EXHIBIT 10.11
WORKSCAPE, INC.
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, dated as of December
17, 1999, among Warburg, Xxxxxx Equity Partners, L.P., a Delaware limited
partnership ("WPEP") and certain partnerships affiliated with WPEP whose names
appear on Schedule I hereto (collectively "Warburg"); ABS Capital Partners III,
L.P., a Delaware limited partnership ("ABS"); the individuals whose names and
addresses appear from time to time on Schedule II hereto (the "Other
Investors"); and Workscape, Inc., a Delaware corporation (the "Company"), amends
and restates that certain Stockholders Agreement dated as of February 2, 1999,
as amended as of July 15, 1999. Warburg, ABS and the Other Investors are
hereinafter collectively referred to as the "Investors."
RECITALS
WHEREAS, certain of the Other Investors own shares of Series A
Convertible Preferred Stock, par value $0.01 per share of the Company (the
"Series A Preferred Stock"); and
WHEREAS, Warburg and certain of the Other Investors, pursuant to the
terms of an Agreement and Plan of Recapitalization and Sale dated February 2,
1999, as amended, with the Company (the "First Purchase Agreement"), purchased
shares of the Series A Preferred Stock; and
WHEREAS, Warburg, pursuant to the terms of a Securities Purchase
Agreement dated July 15, 1999 with the Company (the "Second Purchase
Agreement"), purchased shares of Series B Convertible Preferred Stock of the
Company, par value $0.01 per share ("Series B Preferred Stock"), Series C
Preferred Stock, par value $0.01 per share ("Series C Preferred Stock"), and
warrants to purchase Class A Common Stock (as defined herein) of the Company
(the "Warrants"); and
WHEREAS, certain of the Other Investors have, pursuant to the terms of
certain subscription agreements (collectively, the "Subscription Agreements"),
purchased shares of the Series A Preferred Stock, Series B Preferred Stock and
Class A Common Stock, par value $0.01 per share, of the Company ("Class A Common
Stock"), and warrants to purchase shares of Class B Common Stock, par value
$0.01 per share, of the Company ("Class B Common Stock", and together with the
Class A Common Stock, the "Common Stock"); and
WHEREAS, ABS and Warburg, pursuant to the terms of a Stock Purchase
Agreement dated as of December 17, 1999 with the Company (the "Series D Purchase
Agreement"), have agreed to purchase shares of Series D Convertible Preferred
Stock of the Company, par value $0.01 per share ("Series D Preferred Stock", and
together with the Series A Preferred Stock, Series B Preferred Stock and Series
C Preferred Stock, the "Preferred Stock"); and
WHEREAS, the Investors and the Company desire to promote their mutual
interests by agreeing to certain matters relating to the operations of the
Company and the disposition and
voting of the Common Stock and the Preferred Stock. The Common Stock (including
all shares of Class A Common Stock issuable upon exercise of the Warrants) and
the Preferred Stock are referred to collectively herein as the "Shares".
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto hereby agree as follows:
1. COVENANTS OF THE PARTIES
(a) Legends. The certificates evidencing the Shares acquired by the
Investors will bear a legend reflecting the restrictions on the transfer of such
securities contained in this Agreement in substantially the following form:
"The Securities evidenced hereby are subject to the terms of
that certain Amended and Restated Stockholders Agreement,
dated as of December 17, 1999, by and among the Company and
certain investors identified therein, including certain
restrictions on transfer. A copy of this Agreement has been
filed with the Secretary of the Company and is available upon
request."
(b) Additional Investors. The parties hereto acknowledge that certain
employees of the Company may become stockholders of the Company after the date
hereof. As a condition to the issuance of shares of capital stock of the Company
to them, the Company shall require such employees to execute and deliver an
agreement containing restrictions substantially similar to those set forth in
Sections 3(a), (b) and (d) hereof.
2. BOARD OF DIRECTORS
(a) Election of Directors.
