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EXHIBIT 10.14
ANTI-DILUTION RIGHTS AGREEMENT
This Agreement is made and entered into this 8th day of October, 1996, by
and between E HOLDINGS, INC. a Georgia corporation (hereinafter called the
"Company"), and XXXXXXX X. XXXXXXX (hereinafter called "Xxxxxxx"), and its
successors and assigns.
WHEREAS, concurrently with the execution of this Agreement the Company
has issued to Xxxxxxx 30,000 shares (the "Shares") of the Class A Common Stock
of the Company; and
WHEREAS, Xxxxxxx desires certain anti-dilution rights with respect to the
Shares, all upon the terms and conditions more fully set out below; and
WHEREAS, the Board of Directors of the Company has approved the issuance
of the Shares and this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Certain Other Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Appraisal Procedure" means the following procedure for determining the
Market Value of the Common Stock: (a) upon the need to determine the Market
Value for purposes of Section 3 of this Agreement, the Company and Xxxxxxx shall
attempt to agree on a mutually acceptable Qualified Appraiser to value the
Common Stock, and if such parties agree on a Qualified Appraiser within ten (10)
days following the receipt of a demand to determine the Market Value, such
Qualified Appraiser shall, on or before twenty (20) days following the date it
is appointed, determine the Market Value of the Common Stock, and such
determination shall be binding upon the Company and Xxxxxxx; (b) in the event
the Company and Xxxxxxx are unable to agree upon a mutually acceptable Qualified
Appraiser within ten (10) days following receipt of a demand to determine the
Market Value, on the expiration of such ten (10) day period, the Company and
Xxxxxxx shall each appoint a Qualified Appraiser to value the Common Stock.
Within twenty (20) days following the date they are appointed, the Qualified
appraisers appointed by the Company and Xxxxxxx shall determine the Market Value
of the Common Stock. In the event the values determined by the Company's
Qualified Appraiser and Xxxxxxx'x Qualified Appraiser are within five percent
(5%) of each other, the Market Value for purposes of this Agreement shall be the
average of the values determined by such appraisers and such determination shall
be binding upon the Company and Xxxxxxx. In the event such values differ by five
percent (5%) or more, such appraisers shall in turn promptly appoint a third
Qualified Appraiser who shall, with twenty (20) days following the date it is
appointed, determine the Market Value of the Common Stock. The value which is
the average of the lowest and the highest of the values determined by the three
Qualified Appraisers shall be the Market Value of the Common Stock for purposes
of this Agreement and shall be binding upon the Company and Xxxxxxx. In the
event either the Company or Xxxxxxx fails to timely appoint a Qualified
Appraiser, such failing party will be deemed to have waived its rights to
appoint a Qualified Appraiser, and the Qualified Appraiser appointed by the
other party shall determine the Market Value for purposes of this Agreement
which determination shall be binding upon Xxxxxxx and the Company. The costs of
any mutually agreeable Qualified Appraiser referred to in (a) above and of the
third Qualified Appraiser referred to in (b) above shall be paid equally by the
Company and Xxxxxxx. Xxxxxxx shall pay all costs of the Qualified Appraiser
appointed by Xxxxxxx pursuant to (b) above and the Company shall pay all costs
of the Qualified Appraiser so appointed by it.
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"Common Stock" means the Company's Class A Common Stock, without par
value and Class B Common Stock, without par value.
"Employee Options" means options to acquire, up to, but in no event in
excess of 59,242 shares of Common Stock pursuant to the Company's stock option
plan.
"Fully Diluted Basis" means, with reference to outstanding Common Stock,
the shares of Common Stock that would be outstanding assuming that all
outstanding options, warrants and other rights to acquire common stock had been
exercised (regardless of whether such rights are then exercisable) and all
securities of the Company convertible into Common Stock had then been converted
(regardless of whether such securities are then convertible) had been issued.
Any reference in this Agreement to "holder(s) of outstanding Common Stock on a
Fully Diluted Basis" or words of similar import shall be deemed to include
holder(s) of outstanding options, warrants or similar rights to acquire Common
Stock or securities convertible into Common Stock.
"Holder" with respect to any security of a Person, shall mean the record
or beneficial owner of such security.
"Junior Lender" means Stratford Capital Partners, L.P., a Texas limited
partnership which is licensed as a Small Business Investment Company under the
Small Business Investment Act of 1954 (as amended), and its successors and
assigns.
"Junior Lender Warrants" means those warrants to purchase Common Stock
issued to the Junior Lender pursuant to the Subordinate Loan and Warrant
Agreement, dated as of the date hereof, between the Company and the Junior
Lender.
"Market Value" means, with respect to a share of Common Stock on any date
herein specified, the fair market value of such share of Common Stock determined
as of the last day of the month most recently ended prior to such date without
giving effect to any discount for (a) a minority interest, (b) a lack of
liquidity of such Common Stock, (c) the fact that such Common Stock is subject
to this Agreement or the Shareholders' Agreement, or (d) the fact that such
Common Stock is Class A Common Stock or Class B Common Stock. The Market Value
shall be determined pursuant to the Appraisal Procedure.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or any agency or instrumentality thereof and shall also
mean the Company.
"Qualified Appraiser" shall mean an investment banking firm of recognized
national or regional standing other than Xxxxxxx.
"Senior Lender" means NationsBank, N.A. (South) and its successors and
assigns.
"Senior Lender Warrants" means those warrants to purchase Common Stock
issued to the Senior Lender pursuant to the Warrant Agreement, dated as of the
date hereof, between the Company and the Senior Lender.
