Exhibit 10.9
FIFTH AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
This FIFTH AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT dated as of
August 11, 2000 (the "Agreement") by and among (i) InFlow, Inc., a Delaware
corporation (the "Company"), (ii) Art Zeile, Xxxx Xxxx and Xxxxxxx X. Xxxxx, as
holders of common stock, par value .001 per share (the "Common Stock") of the
Company (the "Common Holders") and (iii) the undersigned holders of the Series
A, Series B and Series C Preferred Stock of the Company, together with those
holders listed on Schedule A hereto or that subsequently execute a counterpart
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signature page hereto (collectively, the "Purchasers" and each individually a
"Purchaser"). The Series A, the Series B and the Series C Preferred Stock shall
be referred to herein as "Preferred Shares" and the Common Stock held by the
Common Holders shall be referred to herein as "Common Shares"). This Agreement
amends and restates in its entirety the Third Amended and Restated Stockholders
Agreement dated as of June 30, 2000 among the Company, the Common Holders and
certain of the Purchasers.
1. Definitions.
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(a) Purchaser Holders. For purposes of this Agreement, the term
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"Purchaser Holders" shall mean the Purchasers or persons who have acquired
shares from such Purchasers or the Purchasers' transferees or assignees in
accordance with the provisions of this Agreement.
(b) New Securities. For purposes of this Agreement, the term "New
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Securities" shall mean any capital stock of the Company whether now authorized
or not, and rights, options or warrants to purchase such capital stock, and
securities of any type whatsoever that are, or may become, convertible into or
exchangeable for such capital stock; provided that the term "New Securities"
does not include (i) securities issued upon conversion of the Preferred Shares;
(ii) securities issued pursuant to the acquisition of another business entity or
business segment of any such entity by the Company by merger, purchase of
substantially all the assets or other reorganization whereby the Company will
own not less than fifty-one percent (51%) of the voting power of such business
entity or business segment of any such entity; provided, to the extent such
securities are issued below the Original Series C Issue Price (as defined in the
Company's Fifth Amended and Restated Certificate of Incorporation), all such
securities issued below such price do not exceed in the aggregate 10% of the
total number of shares of Common Stock outstanding on a fully diluted basis;
(iii) any borrowings, direct or indirect, from financial institutions or other
persons by the Company, whether or not presently authorized, including any type
of loan or payment evidenced by any type of debt instrument, provided such
borrowings do not have any equity features (including warrants, options or other
rights to purchase capital stock), that collectively represent in excess of
250,000 shares of Common Stock (subject to stock dividends, stock splits and
similar transactions); (iv) securities issued to employees, consultants,
officers or directors of the Company pursuant to any stock option, stock
purchase or stock bonus plan, agreement or arrangement approved by the Board of
Directors, which securities shall not
represent in the aggregate more than 2,685,000 shares of Common Stock (subject
to adjustment for stock dividends, stock splits and similar transactions) unless
such number shall have been increased pursuant to Section 6(a)(i) of the
Company's Fifth Amended and Restated Certificate of Incorporation; (v)
securities issued to vendors or customers or to other persons in similar
commercial situations with the Company if such issuance is approved by the Board
of Directors; (vi) securities issued in connection with obtaining lease
financing, whether issued to a lessor, guarantor or other person if such
issuance is approved by the Board of Directors; (vii) securities issued in a
Qualified Public Offering (as defined in Section 13 below); (viii) securities
issued in connection with any stock split, stock dividend or recapitalization of
the Company; and (ix) any right, option or warrant to acquire any security
convertible into the securities excluded from the definition of New Securities
pursuant to subsections (i) through (viii) above.
(c) Equity Securities. For purposes of this Agreement, the term
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"Equity Securities" shall mean any securities having voting rights in the
election of the Board of Directors or any securities evidencing an ownership
interest in the Company, or any securities convertible into or exercisable for
any shares of the foregoing, or any agreement or commitment to issue any of the
foregoing.
(d) Company Holders. For purposes of this Agreement, the term
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"Company Holders" shall mean any Common Holder and any Person who acquires
shares of Common Stock pursuant to the Option Plan as a result of the exercise
of options granted thereunder after the date hereof.
(e) Person. For purposes of this Agreement, the term "Person" shall
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mean any individual, firm, corporation, partnership, trust, limited liability
company, incorporated or unincorporated association, joint venture, joint stock
company or other entity of any kind.
(f) Option Plan. For purposes of this Agreement, the term "Option
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Plan" shall mean the Company's 1997 Stock Issuance/Stock Option Plan, as amended
and as the same may be further extended, amended, restated or modified from time
to time.
(g) Stock. For purposes of this Agreement, the term "Stock" shall
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mean the Preferred Shares and the Common Shares.
(h) Stockholder. For purposes of this Agreement, the term
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"Stockholder" shall mean a Purchaser Holder or a Company Holder.