(i) From and after the date hereof, the Investors and
the Company shall take all action within their respective power,
including but not limited to, the voting of all shares of capital stock
of the Company owned by them, required to cause the Board of Directors
of the Company (the "Board") to consist of five (5) members or such
other number as the Board may from time to time establish, to maintain
the quorum requirements for actions of the Board at a majority of the
entire number of directors, to maintain the voting requirements for
actions of the Board at a majority of directors present at a meeting at
which there is a quorum (except in respect of such matters as this
Agreement, the Amended and Restated Certificate of Incorporation or the
Bylaws of the Company may impose a greater requirement), and at all
times throughout the term of this Agreement to include (A) as long as
Warburg owns (beneficially within the meaning of Rule 13d-3 under the
Exchange Act) at least fifteen percent (15%) of the shares of Common
Stock (on a fully converted basis), two representatives designated by
Warburg (each, a "Warburg Director"), (B) as long as ABS owns
(beneficially within the meaning of Rule 13d-3 under the Exchange Act)
at least fifty percent (50%) of the shares of Series D Preferred Stock
(or shares of Class A Common Stock into which such shares have been
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converted) purchased by it under the Series D Purchase Agreement, one
representative designated by ABS (the "ABS Director"), and (C) Xxxxx X.
Xxxxxxx and Xxxxxxx X. Xxxxxxxx, each of whom shall be entitled to be a
member of the Board for so long as he is serving as an executive
officer of the Company (the "Voting Agreement"). For as long as Warburg
and ABS are entitled to designate directors under this Section 2(a),
the Investors agree that the Warburg Directors and the ABS Director
shall be three of the Preferred Stock Directors (as defined in the
Company's Amended and Restated Certificate of Incorporation).
Notwithstanding anything to the contrary, as of February 2, 2004,
Messrs. Xxxxxxxx and Percia shall no longer be subject to the Voting
Agreement.
(ii) From the date on which the Company completes an
underwritten public offering for shares of Common Stock (the "Initial
Public Offering") pursuant to a registration under the Securities Act
of 1933, as amended (the "Securities Act"), and for as long as Warburg
owns beneficially (within the meaning of Rule 13d-3 under the Exchange
Act) at least twenty percent (20%) of the Common Stock, the Company
will nominate and use its best efforts to have two individuals
designated by Warburg elected to the Board. From the date on which the
Company completes its Initial Public Offering and for as long as
Warburg owns beneficially and of record at least ten percent (10%) of
the outstanding shares of Common Stock, the Company will nominate and
use its best efforts to have one individual designated by Warburg
elected to the Board.
(b) Replacement Directors. In the event that any Warburg
Director or the ABS Director (a "Withdrawing Director") designated in the manner
set forth in Section 2(a) hereof is unable to serve, or once having commenced to
serve, is removed or withdraws from the Board, such Withdrawing Director's
replacement (the "Substitute Director") will be designated by Warburg or ABS, as
applicable. The Investors and the Company agree to take all action within their
respective power, including, but not limited to, the voting of capital stock of
the Company owned by them (i) to cause the election of such Substitute Director
promptly following his or her nomination pursuant to this Section 2(b) or (ii)
upon the written request of Warburg or ABS, as applicable, to remove, with or
without cause, any Warburg Director or the ABS Director, as the case may be.
(c) Observation Rights. In addition to the agreements of the
Investors and the Company set forth above, the Company and each Investor hereby
agree that for so long as ABS is a party to this Agreement and this Agreement is
in effect, ABS shall have the right to have one observer attend each Board
meeting in addition to any directors it has designated in accordance with
Section 2(a). Such observer shall not be entitled to vote on any matter
presented to the Board, and, except as otherwise requested by the Board, shall
not actively participate in Board meetings.
(d) Board Committees. The Company and each Investor further
agree to take, or to cause the Board of Directors to take, all such actions
necessary to cause the ABS Director to be nominated to each committee of the
Board, whether now in existence or created after the date hereof, unless such
nomination would be contrary to applicable law.
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3. TRANSFER OF STOCK
(a) Resale of Securities. No Other Investor shall Transfer any
Shares other than in accordance with the provisions of this Section 3. Any
Transfer or purported Transfer made in violation of this Section 3 shall be null
and void and of no effect.
(b) Rights of First Refusal.
(i) No Other Investor shall Transfer any of the
Shares owned by him (except to members of such Other Investor's family,
heirs, executors or legal representatives or trusts for the benefit of
such Other Investor or such Other Investor's family, provided in each
instance that such transferee agrees to be bound by the provisions of
this Agreement as if such transferee were an original signatory hereto)
unless the Other Investor desiring to make the Transfer (hereinafter
referred to as the "Transferor") shall have first made the offers to
sell all of the Shares then proposed to be transferred by the
Transferor (the "Subject Shares") to the Company and then to the
Investors holding Preferred Stock (the "Preferred Holders") as
contemplated by this Section 3(b), and such offers shall not have been
accepted.
