |||
ARTICLE 5 |
||||
Miscellaneous |
||||
Section 5.01. Entire Agreement |
12 | |||
Section 5.02. Binding Effect; Benefit |
12 | |||
Section 5.03. Assignability |
12 | |||
Section 5.04. Waiver; Amendment; Termination |
13 | |||
Section 5.05. Notices |
13 | |||
Section 5.06. Fees and Expenses |
13 | |||
Section 5.07. Headings |
14 | |||
Section 5.08. Counterparts |
14 | |||
Section 5.09. Applicable Law |
14 | |||
Section 5.10. Waiver of Jury Trial |
14 |
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Section 5.11. Specific Enforcement |
14 | |||
Section 5.12. Consent to Jurisdiction |
14 | |||
Section 5.13. Severability |
15 | |||
Section 5.14. Recapitalization |
15 | |||
Section 5.15. No Inconsistent Agreements |
15 |
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SHAREHOLDERS’ AGREEMENT
SHAREHOLDERS’ AGREEMENT dated as of March 8, 2005 (the “Agreement”) among SMART Modular
Technologies (WWH), Inc., an exempted company organized under the laws of the Cayman Islands (the
“Company”), Modular, L.L.C., a Delaware limited liability company (“Modular”), and such additional
persons as may sign joinder agreements to this Agreement.
W I T N E S S E T H :
WHEREAS, Modular is currently the owner of all of the Ordinary Shares of the Company;
WHEREAS, the parties hereto desire to enter into this Agreement to govern certain of their
rights, duties and obligations;
NOW, THEREFORE, in consideration of the covenants and agreements contained herein, the parties
hereto agree as follows:
ARTICLE 1
Definitions
Definitions
Section 1.01. Definitions. (a) The following terms, as used herein, have the following meanings:
“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person,
provided that no securityholder of the Company shall be deemed an Affiliate of
any other securityholder solely by reason of any investment in the Company. For
the purpose of this definition, the term “control” (including with correlative
meanings, the terms “controlling,” “controlled by” and “under common control with”), as
used with respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
“Aggregate Ownership” means, with respect to any Shareholder or group of
Shareholders, and with respect to any class of Company Securities, the total amount of
such class of Company Securities “beneficially owned” (as such term is defined in Rule 13d-3 of the Exchange Act) (without duplication) by such Shareholder or group of
Shareholders as of the date of such calculation, calculated on a Fully Diluted basis.
“Aggregate Ownership Percentage” means, with respect to any Shareholder (or group of Shareholders), and with respect to any class of Company
Securities, the percentage equal to such Shareholder’s (or group of Shareholders’)
Aggregate Ownership of such class of Company Securities divided by all outstanding
Ordinary Shares, calculated on a Fully Diluted basis.
“Board” means the board of directors of the Company.
“Business Day” means any day except a Saturday, Sunday or other day on which
commercial banks in San Francisco or New York City are authorized by law to close.
“Charter” means the Amended and Restated Memorandum and Articles of Association of the
Company, as the same may be amended from time to time.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Company Securities” means (i) the Ordinary Shares, (ii) securities convertible into or
exchangeable for Ordinary Shares, and (iii) options, warrants or other rights to acquire Ordinary
Shares or any other equity or equity-linked security issued by the Company.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Five Percent Shareholder” means a Shareholder whose Aggregate Ownership Percentage is 5%
or more.
“Foreign Subsidiary” means, with respect to the Company, any entity organized under the laws
of a jurisdiction other than a State of the United States of America of which securities or other
ownership interests having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or indirectly owned by the
Company.
“Fully Diluted” means, with respect to any class of Company Securities, all
outstanding shares and all shares issuable in respect of securities convertible into or
exchangeable for such shares, all stock appreciation rights, options, warrants and other
rights to purchase or subscribe for such Company Securities or securities convertible into
or exchangeable for such Company Securities; provided that if any of the
foregoing stock appreciation rights, options, warrants or other rights to purchase or
subscribe for such Company Securities are subject to vesting, the Company Securities
subject to vesting shall be included in the definition of “Fully Diluted” only upon and to
the extent of such vesting.
“Insignificant Subsidiary” means a subsidiary of the Company that does not meet any of the
conditions contained in the definition of “significant
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subsidiary” as defined in Rule 1-02(w) of Regulation S-X promulgated under the Securities Act.
