EXHIBIT 4.2
EXECUTION COPY
AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this "Agreement") is
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entered into as of May 25, 1999 by and among (i) Law Office Information Systems,
Inc., an Arkansas corporation (the "Company"), (ii) Capital Resource Lenders
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III, L.P., a Delaware limited partnership ("CRL III"), (iii) CRP Investment
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Partners III, LLC, a Delaware limited liability company ("CRP"), (iv) Xxxxxxx
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Xxxxxxxx ("Xxxxxxxx," and together with CRL III and CRP, the "Capital Resource
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Parties"), (v) Sandler Capital Partners IV, L.P., a Delaware limited partnership
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("Sandler IV"), (vi) Sandler Capital Partners IV FTE, L.P., a Delaware limited
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partnership ("Sandler IV FTE", and together with Sandler IV, the "Sandler
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Parties"), (vii) Xxxx X. Xxxxxx ("Xxxxxx"), individually and as Trustee of The
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Xxxxxx Trust ("Xxxxxx Trust"), created by instrument dated March 15, 1989, and
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amended and restated by two Trust Agreements dated November 25, 1997, (viii)
each of the other Persons listed as a Holder on the signature pages hereto who
presently owns or has the right to acquire shares of capital stock of the
Company or who, as a beneficiary under the Xxxxxx Trust, are equitable owners of
capital stock of the Company, (ix) Xxxx Xxxxxxx, an individual ("Beyland"), (x)
Exeter Capital Partners IV, L.P., a Delaware limited partnership ("Exeter"), and
(xi) each of the Persons who shall, after the date hereof, acquire shares of the
capital stock of the Company and join in and become a party to this Agreement by
executing and delivering to the Company an Instrument of Accession in the form
of Exhibit I attached hereto. Each of the persons described in clauses (ii)
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through (xi) of the preceding sentence in their capacities as holders of capital
stock of the Company are hereinafter referred to collectively as the "Holders"
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and singularly as a "Holder".
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RECITALS
WHEREAS, the Company, CRL III and certain of the parties identified in
clauses (vii) and (viii) in the preamble of this Agreement, together with
Dublind Investments LLC, a Delaware limited liability company ("Dublind LLC"),
are parties to the Stockholders' Agreement ("Existing Stockholders Agreement"),
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dated November 24, 1997, among the Company and such Stockholders;
WHEREAS, CRL III has transferred some of its Series A Preferred Shares and
Warrants to CRP and Xxxxxxxx pursuant to that certain Assignment, Assumption and
Consent dated as of January 1, 1998;
WHEREAS, CRL III exercised the Warrants held by it in full immediately
prior to the execution and delivery of this Agreement;
WHEREAS, Dublind LLC has exercised its Warrant dated November 24, 1997 to
purchase 365,346 shares of Common Stock and has transferred such shares of
Common Stock to certain individuals, each of whom is a party hereto as described
in clause (x) in the preamble of this Agreement;
WHEREAS, the Company proposes to sell (i) to the Sandler Parties, CRL III,
Exeter and Beyland an aggregate of 2,495,697 shares of the Company's Series C
Convertible Preferred Stock, $0.001 par value per share, and (ii) to Dublind
Partners Inc., a New York corporation, 86,059 shares of the Company's Common
Stock, pursuant to the Stock Purchase Agreement entered into on or about the
date hereof ("Series C Purchase Agreement") by and among the Company and the
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other parties thereto; and
WHEREAS, as a condition to the execution and delivery of the Series C
Purchase Agreement and the consummation of the transactions contemplated thereby
the parties have agreed to amend and restate the Existing Stockholders'
Agreement so as to include the parties to the Series C Purchase Agreement and
the other parties hereto as parties to the agreement and to revise the terms of
the agreement in the manner provided herein.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby amend and
restate in its entirety the Existing Stockholders' Agreement as follows:
1. DEFINITIONS
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Section 1.1. As used in this Agreement, the following terms have the
meanings indicated:
"Affiliate" means, with respect to any Person, any other Person which
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directly or indirectly controls, or is under common control with, or is
controlled by, such first Person. For the purposes of this definition,
"control", as used with respect to any Person, shall mean the possession,
directly or indirectly through or with one or more intermediaries, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
The terms "controlled by" and "under common control with" shall have correlative
meanings. For purposes of this Agreement, no Stockholder or group of
Stockholders shall be deemed to be an Affiliate of the Company, any other
Stockholder or any of the Company's or such other Stockholders' respective
Affiliates by reason of the ownership of any Shares or other securities or by
reason of the possession or exercise of the right to elect directors of the
Company or any other rights hereunder.
"Beneficial Owner" means a beneficial owner within the meaning of Rules
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13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended ("Exchange
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Act"), as interpreted by the Securities and Exchange Commission, provided that a
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Person shall be deemed to have
beneficial ownership of all securities that such Person has a right to acquire
without regard to the 60-day limitation in subdivision (d)(i) of such Rule 13d-
3. The terms (whether or not capitalized) "beneficially own" and "owned
beneficially" shall have correlative meanings.
"Business Day" means any day other than a Saturday, a Sunday or a day on
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which banking institutions in either New York, New York, or the city and state
in which the principal executive offices of the Company within the United States
are located are not open for business.
"Change in Control" means any Person other than Xxxxxx or a Person
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controlled by Xxxxxx at any time becomes the Beneficial Owner, directly or
indirectly and whether as a result of issuances, redemptions or repurchases by
the Company of Common Stock or transfers of Common Stock by stockholders of the
Company, of Common Stock representing 50% or more of the combined voting power
with respect to the election of directors of the Company represented by all then
outstanding Common Stock of the Company.
"Charter" means the Articles of Incorporation of the Company, as filed with
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the Secretary of State of the State of Arkansas, as they may be amended or
restated from time to time.
"Common Stock" means the common stock of the Company, par value $0.001 per
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share.
"Control Block Sale" means a Transfer of Shares in a single transaction or
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series of related transactions that is (i) not registered under the Securities
Act and (ii) for a number of Shares equal to or greater than ten percent of the
number of Shares outstanding (including the number of shares of Common Stock
that would be received upon conversion of any Rights, whether or not they are
then convertible).
"Current Market Price" means, in respect of any share of Common Stock as of
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any time,
(a) if the Common Stock shall not then be Publicly Traded, the Fair Market
Value per share of Common Stock as at such date as determined by the
Board in good faith, or
(b) if the Common Stock is then Publicly Traded, the average of the
reported last sales prices for the ten consecutive Trading Days
commencing 20 Trading Days before the date in question.
The reported last sales price for each Trading Day shall be
(i) the reported last sales price, regular way, as reported on the
New York Stock Exchange Composite Tape, or
(ii) if not listed or admitted to trading on the New York Stock
Exchange, on the National Market tier of The Nasdaq Stock
Market, or
(iii) if the Common Stock is not listed or admitted to trading on the
National Market tier of the Nasdaq Stock Market at such time, in
the principal consolidated or composite transaction reporting
system on the principal national securities exchange on which
such security is listed or admitted to trading, or
(iv) if such security is not quoted on such National Market tier or
any national securities exchange, the average of the highest bid
and lowest asked prices on such day as reported by The Nasdaq
Stock Market .
As used herein, the term "Trading Day" means a day on which the New York
Stock Exchange, each national securities exchange on which the Common Stock
is listed and The Nasdaq Stock Market are open for business, provided that
if no sales of the Common Stock take place on such day on the relevant
exchange or stock market determined under the immediately preceding
sentence, such day shall not be a Trading Day. The Common Stock shall be
considered to be "Publicly Traded" as of any date if on such date (i) the
Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act
and (ii) the Common Stock is listed for trading on a national securities
exchange registered under the Exchange Act or traded in the over-the-
counter market and quoted on The Nasdaq Stock Market.
"Designated Competitor" means each Person listed on Exhibit II so long as
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such Person or any of its Affiliates is engaged in the legal publishing
business.
"Disinterested Outside Director" means, unless any such requirement is
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waived by the Majority Senior Holders, an individual who satisfies each of the
following requirements: (i) has a significant strategic position or expertise
relative to the business of the Company, (ii) is not (A) an officer or employee
of the Company or any of its Subsidiaries, (B) a director, employee, partner,
manager or other member of management of any Affiliate of the Company (except a
director of a Subsidiary of the Company), (C) a relative of any Person described
in subclause (ii)(A) or (ii)(B) or (D) a trustee of any trust or estate in which
any Person described in subclause (ii)(A), (ii)(B) or (ii)(C) is a beneficiary
or has a substantial beneficial interest and (iii) does not have any other
relationship which would interfere with the exercise of independent judgment in
carrying out the responsibilities of a Director of the Company.
"Fair Market Value" means, in respect of any security, asset or other
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property, the price at which a willing seller would sell and a willing buyer
would buy such security, asset or other property having full knowledge of the
facts, in an arm's-length auction transaction without time constraints, and
without being under any compulsion to buy or sell. The Fair Market Value of a
share of Common Stock as of any time shall be determined as of the last day of
the most recent calendar month which ended prior to such time, shall be
determined without giving effect to any discount for a minority interest, to any
lack of liquidity of the Common Stock or to the fact that the Company may have
no class of equity security registered under the Exchange Act. The Fair Market
Value of the Company shall be determined on a going concern basis, and on the
basis that
the management and other key employees of the Company and its subsidiaries will
continue to be employed indefinitely and without treating as liabilities the
amount, if any, payable or which may be payable by the Company pursuant to the
indemnification provisions of the Series A Stock Purchase Agreement or the
Series C Stock Purchase Agreement.
