Exhibit 4.1
AVANADE INC.
EMPLOYEE STOCKHOLDERS AGREEMENT
This EMPLOYEE STOCKHOLDERS Agreement (this "Agreement") dated as of August
4, 2000, by and among Avanade Inc., a Delaware corporation (the "Company"), the
holders of shares of Series A Preferred Stock (the "Preferred Shares") listed on
Attachment B (collectively, the "Investors," each individually, an "Investor"),
and the individuals listed on Attachment A (collectively, the "Employees," and
each individually, an "Employee").
The parties agree as follows:
RECITALS
The Company and the Employees have entered into certain employment
agreements (collectively, the "Employment Agreements," and singularly, an
"Employment Agreement") pursuant to which the Company has granted shares of
Common Stock of the Company (the "Common Shares") under the terms of the
Company's 2000 Stock Incentive Plan (the "SIP"). Under the Employment
Agreements, a condition to the Employees' employment with the Company is that
the Employees enter into this Agreement for the purpose of setting forth the
terms and conditions pursuant to which (a) the Employees shall vote their Common
Shares granted to them under the SIP ("Grant Shares") and any Common Shares
issued to the Employees upon exercise of options to purchase Common Shares under
any stock option plan of the Company (such Common Shares are referred to herein
collectively with the Grant Shares as "Shares"), (b) the Investors are granted
certain drag-along rights, and (c) the Employees are granted certain tag-along
rights. The Company, the Employees and the Investors each desire to facilitate
the voting arrangements, the limitation of certain rights of the Investors to
treat sales of the Company as a deemed liquidation, and the granting of
drag-along rights and tag-along rights set forth in this Agreement by agreeing
to the terms and conditions set forth below.
AGREEMENT
ARTICLE I - VOTING AGREEMENT
1.1 VOTING OF SHARES
During the term of this Agreement, Employees shall vote all their Shares
with and in proportion to how the Investors vote their Preferred Shares.
1.2 NO REVOCATION
The voting agreement contained herein is coupled with an interest and may
not be revoked during the term of this Agreement.
ARTICLE II - DEEMED LIQUIDATIONS
No Investor shall at any time hereafter exercise any right it may have
under Section B.3(c) of Article Fifth of the Restated and Amended Certificate of
Incorporation of the Company as in effect as of the date of this Agreement to
treat a sale of shares of stock of the Company, a merger or consolidation of the
Company, a sale, lease or transfer of assets of the Company, or any other
transaction described therein as a liquidation, dissolution or winding up of the
Company. The preceding prohibition shall apply to the successors and assigns of
the Investors, and it shall apply whether or not the transaction in question is
a Qualified Offer (as hereinafter defined).
ARTICLE III - DRAG-ALONG AND TAG-ALONG RIGHTS
3.1 NOTICE OF SALE
In the event any Investor has received a bona fide third-party offer for
the transfer of two-thirds or more of the outstanding shares of capital stock of
the Company that it intends to accept for which the consideration to be received
by the Investor is cash or substantially all cash (a "Qualified Offer"), such
Investor shall promptly deliver to the Company, the Employees and the other
Investor written notice of the sale ("Notice of Sale") and the basic terms and
conditions thereof, including the identity of the proposed purchaser.
3.2 GRANT OF DRAG-ALONG RIGHT
In the event one or more Investors holding an aggregate of two-thirds or
more of the outstanding capital stock of the Company elect to accept a Qualified
Offer, then that Investor or Investors (the "Selling Investors") shall have the
right to require that all or any portion of the Employees' (collectively, the
"Drag-Along Employees," and each individually, a "Drag-Along Employee") include
the same portion (as determined below) of their Shares in the sale in accordance
with the terms of the Notice of Sale; provided, however, that the Selling
Investors shall not have such drag-along right with respect to any Drag-Along
Employee's capital stock unless (a) such transaction for the sale of the Selling
Investors' capital stock (excluding the Drag-Along Shares, as defined below, but
including any other shares of capital stock voluntarily being sold with the
Selling Investors' shares) represents the sale of more than two-thirds of the
outstanding capital stock of the Company and (b) holders of at least two-thirds
of the capital stock then owned by the Investors consent to such transaction and
at least two-thirds of the capital stock then owned by the Investors is included
in such transaction.
Each Drag-Along Employee can be required to sell pursuant to this Section
3.2 that number of Shares equal to the product obtained by multiplying (a) a
fraction, the numerator of which is the aggregate number of Common Shares or
Preferred Shares (on an as-converted to Common Shares basis), as the case may
be, to be transferred by the Selling Investors and the denominator of which is
the aggregate number of Common Shares and Preferred Shares (on an as-converted
to Common Shares basis), as the case may be, owned by the Selling
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Investors at the time of transfer by (b) the aggregate number of Shares owned by
such Drag-Along Employee. The Selling Investors will notify the Drag-Along
Employees of the required transfer at least ten (10) calendar days prior to such
transfer
The drag-along right of the Selling Investors shall be subject to the
terms and conditions set forth in this Section 3.2.