“Investment” means, with respect to any Person, (i) any direct or indirect purchase or other
acquisition by such Person of any notes, obligations, instruments, stock, securities or ownership
interest (including any partnership, limited liability and joint venture interest) of any other
Person and (ii) any capital contribution by such Person to any other Person.
“LLC Agreement” means the Second Amended and Restated Limited Liability Company Agreement,
dated as of June 15, 2004, of Modular.
“Ordinary Shares” means the Ordinary Shares, par value $0.000166667 per share, of the Company.
“Permitted Transferee” means any Person so designated by Modular in its sole discretion.
“Person” means an individual, corporation, limited liability company,
partnership, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
“Registration Rights Agreement” means the Registration Rights Agreement dated
as of March 8, 2005 between the Company and Modular.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Shareholder” means at any time, any Person (other than the Company) who shall then be a party
to or bound by this Agreement, so long as such Person shall “beneficially own” (as such term is
defined in Rule 13d-3 of the Exchange Act) any Company Securities.
“Subsidiary” means, with respect to any Person, any entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or indirectly owned by such
Person.
“Third Party” means a prospective purchaser(s) (other than a Permitted Transferee or
other Affiliate of a Shareholder) of Company Securities in an
arm’s-length transaction
from such Shareholder.
“Transfer” means, with respect to any Company Security, (i) when used as a verb, to sell,
assign, dispose of, exchange, pledge, encumber, hypothecate or otherwise transfer such security or
any participation or interest therein, whether directly or indirectly, or agree or commit to do any
of the foregoing and (ii) when used as a noun, a direct or indirect sale, assignment, disposition,
exchange,
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pledge, encumbrance, hypothecation or other transfer of such security or any participation or
interest therein or any agreement or commitment to do any of the foregoing.
(b) The term “Modular,” to the extent Modular shall have transferred any of its Company
Securities, shall mean Modular and such transferee or transferees, taken together.
(c) Each of the following terms is defined in the Section set forth opposite
such term:
Term | Section | |||
Additional Directors
|
2.01 | |||
Agreement
|
Preamble | |||
Cause
|
2.02 | |||
Company
|
Preamble | |||
Modular
|
Preamble | |||
Modular Shareholder Representative
|
4.04 | |||
Replacement Nominee
|
2.03 | (a) | ||
Shareholder
|
5.03 |
ARTICLE 2
Corporate Governance
Corporate Governance
Section 2.01. Composition of the Board. (a) The Board shall consist of
nine directors, nominated as follows: (i) up to five directors will be nominated by
Modular; (ii) one director will be the Chief Executive Officer or President of the Company
for so long as he or she is employed by the Company; and (iii) three directors will be
nominated by the Chief Executive Officer or President and Modular together, provided
that, to the extent required under the Exchange Act rules and the rules of the
securities exchange or quotation system on which the Ordinary Shares are traded, each such
director nominated pursuant to this clause (iii) shall (x) not be an “Affiliate” or an
“Associate” (as such terms are used within the meaning of Rule 12b-2 under the Exchange
Act) of Modular and (y) be an “independent director,” as such term is defined by the rules
of the securities exchange or quotation system on which the Ordinary Shares are traded. If
the number of directors that comprise the entire Board is increased in accordance with
Section 2.04 hereof, the number of directors added to the Board (the “Additional
Directors”) must be a multiple of two, and Modular shall continue to be entitled to
nominate a majority of the Board as provided in this Section 2.01.
(b) Each Shareholder entitled to vote for the election of directors to the Board
agrees that it will vote its Ordinary Shares or execute a proxy or written consent, as the
case may be, and take all other necessary action (including causing
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the Company to call a special meeting of Shareholders) in order to ensure that the composition of
the Board is as set forth in this Section 2.01.
(c) The right of Modular to nominate a majority of the members of the Board pursuant to this
Article 2 shall:
(i) at such time as Modular’s Aggregate Ownership Percentage is less than
25%, be reduced to the right to nominate [one-fourth] of the members of the
Board, rounded up to the nearest whole number of members of the Board if such
fraction is not a whole number;
(ii) at such time as Modular’s Aggregate Ownership Percentage is less than
20%, be reduced to the right to nominate [one-fifth] of the members of the
Board, rounded up to the nearest whole number of members of the Board if such
fraction is not a whole number;
(iii) at such time as Modular’s Aggregate Ownership Percentage is less than
10%, be reduced to the right to nominate [one-tenth] of the members of the
Board, rounded up to the nearest whole number of members of the Board if such
fraction is not a whole number; and
(iv) terminate at such time as Modular’s Aggregate Ownership
Percentage is less than 5%.
