EXHIBIT 10.11
SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT (this "Agreement") is made and entered into as of
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October 10, 2000, among TURBOLINUX, INC., a Delaware corporation, (the
"Company"), the undersigned subsidiaries of the Company, Xxxxxx X. Xxxxxx, Xxxx
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X. Xxxxxx (Irving and Xxxx Xxxxxx are collectively referred to as the "Millers")
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and the undersigned entities controlled by the Millers.
A. The Millers are the founders of the Company and have served as officers
and directors of the Company from its formation until July 21, 2000 (the
"Separation Date").
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B. The Millers continue to serve the Company as directors and are
significant holders of the Company's Common Stock (the "Common Stock").
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C. The Millers and the Company each desire to enter into this Agreement to
more fully detail certain arrangements between the Millers and the Company in
connection with their separation from the Company as senior executive officers
of the Company.
AGREEMENT
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NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants contained in this Agreement, the parties hereto agree as follows:
ARTICLE I
COVENANTS AND AGREEMENTS
Section 1.1 Severance.
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(a) Base Salary and Benefits. For a period of twenty-four (24)
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months following the Separation Date, the Company shall continue to make equal
semi-monthly severance payments to Xxxxxx Xxxxxx in the semi-monthly amount of
$11,458.33 ($275,000 per year) and to Xxxx Xxxxxx in the semi-monthly amount of
$6,250.00 ($150,000 per year). The Company also agrees to continue each of the
Millers' respective benefits as set forth in Article IV of Xxxxxx Xxxxxx'x
Executive Employment Agreement dated July 12, 2000, with respect to Xxxxxx
Xxxxxx, and in Article IV of Xxxx X. Xxxxxx'x draft Executive Employment
Agreement, as described in Xxxx Xxxxxx' letter to Xxxx X. Xxxxxx dated July 1,
2000, with respect to Xxxx Xxxxxx. Notwithstanding the foregoing, in the event
the Company receives at least $20 million (net of any proceeds used for the
Share Repurchase, as defined in Section 1.2 below) in the Financings (as defined
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in Section 1.2 below), the Company shall pay the remaining base salary severance
payments in a lump sum payment on the closing of the Share Repurchase, as
defined below. Except as otherwise provided in this Agreement, the Company
shall not be obligated to make any other severance payments in connection with
the termination of Xxxxxx Xxxxxx'x or Xxxx Xxxxxx'x employment with the Company.
(b) Bonus. The Company shall pay Xxxxxx Xxxxxx and Iris
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Xxxxxx, respectively, for each of fiscal years 2000 and 2001, a target bonus of
up to $275,000 for Irving
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Xxxxxx and $75,000 for Xxxx Xxxxxx. Such target bonuses shall be payable to the
Millers when and if annual bonuses for fiscal years 2000 and 2001 are generally
paid to other executive officers of the Company and shall be paid in amounts
determined based on the percentage of such target bonuses that is equal to the
highest percentage of target bonuses paid to other executive officers of the
Company, without regard to any guaranteed bonus payments that may be paid to
Xxxx Xxxxxx.
(c) Certain Expenses. Upon execution and delivery of this
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Agreement by the parties, the Company shall pay to the Millers the amounts set
forth on Schedule 1 of this Agreement as reimbursement of expenses incurred by
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the Millers in service to the Company and as an allowance for expenses incurred
in connection with this Agreement.
(d) Excise Tax. No payment shall be made under this Section
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1.1 to the extent that such payment, when aggregated with prior payments under
this Section 1.1, gives rise to an excise tax under Section 280G of the Internal
Revenue Code of 1986, as amended, provided that the Millers give the Company
written notice prior to such payment that an excise tax under Section 280G would
arise as a result of such payment.
Section 1.2 Share Repurchase. Subject to the terms and conditions of this
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Agreement and any required consent of stockholders of the Company and the
effectiveness of the general release described in Section 1.6 of this Agreement
in accordance with the terms of such general release, the Company agrees to
repurchase (the "Share Repurchase") from the Millers, on a pro rata basis, a
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number of shares of Common Stock (the "Repurchase Shares") held by the Millers
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as set forth on Schedule 2 of this Agreement. The per share purchase price
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shall be equal to $3.65 per share. The Company's obligation to effect the
Share Repurchase shall be subject to the closing of a preferred stock financing
with the investors listed on Schedule 2 in the amounts set forth on such
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Schedule. In the event the Company fails to close the Share Repurchase within
thirty (30) days of the date of this Agreement, provided such failure does not
result from the Millers breach of their obligations, representations or
warranties under this Section 1.2 or the Repurchase Agreement described below,
the Xxxxxx'x may elect to terminate this Agreement and all related agreements
entered contemporaneously herewith, which termination shall be effected by the
Millers in writing no later than sixty (60) days from the date of this
Agreement. Upon closing the Share Repurchase, the Millers shall pay one half of
the finders fee of $750,000 (i.e., $375,000) payable to Asia Pacific Finance
Group, Ltd. or its affiliates in connection with the preferred stock financings
closing between September 1, 2000 and October 15, 2000 (the "Financings"). At
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the closing of the Share Repurchase, the parties shall execute and deliver the
Repurchase Agreement attached hereto as Exhibit A.
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Section 1.3 Certain Tax Matters. In the event of an audit by the Internal
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Revenue Service or applicable state taxing authorities resulting in federal or
state income tax liability (including interest and penalties) for the Millers
arising out of or in connection with the Millers' ownership of the Company's
predecessor, Pacific HiTech, Inc., a Utah corporation ("Pacific HiTech"), and
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income of Pacific HiTech prior to fiscal year 1995 attributable to the Millers
because of the "S" corporation status of Pacific HiTech, the Company agrees to
make a loan to the Millers in an amount necessary to satisfy such liability.
Such loan shall be evidenced by a promissory note bearing interest at the
minimum rate permitted by applicable law with principal and interest to be due
and payable in a lump sum on the maturity date of the promissory note,
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which shall be the third anniversary date of such promissory note. The
promissory note shall be secured by a number of shares of Common Stock owned by
the Millers having a fair market value equal to the maximum principal and
interest to be due and payable under the terms of the promissory note. The fair
market value of such shares for purposes of this Section 1.3 shall be either (a)
the most recent price at which the Company has sold preferred shares to a
nonaffiliated party or (b) in the event the shares are traded on a securities
exchange or through Nasdaq National Market on the date of such loan, the average
of the closing prices of the securities on such exchange or quotation system for
the twenty (20) trading day period ended three (3) days prior to the date of
determination of such fair market value. The promissory note shall provide that
the shares securing the loan shall be the sole recourse available to the Company
in the event of default by the Millers under the terms of the promissory note
and pledge agreement in connection therewith. Notwithstanding anything in this
Agreement to the contrary, the Company's obligation to make a loan shall be
limited to an amount not to exceed the fair market value of shares owned and
pledged as security for the loan on the date of the promissory note. The parties
further agree that they will use commercially reasonable efforts to provide the
other party reasonable access to documents and information relating to any such
tax liabilities during normal business hours upon receipt of written request at
least twenty-four (24) hours prior to such access.