(ii) Offer by Transferor. Copies of the Transferor's
offer shall be given to the Company and the Preferred Holders and shall
consist of an offer to sell to the Company or, failing its election to
purchase all of the Subject Shares, then to the Preferred Holders, all
of the Subject Shares pursuant to a bona fide offer of a third party,
to which copies shall be attached a statement of intention to Transfer
to such third party, the name and address of the prospective third
party transferee, the number of Subject Shares involved in the proposed
Transfer, and the terms of such Transfer.
(iii) Acceptance of Offer.
(A) Within twenty (20) days after the receipt of the
offer described in Section 3(b)(ii), the Company may, at its
option, elect to purchase some or all of the Subject Shares.
The Company shall exercise such option by giving notice
thereof to the Transferor and to the Preferred Holders within
twenty (20) days after receipt of such notice.
(B) If the Company does not elect to purchase all of
the Subject Shares within such 20-day period, one or more
Preferred Holders may purchase all, but not less than all, of
the remaining Subject Shares by giving notice thereof to the
Transferor and to the Company within twenty (20) days after
receipt of notice from the Transferor in accordance with
Section 3(b) to the effect that the Company did not exercise
its option to purchase all of the Subject Shares. Each
Preferred Holder who has complied with the notice provisions
hereof shall be entitled to purchase a pro rata portion of the
remaining Subject Shares equal to the number of remaining
Subject Shares multiplied by a fraction, the numerator of
which shall be the number of Shares owned by such Preferred
Holder and the denominator of which shall be the aggregate
number of Shares owned by the
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Preferred Holders electing to purchase the remaining Subject
Shares. Each Preferred Holder shall have the right of
over-subscription such that if any Preferred Holder having a
similar right of first refusal fails to exercise such right to
purchase its pro rata portion of the remaining Subject Shares,
the Transferor shall promptly notify the other Preferred
Holders and the other Preferred Holders may purchase the
non-purchasing Preferred Holder's portion on a pro rata basis,
within five business days of the date of this subsequent
notice by the Transferor.
(C) In either event, the notice required to be given
by the purchasing party or parties (the "Purchaser") shall
specify a date for the closing of the purchase which shall not
be more than thirty (30) days after the date of the giving of
such notice.
(iv) Purchase Price. The purchase price per share for
the Subject Shares shall be the price per share offered to be paid by
the prospective Transferee described in the offer, which price shall be
paid in cash or, if so provided in the offer of the prospective
transferee, cash plus deferred payments of cash in the same
proportions, and with the same terms of deferred payment as therein set
forth.
(v) Consideration Other Than Cash. If the offer of
Subject Shares under this Section 3(b) is for consideration other than
cash or cash plus deferred payments of cash, the Purchaser shall pay
the cash equivalent of such other consideration. If the Transferor and
the Purchaser cannot agree on the amount of such cash equivalent within
ten (10) days after the beginning of the 20-day period under Section
3(b)(iii)(A), any of such parties may, by three (3) days' written
notice to the other, initiate appraisal proceedings under Section
3(b)(vi) for determination of the cash equivalent. The Purchaser may
give written notice to the Transferor revoking an election to purchase
all, but not less than all, of the Subject Shares within ten (10) days
after determination of the appraised value, if it chooses not to
purchase the Subject Shares.