The obligations imposed on the Shareholders to give effect to the rights to nominate
directors set forth in this Section 2.01 shall terminate as to any Person when such Person’s right
to nominate a director is terminated.
(d) The Company agrees to take all other necessary actions (including calling a special
meeting of the Board and/or Shareholders) to ensure that the nominations to the Board are as
contemplated by this Section 2.01.
Section 2.02. Removal. Each Shareholder agrees that if at any time it is
then entitled to vote for the removal of directors from the Board, it will not vote any of
its Ordinary Shares in favor of the removal of any director who shall have been nominated
in accordance with Section 2.01 hereof, unless such removal shall be for Cause or the
Person or Persons entitled to nominate such director shall have consented to such removal
in writing; provided that if the Person or Persons entitled to nominate any
director pursuant to Section 2.01 hereof shall request in writing the removal, with or
without Cause, of such director, such Shareholder shall vote its Ordinary Shares in favor
of such removal. Removal for “Cause” shall mean removal of a director because of such
director’s (a) willful and continued failure substantially to perform his or her statutory
or fiduciary duties to the Company in his or her established position, (b) participation in
a fraud, act of dishonesty or other misconduct that is injurious, monetarily or otherwise,
to the Company or any of its Subsidiaries, (c) having been charged with or pleading
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guilty to a felony or a crime involving fraud or dishonesty, (d) violation of any state or
federal law that has an adverse effect on the Company or (e) abuse of illegal drugs or other
controlled substances or habitual intoxication.
Section 2.03. Vacancies. If, as a result of death, disability, retirement,
resignation, removal (with or without Cause) or otherwise, there shall exist or occur any vacancy
on the Board:
(a) the Person or Persons entitled under Section 2.01 hereof to nominate such
director whose death, disability, retirement, resignation or removal resulted in such
vacancy may, subject to the provisions of Section 2.01 hereof, nominate another individual
(the “Replacement Nominee”) to fill such vacancy and serve as a director on the Board; and
(b) subject to Section 2.01 hereof, each Shareholder then entitled to vote for the
election of the Replacement Nominee as a director of the Company agrees that it will vote
its Ordinary Shares, or execute a proxy or written consent, as the case may be, in order
to ensure that the Replacement Nominee be elected to the Board.
Section 2.04. Action by the Board. (a) A quorum of the Board shall consist of a
majority of the total number of directors, which such majority shall include a majority of the
nominees of Modular ; provided that if Modular has not nominated its independent directors
pursuant to Section 2.01(a), such majority will include all directors nominated by Modular.
(b) All actions of the Board shall require (i) the affirmative vote of at least a majority of
the directors present at a duly convened meeting of the Board at which a quorum is present or (ii)
the unanimous written consent of the Board; provided that if there is a vacancy on the
Board and an individual has been nominated to fill such vacancy, the first order of business shall
be to fill such vacancy.
(c) The Board may create executive, compensation, audit, nominating and corporate
governance and such other committees as it may determine. During such time as Modular’s
Aggregate Ownership Percentage is greater than or equal to 25%, Modular shall be entitled
to majority representation on any committee created by the Board, which majority
representation shall consist of any director or directors designated by Modular to serve
on such committee; provided that if the rules or regulations of the SEC or the
securities exchange or quotation system on which the Ordinary Shares are traded require
any committee to consist of one or more “independent directors,” as such term is defined
by the rules of the securities exchange or quotation system on which the Ordinary Shares
are traded, the directors designated to serve on such committee by Modular shall be
“independent directors.” Modular’s entitlement to majority representation on any committee
created by the Board shall:
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(i) at such time as Modular’s Aggregate Ownership Percentage is less than
25%, be reduced to an entitlement to designate one-fourth of the members of each
such committee, rounded up to the nearest whole number of members if such
fraction is not a whole number;
(ii) at such time as Modular’s Aggregate Ownership Percentage is less than
20%, be reduced to an entitlement to designate one-fifth of the members of each
such committee, rounded up to the nearest whole number of members if such
fraction is not a whole number;
(iii) at such time as Modular’s Aggregate Ownership Percentage is less than
10%, be reduced to an entitlement to designate one-tenth of the members of each
such committee, rounded up to the nearest whole number of members if such
fraction is not a whole number; and
(iv) terminate at such time as Modular’s Aggregate Ownership Percentage is
less than 5%.