2. Transfer Restrictions; Right of First Refusal.
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(a) Before any Stock (the "Offered Shares") may be sold or
transferred by any Stockholder (the "Selling Stockholder"), the Selling
Stockholder shall deliver a notice by certified mail (the "Sale Notice") to the
principal business office of the Company and to each of the Purchaser Holders
(and, if necessary in order to comply with Section 4, the other Stockholders)
stating (i) the Selling Stockholder's bona fide intention to sell or transfer
the Offered Shares, (ii) the number of such shares to be sold or transferred,
(iii) the price and terms for which the Selling Stockholder proposes to sell or
transfer the Offered Shares, and (iv) the
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name and address of the proposed purchaser or transferee and that such purchaser
or transferee is committed to acquire the stated number of shares on the stated
price and terms. The Company, upon the request of the Selling Stockholder, will
provide a list of the addresses of the Purchaser Holders (and, if required in
order to comply with Section 4, the other Stockholders).
(b) In the event that the Selling Stockholder is a Common Holder (an
"RFR Holder"), the Company shall have the right at any time within twenty (20)
days of receipt of the Sale Notice (the "Company Election Period") to elect to
purchase some or all of the Offered Shares at the price per share specified in
the Sale Notice, or if no price is specified therein, at the Fair Market Value
thereof. "Fair Market Value" shall be determined by the Board of Directors of
the Company in good faith (with either the Series A Director or the Series B
Director or the Series C Director (as defined in Section 7 below) voting to
approve the value so determined).
(c) If the Company desires to purchase all or any part of the Offered
Shares from the RFR Holder, the Company shall communicate in writing its
election to purchase to the RFR Holder and the Purchaser Holders, which
communication shall state the number of Offered Shares the Company desires to
purchase and shall be given to the RFR Holder and the Purchaser Holders in
accordance with the notice requirements of this Agreement prior to or
concurrently with the expiration of the Company Election Period.
(d) If the Company does not elect to purchase all of the Offered
Shares from the RFR Holder, each Purchaser Holder shall have the absolute right
at any time within ten (10) days following the expiration of the Company
Election Period (the "Purchaser Election Period") to elect to purchase, at the
price per share specified in the Sale Notice, or if no price is specified
therein, at the Fair Market Value thereof, that portion of the balance of the
Offered Shares from the RFR Holder as shall be equal to the number of such
Offered Shares multiplied by a fraction, the numerator of which shall be the
number of Preferred Shares then owned by each Purchaser Holder and the
denominator of which shall be the aggregate number of Preferred Shares then
owned by all of the Purchaser Holders. (The amount of Offered Shares that each
Purchaser Holder is entitled to purchase under this Section 2(e) shall be
referred to as its "Pro Rata Share").
(e) If any Purchaser Holder elects not to exercise its option to
purchase its Pro Rata Share of the Offered Shares from the RFR Holder, then
those Purchaser Holders that do exercise their option shall have the option, for
an additional five (5) days following the end of the Purchaser Election Period,
to elect to acquire the Offered Shares that could have been acquired by the
nonexercising Purchaser Holders in proportion to the relative number of
Preferred Shares held by the exercising Purchaser Holders.
(f) If the Company and/or the Purchaser Holders elect to purchase all
or any portion of the Offered Shares from the RFR Holder, any written
communication of an election to so purchase delivered by the Company or the
Purchaser Holders shall, when taken in conjunction with the offer, be deemed to
constitute a valid, legally binding and enforceable agreement for the sale and
purchase of the stated Offered Shares. Sales of the Offered Shares to be sold
to the Company and/or the Purchaser Holders pursuant to this Section 2 shall be
made at
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the offices of the Company on the 60th day following the date of the Sale Notice
(or if such 60th day is not a business day, then on the next succeeding business
day). Such sales shall be effected by the delivery to the Company of a
certificate or certificates evidencing the Offered Shares to be purchased by the
Company or the Purchaser Holders duly endorsed for transfer to such party, free
and clear of all liens, claims and encumbrances except those arising under this
Agreement and the Investors' Rights Agreement of even date herewith, against
payment to the RFR Holder of the purchase price therefor by the party purchasing
such Offered Shares.
(g) If the Company and/or the Purchaser Holders do not purchase all of
the Offered Shares from the RFR Holder, then, subject to the other terms of this
Agreement all, but not less than all, of the Offered Shares not so purchased may
be sold by the RFR Holder at any time within ninety (90) days after the date of
the Sale Notice. Any such sale shall be to the proposed transferee specified in
the Sale Notice, at not less than the price and upon other terms and conditions,
if any, not more favorable to the proposed transferee than those specified in
the offer. If the Offered Shares are not sold within such 90-day period, the RFR
Holder shall not thereafter transfer any Offered Shares without again complying
with the requirements of this Section 2.