"Family Member" means, with respect to any person, such person's spouse,
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children, grandchildren, parents or siblings, or any spouse of any children,
grandchildren, parents or siblings of such person, or any children or
grandchildren of any siblings of such person, or heirs or devisees and any trust
for the benefit of any of the foregoing.
"Holder" means at any time any Person that holds Shares who (i) is one of
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the Holders identified in the preamble to this Agreement or (ii) hereafter
becomes a party to this Agreement in accordance with the provisions hereof by
executing and delivering to the Company an Instrument of Accession in the form
attached at Exhibit I.
"IPO" means the consummation of an underwritten initial public offering of
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the Company's stock registered under the Securities Act.
"IPO Date" means the closing date of the IPO.
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"Majority Series A Holder" and "Majority Series C Holder" have the meanings
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given to such terms in the Charter.
"Majority Senior Holders" means, as of any time, any Holder who holds, or
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Holders who hold, in the aggregate, more than fifty percent (50%) of the Shares
then held by all Senior Holders.
"Majority Warrant Holders" means, as of any time, any Holder who holds, or
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Holders who hold, in the aggregate, more than fifty percent (50%) of the
Warrants and Warrant Shares then held by all Holders.
"New Securities" means, subject to Section 4.4, any newly issued shares of
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capital stock of the Company, including Common Stock and any class or series of
preferred stock, whether authorized or not, and Rights to acquire shares of
Common Stock or preferred stock.
"New Securities Purchaser" has the meaning set forth in the definition of
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"Preissuance Notice" set forth below in this Section 1.1.
"Notes" has the meaning given to such term in the Series A Purchase
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Agreement.
"Number of Common Shares Outstanding" as of any time means the sum of (i)
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the number of shares of Common Stock which then are actually issued and
outstanding, plus (ii) the total number of additional shares of Common Stock
which would then be issued and outstanding if it
were assumed that all Preferred Shares and Warrants then outstanding, if any,
were then duly converted or exercised in full (whether or not then convertible
or exercisable).
"Parker Holder" means Xxxxxx, any Family Member of Xxxxxx, the Xxxxxx
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Trust, any beneficiary of the Xxxxxx Trust and any Permitted Transferee of any
such Person, in each case in such Person's capacity as a Holder.
"Part A" and "Part C" refer to Part A and Part C, respectively, of Article
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Fourth of the Charter.
"Person" means any individual, corporation, limited liability company,
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general or limited partnership, joint venture, association, joint stock company,
trust, unincorporated business or organization, governmental authority or other
entity or legal person, whether acting in an individual, fiduciary or other
capacity.
"Preferred Shares" means the Series A Preferred Shares and the Series C
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Preferred Shares.
"Preissuance Notice" shall be a written notice given to the Investors
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pursuant to Section 4.1 no later than ten days prior to the date the Company
plans to issue New Securities. Each Preissuance Notice shall (i) specify the
kind and amount of New Securities proposed to be issued, (ii) if such New
Securities consist of or include Rights to acquire Common Stock, briefly
describe the terms of such Rights, (iii) identify each Person to whom such New
Securities are proposed to be issued (each a "New Securities Purchaser"), if
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then known by the Company, (iv) state the method or manner of issuance, (v)
state the kind(s) and amount(s) of consideration for which such New Securities
are proposed to be issued and the determination of the Company's Board of
Directors of the Fair Market Value of any such consideration other than cash and
(vi) describe the other material terms and conditions of the proposed issuance
of New Securities.
"Private Sale" means, with respect to any Transfer, a privately negotiated
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transaction between the Transferor and the Transferee.
"Pro Rata" means with respect to a Holder that is one of an applicable
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group of Holders the equivalent of a fraction, the numerator of which is the
number of Shares then held by such Holder plus the number of Shares then
issuable upon conversion of any other security convertible into Shares then held
by such Holder, and the denominator of which is the total number of Shares then
outstanding among all relevant Holders of such group plus the number of Shares
then issuable upon conversion of any other security convertible into Shares then
outstanding among all relevant Holders of such group.
"Redemption Event" has the meaning given to such term in the Charter.
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"Redemption Price" has the meaning given to such term in the Charter.
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"Rights" means any options, warrants, convertible or exchangeable
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securities or other rights, however denominated, to subscribe for, purchase or
otherwise acquire any Common Stock, with or without payment of additional
consideration in cash or property, either immediately or upon the occurrence of
a specified date or a specified event or the satisfaction or happening of any
other condition or contingency.
"Securities Act" means the Securities Act of 1933, as amended, or any
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successor federal statute, and (unless the context otherwise indicates) the
rules and regulations of the Commission promulgated thereunder, as they each
may, from time to time, be in effect.
"Senior Holder" means any Holder of Series A Shares, Series C Shares,
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Warrants or Warrant Shares.
"Series A Preferred Shares" means shares of the Series A Convertible
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Preferred Stock of the Company, par value $0.001 per share.
"Series A Purchase Agreement" means the Senior Subordinated Note and
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Securities Purchase Agreement, dated November 24, 1997, between the Company and
CRL III, as amended.
"Series A Shares" means shares of Series A Preferred Stock and shares of
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Common Stock issued upon conversion of shares of Series A Preferred Stock in
accordance with the terms thereof.
"Series C Holders" means Holders of Series C Shares.
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"Series C Preferred Shares" means shares of the Series C Convertible
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Preferred Stock of the Company, par value $0.001 per share.
"Series C Shares" means shares of Series C Preferred Stock and shares of
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Common Stock issued upon conversion of shares of Series C Preferred Stock in
accordance with the terms thereof.
"Shares" means shares of Common Stock and any Rights which are convertible
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into or exchangeable or exercisable for Common Stock, including the Preferred
Shares and Warrants.
"Subordinate Holder" means any Holder that is not a Senior Holder.
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"Subsidiary" of any Person as of any relevant date means a corporation,
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company or other entity (i) more than fifty percent (50%) of whose outstanding
shares or equity securities are, as of such date, owned or controlled, directly
or indirectly through one or more Subsidiaries, by such Person, and the shares
or securities so owned entitle such Person and/or its Subsidiaries to elect at
least a majority of the members of the board of directors or other managing
authority of such corporation, company or other entity notwithstanding the vote
of the holders of the remaining shares or equity securities so entitled to vote
or (ii) which does not have outstanding shares or securities, as may be the case
in a partnership, joint venture or unincorporated association, but more than
fifty percent (50%) of whose ownership interest is, as of such date, owned or
controlled, directly or indirectly through one or more Subsidiaries, by such
Person, and in which the ownership interest so owned entitles such Person and/or
Subsidiaries to make the decisions for such corporation, company or other
entity.
"Transfer" means, when used with respect to any Shares or any interest in
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the Xxxxxx Trust, to sell, assign, make a gift of, distribute (including
distributions upon dissolution or liquidation and distributions to partners of
any Holder), pledge, hypothecate, grant an option with respect to, or otherwise
transfer, encumber or subject to any claim or lien of any nature such Share or
interest, including, without limitation, pursuant to a Permitted Transfer. For
all purposes under this Agreement a Transfer of any interest in the Xxxxxx Trust
shall be deemed to be a Transfer of a proportionate number of Shares then held
by the Xxxxxx Trust. "Transferor", "Transferee" and "Transfer" when used as a
noun shall have correlative meanings.
"Warrants" has the meanings given to such term in the Series A Purchase
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Agreement.
"Warrant Holder" means a Holder that holds Warrant Shares.
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"Warrant Shares" means the 1,056,616 shares of Common Stock that were
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issued upon exercise of the Warrants held by CRL III immediately prior to the
execution and delivery of this Agreement and any shares of Common Stock that may
hereafter be issued or issuable upon exercise of the outstanding Warrants in
accordance with the terms thereof.
Section 1.2. Terms Generally; Certain Rules of Construction. The
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definitions in Section 1.1 and elsewhere in this Agreement shall apply equally
to both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". The words "herein", "hereof" and
"hereunder" and words of similar import refer to this Agreement in its entirety
and not to any part hereof unless the context shall otherwise require. All
references herein to Sections shall be deemed references to Sections of this
Agreement unless the context requires otherwise. Unless otherwise expressly
provided herein or unless the context requires otherwise, any references as of
any time to the "Certificate of Incorporation", "Articles of Incorporation",
"charter", "Charter", "organizational or constituent documents" or "By-laws" of
any entity, to any agreement (including this Agreement) or other contract,
instrument or document or to any statute or regulation or any specific section
or other provision thereof are to it as amended and supplemented through such
time (and, in the case of a statute or regulation or specific section or other
provision thereof, to any successor of such statute, regulation, section or
other provision). Any reference in this Agreement to a "day" or number of "days"
(without the
explicit qualification of "Business") shall be interpreted as a reference to a
calendar day or number of calendar days. If any action or notice is to be taken
or given on or by a particular calendar day, and such calendar day is not a
Business Day, then such action or notice shall be deferred until, or may be
taken or given on, the next Business Day. Unless otherwise expressly provided
herein or unless the context requires otherwise, any provision of this Agreement
using a defined term (by way of example and without limitation, such as
"Stockholders" or "Majority Stockholders") which is based on a specified
characteristic, qualification, feature or status shall, as of any time, refer
only to such Persons who have the specified characteristic, qualification,
feature or status as of that particular time. The word "property" includes
property and assets of any kind, whether real or personal, tangible or
intangible.