(d) At such time as Modular’s Aggregate Ownership Percentage is greater than or equal
to 25%, no action by the Company (including but not limited to any action by the Board or
any committee thereof) shall be taken with respect to any of the following matters without
the prior written consent of Modular and the affirmative approval of the Board:
(i) the declaration of any dividend on or the making of any distribution with respect to, or
the recapitalization, reclassification, redemption, repurchase or other acquisition of any
securities of the Company or any Subsidiary, except as expressly permitted by this Agreement;
(ii) any incurrence, refinancing, alteration of material terms or prepayment
by the Company or any Subsidiary of indebtedness for borrowed money in excess of
$10,000,000 in the aggregate (or the guaranty by the Company or any Subsidiary of
any such indebtedness);
(iii) any approval of the annual business plan, budget and long-term
strategic plan of the Company or any Subsidiary;
(iv) any modification of the long-term business strategy or scope of the
business of the Company or any Subsidiary or any material customer
relationships thereof;
(v) (A) any merger or consolidation of the Company with or into any
Person, other than a wholly owned Subsidiary, or of any Subsidiary with or into
any Person other than the Company or any other wholly owned Subsidiary, or (B)
any sale of the Company or any
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Subsidiary or any significant operations of the Company or any Subsidiary or any
joint venture transaction, acquisition or disposition of assets, business,
operations or securities by the Company or any Subsidiary (in a single transaction
or a series of related transactions) having a value in each case in this clause
(B) in excess of $10,000,000;
(vi) any liquidation, dissolution, commencement of bankruptcy, liquidation or
similar proceedings with respect to the Company or any Subsidiary;
(vii) the issuance of any security by the Company or any Subsidiary (not
including issuances of such securities in connection with employee or stock
option plans previously approved by the Board), other than as specifically
contemplated by this Agreement;
(viii) any determination of compensation, benefits, perquisites
and other incentives for the Chief Executive Officer, President or the Chief
Financial Officer of the Company or its Subsidiaries and the approval or
amendment of any plans or contracts in connection therewith, and any approval or
amendment to any equity or other compensation or benefit plans for employees of
the Company or its Subsidiaries;
(ix) any appointment or dismissal of any of the Chairman of the Board, Chief
Executive Officer, President, Chief Financial Officer or any other executive
officer in any similar capacity of the Company or any Subsidiary;
(x) any amendment to this Agreement, any exercise or waiver of the
Company’s rights under this Agreement, any amendment to the Charter or Bylaws or
any adoption of or amendment to the certificate of incorporation or bylaws of
any Subsidiary; or
(xi) any increase or decrease to the number of Directors that comprise the entire Board of the
Company or any Subsidiary.
Section 2.05. Conflicting Charter Provisions. Each Shareholder shall vote
its Ordinary Shares or execute proxies or written consents, as the case may be, and shall
take all other actions necessary to ensure that the Company’s Charter (i) facilitates, and
does not at any time conflict with, any provision of this Agreement and (ii) permits each
Shareholder to receive the benefits to which each such Shareholder is entitled under this
Agreement.
Section 2.06. Subsidiary Governance. The Company and each Shareholder agree that (i)
the board of directors or other persons performing similar functions of each Subsidiary of the
Company (other than any Foreign Subsidiary and any Insignificant Subsidiary) shall be comprised of
the individuals who are serving as directors on the Board in accordance with Section 2.01 hereof
8
and (ii) the board of directors or other persons performing similar functions of any
Subsidiary of the Company shall be subject to all the provisions of this Article 2,
including paragraph Section 2.04(d) of Section 2.04 hereof. Each Shareholder agrees to
vote its Ordinary Shares and to cause its representatives on the Board, subject to their
fiduciary duties, to vote and take other appropriate action to effectuate the agreements
in this Section 2.06 in respect of any Subsidiary of the Company.
ARTICLE 3
Restrictions on Transfer
Restrictions on Transfer
Section 3.01.
General. (a) Each Shareholder understands and agrees that the
Company Securities acquired prior to the date of this Agreement have not been registered under
the Securities Act and are restricted securities under such Act and the rules and regulations
promulgated thereunder. Each Shareholder agrees that it will not Transfer any Company Securities
(or solicit any offers in respect of any Transfer of any Company Securities), except in compliance
with the Securities Act, any applicable foreign or state securities or “blue sky” laws, and the
terms and conditions of this Agreement.