(h) In the event that the Selling Stockholder is a Purchaser Holder,
the Company shall have the right to approve the proposed transferee(s) of the
Offered Shares, which approval shall not be unreasonably withheld (it being
understood that the Company's failure to approve a proposed transferee that the
Company believes in good faith constitutes an actual or potential competitor of
the Company shall be conclusively deemed reasonable).
(i) If Offered Shares are sold pursuant to this Section 2 to any
purchaser who is not a party to this Agreement, it shall be a condition of such
sale that the purchaser shall execute a counterpart of this Agreement and the
Offered Shares so sold shall be subject to this Agreement.
3. Preemptive Right.
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(a) The Right. If the Company shall propose to issue any New
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Securities, it shall first offer to sell to each Purchaser Holder a Ratable
Portion of such New Securities on the same terms and conditions and at the
lowest price as such New Securities are offered to any person. "Ratable
Portion" shall mean that portion of such New Securities equal to the fraction
determined by dividing the number of shares of Common Stock held by the
Purchaser Holder (assuming full conversion and exercise of all convertible or
exercisable securities held by such Purchaser Holder) by the number of Common
Shares then outstanding (assuming full conversion and exercise of all
convertible or exercisable securities but excluding the New Securities so
issued).
(b) Notice. The Company shall give written notice of the proposed
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issuance of New Securities to each Purchaser Holder not later than thirty (30)
days prior to issuance. Such notice shall contain all material terms and
conditions of the issuance and of the New Securities. Each Purchaser Holder may
elect to exercise all or any portion of its rights under this Section 3 by
giving written notice to the Company within thirty (30) days of the
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Company's notice. If the consideration paid by others for the New Securities is
not cash, the value of the consideration shall be determined in good faith by
the Company's Board of Directors (with no less than 2/3 of the group consisting
of the Series C Director and the Outside Directors (as defined in Section 7
below) voting to approve the value so determined), and any electing Purchaser
Holder shall pay the cash equivalent thereof as so determined. All payments
shall be delivered by electing Purchaser Holders to the Company not later than
the date specified by the Company in its notice, but in no event earlier than
thirty-five (35) days after the Company's notice. Each Purchaser Holder shall
have a right of over allotment such that, if any other Purchaser Holder fails to
exercise the right to purchase its full Ratable Portion of the New Securities,
the other participating Purchaser Holders may, before the date ten (10) days
following the expiration of the thirty (30) day period, set forth above,
exercise an additional right to purchase, on a pro rata basis, the New
Securities not previously purchased by so notifying the Company, in writing,
within such ten (10) day period. Each Purchaser Holder shall be entitled to
apportion New Securities to be purchased among its affiliates, members and
general and limited partners, provided that such Purchaser Holder notifies the
Company of such allocation.
4. Right of Co-Sale.
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(a) The Right. If at any time a Selling Stockholder proposes to
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sell any shares of Stock to any third party in a transaction involving the sale
of more than five percent (5%) of the then-outstanding Common Stock determined
on an as-converted basis (a "Co-Sale Transaction"), then the Sale Notice
required by Section 2 shall be delivered to all Stockholders. For purposes of
calculating the preceding percentage, all transfers by a Selling Stockholder
shall be aggregated with all prior and contemporaneous transfers by such Selling
Stockholder (not including transfers to affiliates, members and general and
limited partners). In the event that, after giving effect to all purchases of
such Stock by the Company and the Purchaser Holders pursuant to Section 2, the
amount of Stock to be sold to such third party continues to represent at least
five percent (5%) of the then-outstanding Common Stock on an as-converted basis,
then each Stockholder which notifies the Selling Stockholder in writing within
30 days following receipt of the Sale Notice (a "Co-Seller") shall have the
opportunity to sell a pro rata portion of the remaining Stock which the Selling
Stockholder proposes to sell to such third party in the Co-Sale Transaction. In
the event a Co-Seller exercises its right of co-sale hereunder, the Selling
Stockholder shall assign so much of his interest in the proposed agreement of
sale as the Co-Seller shall be entitled to and shall request hereunder, and the
Co-Seller shall assume such part of the obligations of the Selling Stockholder
under such agreement as shall relate to the sale of the securities by the Co-
Seller. For the purposes of this Section 4, the "pro rata portion" which each
Co-Seller shall be entitled to sell shall be an amount of Stock equal to a
fraction of the total amount of Stock proposed to be sold to such third party
(after giving effect to all purchases pursuant to Section 2), the numerator of
which shall be the number of shares of Stock owned by such Co-Seller and the
denominator of which shall be the total number of shares of Stock then held by
the Selling Stockholder and all Co-Sellers (giving effect in each case to the
conversion of all Preferred Shares into Common Stock). Insofar as possible this
right of co-sale shall apply to Stock of the same class or classes as the Stock
subject to the Sale Notice. If any Person desiring to exercise its rights of co-
sale hereunder does not have a sufficient amount of Stock of the same class as
the Stock subject to the Sale Notice, such Person may substitute Stock of
another class so long as such class ranks senior in liquidation to the class of
Stock subject to
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the Sale Notice. In the event the proposed Transfer is of Common Stock and a
Person wishing to exercise its rights of co-sale hereunder does not have
sufficient shares of Common Stock, but has Preferred Shares, such Person may
convert a sufficient number of Preferred Shares into Common Stock in accordance
with the procedures set forth in the Certificate of Incorporation, as amended.
