AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
Exhibit
99.1
AMENDED
AND RESTATED SHAREHOLDERS AGREEMENT
THIS AMENDED AND
RESTATED SHAREHOLDERS AGREEMENT (this “Agreement”), dated as of
March 8, 2005 (the “Effective
Date”), between
Xxxxxxxx Xxxxx Co., a Utah corporation (the “Company”), and Knowledge
Capital Investment Group, a Texas general partnership (the “Purchaser” and, together
with its Permitted Transferees, the “Investor”).
WHEREAS, Purchaser is a
holder of shares of the Company’s outstanding Series A Preferred Stock (the
“Series A
Preferred”), and the
Company and Purchaser have previously entered into the Stockholders Agreement
dated June 2, 1999 (the “Prior
Shareholders Agreement”);
and
WHEREAS, The Company and
Purchaser entered into a Preferred Stock Amendment and Warrant Issuance
Agreement, dated November 29, 2004 (as amended from time to time, the
“Amendment
Agreement”), pursuant to
which, among other things, the Company and Purchaser, on the terms and subject
to the conditions thereof, agreed to amend and restate the Prior Shareholders
Agreement as set forth herein.
NOW,
THEREFORE, in consideration
of the mutual promises and covenants set forth herein, the Company and Purchaser
hereby agree that the Prior Shareholders Agreement is terminated and superceded
and replaced in its entirety by this Agreement, and the parties further agree as
follows:
I. DEFINITIONS
1.1 Definitions.
Capitalized terms used herein but not defined have the meaning assigned to them
in the Amendment Agreement. In addition to the terms defined elsewhere herein,
the following terms have the following meanings when used herein with initial
capital letters:
(a) “Affiliate” of any Person
means any other Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
such Person; and, for the purposes of this definition only, “control” (including the
terms “controlling,” “controlled
by” and
“under common
control with”) means the
possession, direct or indirect, of the power to direct or cause the direction of
the management, policies or activities of a Person whether through the ownership
of securities, by contract or agency or otherwise.
(b) “Associate,” as used to
indicate a relationship with any Person, means:
(i) any corporation or
organization (other than the Company or a majority-owned subsidiary of the
Company) of which such Person is an officer or partner or is, directly or
indirectly, the beneficial owner of 10 percent or more of any class of
securities;
(ii) any trust or other
estate in which such Person has a substantial beneficial interest or as to which
such person serves as trustee or in a similar fiduciary capacity;
and
(iii) any relative or
spouse of such Person, or any relative of such spouse, who has the same home as
such Person or who is a director or officer of the Company or any of its parents
or subsidiaries.
(c) “Assumption
Agreement” means a writing
in substantially the form of Exhibit A
hereto.
(d) A Person will be
deemed the “beneficial
owner” of, will be
deemed to “beneficially
own” and will be
deemed to have “beneficial
ownership” of:
(i) any securities
that such Person or any of such Person’s Affiliates is deemed to “beneficially
own” within the
meaning of Rule 13d-3 under the Exchange Act, as in effect on the date of
this Agreement; and
(ii) any securities
(the “underlying
securities”) that such
Person or any of such Person’s Affiliates or Associates has the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (written or oral),
or upon the exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise (it being understood that such Person will also be deemed
to be the beneficial owner of the securities convertible into or exchangeable
for the underlying securities).
(e) “Board” means the Board
of Directors of the Company.
(f) “Board
Approval” means the
approval of a majority of the members of the Board who (i) are not officers
or employees of the Company or any of its Affiliates and (ii) are not
Purchaser Designees.
(g) “Business
Combination” has the meaning
set forth in Section 4.2(a).
(h) “Capital Lease
Obligations” of any Person
shall mean the obligations of such Person to pay rent or other amounts under any
lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such Person
under GAAP and, for purposes hereof, the amount of such obligations at any time
shall be the capitalized amount thereof at such time determined in accordance
with GAAP.
(i) “Change in
Control” will be deemed
to occur (i) upon any “person” or “group” (within the meaning of Sections 13(d)
and 14(d) of the Exchange Act), becoming the beneficial owner (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the
combined voting power of the Company’s then-outstanding Voting Securities,
whether directly by a stock purchase or indirectly through a Business
Combination of the Company or (ii) the sale by the Company of all or
substantially all of its assets to any such “person” or “group.”
(j) “Common
Stock” means the common
stock of the Company, par value $0.05 per share.
(k) “Common Stock
Dividends” means any
dividends or other distributions on or in respect of the Common Stock excluding
any Common Stock Repurchases.
(l) “Common Stock
Repurchases” means any
purchase or other acquisition by the Company or any direct or indirect
subsidiary thereof to purchase or otherwise acquire any Common Stock excluding
any Common Stock Dividends.
(m) “EBITDA” means, for any
period, the Net Income for such period plus (x) to the extent deducted in
computing such Net Income, without duplication, the sum of (i) income tax
expense or, if imposed by any relevant jurisdiction in lieu of an income tax,
franchise and/or gross receipts tax expense, (ii) Interest Expense,
(iii) depreciation and amortization expense, (iv) amortization of
intangibles (including but not limited to good will), (v) any special
charges and any extraordinary or nonrecurring losses or charges or loan loss
reserves, payments or accruals on loans from the Company to its current or
former employees or directors, non-cash impairments, restricted stock awards and
other similar non-cash items and (vi) other non-cash items reducing Net
Income, minus (y) to the extent added in computing such Net Income, without
duplication, the sum of (A) interest income, (B) extraordinary or
nonrecurring gains and (C) other non-cash items increasing Net Income
(excluding any items that represent the reversal of any accrual of, or cash
reserve for, anticipated cash charges in any prior period) and minus (z) if the
Company sells all or a portion of its corporate campus real estate (regardless
of accounting treatment), any rent amounts paid by the Company related to space
it is leasing or master leasing.
(n) “Excess
Debt” means any
Indebtedness other than Permitted Indebtedness.
(o) “Exchange
Act” means the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
(p) “Financial
Test” will be
satisfied if, on a pro forma basis, after giving effect to the proposed
transaction (with respect to clauses (i) and (ii) below, as if such
transaction had occurred on the first day of the LTM), (i) the Net Worth
would be at least $275.0 million at the end of the most recent fiscal quarter,
(ii) the Fixed Charge Coverage Ratio for the LTM would be at least 3.5:1
and (iii) EBITDA for the LTM would be at least $65.0 million.
(q) “Fixed Charge
Coverage Ratio” means, with
respect to the Company and its subsidiaries for any period, on a consolidated
basis, the ratio of EBITDA for such period to the Fixed Charges for such
period.
(r) “Fixed
Charges” means, with
respect to the Company and its subsidiaries for any period, on a consolidated
basis, the sum of (i) Interest Expense for such period, (ii) income
tax expense of such period and (iii) all dividend payments on any series or
class of preferred stock paid or required to be paid in cash, but any rent
deducted from Net Income pursuant to clause (z) of the definition of EBITDA
shall be not be included as a Fixed Charge regardless of accounting treatment.
(s) “GAAP” means generally
accepted accounting principles in effect from time to time in the United States
of America applied on a consistent basis.
(t) “Guarantee” of or by any
Person (“guaranteeing
person”), means
(i) any obligation, contingent or otherwise, of such Person guaranteeing or
having the economic effect of guaranteeing any Indebtedness of any other Person
(the “primary
obligor”) in any manner,
whether directly or indirectly, and including any obligation of the guaranteeing
person, direct or indirect, (A) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness (whether arising by
virtue of partnership arrangements, by agreement to keep well, to purchase
assets, goods, securities or services, to take-or-pay or otherwise) or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness (B) to purchase or lease property,
securities or services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness, (C) to maintain working
capital, equity capital or any other financial statement condition or liquidity
of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or (D) entered into for the purpose of assuring in any other
manner the holders of such Indebtedness of the payment thereof or to protect
such holders against loss in respect thereof (in whole or in part) or
(ii) any Lien on any assets of the guaranteeing person securing any
Indebtedness of any other Person, whether or not such Indebtedness is assumed by
the guaranteeing person.
(u) “Indebtedness” means, with
respect to any Person, without duplication, (i) all obligations of such
Person for borrowed money, whether short-term or long-term, and whether secured
or unsecured, or with respect to deposits or advances of any kind, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (iii) all obligations of such Person upon which interest
charges are customarily paid (other than trade payables incurred in the ordinary
course of business), (iv) all obligations of such Person under conditional
sale or other title retention agreements relating to property or assets
purchased by such Person, (v) all obligations of such Person issued or
assumed as the deferred purchase price of property or services (other than
current trade liabilities incurred in the ordinary course of business),
(vi) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (vii) all Guarantees by such
Person of Indebtedness of others, (viii) all Capital Lease Obligations of
such Person, (ix) all payments that such Person would have to make in the event
of an early termination, on the date Indebtedness of such Person is being
determined, in respect of outstanding interest rate protection agreements,
foreign currency exchange agreements or other interest or exchange rate hedging
arrangement, (x) all obligations of such Person as an account party in
respect of letters of credit and bankers’ acceptances, (xi) obligations of
such Person to purchase, redeem, retire, defease or otherwise acquire for value
any capital stock of such Person or any warrants, rights or options to acquire
such capital stock and (xii) renewals, extensions, refundings, deferrals,
restructurings, amendments and modifications of any such Indebtedness,
obligations or Guarantee. The Indebtedness of any Person shall include the
Indebtedness of any partnership in which such Person is a general partner, other
than to the extent that the instrument or agreement evidencing such Indebtedness
expressly limits the liability of such Person in respect thereof, provided, that, if the
sole asset of such Person is its general partnership interest in such
partnership, the amount of such Indebtedness shall be deemed equal to the value
of such general partnership interest and the amount of any indebtedness in
respect of any Guarantee of such partnership Indebtedness shall be limited to
the same extent as such Guarantee may be limited.
(v) “Initial
Purchaser Shares” means the
3,311,438 shares of Series A
Preferred held by Purchaser as of the Effective Date.
(w) “Interest
Expense” means, for any
period, the sum of (i) gross interest expense of the Company and its
subsidiaries for such period on a consolidated basis in accordance with GAAP, on
the aggregate principal amount of the Indebtedness of the Company and its
subsidiaries, including (A) the amortization of debt discounts,
(B) the amortization of all fees payable in connection with the incurrence
of Indebtedness to the extent included in interest expense and (C) the
portion of any payments or accruals with respect to Capital Lease Obligations
allocable to interest expense and (ii) capitalized interest of the Company
and its subsidiaries for such period on a consolidated basis in accordance with
GAAP.
(x) “Lien” means, with
respect to any asset, (i) any mortgage, deed of trust, lien, pledge,
encumbrance, assignment, charge or security interest in or on such asset,
(ii) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (iii) in the case of securities, any purchase option,
call or similar right of a third party with respect to such
securities.
(y) “LTM” means the four
full fiscal quarters ended immediately prior to the relevant calculation date
for which financial statements are then available.
(z) “Major
Acquisition” means the
purchase for cash, securities, property or other consideration, whether by
merger, consolidation, acquisition of assets, contribution or any other form of
transaction, of any business or properties in a single transaction or series of
related transactions on which the purchase price paid (including any
Indebtedness assumed by the Company or any of its subsidiaries in connection
with such purchase by the Company or any of its subsidiaries) calculated in
accordance with GAAP (and prior to any write-downs or write-offs of tangible or
intangible assets whether or not defined or permitted by GAAP) (the
“Purchase
Price”), which Purchase
Price, when taken together with the Purchase Prices of all other such purchases
during the twelve months immediately preceding the date of the definitive
agreement for or, if there is no such agreement, the date of consummation,
exceeds $50.0 million.
(aa) “Major
Divestiture” means the
divestiture, whether by merger, consolidation, disposition of assets, spin-off,
contribution or any other form of transaction, in a single transaction or series
of related transactions, of any business or properties of the Company or any of
its subsidiaries that had Revenues in the LTM in excess of 25% of the Company’s
Revenues in the LTM and in which less than 80% of the total consideration paid
in such transaction consists of cash.
(bb) “Net
Income” means for any
period, the net income of the Company and its subsidiaries, determined on a
consolidated basis in accordance with GAAP.
(cc) “Net Working
Capital” means working
capital, excluding cash and all sales tax and income tax reserves that the
Company reasonably expects will not be paid in the 12-month period following the
date the Net Working Capital is calculated.
(dd) “Net
Worth” means, as of the
date of determination, the “shareholders equity” as shown on a consolidated
balance sheet for the Company and its subsidiaries at such date prepared in
accordance with GAAP.
(ee) “Permitted
Acquisition” means any
acquisition of Company securities pursuant to Section 2.1 of this Agreement
and any additional acquisition of Company securities that does not increase
Purchaser’s beneficial ownership of Common Stock by more than 10% in any 12
consecutive month period.
(ff) “Permitted
Indebtedness” means
(i) any Indebtedness up to $20,000,000 to be used for ordinary working
capital purposes only (excluding, without limitation, acquisitions, stock
repurchases or Common Stock dividends), (ii) any Indebtedness in excess of
$20,000,000 if, upon the incurrence of such Indebtedness, with respect to the
Company and its subsidiaries for the LTM, on a consolidated basis, (x) the ratio
of Pro Forma EBITDA for such period to the Pro Forma Fixed Charges for such
period and (y) the ratio of EBITDA for such period to the Fixed Charges for such
period would each be at least 3.5:1.
(gg) “Permitted
Transferees” means any Person
to whom Securities are Transferred in a Transfer not in violation of this
Agreement and who, if required by Section 5.1(a), enters into an Assumption
Agreement, and includes any Person to whom a Permitted Transferee of any
Investor (or a Permitted Transferee of a Permitted Transferee) who further
Transfers shares of Common Stock and who is required to, and does, become bound
by the terms of this Agreement.
(hh) “Person” means an
individual, a corporation, a partnership, an association, a trust or other
entity or organization, including without limitation a government or political
subdivision or an agency or instrumentality thereof.
(ii) “Pro Forma
EBITDA” means EBITDA
calculated by making the following pro forma adjustments (which shall be made in
compliance with SEC requirements): (A) any acquisitions or dispositions since
the beginning of the period for which Pro Forma EBITDA is being determined for
which, under Rule 11-01 of Regulation S-X promulgated by the SEC, pro forma
information would be required in filings with the SEC shall be reflected as if
such acquisitions or dispositions had occurred at the beginning of such period
and (B) rent amounts to be deducted from Net Income pursuant to clause (z) of
the definition of EBITDA if the sale of the corporate campus real estate
occurred after the beginning of the period for which Pro Forma EBITDA is being
calculated shall be determined as if such sale had occurred at the beginning of
such period.
(jj) “Pro Forma Fixed
Charges” means Fixed
Charges, with the following adjustment: Interest Expense shall be calculated by
assuming that the amount of Indebtedness and other obligations giving rise to
such Interest Expense on the most recent practical date on or prior to the
determination of Pro Forma Fixed Charges plus, in the case of a calculation of
Pro Forma Fixed Charges pursuant to Section 4.1(a) (and the calculation of
Permitted Indebtedness), the Indebtedness proposed to be incurred had been the
amount outstanding throughout the period for which Pro Forma Fixed Charges is
being calculated.
(kk) “Public
Offering” means the sale
of shares of any class of the Common Stock to the public pursuant to an
effective registration statement (other than a registration statement on
Form S-4 or S-8 or any similar or successor form) filed under the
Securities Act.
(ll) “Purchaser
Designees” has the meaning
set forth in Section 3.1(a).
(mm) “Restated
Articles” means the
Company’s Articles of Restatement amending and restating its Articles of
Incorporation dated March 4, 2005.
(nn) “Restricted
Securities” means any Voting
Securities and any other securities convertible into, exchangeable for or
exercisable for Voting Securities (whether immediately or otherwise), except any
securities acquired pursuant to a Permitted Acquisition.
(oo) “Revenues” means for any
Person for any period, the revenues of such Person and its subsidiaries
determined on a consolidated basis in accordance with GAAP.
(pp) “Securities” means the Series
A Preferred and the Common Stock held by the Purchaser as of the Effective
Date.
(qq) “Securities
Act” means the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
(rr) “SEC” means the
Securities and Exchange Commission.
(ss) “Senior
Preferred” means the Series
A Preferred and the Series B Preferred.
(tt) “Series B
Preferred” means the Series
B Preferred Stock of the Company.
(uu) “Special Board
Vote” means the
affirmative vote or written consent of not fewer than 80% of the total number of
directors of the Company.
(vv) “Surviving
Person” means the
continuing, surviving or resulting Person in a Business Combination, the Person
receiving a transfer of all or a substantial part of the properties and assets
of the Company, or the Person consolidating with or merging into the Company in
a Business Combination in which the Company is the continuing or surviving
Person, but in connection with which the Senior Preferred is exchanged or
converted into the securities of any other Person or the right to receive cash
or any other property.
(ww) “Total Voting
Power” means, at any
time, the aggregate number of votes which may then be cast by all holders of
outstanding Voting Securities in the election of directors of the
Company.
(xx) “Transfer” means a
transfer, sale, assignment, pledge, hypothecation or other disposition, whether
directly or indirectly pursuant to the creation of a derivative security, the
grant of an option or other right, the imposition of a restriction on
disposition or voting or transfer by operation of law. Notwithstanding the
foregoing, “Transfer” does not include
any change of control of Purchaser or a successor of Purchaser.
(yy) “Voting
Securities” means the Common
Stock and the Series A Preferred and all other securities of the Company
entitled to vote generally in the election of directors of the Company, except
to the extent such voting rights are dependent upon the non-payment of
dividends, events of default or bankruptcy or other events not in the ordinary
course of business.
(zz) “Warrant” means the
warrants to purchase Common Stock issued pursuant to the Amendment
Agreement.
II. STANDSTILL
2.1 Acquisition of
Restricted Securities. Without prior
Board Approval, no Investor will purchase or otherwise acquire beneficial
ownership of any Restricted Securities if after such acquisition the Investors
would have, in the aggregate, beneficial ownership of 25% or more of the Total
Voting Power (the “25%
Threshold”); provided, however, that the
foregoing restriction will not apply to (i) any acquisition of Restricted
Securities that is approved prior to such acquisition by a majority of the
members of the Board that are not Purchaser Designees or Affiliates or
Associates of any Investor or by the holders of a majority of the Total Voting
Power, (ii) purchases of Common Stock upon exercise of any Warrant,
(iii) the acquisition of beneficial ownership of additional Senior
Preferred pursuant to the terms thereof and (iv) a Permitted Acquisition or
any other transaction or series of transactions permitted or contemplated by
this Agreement or the Amendment Agreement.
2.2 Other
Restrictions. Without prior
Board Approval, except as otherwise permitted hereunder, no Investor will do any
of the following:
(a) solicit proxies
from other shareholders of the Company in opposition to a recommendation of the
Board for any matter to be considered at any meeting of the shareholders of the
Company, except matters on which a vote of Series A Preferred or the Senior
Preferred, in either case, as a separate voting group, is required or as
permitted by this Agreement;
(b) knowingly form,
join or participate in or encourage the formation of a “group” (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any Voting
Securities of the Company, other than a group consisting solely of Affiliates of
Purchaser or the Company; or
(c) deposit any Voting
Securities of the Company into a voting trust or subject any such Voting
Securities to any arrangement or agreement with respect to the voting thereof,
other than any such trust, arrangement or agreement (i) the only parties
to, or beneficiaries of, which are Affiliates of an Investor; and (ii) the
terms of which do not require or expressly permit any party thereto to act in a
manner inconsistent with this Agreement.
2.3 No
Breach. No Investor will
be deemed to have breached the terms of Section 2.1 above if Voting
Securities beneficially owned by the Investors exceed the percentage limitation
set forth in Section 2.1 due to any reduction in Total Voting Power or
other action by the Company or due to any Investor’s acquisition of Company
securities pursuant to a Permitted Acquisition.
III. BOARD
REPRESENTATION; CONSULTATION
3.1 Nomination and
Voting.
(a) The Company will
nominate for election as directors of the Company up to the following numbers of
persons designated by Purchaser (the “Purchaser
Designees”): (i) if
Purchaser is the beneficial owner of 1,760,000 or more shares of Series A
Preferred, two Purchaser Designees; (ii) if Purchaser is the beneficial owner of
at least 880,000 but less than 1,760,000 shares of Series A Preferred, one
Purchaser Designee; (iii) if Purchaser is the beneficial owner of at least one
but less than 880,000 shares of Series A Preferred, one Purchaser Designee,
provided, that such
Purchaser Designee must be Xxxxxx X. XxXxxxxx, and Xx. XxXxxxxx must agree to
serve as such Purchaser Designee; and (iv) in addition to any Purchaser Designee
or Designees Purchaser is entitled to designate pursuant to clauses (i) through
(iii) above, if Purchaser is the beneficial owner of at least 1,000,000 shares
of Common Stock, one Purchaser Designee. If Purchaser is entitled to designate
more than one Purchaser Designee, each will be nominated to be elected to a
different class of directors to the extent the Board is divided into classes.
The share numbers set forth in this Section 5.1(a) are subject to adjustment for
any stock split, combination, stock dividend or similar event with respect to
such shares.
(b) As of the
effective date of this Agreement, Purchaser is entitled to designate three
Purchaser Designees, and currently Xxxxxx X. XxXxxxxx and Xxxxx X. Xxxxxx serve
on the Board as Purchaser Designees. The Company and Purchaser acknowledge that
Xxxxxx X. Xxxxxxx, who serves as Chairman of the Board, is not a Purchaser
Designee.
(c) The Company, at
each meeting of shareholders of the Company at which directors are elected,
will, to the extent requested by Purchaser, cause to be nominated for election
as directors of the Company the appropriate number of Purchaser Designees as
determined pursuant to Section 3.1(a), which in no event shall exceed
three, provided, that if a class
of only three or fewer directors stands for election at any meeting, no more
than one Purchaser Designee shall stand for election at such meeting to serve as
a member of such class. The Company will solicit proxies from its shareholders
for such nominees, vote all management proxies in favor of such nominees, except
for such proxies that specifically indicate to the contrary and otherwise use
its best efforts to cause such nominees to be elected to the Board as herein
contemplated.
(d) If any Purchaser
Designee ceases to be a director of the Company, the Company will promptly upon
the request of Purchaser cause a person designated by Purchaser to replace such
director. If Purchaser fails to designate for election at a meeting of
shareholders the full number of Purchaser Designees to which the Purchaser is
entitled pursuant to Section 3.1(a), Purchaser will thereafter be permitted to
designate additional Purchaser Designees, up to the additional number of
Purchaser Designees that would be permitted pursuant to Section 3.1(a), and the
Company will, promptly upon the request of Purchaser cause such additional
Purchaser Designees to be elected or appointed a director of the
Company.
(e) The Company
covenants that the total number of seats on the Board (including any vacant
seats) will in no event exceed 15 so long as Purchaser is entitled to designate
at least one Purchaser Designee.
(f) At all times after
the date hereof, if Purchaser is entitled to designate at least one Purchaser
Designee, and to the extent permitted by law and applicable rules of the New
York Stock Exchange, the Company shall ensure that at least one Purchaser
Designee is a member of any committee of the Board requested by Purchaser, other
than any special committee of directors formed as a result of any conflict of
interest arising from any Purchaser Designee’s relationship with
Purchaser.
(g) So long as
Purchaser beneficially owns a majority of the outstanding shares of Senior
Preferred, persons elected to the Board by holders of the Senior Preferred
pursuant to Article IV.C.4(d) of the Restated Articles (the “Default
Designees”) will be deemed
to be Purchaser Designees for purposes of Sections 3.1(d) through (g). If
Purchaser beneficially owns less than a majority of the outstanding shares of
Senior Preferred, then the Default Designees will not be deemed to be Purchaser
Designees for purposes of Section 3.1(d) through (g).
3.2 Director
Fees. Designees of
Purchaser will not be entitled to receive fees from the Company for their
service as directors for any period during which Hampstead Interests, LP
receives a fee pursuant to the Amended and Restated Monitoring Agreement, dated
as of the date hereof, between the Company and Hampstead Interests, LP (as
amended from time to time).
3.3 Consultation. So long as (i)
Purchaser is the beneficial owner of at least 880,000 shares of Series A
Preferred (subject to adjustment for any stock split, combination, stock
dividend or similar event with respect to the Series A Preferred) and (ii)
Xxxxxx X. XxXxxxxx retains substantially the same authority of a Managing
Partner of Purchaser (as CEO and President of Hampstead Associates, Inc. or
otherwise), Purchaser will have the right to consult with the Company, including
its principal officers, and to participate in the drawing up of any
recommendation or Company position, prior to its presentation to the Board of
Directors (if applicable) or implementation, regarding the following:
(a) the appointment
and/or termination of the chief executive officer, chief operating officer,
president and chief financial officer, or any person or persons fulfilling
similar duties;
(b) the remuneration,
both cash and non-cash, and other benefits of the officers and of any managers
of the Company with annual salaries in excess of $100,000;
(c) the appointment
and/or termination of the Company’s auditors and accountants;
(d) the annual
operating and capital budgets of the Company;
(e) any deviation from
the approved budgets referred to in paragraph (d) by more than 20 percent on any
line item or 10 percent of the total budget; and
(f) the Company’s
annual or long range strategic plans which incorporate specific business
strategies, operating agenda, investment and disposition objectives, or
capitalization and funding strategies.
The foregoing
rights are in addition to any voting or other rights granted to Purchaser by any
other document or agreement or by any law, rule or regulation.
3.4 Access. So long as (i)
Purchaser is the beneficial owner of at least 880,000 shares of Series A
Preferred (subject to any stock split, combination, stock dividend or similar
event with respect to the Series A Preferred) and (ii) Xxxxxx X. XxXxxxxx
retains substantially the same authority of a Managing Partner of Purchaser (as
CEO and President of Hampstead Associates, Inc. or otherwise), the Company will,
and will cause its subsidiaries and each of the Company’s and its subsidiaries’
officers, directors, employees, agents, representatives, accountants and counsel
to: (a) afford the members, officers, employees and authorized agents,
accountants, counsel, financing sources and representatives of Purchaser
reasonable access, during normal business hours and without unreasonable
interference with business operations, to the offices, properties, other
facilities, books and records of the Company and each subsidiary and to those
officers, directors, employees, agents, accountants and counsel of the Company
and of each subsidiary who have any knowledge relating to the Company or any
subsidiary and (b) furnish to the members, officers, employees and authorized
agents, accountants, counsel, financing sources and representatives of
Purchaser, such additional financial and operating data and other information
regarding the assets, properties and goodwill of the Company and its
subsidiaries (or legible copies thereof) as Purchaser may from time to time
reasonably request.
IV. PURCHASER
CONSENT RIGHTS
4.1 Extraordinary
Actions. So long as
Purchaser is entitled to designate at least two Purchaser Designees, the
approval of a Special Board Vote will be required for the Company to effect any
of the following transactions without first obtaining Purchaser’s prior written
consent:
(a) the incurrence of
Excess Debt;
(b) a Major
Divestiture with respect to which the Company does not satisfy the Financial
Test; and
(c) a Major
Acquisition, the Purchase Price of which exceeds seven times the acquired
entity’s or business’ EBITDA for the LTM.
4.2 Business
Combinations, Etc. So long as
Purchaser is the beneficial owner of at least 880,000 shares of Series A
Preferred (as adjusted for any stock dividends, combinations or splits with
respect to the Series A Preferred), the Company may not, without obtaining the
prior written consent of Purchaser:
(a) authorize or
effect any merger, consolidation, combination, recapitalization, reorganization
or other transaction (whether or not the Company is the Surviving Person) (any
such transaction, a “Business
Combination”) or sale,
assignment, transfer, conveyance or other disposal of all or substantially all
of its properties or assets in one or more related transactions to another
Person unless: (A) the Company is the Surviving Person or the Surviving Person
is a corporation organized or existing under the laws of the United States, any
state thereof or the District of Columbia, (B) the Senior Preferred remains
outstanding (if the Surviving Person is the Company) or is converted into or
exchanged for and becomes shares of the Surviving Person (if other than the
Company), in each case such that the Senior Preferred or shares into which it is
converted or for which it is exchanged has in respect of the Surviving Person
the same powers, preferences and relative participating optional or other
special rights, and the qualifications, limitations or restrictions thereon,
that the Senior Preferred had immediately prior to such transaction, and such
Surviving Person has no class of shares either authorized or outstanding ranking
prior to or on a parity with the Senior Preferred except the same number of
shares ranking prior to or on a parity with the Senior Preferred and having the
same rights and preferences as the shares of the Company authorized and
outstanding immediately prior to any such transaction and (C) the Company
delivers to Purchaser prior to the consummation of the proposed transaction an
officers’ certificate and an opinion of counsel to the combined effect that such
transaction complies with the terms of this Section 4.2(a) and that all
conditions precedent to such transaction have been satisfied; or
(b) pay any Common
Stock Dividends or complete any Common Stock Repurchases in the amount (valued
in the good faith opinion of the Board), if any, by which the aggregate of all
Common Stock Dividends plus the gross amount expended by the Company or any
direct or indirect subsidiary thereof to complete Common Stock Repurchases for
the LTM, exceeds 10% of the Net Income for the LTM; provided, however, that if (i) the
Company previously has redeemed a sufficient number of shares of Senior
Preferred such that it has paid to holders of Senior Preferred at least $30
million in aggregate Liquidation Price (as such term is defined in the Restated
Articles), whether pursuant to the Restated Articles or the provisions of
Section 5.2 below, (ii) the Company has prior to and will have after the payment
of any such Common Stock Dividends or completion of any such Common Stock
Repurchases positive Net Working Capital and (iii) the Company’s Pro Forma
EBITDA for the LTM equals or exceeds at least two times the Company’s Pro Forma
Fixed Charges for the LTM, then the Company may utilize any or all of its cash
in excess of 56.2% of the aggregate Liquidation Price of, and all accrued and
unpaid dividends on, all then remaining outstanding shares of Senior Preferred
to pay any such Common Stock Dividends or complete any such Common Stock
Repurchases; provided, further, that (x) no such
Common Stock Dividend may be paid to, and no such Common Stock Repurchase may be
completed with, any Affiliate of the Company and (y) the aggregate amount of any
such Common Stock Dividends (without limiting the aggregate amount of any such
Common Stock Repurchases) may not exceed 25% of Net Income for the
LTM.
V. TRANSFER OF
SECURITIES
5.1 Transferability.
(a) Any Investor may
Transfer all or any part of the shares of Senior Preferred held by such Investor
to any Person provided one of the three following conditions is satisfied:
(i) the Person duly
executes and delivers an Assumption Agreement;
(ii) the Company has
fully exercised its Redemption Right pursuant to Section 5.2 or the Redemption
Right has otherwise expired; or
(iii) the aggregate
Liquidation Price of all Initial Purchaser Shares that remain in Purchaser’s
possession immediately following such Transfer will equal or exceed $30,000,000.
The foregoing
notwithstanding, no Transfer will be permitted (other than pursuant to a Public
Offering) pursuant to clause (i), (ii) or (iii) unless in connection therewith
the Company has been furnished an opinion of such Investor’s counsel (which
counsel shall be reasonably acceptable to the Company, provided, that any law
firm having at least 100 lawyers, including associates and partners, shall be
deemed acceptable, “Counsel”) to the effect
that such Transfer is exempt from or not subject to the registration
requirements of Section 5 of the Securities Act.
(b) In the event of
any purported Transfer by any Investor of any shares of Senior Preferred not
permitted by Section 5.1(a), such purported Transfer will be void and of no
effect and the Company will not give effect to such Transfer.
(c) Each certificate
representing shares of Senior Preferred issued to any Investor will bear a
legend on the face thereof substantially to the following effect (with such
additions thereto or changes therein as the Company may be advised by counsel
are required by law) (the “Legend”):
“THE SHARES OF
STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A SHAREHOLDERS AGREEMENT
BETWEEN THE COMPANY AND (INVESTOR), A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY. NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION
OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE
MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH SHAREHOLDERS
AGREEMENT.”
“THE SHARES OF
STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THEY HAVE BEEN REGISTERED UNDER THAT ACT OR ANY OTHER
APPLICABLE LAW OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.”
The Legend will be
removed by the Company by the delivery of substitute certificates without such
Legend in the event of (i) a Transfer permitted by Section 5.1(a) and
in which the Transferee is not required to enter into an Assumption Agreement or
(ii) the termination of this Article V pursuant to the terms of this
Agreement; provided, however, that the second
paragraph of such Legend will only be removed if at such time a legal opinion
from counsel to the Transferee shall have been obtained to the effect that such
legend is no longer required for purposes of applicable securities laws. In
connection with the foregoing, the Company agrees that, if the company is
required to file reports under the Exchange Act, for so long as and to the
extent necessary to permit any Investor to sell the Securities pursuant to Rule
144, the Company will use its reasonable best efforts to file, on a timely
basis, all reports required to be filed with the SEC by it pursuant to Section
13 of the Exchange Act, furnish to the Investors upon request a written
statement as to whether the Company has complied with such reporting
requirements during the 12 months preceding any proposed sale under Rule 144 and
otherwise use its reasonable best efforts to permit such sales pursuant to Rule
144.
5.2 Company Special
Redemption Right.
(a) The Company, at
any time, at it sole option, may, upon 15 business days prior notice to
Investors, redeem from Investors, on a pro-rata basis according to the number of
shares of Senior Preferred then held by them, up to an aggregate number of
shares of Senior Preferred held by such Investors having an aggregate
Liquidation Price of $30 million (the “Redemption
Right”). The purchase
price per share of Senior Preferred payable to Investors upon any exercise by
the Company of its Redemption Right (the “Redemption
Price”) shall be
determined as follows:
(i) until the first
anniversary of the Effective Date, the Redemption Price will be 100% of the
Liquidation Price plus accrued and unpaid dividends on the Senior Preferred to
the date of payment;
(ii) thereafter, until
the second anniversary of the Effective Date, the Redemption Price will be 101%
of the Liquidation Price plus accrued and unpaid dividends on the Senior
Preferred to the date of payment;
(iii) thereafter, until
the third anniversary of the Effective Date, the Redemption Price will be 102%
of the Liquidation Price plus accrued and unpaid dividends on the Senior
Preferred to the date of payment; and
(iv) thereafter, until
the fourth anniversary of the Effective Date, the Redemption Price will be 103%
of the Liquidation Price plus accrued and unpaid dividends on the Senior
Preferred to the date of payment.
(b) Any notice of
redemption given pursuant to Section 5.2(a) (“Redemption
Notice”) will be given
in writing by the Company by first class mail, postage prepaid, to the Investors
by the Board at each such Investor’s address as it appears on the stock books of
the Company, provided, that no failure
to give such notice nor any deficiency therein will affect the validity of the
procedure for redemption of any shares of Senior Preferred except as to the
Investor or Investors to whom the Company has failed to give such notice or
whose notice was defective. The Redemption Notice will state:
(i) the applicable
Redemption Price;
(ii) the total number
of shares of Senior Preferred being redeemed;
(iii) the date fixed for
redemption by the Board (the “Redemption
Date”);
(iv) the place or
places and manner in which each Investor is to surrender his or her
certificate(s) to the Company; and
(v) that dividends on
the shares of Senior Preferred to be redeemed will cease to accumulate on the
Redemption Date unless the Company defaults on the Redemption
Price.
(c) Upon surrender of
the certificate(s) representing shares of Senior Preferred that are the subject
of redemption pursuant to Section 5.2(a), duly endorsed (or otherwise in
proper form for transfer, as determined by the Company), in the manner and at
the place designated in the Redemption Notice and on the Redemption Date, the
full Redemption Price for such shares will be paid in cash to the Person whose
name appears on such certificate(s) as the owner thereof, and each surrendered
certificate will be canceled and retired.
(d) In accordance with
the Restated Articles, on and after the Redemption Date, unless the Company
defaults in the payment in full of the applicable Redemption Price, dividends on
the Senior Preferred to be redeemed will cease to accumulate, and all rights of
the holders thereof will terminate with respect thereto on the Redemption Date,
other than the right to receive the Redemption Price.
5.3 Purchaser
Special Redemption Right. In the event of
a Change in Control or if the Company enters into a definitive agreement
providing for a Change in Control, the Company will, within 30 calendar days
after such Change in Control or the execution of such an agreement, offer to
purchase each then-outstanding share of Senior Preferred held by an Investor for
a cash amount per share equal to 101% of the Liquidation Price, plus all accrued
and unpaid dividends on the Senior Preferred to the date of payment. Within 10
calendar days after such Change in Control or the execution of such an
agreement, the Company will provide written notice to each Investor at such
Investor’s address as it appears on the stock books of the Company. The Company
will extend such offer for a period of 20 business days after commencing such
offer and will purchase any shares tendered to the Company pursuant to such
offer at the end of such 20-business day period. Dividends will cease to accrue
with respect to shares of Senior Preferred tendered and all rights of holders of
such tendered shares will terminate, except for the right to receive payment
therefor, on the date such shares are purchased and paid for by the
Company.
VI. TERMINATION
6.1 Termination. The provisions
of this Agreement specified below will terminate, and be of no further force or
effect (other than with respect to prior breaches), as follows:
(a) Articles II,
III and IV will terminate (but in the case of subparagraphs (ii) through (vi),
only as to the Investor that has given the notice contemplated thereby), upon
the earliest to occur of the following dates or events:
(i) ten years after
the date hereof;
(ii) notice that an
Investor has determined to terminate this Agreement effective as of a date
stated in such notice, at any time following the announcement by any Person or
group (other than an Investor) that it intends to commence a tender offer for or
otherwise acquire Voting Securities if, after the completion of such proposed
tender offer or acquisition, such Person or group, together with all persons and
entities controlling, controlled by or under common control (or in a group with
it), would own 20% or more of the Total Voting Power;
(iii) notice that an
Investor has determined to terminate this Agreement effective as of a date
stated in such notice, at any time following the acquisition by any Person or
group of 20% or more of the Total Voting Power or the filing by any Person or
group (other than an Investor) of any document with a governmental agency
(including without limitation a Schedule 13D with the SEC or a notification
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act) to the effect that such
person, entity or group intends or contemplates acquiring Voting Securities if,
after the completion of such proposed acquisition, such person, entity or group,
together with all persons and entities controlling, controlled by or under
common control or in a group with it, would own 20% or more of the Total Voting
Power;
(iv) notice that an
Investor has determined to terminate this Agreement effective as of a date
stated in such notice, at any time following the execution, approval by the
Board or announcement of an agreement, agreement in principle or proposal
(whether or not subject to approval by the Board or other corporate action) that
provides for or involves (A) the merger of the Company with or into any
other entity, (B) the sale of all or any significant part of the assets of
the Company, (C) the reorganization or liquidation of the Company or (D)
any similar transaction or event that is subject to approval by the shareholders
of the Company;
(v) notice that an
Investor has determined to terminate this Agreement effective as of a date
stated in such notice at any time following the failure by the Board or the
Company to observe any of the provisions of this Agreement hereof which breach
has continued for at least five calendar days after notice thereof to the
Company from Purchaser; and
(vi) with respect to
Purchaser only, notice that Purchaser has determined to terminate this Agreement
following (A) the failure of the shareholders of the Company to elect any
Purchaser Designee as a director, (B) the removal of any Purchaser Designee
from the Board, (C) the failure of the Board to replace any Purchaser
Designee with a person designated by an Investor or (D) the failure of the
Board to effect without unreasonable delay and maintain the committee
appointments required under Section 3.1(f);
(b) Article V
will terminate on the fourth anniversary of the date of this
Agreement;
(c) Any portion or all
of this Agreement will terminate and be of no further force and effect upon a
written agreement of the parties to that effect; and
(d) All other sections
of this Agreement will terminate at such time as all other sections of this
Agreement have terminated.
VII. MISCELLANEOUS
7.1 Specific
Performance. The parties
agree that any breach by any of them of any provision of this Agreement would
irreparably injure the Company or Purchaser, as the case may be, and that money
damages would be an inadequate remedy therefor. Accordingly, the parties agree
that the other parties will be entitled to one or more injunctions enjoining any
such breach and requiring specific performance of this Agreement and consent to
the entry thereof, in addition to any other remedy to which such other parties
are entitled at law or in equity; provided, however, that in the
event the Company breaches or is unable to perform (even if legally excused
therefrom) Section 3.1, the obligations of Purchaser under Article II
hereof will terminate without further action but the Company will have no
liability for damages as a result thereof.
7.2 Notices. All notices,
requests and other communications to either party hereunder will be in writing
(including telecopy or similar writing) and will be given,
|
if to the Company, to: |
| Xxxxxxxx Xxxxx Co. |
| 0000 Xxxx Xxxxxxx Xxxxxxxxx |
| Xxxx Xxxx Xxxx, Xxxx 00000-0000 |
| Attention: Xxx X. Xxxxxxxxxxx |
| Fax: (000) 000-0000 |
| with a copy to: |
| Xxxx X. Xxxxxxxx |
| Chairman of the Special Committee of the Board of Directors |
| c/o Peterson Partners LP |
| 000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000 |
| Xxxx Xxxx Xxxx, Xxxx 00000 |
| Fax: (000) 000-0000 |
|
with a copy to: |
| Xxxxxx & Whitney LLP |
| 000 Xxxxx Xxxx Xxxxxx, Xxxxx 000 |
| Xxxx Xxxx Xxxx, Xxxx 00000 |
| Attention: Xxxxx X. Xxxxxx |
| Fax: (000) 000-0000 |
| If to any member of Purchaser, to: |
| Knowledge Capital Investment Group |
| c/o The Hampstead Group, LLC |
| 0000 XxXxxxxx Xxxxxx |
| Xxxxx 000 |
| Xxxxxx, Xxxxx 00000 |
| Attention: Xxxxxx X. XxXxxxxx |
| Fax: (000) 000-0000 |
| with a copy to: |
| Xxxxxx Xxxxx Xxxx & Xxxx, P.C. |
| 0000 Xxxx Xxxxxx |
| Xxxxx 0000 |
| Xxxxxx, Xxxxx 00000 |
| Attention: Xxxxxxx X. Xxxxxxxxx, Xx. |
| Fax: (000) 000-0000 |
or such other
address or telecopier number as such party may hereafter specify for the purpose
of notice to the other party hereto. Each such notice, request or other
communication shall be effective when delivered at the address specified in this
Section 7.2.
7.3 Amendments; No
Waivers.
(a) Any provision of
this Agreement may be amended or waived if, and only if, such amendment or
waiver is in writing and signed, in the case of an amendment, by the parties
hereto, or in the case of a waiver, by the party against whom the waiver is to
be effective.
(b) No failure or
delay by any party in exercising any right, power or privilege hereunder will
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided will be
cumulative and not exclusive of any rights or remedies provided by
law.
7.4 Expenses. Except as
otherwise provided herein or in the Amendment Agreement, all costs and expenses
incurred in connection with this Agreement will be paid by the party incurring
such cost or expense.
7.5 Successors and
Assigns. The provisions
of this Agreement will be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns; provided, however, that none of the
parties may assign, delegate or otherwise transfer any of their rights or
obligations under this Agreement without the written consent of the other
parties hereto, except that Purchaser may assign, delegate or otherwise transfer
any of its rights hereunder to any of its Affiliates which commits to the
Company in writing to be bound by the terms hereof (but no assignment or
transfer shall relieve Purchaser of its obligations hereunder) and, upon such
assignment or transfer, references to Purchaser herein will be deemed to include
any such Affiliate. Neither this Agreement nor any provision hereof is intended
to confer upon any Person other than the parties hereto any rights or remedies
hereunder.
7.6 Counterparts;
Effectiveness. This Agreement
may be signed in any number of counterparts, each of which will be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement will become effective when each party hereto will
have received a counterpart hereof signed by the other party
hereto.
7.7 Entire
Agreement. This Agreement,
the Amendment Agreement and the documents contemplated thereby (and all
schedules and exhibits thereto) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements, understandings and negotiations, both written and oral, between the
parties with respect thereto. No representation, inducement, promise,
understanding, condition or warranty not set forth herein or therein has been
made or relied upon by any of the parties hereto.
7.8 Governing
Law. This Agreement
shall be construed in accordance with and governed by the laws of the State of
Utah, without giving effect to the principles of conflict of laws
thereof.
7.9 Registration
Rights. Upon
consummation of one or more Transfers of Securities by an Investor (other than a
Transfer in a Public Offering) to any Qualified Transferee (as such term is
defined in the Amended and Restated Registration Rights Agreement, dated as of
the date hereof, between Purchaser and the Company (the “Registration
Rights Agreement”)), the Company
and each such Qualified Transferee will enter into a registration rights
agreement substantially in the form of the Registration Rights Agreement (to the
extent of the registration rights such Qualified Transferee is entitled to
receive pursuant to the Registration Rights Agreement) with such modifications
thereto as are acceptable to such Qualified Transferee and the Transferring
Investor and do not materially increase the Company’s obligations thereunder
(excluding the effects of multiple parties).
[Signature page
follows.]
IN WITNESS
WHEREOF, the parties hereto have caused this Amended and Restated Shareholders
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
| XXXXXXXX XXXXX CO. | |
| By: | /s/ XXXXXX X. XXXXXXX |
| Name: | Xxxxxx X. Xxxxxxx |
| Title: | President and Chief Executive Officer |
| KNOWLEDGE CAPITAL INVESTMENT GROUP | |
| By: | Inspiration Investments Partners III, L.P. |
| Its: | Manager |
| By: | Inspiration Investments GenPar III, L.P. |
| Its: | General Partner |
| By: | Hampstead Associates, Inc. |
| Its: | Managing General Partner |
| By: | /s/ XXXXXX X. XXXXXXXX |
| Name: | Xxxxxx X. XxXxxxxx |
| Title: | President |
EXHIBIT
A
FORM OF
ASSUMPTION AGREEMENT
ASSUMPTION
AGREEMENT (this “Agreement”), dated as of
___________________, by __________________ (“Transferee”) in favor of
Xxxxxxxx Xxxxx Co., a Utah corporation (the “Company”).
RECITALS
A. The Company and
Knowledge Capital Investment Group (“KC”) are parties to
an Amended and Restated Shareholders Agreement dated as of March 8, 2005 (the
“Shareholders
Agreement”);
and
B. As contemplated by
the Shareholders Agreement, certain transfers by KC of shares of the Company’s
Series A Preferred Stock, which, except in certain circumstances, automatically
convert into shares of the Company’s Series B Preferred Stock (the “Series B
Preferred”) immediately
prior to such transfer, require KC and the Transferee to enter into this
Agreement in favor of the Company.
NOW THEREFORE, in
consideration of the premises and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties agree as
follows:
1. Transferee hereby
acknowledges receipt from KC of ___________________ shares of
Series B1 Replace with
Series A if the Transferee qualifies to receive shares of Series A Preferred
Stock pursuant to the Restated Articles. Preferred and
will, and hereby agrees to, become a party to, and be bound by, to the same
extent as KC, the terms of the Shareholders Agreement, including, without
limitation, the obligations set forth in Section 5.2; provided, however, that
Article III of the Shareholders Agreement will not be applicable to
Transferee, and Transferee will have no rights or obligations thereunder.
Capitalized terms used and not otherwise defined herein shall have the meaning
ascribed to them in the Shareholders Agreement.
2. This Agreement
shall be governed by, and construed in accordance with, the laws of the State of
Utah, without giving effect to the principles of conflict of laws
hereto.
3. This Agreement may
be executed in any number of counterparts, each of which shall be deemed to be
an original and all of which together shall be deemed to be one and the same
instrument.
IN WITNESS
WHEREOF, each of the undersigned has executed this Agreement or caused this
Agreement to be executed on its behalf as of the date first written
above.
| [TRANSFEREE] | |
| By: | |
| Name: | |
| Title: | |
| KNOWLEDGE CAPITAL INVESTMENT GROUP | |
| By: | Inspiration Investments Partners III, L.P. |
| Its: | Manager |
| By: | Inspiration Investments GenPar III, L.P. |
| Its: | General Partner |
| By: | Hampstead Associates, Inc. |
| Its: | Managing General Partner |
| By: | |
| Name: | |
| Title: |
| Agreed and Accepted: | |
| XXXXXXXX XXXXX CO. | |
| By: | |
| Name: | |
| Title: |