(vi) Appraisal Procedure. If any party shall initiate
an appraisal procedure to determine the amount of the cash equivalent
of any consideration for Subject Shares under Section 3(b)(v), then the
Transferor, on the one hand, and the Purchaser, on the other hand,
shall each promptly appoint as an appraiser an individual who shall be
a member of a nationally-recognized investment banking firm. Each
appraiser shall, within thirty (30) days of appointment, separately,
investigate the value of the consideration for the Subject Shares as of
the proposed transfer date and shall submit a notice of an appraisal of
that value to each party. Each appraiser shall be instructed to
determine such value without regard to income tax consequences to the
Transferor as a result of receiving cash rather than other
consideration. If the appraised values of such consideration (the
"Earlier Appraisals") vary by less than ten percent (10%), the average
of the two appraisals on a per share basis shall be controlling as the
amount of the cash equivalent. If the appraised values vary by more
than ten percent (10%), the appraisers, within ten (10) days of the
submission of the last appraisal, shall appoint a third appraiser who
shall be member of a nationally recognized investment banking firm. The
third
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appraiser shall, within thirty (30) days of his appointment, appraise
the value of the consideration for the Subject Shares (without regard
to the income tax consequences to the Transferor as a result of
receiving cash rather than other consideration) as of the proposed
transfer date and submit notice of his appraisal to each party. The
value determined by the third appraiser shall be controlling as the
amount of the cash equivalent unless the value is greater than the two
Earlier Appraisals, in which case the higher of the two Earlier
Appraisals will control, and unless that value is lower than the two
Earlier Appraisals, in which case the lower of the two Earlier
Appraisals will control. If any party fails to appoint an appraiser or
if one of the two initial appraisers fails after appointment to submit
his appraisal within the required period, the appraisal submitted by
the remaining appraiser shall be controlling. The Transferor and the
Purchaser shall each bear the cost of its respective appointed
appraiser. The cost of the third appraisal shall be shared one-half by
the Transferor and one-half by the Purchaser.
(vii) Closing of Purchase. The Closing of the
purchase shall take place at the office of the Company or such other
location as shall be mutually agreeable and the purchase price, to the
extent comprised of cash, shall be paid at the closing, and cash
equivalents and documents evidencing any deferred payments of cash
permitted pursuant to Section 3(b)(iv) above shall be delivered at the
closing. At the closing, the Transferor shall deliver to the Purchaser
the certificates evidencing the Subject Shares to be conveyed, duly
endorsed and in negotiable form with all the requisite documentary
stamps affixed thereto.
(viii) Release from Restriction; Termination of
Rights. If the offer to sell is not accepted by the Company, the
Preferred Holders or a combination thereof, the Transferor may make a
bona fide Transfer to the prospective transferee named in the statement
attached to the offer in accordance with the agreed upon terms of such
Transfer, provided that (A) such Transfer shall be made only in strict
accordance with the terms therein stated and (B) the transferee agrees,
in writing, to be bound by the provisions of this Agreement. If the
Transferor shall fail to make such Transfer within sixty (60) days
following the expiration of the time provided above for the election by
the Preferred Holders or, if the Purchaser revokes an election to
purchase the Subject Shares pursuant to Section 3(b)(v), within sixty
(60) days of the date of such notice of revocation, such Subject Shares
shall again become subject to all the restrictions of this Section 3.
(ix) Limitations. The provisions of this Section 3(b)
shall not apply to (A) sales by Tag-Along Investors (as defined below)
pursuant to Section 3(c) hereof or (B) sales by Investors pursuant to
Section 3(d) hereof.
(c) Tag-Along Rights.
(i) If any Investor (a "Selling Holder") intends to
Transfer (other than to any of its Affiliates or to the Company) Shares
representing at least three percent (3%) of the fully-diluted equity of
the Company, the Selling Holder shall notify the remaining
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Investors (the "Tag-Along Investors"), in writing, of such proposed
Transfer and its terms and conditions. Within ten (10) business days of
the date of such notice, each other Tag-Along Investor shall notify the
Selling Holder if it elects to participate in such Transfer. Any
Tag-Along Investor that fails to notify the Selling Holder within such
ten (10) business day period shall be deemed to have waived its rights
hereunder. Each Tag-Along Investor that so notifies the Selling Holder
shall have the right to sell, at the same price and on the same terms
and conditions as the Selling Holder, an amount of Shares equal to the
Shares the third party actually proposes to purchase multiplied by a
fraction, the numerator of which shall be the number of Shares issued
and owned by such Tag-Along Investor and the denominator of which shall
be the aggregate number of Shares issued and owned by the Selling
Holder and each Tag-Along Investor exercising its rights under this
Section 3(c) (assuming, in the case of sales of Common Stock, full
conversion of all shares of Preferred Stock held by the Selling Holder
and each Tag-Along Investor exercising its rights under this Section
3(c)). Notwithstanding the foregoing, if the Selling Holder is selling
only shares of Preferred Stock, holders of Common Stock shall not have
the right to sell shares of Common Stock pursuant to this Section 3(c).