(b) Failure to Notify. If within thirty (30) days following receipt of
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the Sale Notice, any Stockholder fails to notify the Selling Stockholder that it
desires to participate in the Co-Sale Transaction, then the Selling Stockholder
may effect the Co-Sale Transaction within a period of ninety (90) days after the
date of the Sale Notice without the participation of such Stockholder. Any such
sale shall be made only to persons identified in the Sale Notice and at the same
price and upon the same terms and conditions as those set forth in the Sale
Notice. In the event the Selling Stockholder has not sold the Stock or entered
into an agreement to sell the Stock within such ninety (90) day period, the
Selling Stockholder shall not thereafter sell any Equity Securities without
again complying with Section 2 and this Section 4.
(c) Prohibited Transfers. In the event that a Selling Stockholder
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should sell any Stock in contravention of the co-sale rights under this
Agreement (a "Prohibited Transfer"), each holder of such co-sale rights, in
addition to such other remedies as may be available at law, in equity or
hereunder, shall have the put option provided below, and such Selling
Stockholder shall be bound by the applicable provisions of such option. In the
event of a Prohibited Transfer, each holder of co-sale rights shall have the
right to sell to such Selling Stockholder the type and number of shares of Stock
equal to the number of shares each holder of co-sale rights would have been
entitled to transfer to the purchaser under Section 4(a) hereof had the
Prohibited Transfer been effected pursuant to and in compliance with the terms
hereof. Such sale shall be made on the following terms and conditions:
(i) The price per share at which the shares are to be sold to
the Selling Stockholder shall be equal to the price per share paid by
the purchaser to such Selling Stockholder in such Prohibited Transfer.
The Selling Stockholder shall also reimburse each co-sale rights holder
for any and all fees and expenses, including legal fees and expenses,
incurred pursuant to the exercise or the attempted exercise of the
rights under Section 4.
(ii) Within ninety (90) days after the date on which a holder of
co-sale rights received notice of the Prohibited Transfer or otherwise
became aware of the Prohibited Transfer, such Person shall, if
exercising the option created hereby, deliver to the Selling
Stockholder the certificate or certificates representing shares to be
sold, each certificate to be properly endorsed for transfer, free and
clear of all liens, claims and encumbrances except those arising under
this Agreement and the Investors' Rights Agreement of even date
herewith.
(iii) Such Selling Stockholder shall, upon receipt of the
certificate or certificate for the shares to be sold by a co-sale
rights holder pursuant to this Section 4(c), pay the aggregate purchase
price therefor and
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the amount of reimbursable fees and expenses, as specified in
Section 4(c)(i), in cash or by other means acceptable to the co-
sale rights holder.
5. Limitations to Rights of First Refusal and Co-Sale.
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Notwithstanding the provisions of Sections 2 and 4 of this Agreement, each
Purchaser Holder may sell or otherwise assign, with or without consideration, an
unlimited amount of Stock to any spouse or member of his immediate family, or to
a custodian, trustee (including a trustee of a voting trust), executor or other
fiduciary for the account of his spouse or members of his immediate family, or
to a trust for himself, or to a charitable remainder trust, or any affiliate,
member or limited or general partner of such Purchaser Holder; provided that
each such transferee or assignee, prior to the completion of the sale, transfer
or assignment shall have executed documents assuming the obligations of the
Purchaser Holder under this Agreement with respect to the transferred
securities. Notwithstanding the provisions of Section 4 of this Agreement, each
of Art Zeile and Xxxx Xxxx may sell his Common Shares without the participation
of any Co-Seller following the termination of his employment with the Company
(not including such individual's voluntary termination of his employment with
the Company), other than for Cause, or following a material reduction in his (i)
duties and responsibilities or (ii) compensation, unless agreed to by such
Common Holder or required by law, or a material change in his responsibilities
which are not agreed to by such Common Holder. As used herein, "Cause" shall
mean a termination for any of the following reasons: (i) engaging in intentional
misconduct which would tend to discredit the Company; (ii) being convicted of a
felony; (iii) committing an act of fraud against the Company or the willful
material misappropriation of property belonging to the Company; (iv) materially
breaching any proprietary information agreement between such Common Holder and
the Company or (v) willfully disregarding such Common Holder's duties despite
adequate warnings from the Board.