Section 1.3. Outstanding Shares. Capital stock or other securities of
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any class held in treasury by the Company or held by any Subsidiary shall not be
considered to be outstanding for any purpose of this Agreement.
Section 1.4 Capital Stock Includes Preferred Stock. As used in this
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Agreement, the term "capital stock" includes any class or series of preferred
stock, however denominated and regardless of the characterization thereof for
accounting purposes under generally accepted accounting principles or the rules,
regulations, interpretations or releases of the Securities and Exchange
Commission.
Section 1.5 Calculation of Shares. Unless specifically provided
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otherwise herein, for all purposes of this Agreement, when calculating the
number of Shares held or proposed to be Transferred by a Holder or group of
Holders or the number of Shares outstanding, (A) Warrants held by any Holder
will be deemed to have been exercised (whether or not actually exercised) in
accordance with the terms of the applicable Warrants immediately prior to
consummation of the proposed Transfer or the applicable date of determination,
(B) Preferred Shares held by any Holder will be deemed to have been converted to
Common Stock (whether or not actually converted) in accordance with the terms of
the Charter immediately prior to consummation of the proposed Transfer or the
applicable date of determination, and (C) all other outstanding Rights shall be
deemed to have been converted, exchanged or exercised, as applicable, (whether
or not actually converted, exchanged or exercised) in accordance with the terms
thereof immediately prior to the consummation of the proposed Transfer or the
applicable date of determination. The price per Share to be paid to any Holder
in any proposed Transfer of any Shares shall be computed on a Common Stock
equivalent basis as if such Shares had been converted into or exchanged for
Common Stock in accordance with the terms thereof immediately prior to the
consummation of such Transfer.
2. BOARD OF DIRECTORS
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Section 2.1. Election of Directors. From and after the date hereof, each
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Holder agrees to vote (including by execution of a written consent or in any
other manner permitted by law, the Charter and the Company's By-laws) all of his
or its Shares and any other voting securities of the Company over which he or it
has control, and will take all other necessary or desirable actions
within his or its control (including, without limitation, attendance in person
or by proxy, at all meetings of stockholders called for the purpose of electing
directors), and the Company agrees to take all necessary or desirable actions
within its control (including, without limitation, nominations of specified
persons), in order to cause the Board of Directors of the Company (the "Board")
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to have the following constituency:
At all times prior to the IPO Date, the Board shall consist of not more
than seven (7) members designated as follows:
(i) The Capital Resource Parties shall be entitled to designate two
(2) representatives as long as they hold at least twenty percent (20%), and
one (1) representative as long as they hold at least ten percent (10%), of
the Number of Common Shares Outstanding (each such designee being referred
to as a "CR Representative").
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(ii) The Sandler Parties shall be entitled to designate one (1)
representative as long as they hold at least ten percent (10%), of the
Number of Common Shares Outstanding (each such designee being referred to
as a "Sandler Representative").
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(iii) Xxxxxx shall be entitled to designate four (4) representatives
(the "Management Representatives") as long as the Xxxxxx Holders hold at
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least thirty-five percent (35%), three (3) representatives as long as the
Xxxxxx Holders hold at least twenty-five (25%), and two (2) Representatives
as long as the Xxxxxx Holders hold at least ten (10%) of the Number of
Common Shares Outstanding; provided that one such designee shall be the
Chief Executive Officer of the Company and two such designees (if there are
three or more) shall be Disinterested Outside Directors designated by
Xxxxxx and approved by the CR Representatives and the Sandler
Representative.
(iv) Any vacancies in the Board that result from the Capital
Resource Parties, the Sandler Parties or Xxxxxx not being entitled to
designate one or more representatives pursuant to clauses (i), (ii) and
(iii) above shall be filled by the Company in accordance with applicable
law, the Charter and the Bylaws; provided that in any event (A) the Board
shall at all times have at least two Disinterested Outside Directors and
(B) the Chief Executive Officer shall be a member of the Board.
After the IPO Date the Board shall consist of at least seven (7) members
designated as follows:
(i) the Capital Resource Parties shall be entitled to designate one
representative (the "CR Representative") as long as they hold at least ten
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percent (10%) of the Number of Common Shares Outstanding,
(ii) The Sandler Parties shall be entitled to designate one (1)
representative as long as they hold at least ten percent (10%), of the
Number of Common Shares
Outstanding (each such designee being referred to as a "Sandler
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Representative").
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(iii) the remaining directors, and any vacancies resulting from the
Capital Resource Parties or the Sandler Parties not being entitled to
designated a representative pursuant to clauses (i) and (ii) above, shall
be designated by the Company in accordance with applicable law, the Charter
and the Bylaws; provided that in any event (A) the Board shall at all times
have at least two Disinterested Outside Directors and (B) the Chief
Executive Officer shall be a member of the Board.
In the absence of any designation from the persons or groups so designating
directors as specified above, the director previously designated by them and
then serving shall be re-elected if still eligible to serve as provided herein.
However, if any person or groups so designate, a director previously designated
by them and then serving shall be subject to re-nomination in accordance with
the provisions of this Section 2 at any meeting of stockholders called for the
purpose of electing directors hereunder.
No party hereto shall vote to remove any member of the Board designated in
accordance with the aforesaid procedure unless the persons or groups so
designating directors as specified above so vote, and, if such persons or groups
so vote then the non-designating party or parties shall likewise so vote.
Nothing contained herein shall prevent any party from removing any member of the
Board who was designated by such party.
Any vacancy on the Board created by the resignation, removal, incapacity or
death of any person designated under this Section 2.1 shall be filled by another
person designated in a manner so as to preserve the constituency of the Board as
provided above.
Section 2.2. Attendance at Board Meetings.
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(a) At any time at which no CR Representative is a member of the
Board or any committee thereof, and so long as (A) any of the Notes remain
outstanding or (B) the Capital Resource Parties hold at least twenty five
percent (25%) of the Series A Shares and Warrant Shares outstanding at such
time, the Capital Resource Parties shall be entitled to have one observer attend
each meeting of the Board and any committee thereof.
(b) At any time at which no Sandler Representative is a member of the
Board or any committee thereof, and so long as the Sandler Parties hold at least
twenty five percent (25%) of the Series C Shares outstanding at such time, the
Sandler Parties shall be entitled to have one observer attend each meeting of
the Board and any Committee thereof.
(c) The Company will send to any Holder entitled to designate an
observer pursuant to subsection (a) or (b) of this Section 2.2 and its designee
the notice of the time and place of any such meeting in the same manner and at
the same time as notice is sent to the directors or committee members, as the
case may be; provided, however, that such Holder and its designee shall each
always receive at least ten (10) days prior notice of any meeting which is not
an emergency meeting or of any written consent requested of directors and at
least three (3) Business Days' notice of any emergency meeting or emergency
written consent requested of directors. The Company shall also provide to each
such party copies of all notices, reports, minutes, consents and other documents
at the time and in the manner as they are provided to the Board or its
committees. The Company shall reimburse each such Holder for all reasonable
costs incurred by such Holder's designee in connection with traveling to and
from and attending meetings of the Board and committees.
(d) Any observer who attends any meetings of the Board of Directors
or any committee thereof, as a condition to his or her right to attend such
meetings, shall execute and comply with an agreement with the Company containing
such restrictions on the use or disclosure of confidential information and
similar matters as the Company may reasonably request.
Section 2.3. Board of Directors and Committees. The Board shall meet at
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least four (4) times per calendar year. The Company shall at all times maintain
a Compensation Committee and an Audit Committee of the Board and each such
committee shall be fixed at three (3) members consisting of one CR
Representative, one Sandler Representative and one Management Representative.
Each other committee of the Board shall at all times have a CR Representative
and a Sandler Representative unless and only for so long as the Capital Resource
Parties or the Sandler Parties, as applicable, waive such right with respect to
a specific committee. The Company shall reimburse members of the Board for all
reasonable costs incurred by them in connection with traveling to and from and
attending meetings of the Board and committees of the Board, in addition to any
directors fees regularly paid to all members of the Board.
3. TRANSFER RESTRICTIONS, CO-SALE AND TAKE-ALONG RIGHTS
----------------------------------------------------
Section 3.1. Restrictions on Transfer. No Holder may Transfer any Shares
------------------------
except as follows:
(a) Senior Holders. Prior to the earlier of (1) the IPO and (2) the
--------------
second anniversary of the date hereof, Senior Holders may Transfer Shares only
(i) pursuant to Permitted Transfers, (ii) pursuant to Section 3.4, or (iii)
pursuant to a bona fide written offer in accordance with the provisions of
Sections 3.2 and 3.3. After such date Senior Holders may Transfer any or all of
their Shares subject only to Section 3.7; provided that, a Senior Holder must
comply with the provisions of Section 3.3 if it proposes to Transfer any Shares
pursuant to a Control Block Sale or a Private Sale to a Designated Competitor.