(ii) Notwithstanding anything contained in this
Section 3(c), if all or a portion of the purchase price consists of
securities and the sale of such securities to the Tag-Along Investors
would require either a registration under the Securities Act or the
preparation of a disclosure document pursuant to Regulation D under the
Securities Act (or any successor regulation) or a similar provision of
any state securities law, then, at the option of the Selling Holder,
any one or more of the Tag-Along Investors may receive, in lieu of such
securities, the fair market value of such securities in cash, as
determined in good faith by the Board.
(d) Drag-Along Right.
(i) If at any time and from time to time after the
date of this Agreement, any Investors that together hold at least 80%
of the Shares (the "Controlling Holders") wish to Transfer in a bona
fide arms' length sale all of their Shares to any Person or Persons who
are not Affiliates of the Controlling Holders (for purposes of this
Section 3(d), the "Proposed Transferee"), the Controlling Holders shall
have the right (for purposes of Section 3(d), the "Drag-Along Right")
to require each Investor to sell to the Proposed Transferee all of his
or its Shares (including any warrants or options to acquire Shares) for
the same per share consideration as proposed to be received by the
Controlling Holders (less, in the case of options or warrants, the
exercise price for such options or warrants) then held by such
Investor. Each Investor agrees to take all steps necessary to enable
him or it to comply with the provisions of this Section 3(d) to
facilitate the Controlling Holders' exercise of a Drag-Along Right.
(ii) To exercise a Drag-Along Right, the Controlling
Holders shall give each Investor a written notice (for purposes of this
Section 3(d), a "Drag-Along Notice") containing (1) the name and
address of the Proposed Transferee and (2) the proposed
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purchase price, terms of payment and other material terms and
conditions of the Proposed Transferee's offer. Each Investor shall
thereafter be obligated to sell his or its Shares (including any
warrants or options held by such Investor), provided that the sale to
the Proposed Transferee is consummated within ninety (90) days of
delivery of the Drag- Along Notice. If the sale is not consummated
within such 90-day period, then each Investor shall no longer be
obligated to sell such Investor's Shares pursuant to that specific
Drag-Along Right but shall remain subject to the provisions of this
Section 3(d).
(iii) Notwithstanding anything contained in this
Section 3(d), if all or a portion of the purchase price consists of
securities and the sale of such securities to the Investors would
require either a registration under the Securities Act or the
preparation of a disclosure document pursuant to Regulation D under the
Securities Act (or any successor regulation) or a similar provision of
any state securities law, then, at the option of the Controlling
Holders, the Investors may receive, in lieu of such securities, the
fair market value of such securities in cash, as determined in good
faith by the Board.
(iv) Satisfaction of Conditions. The obligations of
the Investors pursuant to this Section 3(d) are subject to the
satisfaction of the following conditions:
(1) upon the consummation of the sale, all
of the holders of capital stock of the Company shall receive
the same proportion of the aggregate consideration from such
sale that such holder would have received if such aggregate
consideration had been distributed by the Company in complete
liquidation pursuant to the rights and preferences set forth
in the Certificate of Incorporation as in effect immediately
prior to such sale;
(2) for purposes of determining the per
share consideration received by the Controlling Holders, the
aggregate consideration to be received pursuant to the
Proposed Transferee's offer shall be deemed to include (A) any
consideration received by an Investor or its affiliate for any
reason in a transaction arising from or contemplated by the
Proposed Transferee's offer, including, without limitation,
broker's and/or advisor's fees, transitional services and
other post-closing consulting agreements (other than
post-closing employment agreements in the ordinary course
consistent with past practice), and (B) any option, warrant or
other right to acquire and/or dispose of securities of the
successor to the Company resulting from the Proposed
Transferee's offer;
(3) if any holders of shares of any class of
capital stock of the Company are given an option as to the
form and amount of consideration to be received, all holders
of shares of such class will be given the same option;
(4) no Investor shall be obligated to make
any out-of-pocket expenditure prior to the consummation of the
sale (excluding modest expenditures for postage, copies, etc.)
and no Investor shall be obligated to pay more than its "pro
rata share" of reasonable expenses incurred in connection with
a
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consummated sale to the extent such expenses are incurred for
the benefit of all Investors and are not otherwise paid by the
Company or the acquiring party (costs incurred by or on behalf
of an Investor for its sole benefit will not be considered
costs of the transaction hereunder); and
(5) no Investor shall be required to make
any representations or indemnities in connection with the
sale, other than (a) representations concerning each
Investor's valid ownership of its Shares, free of all liens
and encumbrances (other than those arising under applicable
federal and state securities laws), and each Investor's
authority, power and right to enter into and consummate such
sale without violating any other agreement and (b) indemnities
with respect to such representations by it, provided that such
Investor's liability for indemnity shall in no event exceed
the total purchase price received by such Investor for its
Shares.