6. Drag-Along Rights. If holders of (i) greater than 50% of the
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outstanding Series A and Series B Preferred Stock (voting together as a single
class) and (ii) greater than 50% of the outstanding Series C Preferred Stock
(together, the "Required Preferred Holders") approve any liquidation,
dissolution or winding up of the Company or a transaction to sell, or in any
other way, directly or indirectly convey, assign, distribute, pledge, encumber
or otherwise dispose of all or substantially all of the Company's assets,
property or business or merge into or consolidate with any other corporation
(other than a wholly-owned subsidiary of the Company) or effect any transaction
or series of related transactions in which more than fifty percent (50%) of the
voting power of the Company is disposed of (collectively, a "Drag-Along
Transaction"), then, upon thirty (30) days written notice to the other
Stockholders and the Company (the "Drag-Along Notice"), which notice shall
include reasonable details of the proposed transaction, including the proposed
time and place of closing and the consideration to be received by the
Stockholders in such transaction, each Stockholder shall raise no objection to
such Drag-Along Transaction and be obligated to, and shall sell, transfer and
deliver, or cause to be sold, transferred and delivered, to such third party,
all of his Equity Securities in the same transaction at the closing thereof (and
will deliver certificates for all of his shares at the closing, free and clear
of all liens, claims, or encumbrances except those arising under this Agreement
and the Investors' Rights Agreement of even date herewith). Each Common Holder
shall receive the same consideration per share on an as-converted to Common
Stock basis upon consummation of the Drag-Along Transaction as is received by
the holders of Preferred Shares after giving effect
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to any liquidation preference to which any Person is entitled to pursuant to the
Company's Certificate of Incorporation, as amended; provided, however, that if
within thirty (30) days of receipt of the Drag-Along Notice, the Company
irrevocably commits in writing to use its best efforts to complete a firm
commitment underwritten public offering pursuant to an effective registration
statement under the Securities Act covering the offer and sale of the Company's
Common Stock at a price per share of not less than the price per share which the
holders of the Equity Securities (on an as-converted to Common Stock basis)
would receive upon the consummation of the Drag-Along Transaction (a "Qualified
IPO"), then the closing of the Drag-Along Transaction shall be suspended until
the earlier of (i) one hundred twenty (120) days after the Company so commits or
(ii) the date the Company determines that it will be unable to complete the
Qualified IPO within such 120-day period.
7. Board of Directors.
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(a) Composition. The Stockholders agree that, in any election of
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directors of the Company (or action by written consent in lieu thereof), they
shall vote all shares of capital stock of the Company owned or controlled by
them (or act by written consent) to elect a Board of Directors comprised of
seven members designated as follows:
(i) two directors (the "Common Directors"), each of
whom shall be an executive officer of the Company designated by
the holders of a majority of the then-outstanding Common Stock
(currently Art Zeile and Xxxx Xxxx);
(ii) one director (the "Series A Director"), which
shall be designated by First Union Capital Partners, Inc.
(currently Xxxxx Xxxxxx) so long as such Stockholder and its
affiliates continue to hold at least 1,122,143 shares of Series A
Preferred Stock, as adjusted; provided, however, at such time
that First Union Capital Partners, Inc. does not hold at least
1,122,143 shares of Series A Preferred Stock, as adjusted, the
holders of a majority of the then outstanding Series A Preferred
Stock, voting as a separate class, shall designate the Series A
Director;
(iii) one director (the "Series B Director"), which shall be
designated by Meritage Private Equity Fund, L.P. (currently X.
Xxxxxxx Xxxxxxxxxx, Jr.) so long as such Stockholder and its
affiliates continue to hold at least 1,149,851 shares of Series B
Preferred Stock, as adjusted; provided, however, at such time
that Meritage Private Equity Fund, L.P. does not hold at least
1,149,851 shares of Series B Preferred Stock, as adjusted, the
holders of a majority of the then outstanding of Series B
Preferred Stock, voting as a separate class, shall designate the
Series B Director;
(iv) two independent directors (the "Outside Directors")
selected by the holders of a majority of the then-outstanding
Common Stock and approved by the holders of a majority of the
then-outstanding
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Preferred Shares (currently Xxxxxxx X. Xxxxx and Xxxxxx X.
Xxxxxxxx, Xx.); and
(v) one director (the "Series C Director") which shall be
designated by Spire Capital Partners, L.P., (currently Xxxxxx
Xxxxxxxxx) so long as such Stockholder and its affiliates
continue to hold at least 536,586 shares of Series C Preferred
Stock, as adjusted; provided, however, at such time that Spire
Capital Partners, L.P. does not hold at least 536,586 shares of
Series C Preferred Stock, as adjusted, the holders of a majority
of the then outstanding of Series C Preferred Stock, voting as a
separate class, shall designate the Series C Director.
The obligation to vote shares in accordance with this Section 7 shall be
specifically applicable to and enforceable against any transferees of the
parties hereto.