(b) Xxxxxx Holders. Prior to the earlier of (1) the IPO and (2) the
--------------
fourth anniversary of the date hereof, Xxxxxx Holders may Transfer Shares only
(A) pursuant to Permitted Transfers, or (B) pursuant to Section 3.4. If the IPO
occurs after the fourth anniversary of the date hereof, then during the period
beginning on such fourth anniversary and ending on the IPO Date, Xxxxxx Holders
may Transfer Shares only (i) pursuant to Permitted Transfers, (ii) pursuant to
Section 3.4, or (iii) pursuant to a bona fide written offer in accordance with
the provisions of Sections 3.2 and 3.3. After the IPO (whether or not the
preceding sentence
is applicable) Xxxxxx Holders may Transfer any or all of their Shares, subject
only to Section 3.7; provided that, a Parker Holder must comply with the
provisions of Section 3.3 if it proposes to Transfer any Shares pursuant to a
Control Block Sale or a Private Sale to a Designated Competitor.
(c) Subordinate Holders. Prior to the IPO Subordinate Holders (other
-------------------
than Xxxxxx Holders, whose Transfer rights are set forth in Section 3.1(b)) may
Transfer Shares only (i) pursuant to Permitted Transfers, (ii) pursuant to
Section 3.4, or (iii) pursuant to a bona fide written offer in accordance with
the provisions of Section 3.2 and 3.3. After such date such Holders may
Transfer any or all of their Shares, subject only to Section 3.7; provided that,
each such Holder must comply with the provisions of Section 3.3 if it proposes
to Transfer any Shares pursuant to a Control Block Sale or a Private Sale to a
Designated Competitor.
(d) If any Holder ( an "Offering Holder") proposes to Transfer any
---------------
Shares beneficially owned by such Offering Holder pursuant to a bona fide
written offer in accordance with the provisions of Section 3.2 and 3.3, or
pursuant to a Control Block Sale or a Private Sale to a Designated Competitor in
accordance with Section 3.3 (any such Transfer a "Proposed Sale"), then such
-------------
Offering Holder shall deliver to the Company and each other Holder (each, an
"Other Holder") a notice ("Proposed Sale Notice") setting forth (i) the identity
------------ --------------------
of the proposed purchaser ("Proposed Purchaser"), (ii) the total number of
------------------
shares the Offering Holder proposes to sell ("Offered Shares"), (iii) the
--------------
proposed amount and form of consideration, (iv) the terms and conditions of the
Proposed Sale, and (v) that such Proposed Sale is being made in accordance with
the provisions of Section 3.2, Section 3.3, or both, whichever is the case.
Section 3.2. Rights of First Refusal
-----------------------
(a) Subject to Section 8 of Part A and to Section 8 of Part C, the Company
may elect to purchase all (but not less than all) of the Offered Shares in any
Proposed Sale that is being made in accordance with the provisions of this
Section 3.2 by giving notice of such election (which notice shall be
irrevocable) to the Offering Holder and all Other Holders at any time during the
thirty (30) day period following its receipt of the applicable Proposed Sale
Notice from the Offering Holder. Upon delivery of such notice by the Company,
the Company shall be obligated to purchase from the Offering Holder, and the
Offering Holder shall be obligated to sell to the Company, the Offered Shares at
the same price and on the terms and conditions set forth in the Proposed Sale
Notice. If the Company fails to deliver such notice to the Offering Holder
within such thirty (30) day period, it shall be deemed to have declined to
exercise its right to purchase the Offered Shares.
(b) Unless the Offering Holder and the Company otherwise agree, the
closing of the purchase of the Offered Shares by the Company shall take place at
the principal offices of the Company at 10:00 a.m. on the twentieth day (or if
such day is not a Business Day on the next Business Day) after the expiration of
the thirty (30) day period referred to above in Section 3.2(a). At such closing,
the Offering Holder shall tender the Offered Shares to be sold to the Company,
together with appropriate instruments of transfer endorsed to the Company, and
the
Company shall tender a certified check, cashier's check or a wire transfer of
immediately available funds in the amount of the purchase price therefor.
Subject to Section 3.5, if the Company and the Offering Holder do not consummate
the purchase and sale of the Offered Shares within the time period specified in
the first sentence of this Section 3.2(b) for any reason other than the failure
of the Offering Holder to tender the Offered Shares to the Company on the terms
and conditions provided for in the Proposed Sale Notice, then the Company shall
be deemed to have declined to exercise its right to purchase the Offered Shares.
The Company shall promptly give notice to all Holders if a Proposed Sale is
consummated, or if the Company has declined (or is deemed to have declined) to
exercise its right to purchase the Offered Shares, in accordance with subsection
(a) and this subsection (b) of this Section 3.2.
(c) If the Company declines (or is deemed to have declined) to purchase
the Offered Shares pursuant to subsections (a) and (b) of this Section 3.2, then
each Other Holder may elect to purchase up to all of the Offered Shares by
giving written notice (an "Exercise Notice") to such effect to the Offering
---------------
Holder, the Company and the Other Holders no later than the tenth (10th) day
following the date the Company delivers the notice required by the last sentence
of Section 3.2(b). Each Other Holder's Exercise Notice shall state the maximum
number of the Offered Shares that such Other Holder is willing the purchase. If
Other Holders electing to purchase the Offered Shares ("Electing Holders") elect
----------------
to purchase, in the aggregate, a number of shares greater than or equal to the
total number of Offered Shares, then each Electing Holder shall purchase from
the Offering Holder, and the Offering Holder shall sell to such Electing Holder,
the number of the Offered Shares set forth in such Electing Holder's Exercise
Notice on the terms and conditions set forth in the Proposed Sale Notice;
provided that if the Electing Holders elect to purchase, in the aggregate, a
number of Shares greater than the number of Offered Shares, then each Electing
Holder shall purchase its Pro Rata portion of the Offered Shares, or such other
--- ----
portion as the Electing Holders may agree. The closing of the purchase of the
Offered Shares by the Other Holders shall take place in the same time period and
in the same manner contemplated by Section 3.2(b). If Other Holders do not elect
to purchase, in the aggregate, all of the Offered Shares within the ten-day
period specified in the first sentence of this Section 3.2(c), or, subject to
Section 3.5, the closing of the purchase and sale of the Offered Shares does not
occur within the time period specified in the preceding sentence for any reason
other than the failure of the Offering Holder to tender the Offered Shares to
the Electing Holders on the terms and conditions provided for in the Proposed
Sale Notice, then all Other Holders shall be deemed to have declined to exercise
their rights to purchase any of the Offered Shares pursuant to this Section
3.2(c), and the Offering Holder shall be free to sell the Offered Shares to the
Proposed Purchaser on the terms set forth in the Proposed Sale Notice, subject
to the provisions of Section 3.3. The Offering Holder and Electing Holders shall
promptly notify the Company of the consummation of a sale by the Offering Holder
to the Electing Holders, and the Company shall promptly give notice to all
Senior Holders and Xxxxxx Holders if such a sale is consummated, or if the Other
Holders decline, or are deemed to have declined, to exercise their right to
purchase the Offered Shares pursuant to this Section 3.2(c).
(d) After tender to an Offering Holder of the full purchase price of all
of the Offered Shares by the Company or the Electing Holders in accordance with
the provisions of this Section
3.2, the Company shall not pay any dividends to the Offering Holder or permit
the Offering Holder to exercise any privileges of a Holder of the Company with
respect to such Offered Shares, and the Company or such Electing Holders, as
applicable, shall be treated as the owner of the Offered Shares to the extent
permitted by law.
Section 3.3. Co-Sale.
-------
(a) Co-Sale Right. If (i) any Holder proposes to Transfer any Shares
-------------
pursuant to a bona fide written offer in accordance with the provisions of
Section 3.2 and this Section 3.3, and neither the Company nor the Other Holders
have elected to purchase the Offered Shares pursuant to Section 3.2, or (ii) any
Holder proposes to Transfer any Shares pursuant to a Control Block Sale or a
Private Sale to a Designated Competitor, then each Other Holder that is a Senior
Holder or a Parker Holder shall have the right ("Co-Sale Right") to require the
-------------
Proposed Purchaser to purchase from such Other Holder at the same price per
share and, except as otherwise provided in the second sentence of this
subsection 3.3(a), upon the same terms and conditions as such Proposed Sale, up
to a number of Shares equal to the product of the number of Offered Shares
proposed to be Transferred by such Offering Holder multiplied by a fraction, the
numerator of which is the total number of Shares owned by such Other Holder and
the denominator of which is the total number of Shares owned by the Offering
Holder and by all Other Holders (the "Co-Sale Holders") who elect to participate
---------------
in such Proposed Sale; provided, however, that if such Proposed Sale, by itself
or together with any one or more other past Transfers or Proposed Sales
(regardless of whether such Transfers were Permitted Transfers), would
constitute a Change of Control, then each Co-Sale Holder may elect to require
the Offeror to purchase from such Co-Sale Holder any or all Shares held by such
Co-Sale Holder without regard to the foregoing formula limitation. The other
terms and conditions on which the Co-Sale Holders shall be entitled to Transfer
their shares pursuant to this Section 3.3 shall be, as nearly as reasonably
practicable, the same as those applicable to the proposed Transfer by the
Offering Stockholder; provided, however, that no Co-Sale Holder shall be
required to make (i) any representations or warranties to, or enter into any
indemnification or contribution arrangements with, the Proposed Purchaser
relating to the proposed Transfer other than a representation and warranty with
respect to the Shares being Transferred by such Co-Sale Holder that the
Transferee of such Shares is receiving good and marketable title to such Shares,
free and clear of all pledges, security interests, charges, voting arrangements,
restrictions on or conditions to Transfer, voting or exercise or enjoyment of
any right or beneficial interest, options, rights of first refusal and other
Liens, other than any created by this Agreement or (ii) comply with terms or
conditions which can reasonably be met only by the Offering Holder.