(a) Each Employee and Investor shall be deemed to own the number of shares
of Grant Shares or Common Stock that such Employee or Investor actually holds,
plus, in the case of any Investor, the number of shares of Common Stock that are
issuable upon conversion of any shares of Series A Preferred Stock then held by
such Investor.
(b) The consideration to be received by such Drag-Along Employee for his
or her Drag-Along Shares will equal the amount of such consideration that would
be received in respect of such Drag-Along Shares if the Preferred Shares had
been converted into Common Shares immediately prior to such event, without
regard to any liquidation preference of the Preferred Shares.
(c) Each Drag-Along Employee or Tag-Along Employee (as defined below)
required or permitted to participate in the sale shall deliver to the Selling
Investor all of the Shares that it is required or permitted to sell pursuant to
Section 3.2 (the "Drag-Along Shares") or pursuant to Section 3.3 (the "Tag-Along
Shares") in one or more certificates, properly endorsed for transfer, which
represent the Drag-Along Shares or Tag-Along Shares.
3.3 GRANT OF TAG-ALONG RIGHT
In the event one or more Investors holding an aggregate of two-thirds or
more of the outstanding capital stock of the Company elect to accept a Qualified
Offer, but decline to exercise the drag-along rights it would otherwise have
pursuant to Section 3.2, then the Employees who would have been Drag-Along
Employees if the Selling Investor had exercised its drag-along rights
(collectively, the "Tag-Along Employees," and each individually, a "Tag-Along
Employee") shall have the right to include that portion of their Shares in the
sale as set forth below in accordance with the terms of the Notice of Sale. The
tag-along right of the Tag-Along Employees shall be subject to the terms and
conditions set forth in this Section 3.3.
Each Tag-Along Employee shall exercise its rights under this Section 3.3
by written notice to the Selling Investors. To the extent that one or more of
the Tag-Along Employees exercise such right of participation as provided in the
preceding sentence in accordance with the terms and conditions set forth below,
the number of Preferred Shares or Common Shares that the Selling Investors may
sell in the transaction shall be correspondingly reduced.
(a) Each Tag-Along Employee who elects pursuant to this Section 3.3 may
sell all or any part of that number of Shares equal to the product obtained by
multiplying (i) the aggregate number of Common Shares or Preferred Shares (on an
as-converted to Common
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Shares basis), as the case may be, to be sold by the Selling Investors by (ii) a
fraction, the numerator of which is the aggregate number of outstanding Shares
owned by the Tag-Along Employee at the time of the transfer and the denominator
of which is the total number of Common Shares and Preferred Shares (on an
as-converted to Common Shares basis) outstanding at the time of Transfer.
(b) The consideration to be received by the Tag-Along Employee for its
Tag-Along Shares will equal the amount of such consideration that would be
received in respect of such Tag-Along Shares if the Preferred Shares had been
converted into Common Shares immediately prior to such event, without regard to
any liquidation preference of the Preferred Shares.
3.4 PAYMENT OF PROCEEDS
The stock certificates that the Drag-Along Employees or Tag-Along
Employees deliver to the Selling Investor pursuant to Section 3.2 shall be
transferred by the Selling Investor to the purchaser described in the Notice of
Sale in consummation of the sale pursuant to the terms and conditions specified
in the Notice of Sale, and the Selling Investor shall remit, concurrent with the
closing of such sale, to the Drag-Along Employees or Tag-Along Employees that
portion of the sale proceeds to which the Drag-Along Employees or Tag-Along
Employees are entitled by reason of their participation in such sale.
ARTICLE IV - LEGEND REQUIREMENTS
4.1 LEGEND
Each certificate representing Shares held by the Employees or any assignee
of the Employees shall bear the following legend:
"THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A STOCKHOLDERS AGREEMENT
BY AND AMONG THE COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY (A
COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY), AND BY ACCEPTING ANY
INTEREST IN SUCH SHARES, THE PERSON ACCEPTING SUCH INTEREST SHALL BE
DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF
SAID STOCKHOLDERS AGREEMENT."
4.2 REMOVAL OF LEGEND
At any time after the termination of this Agreement in accordance with
Article IV, any holder of a stock certificate legended pursuant to Section 4.1
may surrender such certificate to the Company for removal of the legend, and the
Company will duly reissue a new certificate without the legend.
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ARTICLE V - TERMINATION
5.1 TERMINATION EVENTS
This Agreement shall terminate upon the closing of a Qualified IPO (as
defined in the SIP).
5.2 TERMINATION OF EMPLOYEE'S EMPLOYMENT; NO EFFECT
In the event that pursuant to an Employment Agreement, an Employee's
employment with the Company is terminated and the Shares are returned to, or
repurchased by, the Company, this Agreement shall continue uninterrupted and in
full force and effect as between the Company, the Investors and the remaining
Employees.