(b) Vacancies; Removal. In the event of any vacancy in the Board
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of Directors, each of the Stockholders agree to vote all shares of stock owned
or controlled by them and to otherwise use their best efforts to fill such
vacancy so that the Board of Directors of the Company will include directors
designated as provided in Section 7(a) above. Each of the Stockholders agrees to
vote all shares of stock owned by them for the removal of a director whenever
(but only whenever) there shall be presented to the Board of Directors the
written direction that such director be removed executed by the person or
persons entitled to designate such director pursuant to Section 7(a).
(c) Meetings. The Board of Directors shall hold regularly
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scheduled meetings as determined by a majority of the Bo of Directors. The
Company will give each Director written notice at least three (3) days (24
hours, in the case of a telephone meeting) in advance of all meetings of the
Board of Directors and all meetings of committees of the Board of Directors. If
the Company proposes to take any action by written consent in lieu of a meeting
of its Board of Directors or any committee thereof, the Company shall give
written notice thereof to each such Director prior to the effective date of such
consent describing in reasonable detail the nature and the substance of such
action.
(d) Expenses and Insurance. The Company shall reimburse all
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persons serving as directors, consistent with the Company's policies for such
reimbursement, if any, for their actual and reasonable out-of-pocket expenses
incurred in attending meetings of the Board of Directors and all committees
thereof. In addition, the Company shall maintain directors' and officers'
liability insurance from reputable insurers of sound financial standing as
presently in effect or in such greater amounts as determined by the Company's
Board of Directors.
(e) Compensation Committee of the Board of Directors. The Board
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of Directors shall establish a compensation committee (the "Compensation
Committee") to which it shall delegate the authority to take all actions with
respect to the Option Plan. The Compensation Committee shall consist of five
members, one of which shall be a Common Director (it being agreed that so long
as such person shall be Art Zeile or Xxxx Xxxx, he shall vote on all matters
other than the compensation for such individuals) one of which shall be the
Series A Director, one of which shall be the Series
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B Director, one of which shall be the Series C Director and one of which shall
be an Outside Director.
8. Legend. Each existing or replacement certificate for shares
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now owned by the Purchasers and Company Holders shall bear the following legend
upon its face:
THE OWNERSHIP, VOTING, TRANSFER, ENCUMBRANCE, PLEDGE, ASSIGNMENT
OR OTHER DISPOSITION OF THIS CERTIFICATE AND THE SHARES OF STOCK
REPRESENTED THEREBY, ARE SUBJECT TO THE RESTRICTIONS CONTAINED IN
A STOCKHOLDERS' AGREEMENT AMONG THE COMPANY AND CERTAIN
STOCKHOLDERS. COPIES OF THE AGREEMENT MAY BE OBTAINED UPON
WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY."
9. Public Offering. In the event that the Board of Directors
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of the Company approves an initial public offering of the Common Stock of the
Company, each of the Company Holders shall take all necessary or desirable
actions in connection with the consummation of the initial public offering. In
the event that such public offering is an underwritten offering and the managing
underwriters advise the Company in writing that in their opinion the current
capital structure may adversely affect the marketability of the offering, each
of the Company Holders shall consent to and vote for a recapitalization,
reorganization and/or exchange of the Company's capital stock into securities
that the managing underwriters and the Board of Directors find acceptable and
shall take all necessary or desirable actions in connection with the
consummation of the recapitalization, reorganization and/or exchange; provided
that the resulting securities reflect and are consistent with the rights and
preferences set forth in the Company's Certificate of Incorporation as in effect
immediately prior to such public offering.
10. "Market Stand-Off" Agreement. Each Company Holder hereby
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agrees to be bound by the provisions of Section 1.15 of that certain Fifth
Amended and Restated Investors' Rights Agreement dated as of the date hereof.
11. Notices. All notices, demands or other communications to be
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given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight courier service
(charges prepaid), or transmitted by facsimile or electronic mail (with request
for immediate confirmation of receipt in a manner customary for communications
of such type and with physical delivery of the communication being made by one
of the other means specified in this Section as promptly as practicable
thereafter). Such notices, demands and other communications shall be addressed
(i) in the case of a Stockholder, to his or its address as is designated in
writing from time to time by such party, (ii) in the case of the Company, to its
principal office, and (iii) in the case of any transferee of a party to this
Agreement or its transferee, to such transferee at its address as designated in
writing by such transferee to the Company from time to time.
10
12. Assignment of Rights. This Agreement and the rights and
--------------------
obligations of the parties hereunder shall inure to the benefit of, and be
binding upon, the parties' respective successors, assigns and legal
representatives; provided, however, that the rights of the Stockholders
hereunder are only assignable to an assignee or transferee (i) who acquires all
of the securities of the Company held by the transferring Stockholder on the
date hereof or, if less than all, securities representing at least fifty percent
(50%) of the securities of the Company held by such transferring Stockholder as
of the date of this Agreement, or (ii) to a transferee described in the first
sentence of Section 5, and it shall be a requirement of such transfer that such
assignee shall then become a party to this Agreement.