Section 1.4 Election of Directors. In each election of directors for the
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Board, with regard to the Millers rights as holders of Common Stock to freely
vote for two directors of their choosing who are not required to be independent
directors pursuant to the Company's Restated Certificate of Incorporation and
various voting agreements to which the Millers are parties applicable to the
election of directors, each of the Millers and the undersigned parties
controlled by the Millers agrees to vote or cause to be voted or consented all
shares of the Common Stock owned or controlled by them, currently or in the
future, proportionately in the same manner as the votes cast by the holders of
Common Stock entitled to vote other than the Millers. In no event shall the
Millers or the undersigned parties controlled by the Millers vote or cause to be
voted or consented any shares of Common Stock for the election of either of the
Millers. To the extent this Section 1.4 conflicts with the provisions of any
other agreement between either of the Millers and the Company, this Section 1.4
shall control. The voting agreement provided in this Section 1.4 shall apply to
any transferee, successor or assignee of the Millers or the undersigned entities
controlled by the Millers (except for transfers of up to an aggregate of 550,000
shares for which the restrictions of this Section 1.4 shall not apply) and the
Millers and the undersigned entities controlled by the Millers agree they shall
cause any such transferee, successor or assign to agree to such restrictions
prior to any transfer. The provisions of this Section 1.4 shall terminate upon
the first to occur of (a) the closing of a firmly underwritten initial public
offering of the Common Stock pursuant to a registration statement filed with,
and declared effective by, the Securities and Exchange Commission under the
Securities Act of 1933, as amended ("Initial Public Offering"), (b) upon any
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merger or consolidation requiring the consent of the holders of the Company's
Common Stock that is approved by the Board, where following the closing of such
transaction the Millers and entities controlled by the Millers beneficially own
less than 30% of the outstanding capital stock of the surviving entity, or (c)
September 30, 2003. Upon execution and delivery of this Agreement by the
parties, each of the Millers shall resign from the Board effective immediately
and shall resign, effective as of the Separation Date, from all director and
officer positions of all of the Company's subsidiaries. The Millers shall not
be
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entitled to any consideration for such resignations, except as otherwise
provided in this Agreement.
Section 1.5 Corporate Control. Except as otherwise permitted or
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contemplated in this Agreement or any agreement to which the Company is a party
on the date hereof which has been approved by the Board, each of the Millers
agrees they will not, directly or indirectly, and will not cause any person or
entity to, without the prior written consent of the Board, (a) in any manner
acquire, agree to acquire or make any proposal to acquire, directly or
indirectly, any securities or property of the Company or any of its affiliates,
(b) propose to enter into, directly or indirectly, any merger, consolidation,
recapitalization, business combination or other similar transaction involving
the Company or any of its affiliates, (c) make, or in any way participate in any
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
Securities and Exchange Commission) to vote, or seek to advise or influence any
person with respect to the voting of, any voting securities of the Company or
any of its affiliates, (d) form, join or in any way participate in a "group"
(within the meaning of Section 13(d)(3) of the Securities Xxxxxxxx Xxx 0000, as
amended), with respect to any voting securities of the Company or any of its
affiliates, (e) otherwise act, alone or in concert with others, to seek to
control or influence the management, Board or policies of the Company or to
disparage or defame the Company, (f) disclose any intention, plan or arrangement
inconsistent with the foregoing, or (g) advise, assist or encourage any other
persons in connection with any of the foregoing. The provisions of this Section
1.5 shall terminate on the earlier to occur of (a) an Initial Public Offering,
(b) upon any merger or consolidation requiring the consent of the holders of the
Company's Common Stock that is approved by the Board, where following the
closing of such transaction the Millers and entities controlled by the Millers
beneficially own less than 30% of the outstanding capital stock of the surviving
entity, or (c) on the one year anniversary of this Agreement.
Section 1.6 General Release. Upon execution and delivery of this
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Agreement by the parties, each party shall execute and deliver the general
release attached hereto as Exhibit B, generally releasing the other parties from
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any and all claims and liabilities, except for certain claims and liabilities as
described in the form of the attached general release.
Section 1.7. Registration Rights and Lock-up Agreement. The Millers shall
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be entitled to piggyback and S-3 registration rights with respect to all shares
of Common Stock currently held by the Millers equivalent to those piggyback and
S-3 registration rights held by "Holders" of "Registrable Securities" under that
certain Second Amended and Restated Investor Rights Agreement dated as of
September 1, 2000, by and among the Company and the Investors named therein (the
"Investor Rights Agreement"), provided, however, notwithstanding the foregoing,
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the piggyback registration rights provided to the Millers in this Section 1.7
shall be subject to cutback in their entirety under the cutback provisions of
the Investor Rights Agreement before any shares of any other "Holder" or
investor are cutback and the S-3 registration rights shall be subject to the
approval of the "Holders" of a majority of the "Registrable Securities" under
the Investor Rights Agreement. The registration rights granted to Millers under
this Section 1.7 may not be assigned or transferred in any manner without the
prior written consent of the Company and all such registration rights shall
terminate four years after the date of the Company's "Initial Offering," as
defined in the Investor Rights Agreement. On the date hereof, the Millers
shall execute and deliver the Lock-Up Agreement attached hereto as Exhibit C.
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Section 1.8. Public Disclosures. The parties agree that the terms of this
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Agreement shall be considered confidential information and shall not be
disclosed to any third party, except as is mutually agreed to by the Company and
Irving and Xxxx Xxxxxx, as applicable; provided, however, notwithstanding the
foregoing, in the event either party is legally required or compelled to
disclose the terms of this Agreement such disclosure shall be permitted
hereunder provided prior written notice of such disclosure is provided to the
nondisclosing party. Notwithstanding the foregoing, it is expressly agreed and
understood that the Company shall be permitted to disclose this Agreement in
connection with an Initial Public Offering and in connection with future
financing transactions or acquisitions by or of the Company and future filings
with the Securities and Exchange Commission.
Section 1.9 Non-Solicitation. For a period of one (1) year from the date
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of this Agreement, each of Millers agree they will not solicit any person
employed by the Company to leave their employment.