(e) Subscription Right.
(i) If at any time after the date hereof, the Company
proposes to issue equity securities of any kind (the term "equity
securities" shall include for these purposes any warrants, options or
other rights to acquire equity securities and debt securities
convertible into equity securities) of the Company (other than the
issuance of securities (A) upon conversion of the Preferred Stock
pursuant to the Company's Certificate of Incorporation, (B) to the
public in a firm commitment underwriting pursuant to a registration
statement filed under the Securities Act, (C) pursuant to the
acquisition of another Person by the Company by merger, purchase of
substantially all of the assets or other form of reorganization, (D)
pursuant to an employee stock option plan, stock bonus plan, stock
purchase plan or other management equity program, (E) to vendors,
lenders, customers and consultants to the Company, (F) in connection
with the payment by the Company of Contingent Consideration (as defined
in Section 2.2(a) of the First Purchase Agreement) or (G) upon exercise
of the Warrants or warrants to purchase Class B Common Stock
outstanding on the date hereof, then, as to each Investor who then
holds in excess of five percent (5%) of the then outstanding shares of
Common Stock (on an as converted basis), the Company shall:
(1) give written notice setting forth in
reasonable detail (w) the designation and all of the terms and
provisions of the securities proposed to be issued (the
"Proposed Securities"), including, where applicable, the
voting powers, preferences and relative participating,
optional or other special rights, and the qualification,
limitations or restrictions thereof and interest rate and
maturity; (x) the price and other terms of the proposed sale
of such securities; (y) the amount of such securities proposed
to be issued; and (z) such other information as the Investors
may reasonably request in order to evaluate the proposed
issuance (it being agreed that Xxxxxxx Xxxxxxxx and Xxxxxxxxx
Xxxxxx will be counted as one holder for purposes of said
requirements); and
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(2) offer to issue to each such Investor a
portion of the Proposed Securities equal to a percentage
determined by dividing (x) the number of shares of Common
Stock held by such Investor and issuable to such Investor,
assuming conversion in full of any convertible securities then
held by such Investor, by (y) the total number of shares of
Common Stock then outstanding, including for purposes of this
calculation all shares of Common Stock issuable upon
conversion in full of any then outstanding convertible
securities.
Each Investor shall have 15 days from the date of receipt of
any such notice to notify the Company in writing that it intends to purchase all
or a portion of its pro rata share of the Proposed Securities and stating
therein the quantity of Proposed Securities to be purchased. If an Investor
elects to purchase a share of the Proposed Securities, it shall do so on the
same terms and conditions as the other purchasers thereof. If an Investor fails
to exercise the rights granted hereunder within the 15-day period, the Company
shall have 90 days to effect the sale of the Proposed Securities at a price and
on terms no more favorable, in the aggregate, to the purchasers thereof than
those offered to the Investors. If the sale is not effected within the 90- day
period, the Company shall not issue and sell the Proposed Securities without
first offering the Proposed Securities to the Investors in the manner provided
in this Section 3(e).
(f) Injunctive Relief. The Company and the Investors hereby
declare that it is impossible to measure in money the damages which will accrue
to the parties hereto by reason of the failure of any Investor to perform any of
its obligations as set forth in this Section 3. Therefore, the Company and the
Investors shall have the right to specific performance of such obligations, and
if any party hereto shall institute any action or proceeding to enforce the
provisions hereof, each of the Company and the Investors hereby waives the claim
or defense that the party instituting such action or proceeding has an adequate
remedy at law.
4. TERMINATION. This Agreement shall terminate:
(a) upon the closing of a Qualified Public Offering (as
defined in the Company's Amended and Restated Certificate of Incorporation),
provided, however, the provisions of Section 2(a)(ii) shall remain in full force
and effect following the closing of such Qualified Public Offering and shall
remain in effect at all times following the closing of the Initial Public
Offering;
(b) on the date on which Warburg, ABS and the beneficial
owners of a majority of the Shares (other than Warburg and ABS) shall have
agreed in writing to terminate this Agreement; or
(c) when neither Warburg nor ABS is a shareholder of the
Company.
5. INTERPRETATION OF THIS AGREEMENT.
(a) Terms Defined. As used in this Agreement, the following
terms have the respective meaning set forth below:
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Affiliate: shall mean any Person or entity, directly or indirectly
controlling, controlled by or under common control with such Person or entity.
Exchange Act: shall mean the Securities Exchange Act of 1934, as
amended.
Person: shall mean an individual, partnership, joint-stock company,
corporation, limited liability company, trust or unincorporated organization,
and a government or agency or political subdivision thereof.
security or securities: shall have the meaning set forth in Section
2(1) of the Securities Act.
Securities Act: shall mean the Securities Act of 1933, as amended.
Transfer: shall mean any sale, assignment, pledge, hypothecation, or
other disposition or encumbrance.
(b) Accounting Principles. Where the character or amount of
any asset or amount of any asset or liability or item of income or expense is
required to be determined or any consolidation or other accounting computation
is required to be made for the purposes of this Agreement, this shall be done in
accordance with U.S. generally accepted accounting principles at the time in
effect, to the extent applicable, except where such principles are inconsistent
with the requirements of this Agreement.
(c) Directly or Indirectly. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person.
(d) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed entirely within such State.
(e) Section Headings. The headings of the sections and
subsections of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part thereof.
6. MISCELLANEOUS.
(a) Notices.
(i) All communications under this Agreement shall be
in writing and shall be delivered by hand or facsimile or mailed by
overnight courier or by registered or certified mail, postage prepaid:
(A) if to any of the Other Investors, at the address
or facsimile number of such Other Investor shown on Schedule
II, or at such other address as the Other Investor may have
furnished the Company in writing;
11
(B) if to Warburg, at 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (facsimile: (000) 000-0000), marked for
attention of Xxxxxxx X. Xxxxxxx, or at such other address as
Warburg may have furnished the Company in writing;
(C) if to ABS, at Xxx Xxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxxx, Xxxxxxxx 00000 (facsimile: (000) 000-0000), marked
for attention of Xxxxxxx X. Xxxxxxxx, or at such other address
as ABS may have furnished the Company in writing;
(D) if to the Company, at 00 Xxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 (facsimile (000) 000-0000), marked for
attention of President, or at such other address as it may
have furnished in writing to each of the Investors.
(ii) Any notice so addressed shall be deemed to be
given if delivered by hand or facsimile, on the date of such delivery;
if mailed by courier, on the first business day following the date of
such mailing; and if mailed by registered or certified mail, on the
third business day after the date of such mailing.
(b) Reproduction of Documents. This Agreement and all
documents relating thereto, including, without limitation, (i) consents, waivers
and modifications which may hereafter be executed, (ii) documents received by
each Investor pursuant hereto and (iii) financial statements, certificates and
other information previously or hereafter furnished to each Investor, may be
reproduced by each Investor by a photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and each Investor may
destroy any original document so reproduced. All parties hereto agree and
stipulate that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by each
Investor in the regular course of business) and that any enlargement, facsimile
or further reproduction of such reproduction shall likewise be admissible in
evidence.
(c) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties.
(d) Entire Agreement; Amendment and Waiver. This Agreement and
the First Purchase Agreement, Second Purchase Agreement, Series D Purchase
Agreement and Subscription Agreements constitute the entire understanding of the
parties hereto relating to the subject matter hereof and supersede all prior
understandings among such parties. This Agreement may be amended, and the
observance of any term of this Agreement may be waived with (and only with) the
written consent of the Company, Warburg, ABS and the holders of a majority of
the Shares (measured on a fully converted, exchanged or exercised basis) other
than Warburg and ABS.