(b) Election to Exercise Co-Sale Rights. Any Senior Holder or Xxxxxx
-----------------------------------
Holder may exercise its Co-Sale Right by delivering written notice (the "Co-Sale
-------
Notice") to the Offering Holder and the Company within (i) 10 days after
------
delivery by the Company of the notice required by the last sentence of Section
3.2(c), or (ii) in the case of a Proposed Sale that is subject only to this
Section 3.3, 15 days after the delivery of the Proposed Sale Notice with respect
to such Proposed Sale. If the Proposed Sale would result in a Change of Control,
the Co-Sale Notice shall state the number of Shares that such Co-Sale Holder
proposes to include in such Proposed Sale.
Upon the expiration of the 10-day or 15-day period specified in the preceding
sentence, as applicable, the Company shall deliver a written notice to the
Offering Holder, the Senior Holders and the Xxxxxx Holders informing them of the
number of shares each Co-Sale Holder, if any, is entitled to sell in such
Proposed Sale.
(c) Closing of Proposed Sale. Subject to Section 3.5, the closing date
------------------------
("Offer Closing Date") for any sale of shares by an Offering Holder and/or Co-
-------------------
Sale Holders to a Proposed Purchaser shall be a date no later than the 30th day
after delivery of the notice the Company is required to deliver pursuant to the
last sentence of Section 3.3(b). If the Proposed Purchaser does not tender on
the Offer Closing Date (or does not tender on the same terms and conditions,
except as otherwise provided in Section 3.3(a)) to the Offering Holder and the
Co-Sale Holders, if applicable, the full purchase price for all of the Shares
which the Offering Holder and the Co-Sale Holders are entitled to Transfer of
pursuant to this Section 3.3, then the Offering Holder shall not be entitled to
Transfer any Shares in such Proposed Sale and shall not Transfer any Shares
(including, without limitation, any of the Offered Shares), whether pursuant to
the Proposed Sale in question, any other proposed Transfer or otherwise, without
again complying with this Section 3.3 (subject in any event to Section 3.1).
Section 3.4. Take-Along Right. If at any time prior to the IPO Date the
----------------
Senior Holders and Xxxxxx all desire to cause the sale of all Shares held by
Holders, then all Holders agree to sell all of their Shares in the same
transaction, on the same terms and conditions, and for the same consideration
per Share, as the Senior Holders and Xxxxxx propose to sell their Shares and the
Shares of the Xxxxxx Trust. This Section 3.4 shall terminate on the IPO Date.
Section 3.5 Regulatory Delays. If a purchase and sale of Shares subject
-----------------
to Sections 3.2 and/or 3.3 is subject to the receipt of any regulatory approval
or the expiration of any waiting period, the time periods specified in Sections
3.2(b), 3.2(c) and/or 3.3(c), as applicable, during which such purchase and sale
may be consummated shall be extended until the expiration of 5 Business Days
after all such approvals have been received or such waiting periods have
expired, but in no event shall such extended period exceed 180 days following
the expiration of the specified time period.
Section 3.6 Effect of Prohibited Transfers. If any Transfer of Shares is
------------------------------
made or attempted by a Holder other than in accordance with the terms of this
Agreement, such Transfer or attempted Transfer shall be void and the Company
shall have the right to purchase such Shares from the Transferee at any time
before or after the Transfer, at the price and on the terms established herein
and, in such event, the Transferee shall be bound by all the terms and
provisions of this Section 3. In addition to any other legal or equitable rights
that it may have, the Company or any of the remaining Holders may enforce its
rights by specific performance to the extent permitted by law. The Company may
refuse for any purpose to recognize any Transferee who receives Shares other
than pursuant to the provisions of this Agreement and any such Transferee shall
have no right to claim or retain any dividends on such Shares which were paid or
payable subsequent to the date on which the prohibited Transfer was made or
attempted, or to claim any right or privilege available to Holders under this
Agreement.
Section 3.7. Securities Act Compliance. None of the Shares shall be sold
-------------------------
or Transferred unless either (i) such Shares first shall have been registered
under the Securities Act or (ii) the Company, if it so requests, first shall
have been furnished with an opinion of legal counsel, reasonably satisfactory to
the Company, to the effect that such sale or Transfer is exempt from the
registration requirements of the Securities Act.
Section 3.8. Stock Certificate Legend. Each certificate for the Shares
------------------------
shall be imprinted with a legend in substantially the following form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act"). The
transfer of the securities represented by this certificate
(including, without limitation, through the exercise of a pledge)
is subject to the conditions and restrictions specified in the
Amended and Restated Stockholders Agreement, dated as of
_____________________, 1999, among the issuer (the "Company") and
certain investors, and the Company reserves the right to refuse
the transfer of such securities until such conditions have been
fulfilled with respect to such transfer. A copy of such
conditions will be furnished by the Company to the holder hereof
upon written request and without charge. In addition such
securities may not be sold or transferred except in compliance
with the Act.
Each certificate for the Shares may also contain such additional legends as
shall be deemed necessary or advisable by counsel to the Company in order to
comply with applicable law. The foregoing legend shall be removed from the
certificates representing any Shares, at the request of the holder thereof, at
such time as they become eligible for Transfer or resale without restriction
pursuant to the provisions of this Agreement and the Securities Act.
Section 3.9. Permitted Transfers. A "Permitted Transfer" means a Transfer
-------------------
of Shares by a Holder without consideration to (i) such Holder's heirs,
executors, administrators or other personal representative upon the death of
such Holder, (ii) such Holder's spouse, children or grandchildren, or a trust
for their or such Holder's benefit, (iii) if such Holder is a partnership, the
partners (including former partners) of such partnership or a liquidity trust
for their benefit, (iv) if such Holder is a corporation, the stockholders of
such corporation, or (v) if such Holder is the Xxxxxx Trust, the Persons who are
beneficiaries of the Xxxxxx Trust as of the date hereof and who have executed
and delivered a counterpart of this Agreement, and, with respect to up to
339,500 Shares of Common Stock held in the Xxxxxx Trust for their benefit,
certain employees of the Company pursuant to their employment agreements with
the Company (any Person described in clauses (i) through (v) being referred to
herein as a "Permitted Transferee" of such Holder); provided that the
--------------------
restrictions on Transfer in this Agreement and the other provisions of this
Agreement shall continue to apply to any Shares received by any such Permitted
Transferee and such Permitted Transferee shall join in and become a party to
this Agreement by executing and delivering to the Company an Instrument of
Accession in the form of Exhibit I hereto.
-------
4. PREEMPTIVE RIGHT
----------------
Section 4.1. Issuance of New Securities. Subject to Section 4.4, the
--------------------------
Company shall deliver a Preissuance Notice to all Senior Holders no later than
ten Business Days prior to the date the Company plans to issue any New
Securities and each Senior Holder shall have the right, but not the obligation,
to purchase its Pro Rata share of the New Securities that are issued. Within ten
Business Days after the receipt of such Preissuance Notice, each Senior Holder
may exercise its rights under this Section 4.1 by giving written notice to that
effect to the Company. Failure to give such notice within that ten Business Day
period or failure to pay at the required time the purchase price for any New
Securities as to which a right to purchase has been exercised shall constitute a
waiver of the rights granted by this Section 4.1 as to the particular issuance
of New Securities specified in the Company's Preissuance Notice. The preemptive
rights of the Senior Holders set forth in this Section 4 shall not apply with
respect to the IPO and shall terminate upon the IPO; provided, that the
--------
preemptive rights, if any, of all other Persons also terminate upon the IPO.