13. Term. This Agreement shall terminate upon the earlier of (i) the
----
closing of a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act covering the offer and
sale of the Company's Common Stock (x) at a public offering price of (A) with
respect to shares other than Series C Preferred Stock and then only with respect
to Section 3, not less than $26.00 per share (adjusted to reflect subsequent
stock dividends, stock splits or similar transactions affecting the outstanding
Common Stock) and (B) otherwise, not less than $35.00 per share (or such lesser
amount as may be agreed to in writing by the holders of greater than 50% of the
outstanding Series C Preferred Stock) (adjusted to reflect subsequent stock
dividends, stock splits or similar transactions affecting the outstanding Common
Stock), (y) resulting in gross proceeds to the Company of not less than
$100,000,000, and (z) after which the Common Stock is either listed on a
national securities exchange or traded in the NASDAQ National Market System (a
"Qualified Public Offering"); (ii) the acquisition of the Company by another
entity by means of any transaction or series of related transactions (including,
without limitation, any reorganization, merger or consolidation) that results in
the Company's stockholders immediately prior to such transaction not holding (by
virtue of such shares or securities issued solely with respect thereto) at least
50% of the voting power of the surviving or continuing entity; (iii) a sale,
conveyance or disposition of all or substantially all of the assets of the
Company unless the Company's stockholders immediately prior to such transaction
will, as a result of such sale, conveyance or disposition hold (by virtue of
securities issued as consideration for such sale, conveyance or disposition) at
least 50% of the voting power of the purchasing entity; or (iv) the effectuation
by the Company or its stockholders of a transaction or series of related
transactions that results in the Company's stockholders immediately prior to
such transaction not holding (by virtue of such shares or securities issued
solely with respect thereto) at least 50% of the voting power of the Company.
14. Entire Agreement. This instrument contains the entire
----------------
understanding of the parties with respect to the subject matter hereof,
supersedes all other agreements between or among any of the parties with respect
to the subject matter hereof and cannot be altered or otherwise amended except
pursuant the terms of Section 17 below. This Agreement shall be interpreted
under the laws of the State of Colorado without reference to its principles of
conflicts of law.
15. Attorneys' Fees. If any action at law or in equity is necessary
---------------
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
11
16. Further Instruments and Actions. The parties agree to execute
-------------------------------
such further instruments and to take such further action as may reasonably be
necessary to carry out the intent of this Agreement. The parties further agree
to cooperate affirmatively with the Company, to the extent reasonably requested
by the Company to enforce rights and obligations to this Agreement.
17. Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of at least seventy-five percent (75%) of the outstanding
Preferred Shares (and if any amendment or waiver by its terms adversely affects
the rights of the persons holding a particular series of the Preferred Shares
and not similarly the rights of holders of the other series of Preferred Shares,
the written consent of a majority in interest of the holders of outstanding
shares of such adversely affected series of Preferred Shares), provided,
however, that any amendment or waiver adversely affecting the rights of the
persons holding Common Shares and not similarly adversely affecting the rights
of holders of Preferred Shares shall require the written consent of a majority
in interest of the outstanding Common Shares. Any amendment or waiver effected
in accordance with this Section shall be binding upon the Company and all
Stockholders and their respective successors and assigns.
18. Rights; Separability. Unless otherwise expressly provided
--------------------
herein, a Company Holder's rights hereunder are several rights, not rights
jointly held with any other Company Holder. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
19. Waiver of Jury Trial. Each party hereto hereby waives trial by
--------------------
jury in any legal action or proceeding relating to this agreement.
20. Other Covenants. The Company covenants to each Preferred Holder
---------------
that has purchased at least $1,000,000 of Preferred Shares and that shall
continue to own at least 25% of the Preferred Shares that it holds as of the
date hereof, that the Company shall:
(a) maintain its corporate existence; and
(b) comply with applicable laws, except where failure to do so
would not reasonably be expected to have a material adverse effect on its
business, assets, operations, properties or financial condition.
21. Liquidation Events. No Stockholder shall be permitted to sell,
------------------
assign or otherwise dispose of any stock to any Person in connection with a
Liquidation Event (as defined in the Company's Fifth Amended and Restated
Certificate of Incorporation) if such sale, assignment or disposition would
prevent the realization by the holders of Preferred Shares of the amounts
payable to them in accordance with Article IV(B)(2)(a) of the Company's Fifth
Amended and Restated Certificate of Incorporation.
12
IN WITNESS WHEREOF, the parties have executed this Fifth Amended and
Restated Stockholders' Agreement as of the date first above written.
INFLOW, INC.
By: /s/ Art Zeile
-------------
Art Zeile
President and Chief Executive Officer
Address: 000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
INVESTORS:
First Union Capital Partners, Inc. Meritage Private Equity Fund, L.P.
Meritage Private Equity Parallel Fund, L.P.