(b) Any attempt to Transfer any Company Securities not in compliance with this
Agreement shall be null and void and the Company shall not, and shall cause any transfer
agent not to, give any effect in the Company’s stock records to such attempted Transfer.
Section 3.02. Legends. (a) In addition to any other legend that may be
required, each certificate for Company Securities that is issued to any Shareholder shall
bear a legend in substantially the following form:
“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
FOREIGN OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH.
THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
SHAREHOLDERS’ AGREEMENT DATED AS OF MARCH 8, 2005, COPIES OF WHICH MAY BE OBTAINED UPON REQUEST
FROM SMART MODULAR TECHNOLOGIES (WWH), INC. OR ANY SUCCESSOR THERETO.”
(b) If
any Company Securities shall cease to be Registrable Securities (as defined in
the Registration Rights Agreement) under clause (i) or clause (ii) of the definition
thereof, the Company, upon the written request of the holder thereof, shall issue to such
holder a new certificate evidencing such shares without the first sentence of the legend
required by Section 3.02(a) hereof endorsed thereon. If any Company Securities cease to be
subject to any and all restrictions on Transfer set forth in this Agreement, the Company,
upon the
9
written request of the holder thereof, shall issue to such holder a new certificate evidencing
such Company Securities without the second sentence of the legend required by Section 3.02(a)
hereof endorsed thereon.
Section 3.03. Restrictions on Transfer. Except with the prior written consent of the
Company and Modular, no Shareholder shall Transfer any of its Company Securities.
Section 3.04. Permitted Transferees. Notwithstanding anything in this Agreement to
the contrary, Modular may at any time Transfer any or all of its Company Securities to one or more
Permitted Transferees without the consent of the Company or any other Shareholder or group of
Shareholders; provided that (a) such Permitted Transferee shall, if so required by
Modular, agree in writing to be bound by the terms of this Agreement in
the form of Exhibit A attached hereto, and (b) the Transfer to such Permitted Transferee is in
compliance with the Securities Act and any other applicable securities or “blue sky” laws.
ARTICLE 4
Certain Covenants and Agreements
Certain Covenants and Agreements
Section 4.01. Information. The Company agrees to furnish Modular, for so long
as Modular owns any Company Securities:
(a) as soon as practicable and in any event no later than 20 days after the end of each fiscal
month, a management report for such month covering the items set forth in Exhibit B hereto;
(b) as soon as practicable and, in any event, within 45 days after the end of each of the
first three fiscal quarters, the unaudited consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter and the related unaudited statement of operations and
cash flow for such quarter and for the portion of the fiscal year then ended, in each case prepared
in accordance with GAAP;
(c) as soon as practicable and, in any event, within 90 days after the end of each
fiscal year, (i) the audited consolidated balance sheet of the Company and its
Subsidiaries as at the end of such fiscal year and the related audited statement of
operations and cash flow for such fiscal year, and for the portion of the fiscal year then
ended, in each case prepared in accordance with GAAP and certified by KPMG or another firm
of independent public accountants of nationally recognized standing, together with a
comparison of the figures in such financial statements with the figures for the previous
fiscal year and the figures in the Company’s annual operating budget, (ii) any management
letters or other correspondence from such accountants and (iii) the Company’s annual
operating budget for the coming fiscal year,
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(d) promptly following the preparation thereof, a copy of any revisions to the annual
operating budget delivered pursuant to clause (c) above,
(e) promptly upon their becoming available, copies of (i) all financial statements, reports,
notices and proxy statements sent or made generally available by the Company to any of its security
holders, (ii) all regular and periodic reports and all registration statements and prospectuses
filed by the Company with any securities exchange or with the SEC and (iii) all press releases and
other statements made generally available by the Company to the public,
(f) as soon as practicable and, in any event, within five Business Days after any officer of
the Company obtains knowledge thereof, notice (with a description in
reasonable detail, and stating the action that the Company is taking or proposes to take with
respect thereto) of (i) the commencement of any material litigation, investigation or other
proceeding to which the Company or any of its Subsidiaries is a party before any court or
arbitrator or any governmental body, agency or official or (ii) the existence of any material
default or breach under this Agreement or any other material contract or agreement to which the
Company or any of its Subsidiaries is a party, and
(g) as promptly as reasonably practicable, such other information with respect to the Company
or any of its Subsidiaries as may reasonably be requested by Modular.