Section 4.2. Per Share Price; Valuations. The per share purchase price
---------------------------
to be paid upon exercise of the rights granted under this Section 4 will be
equal to the lowest per share consideration at which the New Securities are
offered or proposed to be offered by the Company to any New Securities
Purchaser. The consideration for which New Securities are offered or proposed to
be offered will be determined as follows: (i) in case of the proposed issuance
of New Securities for cash, the consideration to be received by the Company will
be the amount of cash for which the New Securities are proposed to be issued and
(ii) in case of the proposed issuance of New Securities in whole or in part for
consideration other than cash, the value of the consideration to be received by
the Company other than cash will be the Fair Market Value of that consideration
as reasonably determined by the Board in good faith. If any Senior Holder within
five days of receipt of any Preissuance Notice notifies the Company in writing
that it objects to any statement of the Fair Market Value of any security or
other property contained therein, the Company and the Senior Holder shall
attempt in good faith to agree on the Fair Market Value of such security or
other property. If they are unable to so agree within five Business Days after
such notice of objection was given, then within five Business Days thereafter,
the Company and the Majority Senior Holders shall select one appraiser and the
Company and the Majority Senior Holders shall submit to such appraiser (and each
other) a brief written statement of their position regarding the matter in
dispute and supporting arguments, and each shall be given a period of five
Business Days thereafter to submit to the other and to the appraiser a written
response to such written statement of the other. Such appraiser shall within
fifteen Business Days of the date of its selection, resolve such dispute by
choosing either the position of the Company set forth in such written statement
so submitted by the Company or the position of the Majority Senior Holders set
forth in such written statement so submitted by the Majority Senior Holders,
whichever in the opinion of the appraiser, in its sole discretion, is more
consistent with the purposes and intent of this Agreement. Decisions with
respect to such determination made pursuant to this Section 4.2 by the Majority
Senior Holders shall be binding on all Senior Holders. Any determination of Fair
Market Value for purposes of this Section 4 by agreement of the Company and the
Majority Senior Holders or by an appraiser appointed as provided in this Section
4.2 shall be final and
binding on the Company and each Senior Holder for all purposes of this Section
4. Promptly after any final determination of Fair Market Value pursuant to this
Section 4.2, the Company shall give each Senior Holder a written notice stating
such Fair Market Value. Each appraiser shall be a nationally recognized
appraiser or investment banking firm which has substantial experience in making
appraisals similar to that being made, which is not directly or indirectly
affiliated with the Company or any other Person who is a party to or otherwise
interested in the event resulting in the need for such appraisal and which has
no interest (other than the receipt of customary fees) in such event. In the
event the appraiser agrees with the written statement submitted by the Senior
Holders, the fees and expenses of any appraiser appointed in connection with an
appraisal pursuant to this Section 4 shall be paid by the Company. In the event
the appraiser agrees with the written statement submitted by the Company, the
fees and expenses of any appraiser appointed in connection with an appraisal
pursuant to this Section 4 shall be paid by the Senior Holders.
Section 4.3. Representations, Warranties and Certain Covenants. In
-------------------------------------------------
connection with each issuance of New Securities to any Senior Holder pursuant to
this Section 4, the Company shall, in the event the Company is making
representations, warranties and/or covenants to the New Securities Purchaser,
make to each Senior Holder such representations, warranties, and covenants as
are customarily made by issuers in similar instances (but which in no event
shall be less favorable to the Senior Holders than those contemplated by the
Preissuance Notice or otherwise made to or for the benefit of any New Securities
Purchaser) and each Senior Holder shall be separately and independently entitled
to rely on such representations and warranties, to the benefit of such covenants
and to exercise all available rights and remedies in the event of any breach or
violation of any such representations, warranties and covenants. Any
representations and warranties made by a Senior Holder shall consist solely of
such representations and warranties relating to (i) such Senior Holder's
authority to consummate the purchase of the New Securities from the Company and
(ii) other similar representations and warranties as are customarily given by
similarly situated purchasers of securities similar to those being purchased by
a Senior Holder in a similar transaction, but no Senior Holder shall be required
to give any such representation or warranty which the New Securities Purchaser
does not give. The representations, warranties, covenants and agreements of each
Senior Holder shall be several and not joint and shall (unless, in the case of
the Company, otherwise required by the New Securities Purchasers) terminate upon
the earlier of (i) the termination of the corresponding representations and
warranties made by the New Securities Purchaser or by the Company and (ii) one
year after closing. The right of each Senior Holder to purchase the full number
of New Securities which such Senior Holder is entitled to purchase under this
Section 4 shall not be subject to any conditions whatsoever, other than the
payment of the purchase price therefor determined as provided herein, and the
consummation of the transaction between the Company and the New Securities
Purchaser. If any Senior Holder shall fail for any reason to purchase any New
Securities which it has elected to purchase, the sole right, remedy and recourse
of the Company, the New Securities Purchaser, and the complying Senior Holders,
as the case may be, shall be the right of the Company to issue to the New
Securities Purchaser and the other Senior Holders, pro rata based on their
respective participations in the transaction as determined pursuant to Section
4.1, additional New Securities equal in kind and number or other relevant amount
to the New Securities which such Senior
Holder failed to purchase at the closing, in which event the Majority Senior
Holders may elect to postpone the closing for five Business Days. Unless the
Company and any Senior Holder otherwise agree, the closing of any issuance of
New Securities to any Senior Holder pursuant to this Section 4 shall take place
at the principal executive offices of the Company at 11:00 A.M., local time, on
the later of (i) the tenth Business Day following the expiration of the period
of fifteen Business Days after the later of (A) the date the relevant
Preissuance Notice was given and (B) the date all disputes as to the valuations
have been resolved and (ii) the fifteenth Business Day following the expiration
of all applicable waiting periods, if any, under the HSR Act and the receipt of
all consents, approvals and authorizations from governmental authorities or
other Persons that are necessary in connection with the acquisition of the New
Securities to be issued to the Senior Holder. The Company shall execute such
documents and instruments as may be necessary or reasonably requested to
effectuate the issuance of New Securities to any Senior Holder.
Section 4.4. Limitations. The provisions of this Section 4 will not
-----------
apply to (i) shares of Common Stock issued as a stock dividend to all holders of
shares of Common Stock or upon any subdivision or combination of shares of
Common Stock, (ii) securities issued for the acquisition by the Company of
another entity or business by merger or such other transaction as would result
in the ownership by the Company of not less than a majority of the voting power
of the other entity or for the purchase of all or substantially all of the
assets of an entity or business, (iii) shares of Common Stock that are sold
pursuant to the IPO, (iv) shares of Common Stock or Rights issued pursuant to
the Company's stock option plans in existence at the date of this Agreement or
other such stock option plans as approved by the Compensation Committee, (v) any
shares of Common Stock issued upon conversion or exercise of the Preferred
Shares, or (vi) shares of Common Stock issued upon exercise of any Rights as to
which the Holders shall have been afforded the opportunity to exercise their
preemptive rights pursuant to this Section 4.
Section 4.5. Terms of Payment of Purchase Price. Subject to Section 4.3
----------------------------------
and the rest of this Section 4, each issuance of New Securities to each Senior
Holder must be on terms not less favorable to such Senior Holder than the most
favorable terms on which the Company issues or proposes to issue in the
transaction in connection with which the preemptive right is being exercised New
Securities to any New Securities Purchaser, any other Senior Holder or any other
Person (without discrimination based on differences in the number or amount of
New Securities to be acquired). Without limiting the generality of the
immediately preceding sentence, (i) each Senior Holder must be given the same
options and rights of election, if any, as to the kind(s) or amount(s) of
consideration to be paid or delivered for New Securities as any other purchaser
is given or was proposed to be given in the Preissuance Notice and (ii) the
purchase price to be paid by each Senior Holder upon exercise of its rights
under this Section 4 will be paid upon terms which are not less favorable than
those on which the New Securities are sold to any other purchaser, unless those
terms provide for payment in a manner which could not reasonably be duplicated
by any Senior Holder, such as the transfer of specific property to the Company,
in which event such payment will be in cash in an amount equal to the Fair
Market Value of such specific property as reasonably determined by the Board of
Directors in good faith. The giving of a Preissuance Notice shall constitute the
representation and warranty by the Company to each
Senior Holder that (i) the proposed issuance is not subject to conditions,
contingencies or material terms not disclosed in the Preissuance Notice or in
the accompanying documents delivered therewith; and (ii) neither the amount or
kind of consideration offered by the New Securities Purchaser for the New
Securities nor any other terms of the proposed issuance or of any other
transaction or proposed transaction with the New Securities Purchaser or any of
its Affiliates have been established for the purpose of circumventing,
increasing the cost of exercising or otherwise impairing any Senior Holder's
preemptive right pursuant to this Section 4.
Section 4.6. Issuance to Others Not Permitted Absent Compliance. If the
--------------------------------------------------
Company does not issue and deliver, to each Senior Holder, on or before the
120th day after the date the applicable Preissuance Notice with respect to any
proposed issuance of New Securities is given (or, if later, the date specified
for the closing in the second to last sentence of Section 4.3), all New
Securities which such Senior Holder is entitled to be issued in accordance with
the provisions of this Section 4 for any reason other than the failure of such
Senior Holder to tender the purchase price therefor if and when required by this
Section 4, then the Company shall not be entitled to issue any New Securities
pursuant to the related Preissuance Notice. If, after compliance with Section
4.2, there remains any portion of the New Securities specified in a Preissuance
Notice which have not been elected to be acquired by one or more Senior Holders,
the Company shall be entitled to issue such remaining portion to the New
Securities Purchasers, in the manner and on terms and conditions not materially
more favorable to the purchaser than those specified in such Preissuance Notice,
but only if such issuance is consummated not later than the 120th day after the
date such Preissuance Notice was given (or, if later, the date specified for
closing in the second to last sentence of Section 4.3). If such issuance is not
so consummated within such period, then the Company shall not be entitled to
issue any such New Securities without again complying with the provisions of
this Section 4. Notwithstanding the foregoing provisions of this Section 4,
unless a binding purchase agreement entered into pursuant to this Section 4 by
the Company and such Senior Holder otherwise provides, the Company may, without
liability to any Senior Holder, abandon the proposed issuance of New Securities.