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2. Restrictions on Transfer. Xxxxxxx represents to the Company that he is
acquiring the Shares for its own investment account and without a view to the
subsequent public distribution of the Shares otherwise than pursuant to an
effective registration statement under the Securities Act or an exemption
therefrom. Each certificate for Shares issued to Xxxxxxx and any subsequent
Holder which have not been sold to the public pursuant to an effective
registration statement under the Securities Act or as to which the restrictions
on transfer have not been removed as hereinafter provided, shall bear a
restrictive legend reciting that the same have not been registered pursuant to
the Securities Act and may not be transferred in the absence of an effective
registration statement as to such Shares or an exemption in fact from the
registration requirements thereof. Prior to any proposed transfer of any
Registrable Securities, except pursuant to an effective registration statement
under the Securities Act, the Holder thereof shall give written notice to the
Company of its intention to effect such transfer. Each such notice shall
describe the manner of the proposed transfer and shall be accompanied by an
opinion of counsel experienced in federal securities laws matters and reasonably
acceptable to the Company and its counsel to the effect that the proposed
transfer may be effected without registration under the Securities Act,
whereupon the Holder of such Registrable Securities shall be entitled to
transfer such securities in accordance with the terms of its notice and such
opinion. Restrictions imposed under this Section 2 upon the transferability of
the Shares shall cease when
(a) a registration statement covering such Shares becomes
effective under the Securities Act, or
(b) the Company receives from the Holder thereof an opinion
of counsel experienced in federal securities laws matters, which counsel shall
be reasonably acceptable to the Company, that such restrictions are no longer
required in order to insure compliance with the Securities Act.
When such restrictions terminate, the Company shall issue new securities in the
name of the Holder not bearing the legends required by this Section 2.
3. Anti-Dilution Rights. The number of shares of Common Stock
issued to Xxxxxxx are subject to adjustment from time to time upon the
occurrence of any of the events enumerated in this Section 3.
(a) In the event that the Company shall at any time after
the date of this Agreement (i) issue any shares of Common Stock (other than
shares issuable upon exercise of the Employee Options or the shares issuable
upon exercise of the Junior Lender Warrants or the Senior Lender Warrants)
without consideration or at a price per share less than the Market Value, or
(ii) issue options, rights or warrants to subscribe for or purchase such Common
Stock (or securities convertible into such Common Stock) without consideration
or at a price per share (or having a conversion price per share, if a security
convertible into such Common Stock) less than the Market Value immediately prior
to such issuance, the number of shares of Common Stock issued to Xxxxxxx shall
be adjusted to equal the product obtained by multiplying the number of shares of
Common Stock held by Xxxxxxx immediately prior to the date of such issuance by a
fraction, the numerator shall be the number of shares of Common Stock
outstanding on a Fully Diluted Basis immediately after such issuance, and the
denominator of which shall be the number of shares of Common Stock outstanding
on a Fully Diluted Basis immediately prior to such issuance plus the number of
shares of such Common Stock which the aggregate offering price of the total
number of shares of such Common Stock so to be issued or to be offered for
subscription or purchase (or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase
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at the Market Value immediately prior to such issuance, and Xxxxxxx shall pay an
additional $10.00 in total consideration for the issuance of the additional
shares required by this adjustment. In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined by a Qualified Appraiser
reasonably acceptable to Xxxxxxx (the cost of the engagement of said investment
banking firm to be borne by the Company). Any shares of such Common Stock owned
by or held for the account of the Company or any Subsidiary thereof shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever the date of such issuance is fixed (which
date of issuance shall be the record date for such issuance if a record date
therefor is fixed); and, in the event that such shares or options, rights or
warrants are not so issued, the number of shares of Common Stock to which
Xxxxxxx is entitled shall again be adjusted to be such number of share of Common
Stock to which Xxxxxxx is entitled if the date of such issuance had not been
fixed.
(b) No adjustment in the number of shares of Common Stock
issued to Xxxxxxx shall be required unless such adjustment would require an
increase or decrease of at least one-tenth of one percent (.1%) in such number
of Shares; provided that any adjustments which by reason of this Section 3(b)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 3 shall be made
to the nearest hundredth of one percent.
(c) If any question shall at any time arise with respect to
the adjusted number of Shares, such question shall be determined by the
independent firm of certified public accountants of recognized national standing
selected by the Company and approved by Xxxxxxx.
4. Amendments and Waivers. This Agreement may be amended and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have obtained
the written consent to such amendment, action or omission to act, of the Holder
of the Shares.
5. Notices. Notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered, or, if
by U.S. mail, when deposited in a regularly maintained receptacle, by Certified
First Class Mail, postage prepaid, addressed
(a) if to Xxxxxxx, at the address shown on the stock or
warrant transfer books of the Company unless Xxxxxxx has advised the Company in
writing of a different address as to which notices shall be sent under this
Agreement, and
(b) if to the Company at Suite 1420, 0000 Xxxxxxxxx Xxxx,
Xxxxxxx, Xxxxxxx 00000, to the attention of the Chairman of the Board, or to
such other address or to the attention of such other officer, as the Company
shall have furnished to Xxxxxxx.
6. Miscellaneous. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective successors and assigns of
the parties hereto, whether so expressed or not, and, in particular, shall inure
to the benefit of and be enforceable by any Holder of the Shares. This Agreement
embodies the entire agreement and understanding between the Company and Xxxxxxx
and supersedes all prior agreements and understandings relating to the subject
matter hereof. This Agreement shall be construed and enforced in accordance with
and governed by the law of the State of Georgia. The
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headings in this Agreement are for purposes of reference only and shall not
limit or otherwise affect the meaning hereof. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their respective officers thereunto duly authorized as of the
date first above written.
E HOLDINGS, INC.
By: /s/ X. Xxxxxx
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R. Xxxxxx Xxxxxx, Chairman of the Board
Attest:
/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx, Secretary /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
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