Section 1.10 Further Assurances and Other Covenants. The parties each
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agree that they will execute and deliver such additional documents and
instruments reasonably acceptable to the parties as may be reasonably necessary
to effect the transactions contemplated in this Agreement, including without
limitation, those matters set forth in this Section 1.10. Each of the Millers
shall cooperate with the Company at the Company's reasonable request and use
commercially reasonable efforts to assist the Company at the Company's sole
expense and without liability to the Millers in understanding and disclosing
information known to the Millers regarding the Company which is reasonably
necessary to effect the Financings, Initial Public Offering or other
transactions requiring such understanding or disclosure. Each of the Millers
further agrees that they will execute such documents and instruments and assist
the Company at its sole expense in transferring any Company assets, including
without limitation Company vehicles, without any additional consideration to the
Millers, as may be requested by the Company and reasonably necessary to effect
such transfers. The Company agrees to provide information and documentation
reasonably requested by the Millers and at their expense related to their
service and employment with the Company.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE MILLERS
Each of the Millers hereby represents and warrants to the Company jointly
and severally as follows:
Section 2.1 Authority and Binding Effect. Each of the Millers has the
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power, authority, and capacity to execute and deliver this Agreement and to
perform his or her obligations under this Agreement. This Agreement has been
duly executed and delivered by each of the Millers and constitutes a valid and
legally binding obligation of each of the Millers, enforceable against them in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
Section 2.2 No Conflict. The execution, delivery and performance of this
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Agreement by the Millers will not violate or result in a material breach of any
agreement to which either of
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the Millers is bound, excluding any violation or breach that may result from the
Company's failure to obtain all requisite consents of its stockholders to the
Share Repurchase and the registration rights contemplated in this Agreement for
which the Company agrees to use commercially reasonable efforts to obtain.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
Section 3.1 Authority and Binding Effect. The Company has the power,
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authority, and capacity to execute and deliver this Agreement and to perform its
obligations under this Agreement. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and legally binding obligation
of the Company, enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
Section 3.2 No Conflict. The execution, delivery and performance of this
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Agreement by the Company will not violate or result in a material breach of the
Company's Restated Certificate of Incorporation or Amended and Restated Bylaws
or any agreement to which it is bound.
Section 3.3 Repurchase. The Company hereby represents and warrants that
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on and as of the date of this Agreement and through and including the closing of
the Share Repurchase, the Company has not and will not repurchase any shares of
its capital stock other than the Repurchase Shares if such repurchase would
cause the Share Repurchase to be deemed to be a dividend to the Millers. The
Company further represents and warrants that it has not had earnings or profits
during the first three quarters of fiscal year 2000 or for fiscal year ended
December 31, 1999 and does not currently expect to have earnings or profits at
or for the year ended December 31, 2000.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Governing Law. This Agreement shall be governed by, and
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construed in accordance with, the internal laws of the State of Delaware,
without regard to principles of conflicts of laws.
Section 4.2 Tax Matters. Each of the Millers acknowledges that, except as
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otherwise expressly provided herein, it is their sole responsibility, and not
the Company's, to pay any taxes of the Millers that may be caused by the
transactions contemplated herein.
Section 4.3 Survival. The representations, warranties, covenants and
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agreements made herein shall survive the closing of the transactions
contemplated hereby.
Section 4.4 Successors and Assigns. Except as expressly provided herein,
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the rights and obligations hereunder may not be assigned or delegated by either
of the Millers or the Company without the prior written consent of the other.
The provisions hereof shall inure to the benefit of, and be binding upon, the
successors and permitted assigns of the parties hereto.
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Section 4.5 Entire Agreement; Amendment. This Agreement constitutes the
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full and entire understanding and agreement among the parties with regard to the
subject matter hereof and supercedes any prior agreements. Any term of this
Agreement may be amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Irving and Xxxx
Xxxxxx.
Section 4.6 Notices and Other Communications. Every notice or other
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communication required or contemplated by this Agreement by either party shall
be deemed sufficient upon delivery when delivered either by (i) personal
delivery, (ii) postage prepaid return receipt requested by registered or
certified mail, (iii) overnight courier, such as Federal Express or UPS, or (iv)
facsimile in each case addressed to the Company or Irving or Xxxx Xxxxxx, as the
case may be, at the address set forth on the signature page hereto or at such
other address as the intended recipient previously shall have designated by
written notice.
Section 4.7 Delays or Omissions. No delay or omission to exercise any
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right, power or remedy accruing to any person or entity hereunder, upon any
breach or default under this Agreement, shall impair any such right, power or
remedy nor shall it be construed to be a waiver of any such breach or default,
or an acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
person or entity hereunder of any breach or default under this Agreement, or any
waiver on the part of any such person or entity of any provisions or conditions
of this Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies either under this
Agreement, or by law or otherwise shall be cumulative and not alternative.
Section 4.8 Severability. In case any provision of this Agreement shall
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be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 4.9 Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. Execution and delivery of this Agreement by
exchange of facsimile copies bearing the facsimile signature of a party hereto
shall constitute a valid and binding execution and delivery of this Agreement by
such party.
Section 4.10 Attorneys' Fees. If any action or proceeding shall be
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commenced to enforce this Agreement or any right or obligation arising in
connection with this Agreement, the prevailing party in such action or
proceeding shall be entitled to recover from the other party the reasonable
attorneys' fees, costs and expenses incurred by such prevailing party in
connection with such action or proceeding.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
TURBOLINUX, INC.
By: /s/ T. Xxxx Xxxxxx /s/ Xxxxxx X. Xxxxxx
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T. Xxxx Xxxxxx Xxxxxx X. Xxxxxx
Chief Executive Officer
/s/ Xxxx X. Xxxxxx
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TURBOLINUX PTY LTD, an Xxxx X. Xxxxxx
Australian corporation
By: /s/ T. Xxxx Xxxxxx
--------------------------- Xxxxxx X. Xxxxxx Annuity Trust No. 1, for
T. Xxxx Xxxxxx itself and as nominee for Xxxxxx X. Xxxxxx
Annuity Trust No. 2
TURBOLINUX DEUTSCHLAND By: /s/ Xxxx X. Xxxxxx
GmbH, A German corporation -----------------------
Name: Xxxx X. Xxxxxx
By: /s/ T. Xxxx Xxxxxx Its: Trustee
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T. Xxxx Xxxxxx Xxxxxx X. Xxxxxx Annuity Trust No. 1., for
President itself and as nominee for Xxxxxx X. Xxxxxx
Annuity Trust No. 2
TURBOLINUX (HONG KONG) By: /s/ Xxxxxx X. Xxxxxx
LIMITED, a Hong Kong corporation -----------------------
Name: Xxxxxx X. Xxxxxx
By: /s/ T. Xxxx Xxxxxx Its: Trustee
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X. Xxxx Xxxxxx XXXXXX IRREVOCABLE 2000 TRUST
President
By: /s/ Xxxx X. Xxxxxx
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TURBOLINUX KK, Name: Xxxx X. Xxxxxx
a Japanese corporation Its: Trustee
By: /s/ T. Xxxx Xxxxxx
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T. Xxxx Xxxxxx
President
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TURBOLINUX KOREA INC.,
a Korean corporation
By: /s/ T. Xxxx Xxxxxx
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T. Xxxx Xxxxxx
President
TURBOLINUX BEIJING INC.,
a PRC corporation
By: /s/ T. Xxxx Xxxxxx
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T. Xxxx Xxxxxx
President
TURBOLINUX TAIWAN LIMITED,
a Taiwanese corporation
By: /s/ T. Xxxx Xxxxxx
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T. Xxxx Xxxxxx
President
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EXHIBIT A
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REPURCHASE AGREEMENT
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THIS REPURCHASE AGREEMENT (this "Agreement") is made and entered into as of
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October 10, 2000, between TURBOLINUX, INC., a Delaware corporation, (the
"Company"), and Xxxxxx X. Xxxxxx and Xxxx X. Xxxxxx (Xxxxxx and Xxxx Xxxxxx are
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collectively referred to as "Holders" and individually as "Holder").