Section 4.7. Rights Apply to Each Issuance of New Securities. Subject to
-----------------------------------------------
the last sentence of Section 4.1, the provisions of this Section 4 shall apply
successively to each and every issuance or proposed issuance of any New
Securities.
5. WARRANT PUT RIGHT
-----------------
(a) Upon the occurrence of a Redemption Event (as defined in Part A) the
Majority Warrant Holders shall have the right ("Put Right") to require the
---------
Company to purchase, at the Repurchase Price specified in Section 5(d), all of
the outstanding Warrants and Warrant Shares. In order to exercise the Put Right,
the Majority Warrant Holders must give written notice to such effect (a "Put
---
Notice") to the Company (which notice shall be irrevocable) within 30 days after
------
the Company's delivery of notice of the Redemption Event to the Warrant Holders.
The Company shall promptly notify the Warrant Holders of the occurrence of a
Redemption Event. The Put Right shall terminate immediately prior to the closing
of the IPO.
(b) The closing of any purchase of the Warrants and Warrant Shares shall
take place on a date specified by the Majority Warrant Holders in the Put Notice
that is not less than 90 days nor more than 120 days after the Company delivers
notice of the Redemption Event to the Warrant Holders; provided however, that if
the outstanding Series A Preferred Shares or Series C Preferred Shares are being
redeemed in connection with such Redemption Event, then the closing of the
purchase of the Warrants and Warrant Shares shall take place on the Redemption
Date (as defined in Part A or Part C, as applicable) set for the redemption of
such Series A Preferred Shares and/or Series C Preferred Shares in accordance
with Section 5 of Part A and/or Section 5 of Part C, as applicable. Subject to
Section 5(c), at or prior to such time the Company shall deliver a certified or
bank cashier's check to each Warrant Holder, at his or its address as the same
appears in the transfer records of the Company, in an amount equal to the
aggregate Repurchase Price for the Warrants and Warrant Shares being repurchased
from such Warrant Holder, determined in accordance with Section 5(d), or shall
transfer such amount by wire transfer of immediately available funds to any
account specified in writing by such Warrant Holder to the Company.
(c) If the Company has insufficient cash to (A) purchase all Warrants and
Warrant Shares that it is required to purchase pursuant to this Section 5 and
(B) redeem all shares of Series A Convertible Preferred Stock and Series C
Convertible Preferred Stock that it is required to redeem pursuant to the
Charter on the Redemption Date (as defined in Section 5.1 of Part A), then the
Company shall (i) promptly give written notice to such effect to the Warrant
Holders and (ii) take all reasonable lawful actions to obtain sufficient cash to
enable the Company to make such redemption and purchase in accordance with, and
subject to, the provisions of Section 5.5 of Part A and Section 5.5 of Part C.
(d) The repurchase price (the "Repurchase Price") for each Warrant
----------------
(determined on the basis of the number of Warrant Shares into which it is then
exercisable) and each Warrant Share which is to be purchased by the Company
pursuant to this Section 5 shall be an amount equal to the price per share that
a holder of Common Stock would be entitled to receive if the Company were sold
for its Fair Market Value (determined as provided in Section 5.1 of Part A and
or Section 5.1 of Part C, as applicable) and the proceeds of such sale were
distributed in accordance with the liquidation, dissolution and winding up
provisions of the Charter. All selections, consents, determinations or other
actions required or permitted of the Warrant Holders pursuant to this Section
5(d) shall be made by the Majority Warrant Holders.
(e) Upon the timely receipt of the Repurchase Price (plus interest, if
applicable) for Warrants or Warrant Shares sold to the Company pursuant to this
Section 5, each Warrant Holder shall forward the Warrants and Warrant Shares, as
the case may be, so sold to the Company. Upon timely payment of the Repurchase
Price therefor (plus interest, if applicable) Warrants so purchased shall no
longer be exercisable or convertible, as the case may be, nor have any validity
whatsoever.
6. NOTICES
-------
All notices and other communications hereunder shall be in writing and
shall be deemed to have been given when delivered or mailed by commercial
courier or first class, registered or certified mail (air mail if to or from
outside the United States), postage prepaid, or facsimile transmission that is
acknowledged as received by the recipient, at his or its respective address set
forth on the signature page hereto, or if to the Company, at its address set
forth on the signature page hereto, or to such other address as the addressee
shall have furnished to the other parties hereto in the manner prescribed by
this Section 6.
7. SPECIFIC PERFORMANCE
--------------------
The rights of the parties under this Agreement are unique and, accordingly,
the parties shall have the right, in addition to such other remedies as may be
available to any of them at law or in equity, to enforce their rights hereunder
by actions for specific performance in addition to any other legal or equitable
remedies they might have to the extent permitted by law.
8. ENTIRE AGREEMENT
----------------
This Agreement constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior agreements and
understandings between them or any of them as to such subject matter. This
Agreement shall supersede the Existing Stockholders Agreement, and upon
execution and delivery of this Agreement by all parties hereto, the Existing
Stockholders Agreement shall terminate and be of no further force or effect.
9. WAIVERS AND FURTHER AGREEMENTS
------------------------------
Any of the provisions of this Agreement may be waived by an instrument in
writing with the consent of the party or parties whose rights are being waived.
Any waiver of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach of that provision or of any
other provision hereof. Each of the parties hereto agrees to execute all such
further instruments and documents and to take all such further action as any
other party may reasonably require in order to effectuate the terms and purposes
of this Agreement.
10. AMENDMENTS
----------
This Agreement may be amended by and such amendment shall be effective upon
the receipt of the written consent of all of the following: (i) the holders of
at least fifty-one percent (51%) of the Shares then held by the Holders, (ii)
the holders of at least fifty-one percent (51%) of the Series A Shares and
Warrant Shares then outstanding and (iii) the holders of at least fifty-one
percent (51%) of the Series C Shares then outstanding.
11. ASSIGNMENT; SUCCESSORS AND ASSIGNS
----------------------------------
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, executors, legal representatives,
successors and permitted assigns,
except as may be expressly provided otherwise herein.
12. COMPANY COVENANT
----------------
The Company hereby covenants and agrees to cause each officer and employee
of the Company and any other Person who, on or after the date hereof, acquires
or has the right to acquire from the Company a number of Shares that, when taken
together with all other Shares or rights to acquire Shares held by such
officers, employee or other Person, is greater than or equal to 1% of the total
number of Shares outstanding to become a party to this Agreement, effective as
of the date of the acquisition of such Shares or such right to acquire such
Shares, by executing and delivering to the Company an Instrument of Accession in
the form of Exhibit I hereto.
---------
13. SEVERABILITY
------------
In case any one or more of the provisions contained in this Agreement shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement and such invalid, illegal and unenforceable
provision shall be reformed and construed so that it will be valid, legal, and
enforceable to the maximum extent permitted by law.
14. COUNTERPARTS
------------
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
15. SECTION HEADINGS
----------------
The headings contained in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.
16. GOVERNING LAW
-------------
This Agreement shall be construed and enforced in accordance with and
governed by the Business Corporation Act of the State of Arkansas as to matters
within the scope thereof and as to all other matters shall be governed by and
construed in accordance with the internal laws of the Commonwealth of
Massachusetts.
17. REPORTS
-------
The Company shall deliver to each Series C Holder the same reports and
information that it delivers to the Capital Resource Parties pursuant to Section
7.03 of the Series A Purchase Agreement, and each Series C Holder shall have the
same inspection rights as the Capital Resource Parties have under Section
7.01(f) of the Series A Purchase Agreement, as long as (a) at least 50% of the
Series C Preferred Shares are outstanding, and (b) such Series C Holder holds at
least 50% of the Series C Preferred Shares acquired by it on the date of initial
issuance of the
Series C Preferred Shares.
[Rest of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned have executed this Amended and Restated
Stockholders' Agreement as of the day and year first above set forth.
COMPANY:
LAW OFFICE INFORMATION SYSTEMS, INC.