ARTICLE VI - MISCELLANEOUS PROVISIONS
6. MISCELLANEOUS
6.1 SUCCESSORS AND ASSIGNS
The terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
6.2 AMENDMENTS AND WAIVERS
Any term hereof may be amended or waived only with the written consent of
the Company, holders of at least a majority of the Grant Shares held by the
Employees, and Investors. Any amendment or waiver effected in accordance with
this Section 6.2 shall be binding upon the Company, the Investors and any
holders of the Employees' shares, and each of their respective successors and
assigns.
6.3 NOTICES
Any notice required or permitted by this Agreement shall be in writing and
shall be deemed sufficient on the date of delivery, when delivered personally or
by overnight courier or sent by telegram or fax, or 48 hours after being
deposited in the U.S. mail, as certified or registered mail, with postage
prepaid, and addressed to the party to be notified at such party's address or
fax number as set forth on the signature page or on Exhibit A hereto, or as
subsequently modified by written notice.
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6.4 SEVERABILITY
If one or more provisions of this Agreement are held to be unenforceable
under applicable law, the parties agree to renegotiate such provision in good
faith. In the event that the parties cannot reach a mutually agreeable and
enforceable replacement for such provision, then (a) such provision shall be
excluded from this Agreement, (b) the balance of this Agreement shall be
interpreted as if such provision were so excluded, and (c) the balance of this
Agreement shall be enforceable in accordance with its terms.
6.5 GOVERNING LAW
This Agreement and all acts and transactions pursuant hereto and the
rights and obligations of the parties hereto shall be governed, construed and
interpreted in accordance with the laws of the State of Washington, without
giving effect to principles of conflict of laws.
6.6 COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one
instrument.
6.7 TITLES AND SUBTITLES
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
6.8 ADDITION OF EMPLOYEES
Notwithstanding anything to the contrary contained herein, if the Company
shall subsequently issue Grant Shares to an employee who is required by the
compensation committee administering the SIP to execute this Agreement, such
employee shall become a party to this Agreement by executing and delivering an
endorsement in the form of Exhibit A to this Agreement. Upon such execution,
such employee shall be deemed an "Employee" hereunder and shall be entitled to
the rights and shall be subject to the obligations contained herein, and this
Agreement shall be enforceable against such employee in accordance with its
terms, and Attachment A shall be amended to reflect the execution of the
endorsement by such employee.
[Signature Pages Follow.]
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IN WITNESS WHEREOF, the parties hereto have executed this Employee
Stockholders Agreement as of the date first written above.
COMPANY
AVANADE INC.
By:______________________________________
President and Chief Executive Officer
Address: 000 Xxxxx Xxx., Xxxxx 0000
Xxxxxxx, XX 00000
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IN WITNESS WHEREOF, the parties hereto have executed this Employee
Stockholders Agreement as of the date first written above.
INVESTOR
MICROSOFT CORPORATION
By: ______________________________________
Its: ______________________________________
Address: ______________________________________________
______________________________________________
INVESTOR
XXXXXXXX CONSULTING LLP
By: ______________________________________
ITS: ______________________________________
Address: _______________________________________________
_______________________________________________
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IN WITNESS WHEREOF, the parties hereto have executed this Employee
Stockholders Agreement as of the date first written above.
EMPLOYEE
Printed Name:_______________________________
Signature: _________________________________
Address: ______________________________________________
______________________________________________
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ATTACHMENT A
LIST OF EMPLOYEES
COMMON STOCK
EMPLOYEE NO. OF SHARES
--------------------------------------- ---------------
Xxxxxxxx X. Xxxx ....................... 750,000
Xxxxxx Xxxxx ........................... 100,000
Xxxxxx XxxXxxxxx ....................... 50,000
Xxxxxx Xxxxx............................ 250,000
Xxxx Xxxxx.............................. 100,000
Xxxxxx Xxxxxx........................... 50,000
Xxxxxx Xxxxx............................ 50,000
Xxxxx Xxxxxxx........................... 50,000
Total............................. 1,400,000
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ATTACHMENT B
LIST OF INVESTORS
SERIES A PREFERRED STOCK
INVESTOR NO. OF SHARES
---------------------------------------- ------------------------
Xxxxxxxx Consulting LLP................. 51,000,000
Accenture Ltd........................... 8,271,768
Microsoft AVN Holdings, Inc............. 14,343,008
Total.............................. 73,614,776
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EXHIBIT A
ENDORSEMENT
The undersigned, a shareholder of Avanade Inc., a Delaware corporation
(the "Company"), hereby agree to the terms and conditions of the Employee
Stockholders Agreement dated August 4, 2000, originally entered into by and
among the Company and the other parties listed on the signature pages hereto and
acknowledges receipt of a copy of such Employee Stockholder Agreement and agrees
to be bound as an Employee hereunder.
Date: ____________________________ _____________________________
Signature of Shareholder
Print Name:__________________
Address:_____________________
_____________________________
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