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A. Pursuant to that certain Separation Agreement (the "Separation
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Agreement") dated as of October 10, 2000, by and among the Company and the
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Holders, the Company desires to repurchase (the "Share Repurchase") from the
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Holders and the Holders desire to sell to the Company that number of shares of
Common Stock of the Company (the "Common Stock") described on the signature page
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of this Agreement (the "Repurchase Shares") for a total aggregate repurchase
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price as set forth on the signature page of this Agreement (the "Aggregate
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Purchase Price").
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B. The Share Repurchase under this Agreement is intended to satisfy the
Company's obligations under Section 1.2 of the Separation Agreement.
AGREEMENT
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NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants contained in this Agreement, the parties hereto agree as follows:
ARTICLE I
COVENANTS AND AGREEMENTS
Section 1.1 Share Repurchase. Subject to the terms and conditions hereof,
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on the Closing Date (as defined below) Holders agree to sell the Repurchase
Shares to the Company and the Company agrees to pay to Holders the Aggregate
Purchase Price.
Section 1.2 Agent Fee. Upon closing the Share Repurchase, the Holders
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shall pay one half of the finders fee of $750,000 (i.e., $375,000) payable by
the Company to Asia Pacific Finance Group, Ltd. in connection with the preferred
stock financings closing between September 1, 2000 and October 15, 2000 (the
"Financings").
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ARTICLE II
CLOSING DATE; DELIVERY
Section 2.1 Closing Date. The consummation of the Share Repurchase with
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respect to Holder's Repurchase Shares shall occur as soon as practicable but no
later than November 9, 2000 (the "Closing Date").
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Section 2.2 Delivery.
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(a) Holder Deliverables. On the Closing Date, in order to effect the
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Share Repurchase, Holders shall deliver to the Company (i) an executed copy of
this Agreement, and (ii) original stock certificates representing the Repurchase
Shares fully endorsed for transfer to the Company.
(b) Company Deliverables. On the Closing Date, the Company shall
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deliver to the Holders (i) an executed copy of this Agreement, and (ii) the
Aggregate Purchase Price for the Repurchase Shares.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE HOLDERS
The Holders hereby, jointly and severally, represent, warrant and covenant
to the Company as follows:
Section 3.1 Title. At the time of the closing of the Share Repurchase,
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except for any rights the Company or any third party may have under any
agreements to which the Company is a party and which have been approved by the
Board of Directors of the Company, (i) the Holders own and shall continue to own
all right, title and interest in and to the Repurchase Shares, free and clear of
all liens, encumbrances, charges, security interests, claims and assessments of
any kind or nature whatsoever, (ii) each of the Repurchase Shares is and shall
continue to be subject to no options to purchase, call right, participation
interest, or any similar or other rights of any person, (iii) the Holders have
made and will make no assignment, pledge, hypothecation or transfer of the
Repurchase Shares, and (iv) the Repurchase Shares are and shall be subject to no
restrictions with respect to transferability except for compliance with
applicable federal and state securities laws as set forth in the legend thereon.
Section 3.2 Authority and Binding Effect. Each of the Holders has the
----------------------------
power, authority, and capacity to execute and deliver this Agreement and to
perform his or her obligations under this Agreement. This Agreement has been
duly executed and delivered by each of the Holders and constitutes a valid and
legally binding obligation of each of the Holders, enforceable against them in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
Section 3.3 No Conflict. The execution, delivery and performance of this
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Agreement by the Holders will not violate or result in a material breach of any
agreement to which either of the Holders is bound, excluding any violation or
breach that may result from the Company's failure to obtain all requisite
consents of its stockholders to the Share Repurchase and the registration rights
contemplated in this Agreement for which the Company agrees to use commercially
reasonable efforts to obtain.
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ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
Section 4.1 Authority and Binding Effect. The Company has the power,
----------------------------
authority, and capacity to execute and deliver this Agreement and to perform its
obligations under this Agreement. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and legally binding obligation
of the Company, enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
Section 4.2 No Conflict. The execution, delivery and performance of this
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Agreement by the Company will not violate or result in a material breach of the
Company's Restated Certificate of Incorporation or Bylaws, any agreement to
which it is bound or the Delaware General Corporation Law.
Section 4.3 Repurchase. The Company hereby represents and warrants that
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on and as of the date of this Agreement and through and including the closing of
the Share Repurchase, the Company has not and will not repurchase any shares of
its capital stock if such repurchase would cause the Share Repurchase to be
deemed to be a dividend to the Holders.
ARTICLE V
MISCELLANEOUS
Section 5.1 Governing Law. This Agreement shall be governed by, and
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construed in accordance with, the internal laws of Delaware, without regard to
principals of conflicts of laws.
Section 5.2 Tax Matters. Holders acknowledge that it is their sole
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responsibility, and not the Company's, to pay any taxes of Holders that may be
caused by the purchase and sale of the Repurchase Shares.
Section 5.3 Survival. The representations, warranties, covenants and
--------
agreements made herein shall survive the closing of the transactions
contemplated hereby.
Section 5.4 Successors and Assigns. Except as expressly provided herein,
----------------------
the rights and obligations hereunder may not be assigned or delegated by the
Holders or the Company without the prior written consent of the other. The
provisions hereof shall inure to the benefit of, and be binding upon, the
successors and permitted assigns of the parties hereto.
Section 5.5 Entire Agreement; Amendment. This Agreement constitutes the
---------------------------
full and entire understanding and agreement among the parties with regard to the
subject matter hereof. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and each Holder, as applicable.