(e) If at any time Warburg owns more than 50% of the issued
and outstanding voting securities of the Company, including for this purpose all
securities owned by Warburg
12
that are convertible into or exchangeable for voting securities of the Company
("Voting Stock"), Warburg agrees that (i) it shall be entitled to vote (or take
action by written consent in respect of) not more than 50% of the issued and
outstanding shares of Voting Stock and (ii) it will vote (or take action by
written consent in respect of) any shares in excess of 50% of the Voting Stock
("Neutral Shares") in proportion to the vote of all other holders of Voting
Stock voting (or acting by written consent) on such matter, unless Warburg
elects to abstain from voting in respect of the Neutral Shares; provided,
however, that any amendment or waiver to this Section 6(e) may be effected by
the holders of a majority of the Shares other than Warburg.
(f) Severability. In the event that any part or parts of this
Agreement shall be held illegal or unenforceable by any court or administrative
body of competent jurisdiction, such determination shall not affect the
remaining provisions of this Agreement which shall remain in full force and
effect.
[signature pages follow]
13
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
WORKSCAPE, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
ABS CAPITAL PARTNERS III, L.P.
By ABS Partners III, L.L.C.
Its General Partner
By: /s/ Xxx Xxxxxxxx
-------------------------------------
Name: Xxx Xxxxxxxx
Title: Managing Member
WARBURG, XXXXXX EQUITY PARTNERS, L.P.
By:Warburg, Xxxxxx & Co.,
Its:General Partner
By: /s/ Xxxx Xxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxx
Title: Partner
WARBURG, XXXXXX NETHERLANDS EQUITY PARTNERS I, C.V.
By:Warburg, Xxxxxx & Co.,
Its:General Partner
By: /s/ Xxxx Xxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxx
Title: Partner
S-1
WARBURG, XXXXXX NETHERLANDS EQUITY PARTNERS II, C.V.
By:Warburg, Xxxxxx & Co.,
Its:General Partner
By: /s/ Xxxx Xxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxx
Title: Partner
WARBURG, XXXXXX NETHERLANDS EQUITY PARTNERS III, C.V.
By:Warburg, Xxxxxx & Co.,
Its:General Partner
By: /s/ Xxxx Xxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxx
Title: Partner
/s/ Xxxxx X. Xxxxxxx
----------------------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx, Xx.
----------------------------------------
Xxxxxxx X. Xxxxxxxx, Xx.
/s/ Xxxxxxxxx Xxxxxx
----------------------------------------
Xxxxxxxxx Xxxxxx
/s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxxx
/s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx
S-2
/s/ Xxxxxxxx Xxxxxxx
----------------------------------------
Xxxxxxxx Xxxxxxx
/s/ XxxxXxx Xxxxxx
----------------------------------------
XxxxXxx Xxxxxx
/s/ Xxxxxx Xxxxx
----------------------------------------
Xxxxxx Xxxxx
/s/ Xxxxxxx XxXxxxxx
----------------------------------------
Xxxxxxx XxXxxxxx
/s/ Xxx Xxxxxx
----------------------------------------
Xxx Xxxxxx
/s/ Xxxxxxx Xxxxx
----------------------------------------
Xxxxxxx Xxxxx
S-4
SCHEDULE I
Warburg Investors
Warburg, Xxxxxx Equity Partners, X.X.
Xxxxxxx, Xxxxxx Netherlands Equity Partners I, X.X.
Xxxxxxx, Xxxxxx Netherlands Equity Partners II, X.X.
Xxxxxxx, Xxxxxx Netherlands Equity Partners III, C.V.
SCHEDULE II
Other Investors
Name and Address of Other Investor
Xxxxx X. Xxxxxxx
0000 Xxxxxxxxx Xxxx
Xxxxxx, XX 00000
Xxxxxxx X. Xxxxxxxx
00 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxxxxxxx Xxxxxx
00 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Xxxxxxx Xxxxxxxx
000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxxx X. Xxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxxxxx
00 Xxxxxxxxx Xxx
Xxxxxx, XX 00000
Xxxxxx X. Xxxxxxx
0000 Xxxxx Xxx
Xxxxxxx, XX 00000
Xxxxxxxx Xxxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
XxxxXxx Xxxxxx
00000 Xxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Xxxxxx Xxxxx
00000 Xxxxxxxxx Xxxx
Xxxxx, XX 00000
Xxxxxxx XxXxxxxx
0000 X. 00xx Xxxxxx
Xxxxxxxxx, XX 00000
Xxx Xxxxxx
0 Xxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Xxxxxxx Xxxxx
000 Xxxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