The Company’s obligation to provide information pursuant to Section 4.01(a) and (b) and
Section 4.02 shall be deemed satisfied upon the timely filing of such information with the SEC.
Section 4.02. Reports. The Company will furnish the Shareholders with the
quarterly and annual financial reports that the Company is required to file with the SEC
pursuant to Section 13 or Section 15(d) of the Exchange Act or, in the event the Company
is not required to file such reports, quarterly and annual reports containing the same
information as would otherwise be required in such reports. The Company’s obligation to
provide information pursuant to this Section 4.01 shall be deemed satisfied upon the
timely filing of such information with the SEC.
Section 4.03. Cooperation in Refinancing. Each Shareholder agrees to
cooperate to the extent commercially reasonable with the Company and take such steps as
the Board reasonably deems appropriate in any financing of debt of the Company and any of
its Subsidiaries, including executing such documents as the Board reasonably determines
should be filed with any governmental agency and conducting presentations to potential
investors and rating agencies. This Section 4.03 shall not be construed to require any
Shareholder to contribute any additional capital to the Company.
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Section 4.04. Appointment of Shareholder Representative. Modular and its
Permitted Transferees, if any, irrevocably appoint the Modular Shareholder Representative
its agent and true and lawful attorney-in-fact, with full power of substitution, to take
the actions, receive notices and exercise the powers delegated to the Modular Shareholder
Representative under this Agreement in the name of each such Shareholder, together with
such actions and powers as are reasonably incidental thereto. Notwithstanding the
foregoing, the Modular Shareholder Representative shall not take any action or exercise
any power to the extent that the holders of the majority of the Fully Diluted Ordinary
Shares held by Modular and its Permitted Transferees shall have voted to prevent the
Shareholder Representative from taking such action or exercising such power. “Modular
Shareholder Representative” means Modular, as agent for Modular and its Permitted
Transferees. The entity appointed as the Modular Shareholder Representative may be replaced at any time and from time to time by the vote of a
majority of the Fully Diluted Ordinary Shares held by Modular and its Permitted
Transferees. Modular shall notify the Company of such appointment as promptly as
practicable after such appointment.
ARTICLE 5
Miscellaneous
Miscellaneous
Section 5.01. Entire Agreement. This Agreement, the Registration
Rights Agreement, and the Charter constitute the entire agreement among the parties hereto
and supersede all prior and contemporaneous agreements and understandings, both oral and
written, among the parties hereto with respect to the subject matter hereof and thereof.
Section 5.02.
Binding Effect; Benefit. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, successors, legal
representatives and permitted assigns. Nothing in this Agreement, expressed or implied, is intended
to confer on any Person other than the parties hereto, and their respective heirs, successors,
legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
Section 5.03. Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be assignable by any party
hereto pursuant to any Transfer of Company Securities or otherwise, except that, subject to Section
3.04 hereof, any Permitted Transferee acquiring Company Securities and any Person acquiring Company
Securities who is required by the terms of this Agreement or any employment agreement or stock
purchase, option, stock option or other compensation plan of the Company or any Subsidiary to
become a party hereto shall (unless already bound hereby) execute and deliver to the Company an
agreement to be bound by this Agreement in the form of Exhibit A hereto and shall thenceforth be a
“Shareholder.” Any
12
Shareholder who ceases to own beneficially any Company Securities shall cease to be bound by the
terms hereof (other than Sections 5.09, 5.10, 5.11 and 5.12).
Section 5.04. Waiver; Amendment; Termination. (a) No provision of this
Agreement may be waived except by an instrument in writing executed by the party against
whom the waiver is to be effective. No provision of this Agreement may be amended or
otherwise modified except by an instrument in writing executed by the Company with
approval of the Board and Shareholders (including Modular) holding at least 50% of the
outstanding Ordinary Shares held by the parties hereto at the time of such proposed
amendment or modification.
(b) Any amendment or modification of any provision of this Agreement that
would adversely affect Modular may be effected only with the consent of Modular.
Section 5.05. Notices. All notices, requests and other communications to any party
shall be in writing (including facsimile transmissions) and shall be given,
if to the Company to:
SMART Modular Technologies (WWH), Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: President
Fax: (000) 000-0000
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: President
Fax: (000) 000-0000
if to Modular in accordance with Section 12.10 of the LLC Agreement.