Section 5.6 Notices and Other Communications. Every notice or other
--------------------------------
communication required or contemplated by this Agreement by either party shall
be deemed sufficient upon delivery when delivered either by (i) personal
delivery, (ii) postage prepaid return
3
receipt requested by registered or certified mail, (iii) overnight courier, such
as Federal Express or UPS, or (iv) facsimile in each case addressed to the
Company or the Holder, as the case may be, at the address as the intended
recipient previously shall have designated.
Section 5.7 Delays or Omissions. No delay or omission to exercise any
-------------------
right, power or remedy accruing to any person or entity hereunder, upon any
breach or default under this Agreement, shall impair any such right, power or
remedy nor shall it be construed to be a waiver of any such breach or default,
or an acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
person or entity hereunder of any breach or default under this Agreement, or any
waiver on the part of any such person or entity of any provisions or conditions
of this Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies either under this
Agreement, or by law or otherwise shall be cumulative and not alternative.
Section 5.8 Severability. In case any provision of this Agreement shall
------------
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 5.9 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. Execution and delivery of this Agreement by
exchange of facsimile copies bearing the facsimile signature of a party hereto
shall constitute a valid and binding execution and delivery of this Agreement by
such party.
Section 5.10 Attorneys' Fees. If any action or proceeding shall be
---------------
commenced to enforce this Agreement or any right arising in connection with this
Agreement, the prevailing party in such action or proceeding shall be entitled
to recover from the other party the reasonable attorneys' fees, costs and
expenses incurred by such prevailing party in connection with such action or
proceeding.
[SIGNATURE PAGE FOLLOWS]
4
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
TURBOLINUX, INC.:
By:
-----------------------------
Name: T. Xxxx Xxxxxx
Title: Chief Executive Officer
HOLDERS:
---------------------------------
Xxxxxx X. Xxxxxx
---------------------------------
Xxxx X. Xxxxxx
Shares to Be Included in the Share Repurchase:
Aggregate of 2,054,793 shares of Common Stock from the Holders on a prorata
basis
Aggregate repurchase price of Repurchase Shares: $7,499,994.40
5
EXHIBIT B
---------
AGREEMENT AND GENERAL RELEASE
-----------------------------
This Agreement and General Release ("Release") is made and entered into as
of October 10, 2000 and is being delivered pursuant to Section 1.5 of that
certain Separation Agreement (the "Agreement"), of even date herewith, by and
among TurboLinux, Inc., a Delaware corporation (the "Company" and collectively
with each of the Company's undersigned subsidiaries, the "Company Parties"), on
the one hand, and Xxxxxx X. Xxxxxx and Xxxx X. Xxxxxx (the "Millers" and
collectively with each of the undersigned entities controlled by the Millers,
the "Xxxxxx Parties"), on the other hand. Each of the Company Parties and the
Xxxxxx Parties is sometimes referred to herein as a "Party."
The Millers hereby confirm their obligations under the Company's standard
form of proprietary information agreement.
Each of the Company Parties and the Xxxxxx Parties acknowledges that they
have read and understand Section 1542 of the California Civil Code which reads
as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR
HER SETTLEMENT WITH THE DEBTOR."
EACH OF THE COMPANY PARTIES AND THE XXXXXX PARTIES HEREBY EXPRESSLY WAIVES
AND RELINQUISHES ALL RIGHTS AND BENEFITS UNDER THAT SECTION AND ANY LAW OF ANY
JURISDICTION OF SIMILAR EFFECT WITH RESPECT TO SUCH PARTY'S RELEASE OF ANY
CLAIMS SUCH PARTY MAY HAVE AGAINST THE OTHER PARTY.
Except as otherwise set forth in this Release, each Party hereby releases,
acquits and forever discharges the other Party and such Party's respective
officers, directors, agents, servants, employees, stockholders, successors,
assigns and affiliates, of and from any and all claims, liabilities, demands,
causes of action, costs, expenses, attorneys fees, damages, indemnities and
obligations of every kind and nature, in law, equity, or otherwise, known and
unknown, suspected and unsuspected, disclosed and undisclosed including but not
limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims for breach of
fiduciary duty, claims or demands related to salary, bonuses, commissions,
stock, stock options, or any other ownership interests in the Company, vacation
pay, fringe benefits, expense reimbursements, severance pay, or any other form
of compensation except severance and other rights provided under the Agreement;
claims pursuant to any federal, state or local law or cause of action including,
but not limited to, the federal Civil Rights Act of 1964, as amended; the
federal Age Discrimination in Employment Act of 1967, as
1
amended ("ADEA"); the federal Americans with Disabilities Act of 1990; the
----
California Fair Employment and Housing Act, as amended; tort law; contract law;
wrongful discharge; discrimination; fraud; defamation; emotional distress; and
breach of the implied covenant of good faith and fair dealing. Notwithstanding
anything to the contrary contained in this Release, this Release extends to all
claims except the following: a) any claim the Millers may have to workers'
compensation and unemployment insurance benefits; b) any right to indemnity the
Millers may have under California Labor Code section 2802 and as provided by the
Company by-laws and policies; c) any right the Millers have to continue their
medical coverage under COBRA; d) any right the Xxxxxx Parties have to vested
stock and earned benefits under Company stock option plans, employee stock
purchase plans, 401k plans, and the like; and e) any claim for indemnification
the Millers may have now or in the future under the Indemnification Agreements
dated as of June 26, 2000; f) any claim that the Company Parties may have now or
in the future against the Xxxxxx Parties arising out of a breach by any of the
Xxxxxx Parties of any representation, warranty or covenant contained in the
documents listed on the attached Schedule (a); g) any claim the Company Parties
------------
may have now or in the future against the Xxxxxx Parties arising out of the
fraud or willful misconduct of any of the Xxxxxx Parties (it being expressed
agreed that "willful misconduct" shall not include any negligent or grossly
negligent act or omission); and h) all benefits and rights to which any Party
may be entitled under, or any breach by any Party of, the Agreement or any
agreements between any of the Xxxxxx Parties and any of the Company Parties
executed in connection therewith. Notwithstanding anything to the contrary
provided in this Release, this Release shall terminate and shall be void ab
initio in the event any of the Company Parties brings any action against any of
the Xxxxxx Parties, other than an action for breach of the Agreement or any of
the agreements, documents or instruments executed in connection, or
concurrently, with the Agreement.