By: /s/ Meritage Entrepreneurs Fund, L.P.
----------------------------
Xxxxx Xxxxxx, Senior Vice President
By: Meritage Investment Partners, LLC
Address: 000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000 By: /s/
-----------------------------
X. Xxxxxxx Xxxxxxxxxx, Jr.,
Managing Member
Address: 0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
X.X. Xxxxxx Investment Corporation Sixty Wall Street SBIC Fund, L.P.,
By: Sixty Wall Street SBIC Corporation, its
By: /s/ General Partner
------------------------------
Name:_____________________________
Title: ___________________________ By: /s/
-------------------------------
Name: ____________________________
Address: 000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx Title: ___________________________
Xxx Xxxxxxxxx, XX 00000
Address: 000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Signature Page to Fifth Amended and Restated Stockholders' Agreement (Continued)
Xxxxxxxx, Xxxxxx and Xxxxx II, L.P. Spire Capital Partners, L.P.
By: Xxxxxxxx, Xxxxxx & Xxxxx LLC, By: Spire Capital Partners, LLC,
General Partner its General Partner
By: /s/ By: /s/
----------------------------- ---------------------------
Name: ___________________________ Name: __________________________
Title: __________________________ Title: __________________________
Address: Republic Plaza Address: 00 Xxxxxxxxxxx Xxxxx
000 00xx Xxxxxx Xxxxx 0000
Xxxxx 0000 Xxx Xxxx, XX 00000
Xxxxxx, XX 00000
G.C. Investments, LLC Xxxxxxxxxx Management Company
Limited Partnership
By: Xxxxxx X. Xxxxxxxxxx Holding Company, Inc.
By: /s/ its General Partner
----------------------------
Name: Xxxxx Xxxxxxxxx
Title: Manager By: /s/
---------------------------
Name: Xxxxxxxxxxx X. Xxxxxx
Address: 000 X. Xxxxx Xxxxxx Xxxxxxx Title: Secretary,
Xxxxx 000
Xxxxxxxxx, XX 00000 Address: 000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Citizens Capital, Inc. BancBoston Capital, Inc.
By: /s/ By: /s/
-------------------------- ---------------------------
Name: Xxxxxxx X. Xxxxxxxx Name: Xxxx X. Xxxxxxx
Title: Managing Director Title: Director
Address: 00 Xxxxx Xxxxxx Address: 000 Xxxxx Xxxxxx
Xxxxxx, XX 00000 00xx Xxxxx
Xxxxxx, XX 00000
Signature Page to Fifth Amended and Restated Stockholders' Agreement (Continued)
PNC Venture Corp. DLJMB Funding III, Inc.
By: /s/ By: /s/
---------------------------- ------------------------------
Name: Xxxx Xxxxxxxx Name: Xxx Xxxxx
Title: Vice President Title: Vice President
Address: 3150 CNG Tower Address: 000 Xxxx Xxxxxx
000 Xxxxxxx Xxxxxx Xxx Xxxx, XX 00000
Xxxxxxxxxx, XX 00000
DLJ ESC II L.P. Grandhaven LLC
By: DLJ LBO Plans Management Corporation
its General Partner
By: /s/ By: /s/
-------------------------- ----------------------------
Name: Xxx Xxxxx Name: Xxxxx Xxxxxxxxxxx
Title: Vice President Title: Vice President
Address: 000 Xxxx Xxxxxx Address: 0000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000 Xxxxx 000
Xxxxxx, XX 00000
Signature Page to Fifth Amended and Restated Stockholders' Agreement (Continued)
Hexagon Investments LLC General Electric Capital Corporation
By: /s/ By: /s/
--------------------------- ---------------------------
Name: Xxxxx Xxxxxxxxxxx Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President Title: Manager - Operations
Address: 0000 Xxxxxxx Xxxxxx Address: 000 Xxxx Xxxxx Xxxx
Xxxxx 000 Xxxxxxxx, XX 00000
Xxxxxx, XX 00000
Cornerstone Equity Investors IV, LP BMO Xxxxxxx Xxxxx Capital (U.S.), Inc.
By: /s/ By: /s/
-------------------------- ---------------------------
Name: Xxx Xxxxxx XX Name: Xxxxxxx X. Xxxxx
Title: Managing Director Title: President
Address: 000 Xxxxx Xxxxxx, Xxxxx 0000 Address: 000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000 00xx Xxxxx
Xxxxxxx, XX 00000
Carlyle High Yield Partners, L.P.
By: TCG High Yield, L.L.C., its General Partner
By: /s/
-----------------------------
Name: Xxxx Xxxx
Title: Executive Managing Director
Address: 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
/s/
--------------------------
Xxxxxx X. Xxxxx
/s/
--------------------------
Xxxx X. Xxxx
/s/
--------------------------
Xxxxxxx X. Xxxxx
[INFLOW LOGO]
SCHEDULE A