All notices, requests and other communications shall be deemed received on the date
of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt
and such day is a Business Day in the place of receipt. Otherwise, any such notice,
request or communication shall be deemed not to have been received until the next
succeeding Business Day in the place of receipt. Any notice, request or other written
communication sent by facsimile transmission shall be confirmed by certified mail, return
receipt requested, posted within one Business Day, or by personal delivery, whether
courier or otherwise, made within two Business Days after the date of such facsimile
transmissions.
Any Person who becomes a Shareholder shall provide its address and fax number to the Company,
which shall promptly provide such information to each other Shareholder.
Section 5.06. Fees and Expenses. The Company shall pay all out-of-pocket costs and
expenses of the Shareholders, including the fees and expenses of counsel, incurred in connection
with the preparation of this Agreement, or any
13
amendment or waiver hereof, and the transactions contemplated hereby and all matters related
hereto.
Section 5.07. Headings. The headings contained in this Agreement are for convenience
only and shall not affect the meaning or interpretation of this Agreement.
Section 5.08. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which together
shall be deemed to be one and the same instrument.
Section 5.09. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to the conflicts of laws rules
of such state.
Section 5.10. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 5.11. Specific Enforcement. Each party hereto acknowledges that the remedies
at law of the other parties for a breach or threatened breach of this Agreement would be inadequate
and, in recognition of this fact, any party to this Agreement, without posting any bond, and in
addition to all other remedies that may be available, shall be entitled to obtain equitable relief
in the form of specific performance, a temporary restraining order, a temporary or permanent
injunction or any other equitable remedy that may then be available.
Section 5.12. Consent to Jurisdiction. The parties hereby agree that any
suit, action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions contemplated
hereby shall be brought in the United States District Court for the District of Delaware
or any Delaware State court sitting in Delaware, so long as one of such courts shall have
subject matter jurisdiction over such suit, action or proceeding, and that any cause of
action arising out of this Agreement shall be deemed to have arisen from a transaction of
business in the State of Delaware, and each of the parties hereby irrevocably consents to
the nonexclusive jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection that it may now or hereafter have to the laying of
the venue of any such suit, action or proceeding in any such court or that any such suit,
action or proceeding which is brought in any such court has been brought in an
inconvenient form. Process in any such suit, action or proceeding may be served on any
party anywhere in the world, whether within or without the jurisdiction of any such court.
Without limiting the foregoing, each party agrees
14
that service of process on such party as provided in Section 5.05 shall be deemed effective service
of process on such party.
Section 5.13. Severability. If one or more provisions of this Agreement are held to
be unenforceable to any extent under applicable law, such provision shall be interpreted as if it
were written so as to be enforceable to the maximum possible extent so as to effectuate the
parties’ intent to the maximum possible extent, and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in accordance with its
terms to the maximum extent permitted by law.
Section 5.14. Recapitalization. If any capital stock or other securities are issued
in respect of, in exchange for, or in substitution of, any Company Securities by reason of any
reorganization, recapitalization, reclassification, merger, consolidation, spin-off, partial or
complete liquidation, stock dividend, split-up, sale of assets, distribution to shareholders or
combination of the Company Securities or any other change in capital structure of the Company,
appropriate adjustments shall be made with respect to the relevant provisions of this Agreement so
as fairly and equitably to preserve, as far as practicable, the original rights and obligations of
the parties hereto under this Agreement.
Section 5.15. No Inconsistent Agreements. The Company will not hereafter enter into
any agreement with respect to its securities that is inconsistent with, or grants rights superior
to the rights granted to the Shareholders pursuant to, this Agreement. The Company represents and
warrants to each Shareholder that it has not previously entered into any agreement with respect to
any of its securities granting any registration rights to any Person.
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by
their respective authorized officers as of the day and year first above written.
SMART MODULAR TECHNOLOGIES (WWH), INC. | ||||
By:
|
/s/ Xxxx XxxXxxxxx | |||
Name: Xxxx XxxXxxxxx Title: President |
||||
MODULAR, L.L.C. | ||||
By: |
||||
Name: Xxxx Xxxxxx | ||||
Title: Board Member |
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by
their respective authorized officers as of the day and year first above written.
SMART MODULAR TECHNOLOGIES (WWH), INC. | ||||
By: |
||||
Name: Xxxx XxxXxxxxx | ||||
Title: President | ||||
MODULAR, L.L.C. | ||||
By: |
/s/ Xxxx Xxxxxx | |||
Name: Xxxx Xxxxxx | ||||
Title: Board Member |