The following paragraph applies to the Millers only:
I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under ADEA. I also acknowledge that the consideration given
for the waiver and release in the preceding paragraph hereof is in addition to
anything of value to which I was already entitled. I further acknowledge that I
have been advised by this writing, as required by the ADEA, that: (A) my waiver
and release do not apply to any rights or claims that may arise after the
effective date of this Release; (B) I have the right to consult with an attorney
prior to executing this Release; (c) I have twenty-one (21) days to consider
this Release (although I may choose to voluntarily execute this Release
earlier); (D) I have seven (7) days following the execution of this Release by
the parties to revoke the Release; and (E) this Release shall not be effective
until the date upon which the revocation period has expired, which shall be the
eighth day after this Release is executed by me, provided that each of the
Company Parties has also executed this Agreement by that date.
[SIGNATURE PAGES FOLLOW]
2
IN WITNESS WHEREOF, the parties have executed this Agreement and General
Release as of the date and year first above written.
TURBOLINUX, INC.
By:
----------------------------- -----------------------------------
T. Xxxx Xxxxxx Xxxxxx X. Xxxxxx
Chief Executive Officer
TURBOLINUX PTY LTD, -----------------------------------
an Australian corporation Xxxx X. Xxxxxx
By:
-----------------------------
T. Xxxx Xxxxxx Xxxx Xxxxxx Annuity Trust No. 1, for
President itself and as nominee for Xxxx Xxxxxx
Annuity Trust No. 2
By:
------------------------------
TURBOLINUX DEUTSCHLAND, Name: Xxxx X. Xxxxxx
GmbH, a German corporation Its: Trustee
By:
----------------------------
T. Xxxx Xxxxxx Xxxxxx X. Xxxxxx Annuity Trust No. 1,
President for itself and as nominee for Xxxxxx
X. Xxxxxx Annuity Trust No. 2
TURBOLINUX (HONG KONG)
LIMITED, a Hong Kong corporation By:
-------------------------------
Name: Xxxxxx X. Xxxxxx
Its: Trustee
By
-----------------------------
T. Xxxx Xxxxxx
President Xxxxxx Irrevocable 2000 Trust
By:
-------------------------------
TURBOLINUX KK, Name: Xxxx X. Xxxxxx
a Japanese corporation Its: Trustee
By:
-----------------------------
T. Xxxx Xxxxxx
President
3
TURBOLINUX KOREA INC.,
a Korean corporation
By:
-----------------------------
T. Xxxx Xxxxxx
President
TURBOLINUX BEIJING INC.,
a PRC corporation
By:
-----------------------------
T. Xxxx Xxxxxx
President
TURBOLINUX TAIWAN LIMITED,
a Taiwanese corporation
By:
-----------------------------
T. Xxxx Xxxxxx
President
4
EXHIBIT C
---------
LOCK-UP AGREEMENT
Dated as of October 10, 2000
TurboLinux, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Deutsche Bank Securities Inc.
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
1. Each of the undersigned understands that Deutsche Bank Securities Inc.
("Deutsche Bank"), as a representative or sole representative (the
"Representative," which term includes any successor to Deutsche Bank in such
capacity) of the several underwriters (the "Underwriters," which term includes
Deutsche Bank in its capacity as an underwriter), proposes to enter into an
Underwriting Agreement (the "Underwriting Agreement") with TurboLinux, Inc., a
Delaware corporation (the "Company"), providing for the initial public offering
by the Underwriters of common stock (the "Common Stock") of the Company (the
"Public Offering").
2. In consideration of the Separation Agreement (the "Separation
Agreement") of even date herewith by and among the Company and its subsidiaries,
on the one hand, and Xxxxxx X. Xxxxxx, Xxxx X. Xxxxxx and the other parties
hereto, on the other hand, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned agree,
jointly and severally, that the undersigned will not and will cause any Donee
(as defined below) not to, in each case without the prior written consent of the
Representative, directly or indirectly, offer, sell, pledge, contract to sell
(including any short sale), grant any option to purchase, enter into any
contract to sell or otherwise dispose of or transfer any shares of Common Stock
(including, without limitation, any shares of Common Stock which may be deemed
to be beneficially owned by any of the undersigned or any Donee in accordance
with the rules and regulations of the Securities and Exchange Commission and any
shares of Common Stock which may be issued upon exercise of any stock options or
warrants or upon conversion or exchange of any convertible or exchangeable
securities) or any rights, warrants, options or other securities that are
convertible into, or exercisable or exchangeable for, Common Stock
(collectively, "Rights," which term includes, without limitation, any shares of
preferred stock which are convertible into Common Stock) or enter into any
Hedging Transaction (as defined
1
below) (each of the foregoing referred to as a "Disposition") for a period
commencing on the date of this letter agreement and continuing through and
including the 180th day following the date of the Underwriting Agreement (the
"Lock-Up Period"). Notwithstanding the restrictions set forth above in this
paragraph, during the period commencing on the date of this letter agreement to
but excluding the date of the Underwriting Agreement (the date of the
Underwriting Agreement being hereinafter called the "Subject Date"), the
undersigned (but not their Donee) shall be permitted to sell or otherwise
transfer up to an aggregate of 550,000 shares (adjusted for any stock split,
stock dividend, stock combination, reorganization or similar transaction) of
Common Stock; provided, however, that in connection with any such sale or other
transfer, the undersigned shall (i) obtain the prior written consent of the
Company, which consent shall not be withheld unless the proposed transferee is a
competitor of the Company or the proposed transferee is otherwise reasonably
objectionable to the Company as determined in good faith by the Company's Board
of Directors or a committee thereof, and (ii) prior to such sale or other
transfer, cause the transferee to execute and deliver to the Company and the
Representative a written agreement, addressed to and in form and substance
satisfactory to the Company and the Representative, (A) in substantially the
form of the lock-up agreement executed by the Company's officers and directors
in connection with the Public Offering, (B) to the further effect set forth in
paragraphs 7, 14 and 15 of this letter agreement, mutatis mutandis, and (C) to
the further effect that, in the event that such transferee elects to effect a
Disposition of or in respect of any such shares at any time prior to the last
day of the Lock-Up Period and at a time when such transferee is not otherwise
prohibited from effecting such Disposition by the other terms of such agreement,
such transferee will not, directly or indirectly, effect such Disposition
unless, prior to such Disposition, the person or entity to whom such Disposition
is being made shall have executed and delivered to the Company and the
Representative a written agreement, addressed to and in form and substance
satisfactory to the Company and the Representative, to the effect specified in
clauses (A) and (B) and this clause (C) of this sentence.
3. The undersigned agree, jointly and severally, that, if the Company
effects the Public Offering, then, during the period beginning on and including
the 181st day after the Subject Date through and including the first anniversary
of the Subject Date (the "Restricted Period"), the undersigned will not and will
cause any Donee not to, in each case without the prior written consent of the
Representative, directly or indirectly, effect any Disposition of any shares of
Common Stock (including, without limitation, any shares of Common Stock which
may be deemed to be beneficially owned by any of the undersigned or any Donee in
accordance with the rules and regulations of the Securities and Exchange
Commission and any shares of Common Stock which may be issued upon exercise of
any stock options or warrants or upon conversion or exchange of any convertible
or exchangeable securities) or Rights, except the undersigned and any Donee may
effect Dispositions which, in the aggregate, when taken together with all other
Dispositions effected by the undersigned and any Donee during the Restricted
Period, do not exceed the volume limitations of Rule 144(e)(1), whether or not
such volume limitations are in fact applicable to any such Dispositions;
provided, however, that the undersigned shall not, and shall cause any Donee not
to, directly or indirectly, effect any Disposition during the Restricted Period
(other than a sale or other transfer of shares of Common Stock that is permitted
by the foregoing provisions of this paragraph and that is made pursuant to Rule
144(e)(1) or pursuant to a registration statement that is effective under the
Securities Act of 1933, as amended, in either case as a result of which the
securities being transferred shall cease to be "restricted securities" as
defined in Rule 144), unless, prior to such Disposition the undersigned shall
have caused the
2
transferee to execute and deliver to the Company and the Representative a
written agreement, addressed to and in form and substance satisfactory to the
Company and the Representative, to the effect that (A) such transferee will not,
directly or indirectly, effect any Disposition of or in respect of any Subject
Securities (as defined below) pursuant to Rule 144, pursuant to a registration
statement that is effective under the Securities Act of 1933, as amended, or
pursuant to any other transaction as a result of which such Subject Securities
shall cease to be "restricted securities" as defined in Rule 144 until after the
first anniversary of the Subject Date, (B) to the further effect set forth in
paragraphs 4, 6, 7 and 8 and paragraphs 12 through 15, inclusive, of this letter
agreement, mutatis mutandis, and (C) to the further effect that such transferee
will not, directly or indirectly, effect any Disposition of or in respect of any
Subject Securities at any time prior to the first anniversary of the Subject
Date unless, prior to such Disposition, the person or entity to whom such
Disposition is being made shall have executed and delivered to the Company and
the Representative a written agreement, addressed to and in form and substance
satisfactory to the Company and the Representative, to the effect specified in
clauses (A) and (B) and this clause (C) of this sentence. For purposes of
determining whether any Disposition complies with the volume limitations of Rule
144(e)(1), all Dispositions made by the undersigned and their Donee during the
Restricted Period, including without limitation, any public or private transfers
and any Hedging Transactions, shall be included and shall be aggregated and
treated as if all such Dispositions were made by a single person (it being
understood and agreed that all such Dispositions, when taken in the aggregate
and assuming that all such Dispositions have been made by the same person, must
comply with such volume limitations) and, for such purposes (x) a Hedging
Transaction shall be deemed to be the sale of the number of shares of Common
Stock covered by or implicit in such Hedging Transaction and (y) the Disposition
of a Right shall be deemed to be the sale of the number of shares of Common
Stock for which such Right may be converted, exchanged or exercised. Any
Disposition made by the undersigned or any of their Donee during the Restricted
Period shall only be made through the Representative, as broker dealer, or, at
the option of the Representative in its sole and absolute discretion, through
another broker dealer approved by the Representative. As used in this letter
agreement, the term "Subject Securities" shall mean any shares of Common Stock
or Rights or any interest therein which are sold or otherwise transferred by any
of the undersigned or any Donee or which are the subject of a Disposition by any
of the undersigned or any Donee.
4. Subject to the exceptions provided in the two immediately preceding
paragraphs, the restrictions set forth in the two immediately preceding
paragraphs are expressly intended to preclude each of the undersigned and any
Donee from engaging in any Hedging Transaction or other transaction which is
designed to or reasonably expected to lead to or result in a Disposition during
either the Lock-Up Period or the Restricted Period, even if the securities would
be disposed of by someone other than any of the undersigned or their Donee, as
the case may be. "Hedging Transaction" means any short sale (whether or not
against the box) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any security (other than a
broad-based market basket or index) that includes, relates to or derives any
significant part of its value from the Common Stock or any Rights. The
restrictions set forth in the two immediately preceding paragraphs and this
paragraph shall apply to all shares of Common Stock and all Rights now owned or
hereafter acquired by any of the undersigned or any Donee, except that such
restrictions shall not apply to any shares of Common Stock acquired by any of
the undersigned or any Donee in open market transactions after the Public
Offering.
3
5. Notwithstanding the foregoing, each of the undersigned may effect
Dispositions of any or all of the undersigned's Common Stock or Rights (i) free
of any restrictions imposed by this letter agreement if (A) the Company files
and thereafter withdraws from filing a registration statement for the Public
Offering with the Securities and Exchange Commission (unless such withdrawal is
in connection with or as a result of a merger or consolidation of the Company
with or into, or a sale, lease or other transfer of all or substantially all of
the Company's assets to, another entity and, within a reasonable period of time
after such withdrawal, the surviving, resulting or acquiring entity or its
parent shall file a registration statement in lieu of the registration statement
which was withdrawn), (B) at any time after the first anniversary date of this
Agreement if the Company fails to close the Public Offering on or before such
anniversary date, (C) prior to the completion of the Public Offering, the
Company merges into or consolidates with another entity whose common stock is
listed on the New York Stock Exchange, the American Stock Exchange or the Nasdaq
National Market and which has a market capitalization (determined as of the
business day immediately preceding the effective date of such merger or
consolidation) of at least $1 billion and, prior to such merger or
consolidation, the undersigned and any Donee execute and deliver to the Company
and the Representative a written agreement, in customary form, addressed to and
in form and substance satisfactory to the Company, the Representative and the
surviving or resulting entity, to the effect that the undersigned and the Donee
agree to comply with the transfer restrictions set forth in Rule 145 under the
Securities Act of 1933, as amended, which are applicable to affiliates of the
entity being acquired and, if applicable, the resulting or acquiring entity, or
(D) the Separation Agreement is terminated pursuant to the provisions set forth
in the fourth sentence of Section 1.2 thereof, (ii) by will or intestacy; (iii)
if such transfer is not for value, to a trust or by gift, in each case for
estate planning purposes; or (iv) to the Company as contemplated in the
Separation Agreement; provided, however, that in any such case described in
clause (ii) or (iii) of this paragraph it shall be a condition to such transfer
that, prior to or concurrently with such transfer, the transferee (any such
transferee being hereinafter called a "Donee") executes and delivers to the
Company and the Representative an agreement stating that the Donee is receiving
and holding the Common Stock or Rights, as the case may be, subject to the
provisions of this letter agreement (except that such agreement shall provide
that such Donee shall not be entitled to effect a Disposition of any such shares
of Common Stock or Rights during the Lock-up Period), and that there shall be no
further transfer or other Disposition of such Common Stock or Rights, as the
case may be, except in accordance with this letter agreement.
6. Without limiting the restrictions herein, any Disposition by any of the
undersigned or any of their Donee shall remain at all times subject to
applicable securities laws, including without limitation the resale restrictions
imposed by Rule 144 promulgated under the Securities Act of 1933, as amended.
7. The undersigned, jointly and severally, agree that the terms of this
letter agreement shall apply, mutatis mutandis, to any securities (as if such
securities were Common Stock or Rights) acquired by the undersigned or any of
their Donee (i) as the result of a merger or consolidation of the Company with
or into any other entity, (ii) as all or part of the consideration received from
a sale, lease, exchange or other transfer of all or any of the Company's assets,
or (iii) pursuant to any other business combination or similar transaction
involving the Company as a result of which holders of Common Stock or Rights
receive other securities in exchange for shares of Common Stock or Rights; it
being understood that, if a transaction described in clause (i), (ii) or
4
(iii) of this sentence shall occur, the undersigned shall be entitled to sell
or exchange their Common Stock or Rights in such transaction.
8. The undersigned, jointly and severally, agree that the Company may, and
that each of the undersigned will, (i) with respect to any shares of Common
Stock or Rights for which any of the undersigned or any Donee is the record
holder, cause the transfer agent for the Company to note stop transfer
instructions with respect to such shares of Common Stock or Rights, as the case
may be, on the transfer books and records of the Company and (ii) with respect
to any shares of Common Stock or Rights for which any of the undersigned or any
Donee is the beneficial owner but not the record holder, cause the record holder
of such shares of Common Stock or Rights, as the case may be, to cause the
transfer agent for the Company to note stop transfer instructions with respect
to such shares of Common Stock or Rights on the transfer books and records of
the Company.
9. In addition, each of the undersigned and each Donee hereby waives any and
all notice requirements and rights with respect to the registration of any
shares of Common Stock, Rights or other securities pursuant to any agreement,
understanding or otherwise, including any registration rights agreement or
similar agreement to which any of the undersigned or any Donee is a party or
under which any of the undersigned or any Donee is entitled to any right or
benefit (hereinafter called, collectively, "Registration Rights"), provided that
such waiver shall apply only to the Public Offering and any other actions taken
by the Company in connection with the Public Offering. Without limitation to
the foregoing provisions of this paragraph and the provisions of paragraph 11 of
this letter agreement, if the undersigned or any Donee is or becomes a party to
or otherwise entitled to any rights under the Second Amended and Restated
Investor Rights Agreement dated as of September 1, 2000 between the Company and
the other parties thereto (as the same may be amended or restated from time to
time, the "Investor Rights Agreement"), the undersigned and each Donee agrees
that the provisions of this paragraph and paragraph 11 of this letter agreement
shall constitute a waiver for purposes of the Investor Rights Agreement;
provided that such waiver shall apply only to the Public Offering and any other
actions taken by the Company in connection with the Public Offering, and
provided, further, that such waiver shall bind (i) the undersigned and any Donee
and (ii) to the extent that the undersigned or any Donee may be deemed, or may
claim to be, a Holder (as defined in the Investor Rights Agreement), then upon
receipt by the Company of similar letter agreements or waivers signed by the
Holders of a sufficient number of Registrable Securities (as defined in the
Investor Rights Agreement) to bind all Holders in accordance with the Investor
Rights Agreement, each other Holder.
10. The undersigned and each Donee hereby, jointly and severally, agree not
to assign or otherwise transfer any Registration Rights to any person or entity
without the prior written consent of the Representative and the Company.
11. The undersigned and each Donee hereby, jointly and severally, agree that,
to the extent that the terms of this letter agreement conflict with or are in
any way inconsistent with any registration rights agreement or similar agreement
to which any of the undersigned or any Donee is a party or under which any of
the undersigned or any Donee is entitled to any right or benefit, the terms and
provisions of this letter agreement shall control and shall supersede any
inconsistent terms and provisions of such registration rights agreement or
similar agreement, but
5
only insofar as such registration rights agreement or similar agreement relates
to the Public Offering and any other actions taken by the Company in connection
with the Public Offering.
12. The undersigned and each Donee understand that the Company, the
Underwriters and the Representative will proceed with the Public Offering in
reliance on this letter agreement.
13. The undersigned and each Donee hereby jointly and severally represent and
warrant that each of them has full power and authority to enter into this letter
agreement and that this letter agreement has been duly authorized (if
applicable), executed and delivered by each of the undersigned and is a valid
and binding agreement of each of the undersigned. All authority herein conferred
or agreed to be conferred shall survive the death, incapacity, bankruptcy or
insolvency of any of the undersigned or any Donee and any obligations of the
undersigned or any Donee shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned and each Donee.
14. Anything herein to the contrary notwithstanding, the undersigned and each
Donee acknowledge and agree that Deutsche Bank has not agreed to and has no
obligation whatsoever to enter into the Underwriting Agreement or to act as
Representative or as an Underwriter for the Public Offering or any other
financing or transaction, and that Deutsche Bank may elect not to enter into the
Underwriting Agreement or to act as Representative or an Underwriter in the
exercise of its sole and absolute discretion.
15. Anything herein to the contrary notwithstanding, no term, covenant,
agreement or condition set forth in this letter agreement may be amended or
waived unless such amendment or waiver, as the case may be, is in writing and
signed by the parties hereto and by the Company and the Representative. No such
amendment or waiver shall extend to or affect any obligation not expressly
amended or waived or impair any right consequent thereon.
16. The undersigned represent and warrant, jointly and severally, that none
of them owns or has any direct or indirect interest in any shares of Common
Stock or Rights except for shares of Common Stock which are registered in the
respective names of the undersigned.
17. All representations, warranties, covenants and agreements of the
undersigned and any Donee set forth in this letter agreement are the joint and
several representations, warranties, covenants and agreements of the undersigned
and such Donee.
[Signature Page Follows]
6
Very truly yours,
-----------------------------------
Xxxxxx X. Xxxxxx
-----------------------------------
Xxxx X. Xxxxxx
XXXX XXXXXX ANNUITY TRUST NO. 1, for itself and
as nominee for Xxxx Xxxxxx Annuity Trust No. 2
By:
-------------------------------
Name: Xxxx X. Xxxxxx
Its: Trustee
XXXXXX X. XXXXXX ANNUITY TRUST NO. 1, for
itself and as nominee for Xxxxxx X. Xxxxxx
Annuity Trust No. 2
By:
-------------------------------
Name: Xxxxxx X. Xxxxxx
Its: Trustee
XXXXXX IRREVOCABLE 2000 TRUST
By:
-------------------------------
Name: Xxxx X. Xxxxxx
Its: Trustee
7