000 Xxxxx 00xx Xxxxxx Xxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, President
Telecopy No.: (000) 000-0000
By: /s/ Xxxx Xxxxxx
------------------------------
Name: Xxxx Xxxxxx
Title: Chief Executive Officer
HOLDERS:
CAPITAL RESOURCE LENDERS III, L.P.
c/o Capital Resource Partners
00 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
By: Capital Resource Partners III, L.L.C.,
Its General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
Name:
Title:
CRP INVESTMENT PARTNERS III, L.L.C.
c/o Capital Resource Partners
00 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
By: /s/ Xxxxxx X. Xxxxxxxx
Name:
Title:
/s/ Xxxxxxx Xxxxxxxx
------------------------------
Xxxxxxx Xxxxxxxx
Address: Cubex Corporation
000 Xxxxxxxxx Xxxxxx, Xxxxxx
/s/ Xxxxxxx X. Xxxxxxx
______________________________________
Xxxxxxx X. Xxxxxxx
Address: 00 Xxxxxxxx Xx., Xxxxxxxxx, XX
________________________________
/s/ Xxxxxxx X. Xxxxxxx
______________________________________
Xxxxxxx X. Xxxxxxx, as Custodian of
Xxxxxxx X. Xxxxxxx under the
Connecticut Uniform Transfers to
Minors Act
Address: 00 Xxxxxxxx Xx., Xxxxxxxxx, XX
_______________________________
_______________________________
[Signature Page to Stockholders' Agreement]
/s/ Xxxxxxx X. Xxxxxxx
______________________________________
Xxxxxxx X. Xxxxxxx, as Custodian of
Xxxxxxx X. Xxxxxxx under the
Connecticut Uniform Transfers to
Minors Act
Address: 00 Xxxxxxxx Xx., Xxxxxxxxx, XX
_______________________________
/s/ Xxxxxxx X. Xxxxxxx
______________________________________
Xxxxxxx X. Xxxxxxx, as Custodian of
Xxxxx X. Xxxxxxx under the
Connecticut Uniform Transfers to
Minors Act
Address: 00 Xxxxxxxx Xx., Xxxxxxxxx, XX
_______________________________
/s/ Xxxxxxx X. Xxxxxxx
______________________________________
Xxxxxxx X. Xxxxxxx, as Custodian of
Xxxxx X. Xxxxxxx under the
Connecticut Uniform Transfers to
Minors Act
Address: 00 Xxxxxxxx Xx., Xxxxxxxxx, XX
_______________________________
/s/ Xxxxxx X. Xxxxxxx
______________________________________
Xxxxxx X. Xxxxxxx
Address:
_______________________________
/s/ Xxxxxxx X. Xxxxxxx
______________________________________
Xxxxxxx X. Xxxxxxx
Address:______________________________
/s/ Xxxxxx X. Xxxxxxx
______________________________________
Xxxxxx X. Xxxxxxx
Address:______________________________
[Signature Page to Stockholders' Agreement]
/s/ Xxxxxx X. Xxxxxxx
______________________________________
Xxxxxx X. Xxxxxx, as Custodian for
Xxxxxxxxxx X. Xxxxxxx under the
Connecticut Uniform Transfers to
Minors Act
Address:______________________________
[Signature Page to Stockholders' Agreement]
SANDLER CAPITAL PARTNERS IV, L.P.
By: SANDLER INVESTMENT PARTNERS, General Partner
By: SANDLER CAPITAL MANAGEMENT,
General Partner
By: MJDM MEDIA CORP., a General Partner
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention:
Telecopy No.:
By: /s/ Xxxxxx Xxxxxxxxx
__________________________________
Name: Xxxxxx Xxxxxxxxx
Title: President
SANDLER CAPITAL PARTNERS IV, FTE, L.P.
By: SANDLER INVESTMENT PARTNERS, General Partner
By: SANDLER CAPITAL MANAGEMENT,
General Partner
By: MJDM MEDIA CORP., a General Partner
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention:
Telecopy No.:
By: /s/ Xxxxxx Xxxxxxxxx
___________________________________
Name: Xxxxxx Xxxxxxxxx
Title: President
[Signature Page to Stockholders' Agreement]
XXXXXX TRUST, created by instrument dated March
15, 1989, and amended and restated by two Trust
Agreements dated November 25, 1997.
By: /s/ Xxxx X. Xxxxxx, Trustee
___________________________
Xxxx X. Xxxxxx, Trustee
Address: 0000 Xxxxx 00xx
Xxxx Xxxxx, XX 00000
/s/ Xxxx X. Xxxxxx
_____________________________
Xxxx X. Xxxxxx
Address: 0000 Xxxxx 00xx
Xxxx Xxxxx, XX 00000
/s/ Xxxxxxx X. Xxxxxx, Xx.
______________________________
Xxxxxxx X. Xxxxxx, Xx.
Address: 2720 So. Xxxxxxx
________________
Ft. Xxxxx, XX 00000
___________________
/s/ Xxxxxxx Xxx Xxxxxx
_____________________________
Xxxxxxx Xxx Xxxxxx
Address: 0000 Xxxx Xxxxx Xxxx
Xxxx Xxxxx, XX 00000
[Signature Page to Stockholders' Agreement]
/s/ Xxxxx Xxxxxx
_____________________________________________
Xxxxx Xxxxxx
Address: 0000 Xxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
XXXXXX XXXXXX REVOCABLE TRUST created by
instrument dated September 24, 1998.
By: /s/ Xxxxx X. Den Uyl, Trustee
___________________________________
Xxxxx X. Den Uyl, Trustee
/s/ Xxxxxxx X. Xxxxxxxxx
______________________________________
Xxxxxxx X. Xxxxxxxxx
Address: #8 Riverlyn Terr.
_________________
Ft. Xxxxx, XX 00000
___________________
/s/ Xxxxx Xxxxxx
______________________________________
Xxxxx Xxxxxx
Address: 4023 Xxxxxxx
______________________________
Ft. Xxxxx, XX 00000
______________________________
/s/ W. Xxxxx Xxxxxx
______________________________________
W. Xxxxx Xxxxxx
Address: 000 Xxxxxxxx Xxxxxx
___________________
Xxxxxxx Xxxxxx, XX 00000
________________________
[Signature Page to Stockholders' Agreement]
/s/ Reves X. Xxxxxx
___________________________________
Reves X. Xxxxxx
Address: 0000 Xxxxxx Xxxxx Xxxxxxxx
__________________________
Xxx Xxxxx, XX
_____________
/s/ J. Xxxxx Xxxxxxxx
___________________________________
J. Xxxxx Xxxxxxxx
Address: 4422 Urbana
___________
Xxxx Xxxxx, XX 00000
____________________
/s/ Xxxx X. Xxxxxxx
___________________________________
Xxxx X. Xxxxxxx
Address: 0000 Xxxxx Xxxx
_______________
Xxx Xxxxx, XX 00000
___________________
/s/ Xxxxxxx Xxxxxx
___________________________________
Xxxxxxx Xxxxxx
Address: 0000 X. 00xx Xx. S. #411
________________________
Xxxxx, XX 00000
_______________
/s/ Xxxx Xxxx
___________________________________
Xxxx Xxxx
Address: 00 Xxxxxxx Xxxx
_____________________________
Xxxxxxxxxx, XX 00000
_____________________________
[Signature Page to Stockholders' Agreement]
/s/ Xxxxx Xxxxxx
______________________________________
Xxxxx Xxxxxx
0000 XX Xxxxxxx Xxxxxx
Address:______________________________
Xxxxxx, XX 00000
_____________________________
/s/ Xxxxxx X. Xxxxxx
______________________________________
Xxxxxx X. Xxxxxx
0000 Xxxx Xxxxx Xxxx
Address:______________________________
Ft. Xxxxx, XX 00000
_____________________________
/s/ Xxxxx X. Xxxxxxx
______________________________________
Xxxxx X. Xxxxxxx
000 Xxxxx Xxxxx Xxxx
Xxxxxxx:______________________________
Xxxx, XX 00000
______________________________
/s/ Xxxxxx X. Xxxxx
______________________________________
Xxxxxx X. Xxxxx
0000 Xxx Xxxxxx Xxxxx
Xxxxxxx:______________________________
Xxxxxx Xxxxxx, Xx 00000
/s/ Xxxxx Xxxxxx
_______________________________________
Xxxxx Xxxxxx
Address:______________________________
_____________________________
[Signature Page to Stockholders' Agreement]
/s/ Xxxx Xxxxxxx
______________________________________
Xxxx Xxxxxxx
Address: 000 Xxxxx 00xx Xxxxxx
_____________________________
Xxx Xxxxx, XX 00000
_____________________________
EXETER CAPITAL PARTNERS IV, L.P.
By: Exeter IV Advisors, L.P.,
Its general partner
By: Exeter IV Advisors, Inc.,
Its general partner
By: /s/ Xxxxx Xxx
_____________________________
Title
_____________________________
Address: 00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxx
Tel: (000) 000-0000
Fax: (000) 000-0000
DUBLIND PARTNERS INC.
By: /s/ Xxxxxx X. Xxxxxx
_____________________________
Name: Xxxxxx X. Xxxxxx
Title: Director
[Signature Page to Stockholders' Agreement]
EXHIBIT I
---------
INSTRUMENT OF ACCESSION
-----------------------
The undersigned, _________________________, as a condition precedent to
becoming the owner or holder of record of ________________ (______________)
shares of the Common Stock, $0.001 par value per share, of Law Office
Information Systems, Inc., an Arkansas corporation (the "Company"), hereby
agrees to become a Holder, party to and bound by that certain Amended and
Restated Holders' Agreement, dated as of ___________, 1999, by and among the
Company and certain Holders of the Company. This Instrument of Accession shall
take effect and shall become an integral part of the said Amended and Restated
Holders' Agreement immediately upon execution and delivery to the Company of
this Instrument.
IN WITNESS WHEREOF, this INSTRUMENT OF ACCESSION has been duly executed by
or on behalf of the undersigned, as a sealed instrument under the laws of The
Commonwealth of Massachusetts, as of the date below written.
Signature:
Address:
Date:
Accepted:
By:
Name:
Date:
