DBSXMEDIA, INC. STOCKHOLDERS AGREEMENT
Exhibit
99.4
DBSXMEDIA,
INC.
_____________________________
_____________________________
This
Stockholders Agreement (the “Agreement”)
is
made as of February 21, 2005, by and among dbsXmedia, Inc., a Delaware
corporation (the “Company”),
Netfran Development Corp. under name change to Ariel Way, Inc. (the
“Investor”)
and
Zygot, LLC, a Wyoming corporation with Xx. Xxxxx Xxxxxxx and Xxxxx Xxxxxxxxxx
being the two equal and only members the “Holder”
and
together collectively with the Investors, the “Stockholders”).
The
Company, the Holders and the Investor are individually referred to herein
as
“Party”
and
are
collectively referred to herein as the “Parties.”
RECITALS:
Immediately
prior to the execution and delivery of this Agreement, the Holder was the
sole
stockholder of the Company. Concurrently with the execution of this Agreement,
the Company, the Investor and the Holder are entering into a subscription
agreement providing for the sale of shares of the Company’s common stock, par
value $.001 per share (the “Common
Stock”)
to
such Stockholders.
The
Company would not agree (and the Holder would not permit the Company) to
enter
into a subscription agreement with any Stockholder who did not also agree
to
become a party to this Agreement. Each Stockholder has agreed to become a
party
to this Agreement in order to induce the Company (and to induce the Holder]
to
permit the Company) to enter into such subscription agreement.
AGREEMENT:
In
consideration of the foregoing and the mutual promises contained herein,
the
Parties agree as follows:
1. Definitions.
As used
in this Agreement:
1.1 “Affiliate”
of
a
specified Person means any other Person which, directly or indirectly, controls,
is controlled by or is under common control with such specified
Person.
1.2 “Capital
Stock”
means
(i) shares of Common Stock (whether now outstanding or hereafter issued in
any
context), (ii) any preferred stock or shares of any other class of capital
stock
of the Company that hereafter may be authorized or (iii) any right to receive
any such Common Stock or other capital stock of the Company other than options
issued under the Company’s stock option plan(s) in effect from time to time (but
any Common Stock or other capital stock issuable upon exercise of such options
shall be Capital Stock).
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1.3 “Person”
means
an individual, organization or entity.
1.4 “Transfer”
means
a
pledge, mortgage, sale, assignment, gift, bequest, transfer by operation
of law,
transfer in connection with any proceeding under any Federal or state law
relating to bankruptcy, insolvency or the rights of creditors generally and
any
other means by which personal property or any legal or beneficial interest
therein may be transferred, whether such transaction is effected voluntarily
or
involuntarily.
1.5 “Voting
Power”
means
the power to cast votes in a vote of the stockholders of the Company (or,
if
expressly provided, a specified group of the stockholders) in which the
outstanding Common Stock and all outstanding preferred stock of the Company
vote
together as a single class and which shall be measured as follows: (a) each
outstanding share of Common Stock shall have the right to cast one vote,
(b)
each outstanding share of a class or series of the Company’s preferred stock, if
any, that is not granted voting rights under the Company’s certificate of
incorporation or the certificate of designations (together the “Charter”)
for
such preferred stock shall not have the right to cast a vote, (c) each
outstanding share of a class or series of the Company’s preferred stock, if any,
that is granted voting rights (for the election of directors or otherwise)
under
the Charter for such preferred stock, but for which voting together with
the
Common Stock as a single class is not provided in the Charter for such preferred
stock, shall have the right to cast one vote and (iv) each outstanding share
of
a class or series of preferred stock, if any, that is granted voting rights
under the Charter for such preferred stock, and for which voting together
with
the Common Stock as a single class is provided in the Charter for such preferred
stock, shall have the right to cast the number of votes provided in the Charter
for such preferred stock.
2. Election
and Removal of Directors.
2.1 Board
Size.
Each
Stockholder agrees to vote all of such Stockholder’s Capital Stock, whether now
owned or hereafter acquired or which such Stockholder may be empowered to
vote,
from time to time and at all times, in whatever manner shall be necessary
to
ensure that:
(a)
The
number of directors who comprise the Board of Directors of the Company (the
“Board”)
shall
be five (5) or such other number as the Board may fix in accordance with
the
Company’s by-laws;
(b) Unless
otherwise waived by the Investor, the composition of the board of directors
of
each subsidiary of the Company shall be the same as that of the
Board;
(c) Unless
otherwise waived by the Investor, the composition of any committee of the
Board
and of the board of directors of each subsidiary of the Company shall include
all of the directors designated by the Investor pursuant to Section 2.2;
and
(d) Except
as
otherwise provided by law and unless otherwise waived by the Investor, no
quorum
shall exist at any meeting of the Board or of the board of directors of any
subsidiary of the Company unless such meeting (including a telephonic meeting):
(i) is called in accordance with the governing document of such entity and
(ii)
at least two-thirds (⅔) of the directors designated by the Investor pursuant to
Section 2.2(c) participate in such meeting.
2.2 Board
Members.
Each
Stockholder agrees to vote all of such Stockholder’s Capital Stock, whether now
owned or hereafter acquired or which such Stockholder may be empowered to
vote,
from time to time and at all times, in whatever manner shall be necessary
to
ensure that at each annual or special meeting of stockholders at which an
election of directors is held or pursuant to any written consent of the
stockholders, the following persons shall be elected to the Board:
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(a) The
Company’s Chief Executive Officer, who shall initially be Xx. Xxxxx Xxxxxxx (the
“CEO
Director”),
provided that if for any reason the CEO Director shall cease to serve as
the
chief executive officer of the Company, each of the Stockholders shall promptly
vote their respective shares of Capital Stock (i) to remove him from the
Board
if he has not resigned from such position and (ii) to elect the person who
replaces him as Chief Executive Officer of the Company as the new CEO Director;
(b) The
Investor shall have the right to designate the individual to serve as the
Chairman of the Board;
(c) Two
individuals designated in writing by the Holder; and
(d) Individuals
designated in writing by the Investor who, in number, shall be equal to the
number of individuals designated pursuant to Section 2.2(c) plus one (1)
in the
case of a total number of five (5) directors. Should the number of directors
on
the Board be adjusted, then the proportion of individuals designated by the
Holder be approximately 40% and the balance 60% of individuals be designated
by
the Investor.
2.3 Removal
of Board Members.
Each
Stockholder agrees to vote all of such Stockholder’s Capital Stock from time to
time and at all times in whatever manner as shall be necessary to ensure
that
(a) no director elected pursuant to Section 2.2 may be removed from office
unless such removal is directed or approved in writing by the Investor or
contemplated by Section 2.2(a), and (c) any vacancies created by the
resignation, removal or death of a director elected pursuant to Section 2.2
shall be filled pursuant to the provisions of Section 2.2. All Stockholders
agree to execute any written consents required to effectuate the obligations
of
this Agreement, and the Company agrees at the request of the Investor to
cause a
special meeting of stockholders to be called for the purpose of electing
directors.
2.4 Termination
of Obligation.
The
provisions of this Section 2 will terminate on the later to occur of the
date
(a) the Investors own in the aggregate less than twenty-five percent (25%)
of
the Voting Power of the outstanding shares of Capital Stock or (b) another
Stockholder owns shares of Capital Stock with an aggregate Voting Power greater
than the Voting Power of the shares of Capital Stock owned by the Investors
in
the aggregate.
3. Restriction
on Transfer; Exempt Transfers.
3.1 Restrictions
on Transfer.
No
Stockholder shall Transfer any Capital Stock other than in accordance with
this
Agreement. The Company shall not permit the Transfer of any Capital Stock
to be
made on its books, and the Company shall not recognize the Transfer of any
Capital Stock, unless such Transfer is made in accordance with the preceding
sentence of this Section 3.
3.2 Exempt
Transfers.
Notwithstanding the foregoing or anything to the contrary in this Agreement,
the
provisions of Sections 4 and 6 shall not apply:
(a) in
the
case of the Investor, to any Transfer (i) to an Affiliate of such Investor,
(ii)
to a designated person or (iii) made prior to the first anniversary of this
Agreement provided such Transfer pursuant to this clause (iii) is not a
Take-Along Sale (as defined in Section 5.1);
(b) to
any
merger, consolidation or other business combination effected pursuant to
a vote
of the Stockholders and involving the Company;
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(c) to
a
repurchase of Capital Stock from a Holder by the Company pursuant to an
agreement approved by the Board;
(d) in
the
case of a Stockholder that is a natural person, to a Transfer of Capital
Stock
by such Stockholder, either during his or her lifetime or on death by will
or
intestacy to his or her siblings, children, grandchildren, spouse or any
other
relatives approved by the Board, or any custodian or trustee for the account
of
such Stockholder or such Stockholder’s siblings, children, grandchildren, spouse
or other such relatives, provided,
however, that
such
Transfer is made pursuant to a transaction in which there is no consideration
actually paid for such Transfer;
(e) to
Transfers of Capital Stock solely among the Stockholders; or
(f) to
the
sale of any Capital Stock to the public in an offering pursuant to an effective
registration statement under the Securities Act of 1933, as
amended;
provided,
however,
that if
the transferee of such Capital Stock Transferred pursuant to clauses (a)
or (d)
of this Section 3.2 is not a Stockholder at the time of such Transfer, such
transferee shall hold such Capital Stock subject to the same restrictions
applicable to such transferee’s transferor and shall agree to be bound by the
terms of this Agreement;
4. Right
of First Refusal.
4.1 Right
of First Refusal to the Company.
Each
Holder hereby unconditionally and irrevocably grants to the Company a right
of
first refusal to purchase all or any portion of the Capital Stock that such
Holder may propose to Transfer (the “Transfer
Shares”),
at
the same price and on the same terms and conditions as those offered to the
prospective transferee (the “Prospective
Transferee”).
Each
Holder proposing to make a Transfer (the “Transferring
Holder”)
must
deliver a notice (the “Proposed
Transfer Notice”)
to the
Company and the Investor prior to the consummation of such Transfer. The
Proposed Transfer Notice shall state all of the material terms and conditions
of
the proposed Transfer, including the name of the Prospective Transferee,
the
number of Transfer Shares proposed to be Transferred and the proposed purchase
price, if any, and describe in reasonable detail the background, character,
experience and financial condition of the Prospective Transferee. The Company
must exercise its right of first refusal under this Section 4.1 by giving
notice
of such exercise to the Transferring Holder within thirty (30) days after
delivery of the Proposed Transfer Notice to the Company (the “Company
Option Period”)
stating the number of Transfer Shares the Company elects to purchase,
provided,
however,
that an
election by the Company to purchase fewer than all of the Transfer Shares
so
offered shall be ineffective unless the Investor elects to purchase the balance
of the Transfer Shares so offered.
4.2 Secondary
Right of Refusal to the Investor.
(a) Each
Holder hereby unconditionally and irrevocably grants to the Investor a secondary
right of refusal to purchase all or any portion of the Transfer Shares not
purchased by the Company pursuant to Section 4.1, at the same price and on
the
same terms and conditions as those offered to the Prospective Transferee.
If the
Company elects not to exercise or fails to exercise its right of first refusal
pursuant to Section 4.1 with respect to all Transfer Shares prior to the
expiration of the Company Option Period, the Company shall deliver a notice
(the
“Secondary
Notice”)
to
each Investor no later than five (5) days after the expiration of the Company
Option Period. The Secondary Notice shall (i) set forth the number of Transfer
Shares the Company has not elected to purchase, (ii) the number of shares
each
Investor may elect to purchase pursuant to this Section 4.2 and (iii) be
accompanied by the related Proposed Transfer Notice given to the Company
pursuant to Section 4.1. Each Investor shall have the secondary right of
refusal
to purchase up to that portion of such Transfer Shares which bears the same
ratio to such shares as the number of outstanding shares of Capital Stock
owned
by such Investor bears to the aggregate number of shares of Capital Stock
owned
by all Investors. The ratio in the immediately preceding sentence shall be
calculated as of the date the Proposed Transfer Notice was first delivered
to
the Company. Each Investor must exercise its secondary right of refusal under
this Section 4.2 by giving notice of such exercise to the Transferring Holder
within thirty (30) days after delivery of the Secondary Notice to the Investors
(the “Investor
Option Period”)
stating the number of Transfer Shares such Investor elects to purchase.
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(b) If
options to purchase have been exercised by the Company and the Investors
with
respect to some but not all of the Transfer Shares by the end of the Investor
Option Period, then the Company shall, immediately after the expiration of
the
Investor Option Period, send written notice to those Investors who fully
exercised their options within the Investor Option Period (the “Exercising
Investors”).
Each
Exercising Investor shall have an additional option to purchase all or any
part
of the balance of any such remaining Transfer Shares on the terms and conditions
set forth in the Proposed Transfer Notice. To exercise such option, an
Exercising Investor must deliver notice of such additional exercise to the
Transferring Holder and the Company within ten (10) days after the expiration
of
the Investor Option Period stating the number of Transfer Shares such Exercising
Investor elects to purchase. In the event there are two or more such Exercising
Investors that choose to exercise such additional option for a total number
of
remaining shares in excess of the number available, the remaining shares
available for purchase pursuant to this Section 4.2(b) shall be allocated
to
such Exercising Investors pro
rata
based on
the number of such Transfer Shares such Exercising Investors have elected
to
purchase. If the options to purchase the remaining Transfer Shares are exercised
in full by the Exercising Investors, the Company shall immediately notify
all of
the Exercising Investors of that fact.
4.3 Forfeiture
of Rights.
If the
total number of Transfer Shares that the Company and the Investor have elected
to purchase pursuant to Sections 4.1 and 4.2 is less than the total number
of
Transfer Shares, then the Company and the Investor shall be deemed to have
forfeited any right to purchase the Transfer Shares, and during the forty-five
(45) day period after the expiration of the last option pursuant to Section
4.2
the Transferring Holder shall be free to Transfer all, but not less than
all, of
the Transfer Shares to the Prospective Transferee at the price and on the
terms
and conditions set forth in the Proposed Transfer Notice (subject to the
other
terms and restrictions of this Agreement). If the Transfer Shares are not
Transferred during such forty-five (45) day period, the Transferring Holder
may
not Transfer any Capital Stock unless such Transferring Holder first again
complies in full with each applicable provision of this Section 4. If the
Transfer Shares are Transferred to the Proposed Transferee pursuant to this
Section 4, thereafter they will be subject to all of the provisions of this
Agreement.
4.4 Consideration;
Closing.
If the
consideration proposed to be paid for the Transfer Shares is in property,
services or other non-cash consideration, the fair market value of the
consideration shall be determined in good faith by the Board. If the Company
or
the Investor cannot for any reason pay for the Transfer Shares in the same
form
of non-cash consideration, the Company or the Investor may pay the cash value
equivalent thereof, as determined by the Board. The closing of the purchase
of
Transfer Shares by the Company and the Investor shall take place at the
principal executive office of the Company or such other place as the Company
may
designate and at such time as the Company may designate, provided such time
must
be before the later of (i) the date specified in the Proposed Transfer Notice
as
the intended date of the proposed Holder Transfer and (ii) thirty (30) days
after the date options to purchase all of the Transfer Shares have been
exercised pursuant to Section 4.1 or 4.2,
as the
case may be. At such closing, certificates representing the Transfer Shares
shall be delivered by the Transferring Holder against payment of the purchase
price for the Transfer Shares as provided in this Section 4.
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5. Take-Along
Right.
5.1 Terms
of Take-Along Right.
In the
event that the Investor (the “Take-Along
Investor”)
approve a transaction or series of related transactions in which a Person,
or a
group of Persons (as the term “group” is defined under the Securities Exchange
Act of 1934, as amended), other than the Investor (i) will acquire shares
of
Capital Stock representing a majority of the Voting Power of the outstanding
Capital Stock in a transaction or series of related transactions requiring
the
approval of the stockholders of the Company or (ii) will acquire from the
Take-Along Investor shares of Capital Stock representing a majority of the
Voting Power of the outstanding Capital Stock held by the Investors (either
of
clause (i) or (ii), a “Take-Along
Sale”),
then
each Holder hereby agrees with respect to all shares of Capital Stock that
such
Holder owns and any other shares of Capital Stock over which such Holder
otherwise exercises voting or dispositive power:
(a) in
the
event such transaction requires the approval of the stockholders of the Company,
(i) if the matter is to be brought to a vote at a stockholder meeting, after
receiving proper notice of any meeting of stockholders of the Company to
vote on
the approval of the Take-Along Sale, to be present, in person or by proxy,
as a
holder of Capital Stock, at all such meetings and be counted for the purposes
of
determining the presence of a quorum at such meetings; and (ii) to vote (in
person, by proxy or by action by written consent, as applicable) all such
Capital Stock in favor of such Take-Along Sale and in opposition of any and
all
other proposals that could reasonably be expected to delay or impair the
ability
of the Company to consummate such Take-Along Sale;
(b) in
the
event that the Take-Along Sale is to be effected by the sale of Capital Stock
held by the Take-Along Investor, and in the event the Take-Along Investor
so
request, to sell all shares of Capital Stock beneficially held by such Holder
(or in the event that the Take-Along Investor are selling fewer than all
of
their shares of Capital Stock, shares in the same proportion as the Take-Along
Investor are selling) to the Person or group of Persons to whom the Take-Along
Investor propose to sell their shares of Capital Stock, for the same per-share
consideration (including for this purpose as part of the per-share consideration
the amount of any and all compensation to be received by the Investor or
other
Stockholder from the acquiring Persons in connection with or related to such
transaction, net of expenses) and on the same other terms and conditions
relating thereto as the Take-Along Investor, except that Holders will not
be
required to sell their Capital Stock unless the liability for indemnification,
if any, of each Holder in such Take-Along Sale is several, not joint, and
is pro
rata in accordance with such Holder’s relative ownership of Capital Stock, and
will not exceed the consideration payable to such Holder, if any, in such
transaction (except in the case of potential liability for fraud or willful
misconduct by such Holder);
(c) to
refrain from exercising any dissenters’ rights or rights of appraisal under
applicable law at any time with respect to such Take-Along Sale;
and
(d) subject
to the provisions of Section 5.1(b), to execute and deliver all related
documentation and take such other actions in support of the Take-Along Sale
as
shall reasonably be requested by the Company or the Take-Along
Investor.
6
For
purposes of Section 5.1(b), if the class of Capital Stock being sold by the
Take-Along Investor is different from a class of Capital Stock held by a
Holder,
the phrase “same per share consideration,” as applied to each such other class
of Capital Stock, shall mean (i) with respect to Common Stock or any class
of
preferred stock of the Company, the value per share implied by the methodology
of the Company’s most recent appraisal pursuant to Section 7 based upon the
price per share consideration being paid to the Take-Along Investor in such
Take-Along Sale and (ii) with respect to any right to acquire Common Stock
or
preferred stock of the Company, the consideration per share being paid to
the
Take-Along Investor or the value per share calculated pursuant to the preceding
clause (i), as the case may be, for the class of Capital Stock such right
is
exercisable for, less the amount of any consideration that has to be paid
to
exercise such right. Notwithstanding the foregoing, if any right to acquire
Common Stock or preferred stock of the Company provides for a different
consideration to be paid to such Holder for such right upon a Take-Along
Sale,
such other provision shall take precedence over the immediately preceding
sentence.
5.2 Expiration
of Take-Along Right.
The
take-along right in favor of the Investor provided in this Section 5 will
expire
and be of no further effect from and after the later to occur of the date
(a)
the Investor owns in the aggregate less than twenty-five percent (25%) of
the
Voting Power of the outstanding shares of Capital Stock or (b) another
Stockholder owns shares of Capital Stock with an aggregate Voting Power greater
than the Voting Power of the shares of Capital Stock owned by the Investor
in
the aggregate.
6. Right
of Co-Sale.
6.1 Co-Sale
Right.
In the
event that the Investor proposes to Transfer shares of Capital Stock to a
prospective transferee (the “Prospective
Co-Sale Transferee”)
in a
single transaction or series of related transactions, which shares represent
more than five percent (5%) of the Voting Power of the then outstanding shares
of Capital Stock, then the Investor (the “Transferring
Investor”)
must
first give notice (a “Proposed
Co-Sale Notice”)
to the
Company and each Holder prior to the consummation of the Transfer. The Proposed
Co-Sale Notice shall state all of the material terms and conditions of the
proposed Transfer, including the name of the Prospective Co-Sale Transferee,
the
number of shares proposed to be Transferred, the maximum number of shares
each
Holder can elect to sell and the proposed purchase price. Each Holder shall
have
the right to sell the amount of such Holder’s Capital Stock provided for in
Section 6.2 to such Prospective Co-Sale Transferee at the same price and
on the
same terms and conditions as those offered by the Prospective Co-Sale Transferee
to such Transferring Investor(s). Each Holder must exercise its co-sale right
under this Section 6 by giving a notice to the Transferring Investor within
fifteen (15) days after delivery of the Proposed Co-Sale Notice identifying
the
number of shares of Capital Stock such Holder elects to sell, and upon giving
such notice such Holder shall be deemed to have effectively exercised the
right
of co-sale.
6.2 Shares
Included.
Each
Holder who timely exercises such Holder’s right of co-sale by delivering the
written notice provided for in Section 6.1 may include in the proposed Transfer
up to the amount of Capital Stock equal to the product obtained by multiplying
(a) the aggregate number of shares of Capital Stock proposed to be
Transferred by the Transferring Investor by (b) a fraction, the numerator
of
which is the number of shares of Capital Stock owned by such Holder immediately
before consummation of the proposed Transfer and the denominator of which
is the
total number of shares of Capital Stock owned, in the aggregate, by all Holders
who have timely exercised such Holders’ right of co-sale immediately prior to
the consummation of the proposed Transfer plus the number of shares of Capital
Stock held by the Transferring Investor. If the Transferring Investor proposes
to Transfer only outstanding shares of Common stock or preferred stock of
the
Company, the co-sale right provided in this Section 6 shall only apply to
outstanding shares of Common Stock or preferred stock owned by the Holders.
If
the Transferring Investor proposes to Transfer any rights to acquire Common
Stock or preferred stock of the Company, the right of co-sale provided in
this
Section 6 shall apply to all forms of Capital Stock held by the Holders.
For
purposes of this Section 6.2, if the class of Capital Stock being Transferred
by
the Transferring Investor is different from a class of Capital Stock held
by a
Holder, the phrase “same per share consideration,” as applied to each such other
class of Capital Stock, shall mean (i) with respect to Common Stock or any
class
of preferred stock of the Company, the value per share implied by the
methodology of the Company’s most recent appraisal pursuant to Section 7 based
upon the price per share consideration being paid to the Transferring Investor
in such Transfer and (ii) with respect to any right to acquire Common Stock
or
preferred stock of the Company, the consideration per share being paid to
the
Transferring Investor or the value per share calculated pursuant to the
preceding clause (i), as the case may be, for the class of Capital Stock
such
right is exercisable for, less the amount of any consideration that has to
be
paid to exercise such right.
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6.3 Delivery
of Stock Certificates.
Each
Holder shall effect its participation in the proposed Transfer by delivering
to
the Transferring Investor, no later than fifteen (15) days after such Holder’s
exercise of the right of co-sale, one or more stock (or other) certificates,
properly endorsed for transfer to the Prospective Co-Sale Transferee,
representing the number of shares of Capital Stock that such Holder elects
to
include in the proposed Transfer.
6.4 Purchase
Agreement.
If
requested by the Transferring Investor, the terms and conditions of any sale
pursuant to this Section 6 will be memorialized in, and governed by, a written
purchase and sale agreement with customary terms and provisions for such
a
transaction.
6.5 Closing.
Each
stock (or other) certificate a Holder delivers to the Transferring Investor
pursuant to Section 6.3 will be transferred to the Prospective Co-Sale
Transferee against payment therefor in consummation of the sale pursuant
to the
terms and conditions specified in the Proposed Co-Sale Notice and the purchase
and sale agreement, if any, and the Transferring Investor shall concurrently
with such sale remit to each Holder the portion of the sale proceeds to which
such Holder is entitled by reason of such Holder’s participation in such sale.
If any Prospective Co-Sale Transferee refuses to purchase shares of Capital
Stock subject to the right of co-sale provided by this Section 6 from any
Holder
exercising its right of co-sale hereunder, no Transferring Investor may Transfer
any of their shares of Capital Stock to such Prospective Co-Sale Transferee
unless and until, simultaneously with such sale, such Transferring Investor
purchases all shares of Capital Stock subject to the right of co-sale from
such
Holder.
6.6 Failure
to Timely Close.
If any
proposed Transfer by the Investor subject to Section 6.1 is not consummated
within ninety (90) days after expiration of the receipt of the Proposed Co-Sale
Notice by the Company, the Investor proposing the Transfer may not Transfer
any
shares of Capital Stock in a transaction or series of related transactions
subject to this Section 6 unless the Investor first again complies in full
with
each applicable provision of this Section 6.
7. Purchase
Right for Employee Shares.
7.1 Grant
of Purchase Right.
Each
Holder who is an employee of the Company (which for purposes of this Section
7
shall be deemed to include any subsidiary of the Company) hereby unconditionally
and irrevocably grants to the Company the right to purchase all or any portion
of the Capital Stock (other than the shares, if any, identified as co-investment
shares on Schedule A) that such Holder owns or has the right to acquire as
of
the date such Holder ceases to be employed by the Company (the “Employee
Shares”),
at
the price and on the terms and conditions set forth in this Section 7. The
Company must exercise its right of purchase under this Section 7 by giving
a
notice of exercise (the “Company
Purchase Notice”)
to
such Holder. Except as contemplated in Section 7.3(c), such notice of exercise
must be given (a) within ninety (90) days after such Holder’s employment
terminates, with respect to any Capital Stock which is Common Stock or preferred
stock owned by such Holder as of the date such Holder’s employment with the
Company terminated, and (b) with respect to Capital Stock such Holder acquires
after such Holder’s employment with the Company terminated but pursuant to a
right that existed as of the time of such termination, within ninety (90)
days
after the date a certificate for such Capital Stock is issued by the Company
to
such Holder (the “Company
Purchase Option Period”).
7.2 Investor
Secondary Right to Purchase.
Each
Holder who is an employee of the Company hereby unconditionally and irrevocably
grants to the Investor a secondary right to purchase all or any portion of
the
Employee Shares not purchased by the Company pursuant to Section 7.1. If
the
Company elects not to exercise or fails to exercise its right of purchase
pursuant to Section 7.1 with respect to all Employee Shares prior to the
expiration of the Company Purchase Option Period, the Company shall deliver
a
notice (the “Secondary
Purchase Notice”)
to the
Investor no later than five (5) days after the expiration of the Company
Purchase Option Period. The Secondary Purchase Notice shall set forth the
number
of such Employee Shares the Company has not elected to purchase and the purchase
price for such shares as provided in Section 7.3. The Investor shall have
the
secondary purchase right to purchase any or all of the remaining Employee
Shares. To exercise its secondary purchase right, the Investor must deliver
a
notice of exercise to the Holder and the Company within ten (10) days after
receipt of the Secondary Purchase Notice (the “Investor
Purchase Option Period”).
In
the event Investor chooses to exercise the secondary purchase option for
a total
number of Employee Shares in excess of the number available, the remaining
shares available for purchase under this Section 7.2 shall be allocated to
the
Investor pro rata based on the number of Employee Shares the Investor has
elected to purchase.
8
7.3 Purchase
Price.
(a) Termination
Other Than For Cause.
If the
employee Holder’s employment with the Company is terminated for any reason other
than by the Company for cause, the purchase price to be paid for each Employee
Share purchased by the Company or the Investor pursuant to this Section 7
shall
be the price per share for such share of Capital Stock set forth in the most
recent valuation of the Capital Stock performed by a third party appraiser
designated by the Board.
(b) Termination
For Cause.
If the
employee Holder’s employment with the Company is terminated for cause (as
defined below), the purchase price to be paid for each Employee Share purchased
by the Company or the Investor pursuant to this Section 7 shall be the lesser
of
(i) the amount paid by such Holder for such share or (ii) the price per share
set forth in the most recent valuation of the Capital Stock performed by
a third
party appraiser designated by the Board. For purposes of this Section 7,
“for
cause” means termination of any employee’s employment with the Company as a
result of (x) any act in bad faith materially detrimental to the business
or
reputation of the Company, or (y) engaging in any illegal activity or being
convicted of any felony involving fraud, deceit or moral turpitude. If the
purchase price contemplated by this Section 7.3(b) would not be permitted
by a
court of competent jurisdiction, the purchase price will be the lesser of
(i)
the book value per share for such share of Capital Stock as shown on the
most
recent quarterly financial statements of the Company and (ii) the price per
share for such share of Capital Stock set forth in the most recent valuation
of
the Capital Stock performed by a third party appraiser designated by the
Board.
(c) Appraisal.
If the
most recent valuation of the Capital Stock performed by a third party appraiser
designated by the Board is more than fifteen (15) months old at the time
the
Holder’s employment with the Company terminates, then, at the request of the
Board, such Holder or the Investor, the Company will cause a new valuation
to be
conducted by a third party appraiser as of the June 30 or December 31 preceding
the date such Holder’s employment with the Company terminated. Notwithstanding
the foregoing, for purposes of this Section 7, the value of any right to
acquire
Common Stock or preferred stock of the Company shall be the value of the
Common
Stock or preferred stock, as the case may be, receivable upon exercise of
such
right, less the amount of any consideration that has to be paid to exercise
such
right. If the most recent valuation of the Capital Stock performed by a third
party appraiser designated by the Board does not include a valuation for
the
class of Capital Stock to be repurchased, then at the request of the Board,
such
Holder or the Investor, the Company will cause such valuation to be calculated
based upon the most recent appraisal. Such appraisal or price per share shall
be
the appraisal or price per share, as the case may be, utilized for purposes
of
Section 7.3(a) and 7.3(b). If an appraisal or price per share is to be prepared
pursuant to this Section 7.3(c), the Company Repurchase Option Period will
not
begin until such appraisal or price per share is delivered to the Company.
9
(d) Special
Treatment of Outstanding Offer Under Section 4.
If an
employee’s employment with the Company terminates during the period after such
employee delivers a Proposed Transfer Notice to the Company and before the
expiration of the Company Option Period and/or Investor Option Period, as
applicable under Section 4, then the option provided by this Section 7 shall
be
waived with respect to the Capital Stock subject to such Proposed Transfer
Notice; provided,
however, that
if
the Company and the Investor do not exercise their options under Section
4 and
the employee does not transfer such shares within forty-five (45) days after
the
expiration of the last option under Section 4.2 and otherwise in accordance
with
the requirements of Section 4, then the option provided by this Section 7
shall
be exercisable from and after such forty-fifth (45th)
day, as
if such day were the date on which such employee’s employment with the Company
terminated.
(e) Different
Terms.
The
Company, with the consent of the Investor, may agree to terms for the repurchase
of a Holder’s Capital Stock different from those provided in this Section
7.
7.4 Closing.
The
closing of the purchase of Employee Shares by the Company or the Investor
shall
take place at 10:00 a.m. local time at the principal executive office of
the
Company on the forty-fifth (45th)
day
after the later of the date (a) the Company or Investor have exercised their
right to acquire all of the Employee Shares pursuant to Section 7.1 or 7.2,
or
(b) the Investor Repurchase Option Period expired. At such closing, the Holder
whose Employee Shares are to be purchased shall deliver to the purchaser(s)
the
certificate representing such Employee Shares, properly endorsed for transfer,
against payment of the purchase price therefore.
7.5 Special
Restriction on Transfer.
If a
Holder’s employment with the Company is terminated for cause, the Holder will
not be permitted to deliver a Proposed Transfer Notice or initiate a Transfer
of
his or her Capital Stock pursuant to Section 4 until after the expiration
of the
Investor Purchase Option Period and
then
only with respect to any shares of Capital Stock that the Company and the
Investor have not elected to purchase pursuant to the foregoing provisions
of
this Section 7.
7.6 Continued
Obligations.
Any
shares of Capital Stock that are not purchased by the Company and the Investor
pursuant to this Section 7 will continue to be subject to the other provisions
of this Agreement.
8. Effect
of Failure to Comply.
8.1 Improper
Transfers Void.
Any
proposed Transfer not made in compliance with the applicable requirements
of
this Agreement shall be null and void ab
initio,
shall
not be recorded on the books of the Company or its transfer agent, if any,
and
shall not be recognized by the Company.
8.2 Refusal
to Transfer.
If any
Holder becomes obligated to Transfer any Capital Stock to the Company or
the
Investor under this Agreement and fails to deliver such Capital Stock in
accordance with the terms of this Agreement, the Party entitled to acquire
such
Capital Stock (or if there is more than one such Party, a majority-in-interest
of such Parties measured by the number of shares to be acquired)(the
“Purchaser”)
may,
in addition to all other remedies the Purchaser may have individually or
collectively, cause the purchase price to be paid for such shares to be
deposited with any bank in the Commonwealth of Virginia with aggregate capital
and surplus of not less than $100,000,000 for a period of six (6) months
to be
paid to such Holder by such bank upon surrender of the certificate representing
such shares, properly endorsed for transfer. Upon such surrender, such
certificate shall be returned to the Company and cancelled. Concurrently
with
such deposit, the Purchaser shall give written notice to that effect to such
Holder (and the Company if it is not a Purchaser), such Holder shall thereafter
have no further voting, dividend or other rights with respect to such shares,
all dividends and other distributions that may be payable to holders of record
on a date on or after the date on which such deposit is made shall be paid
to
the Purchaser, such Holder shall be deemed to have irrevocably consented
to the
transfer of ownership of such shares on the stock records of the Company
to the
Purchaser, the certificate which shall not have been delivered as required
pursuant to this Agreement shall be deemed to have been cancelled and shall
be
null and void, the Company shall issue a new certificate or certificates
representing such shares to the Purchaser registered in the name of the
Purchaser (severally, if there is more than one Purchaser), such shares shall
thereafter be deemed to be validly issued to and owned by the Purchaser and
the
Purchaser’s transferees only, and neither the Purchaser nor the Company (if it
is not a Purchaser) shall thereafter have any liability or obligation in
respect
of such shares to such Holder except as provided in the immediately following
sentence of this Section 8.2. If such Holder fails to so surrender such
certificate within such six (6) month period, the purchase price so deposited
shall be delivered to the Company and, thereafter, such Holder shall look
only
to the Company for payment of such purchase price upon surrender of such
certificate or otherwise. Concurrently with the consummation of the closing
of
the purchase of any shares pursuant to this Section 8.2 or the making of
any
deposit pursuant to this Section 8.2, the Holder whose shares shall have
been
purchased shall be deemed to have represented and warranted that (i) such
Holder
is the sole and absolute owner of such shares and (ii) such Holder is selling,
transferring and assigning all right, title and interest in and to such shares
free and clear of all claims, liens and encumbrances of any kind or nature
whatsoever, except those created under this Agreement.
10
8.3 Remedy
for Co-Sale Violation.
If the
Investor purports to sell any Capital Stock in contravention of the right
of
co-sale provided in Section 6 (a “Prohibited
Transfer”),
each
Holder, in addition to such remedies as may be available by law, in equity
or
hereunder, shall have the option to require the Investor to purchase shares
of
Capital Stock from such Holder, as provided below, and the Investor shall
be
bound by the terms of such option. If the Investor makes a Prohibited Transfer,
each Holder (but, if a Proposed Co-Sale Notice was delivered pursuant to
Section
6.1, only Holders who timely exercised their right of co-sale under Section
6)
may require the Investor to purchase from such Holder the type and number
of
shares of Capital Stock that such Holder would have been entitled to sell
to the
Prospective Co-Sale Transferee under Section 6 had the Prohibited Transfer
been
effected pursuant to and in compliance with the terms of Section 6. The sale
will be made on the same terms and subject to the same conditions as would
have
applied had the Investor not made the Prohibited Transfer, except that the
sale
(including, without limitation, the delivery of the purchase price) must
be made
within ninety (90) days after the Holder learns of the Prohibited Transfer,
as
opposed to the timeframe proscribed in Section 6. The Investor shall also
reimburse each Holder for any and all fees and expenses, including legal
fees
and expenses, incurred pursuant to the exercise or the attempted exercise
of
such Holder’s rights under Section 6.
9. Legend
on Capital Stock.
9.1 Legend.
Each
certificate representing shares of Capital Stock held by a Stockholder or
issued
to any subsequent transferee of such shares shall be endorsed with the following
legend:
THE
VOTING, SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED
BY
THIS CERTIFICATE IS SUBJECT TO, AND IN CERTAIN CASES PROHIBITED BY, THE TERMS
AND CONDITIONS OF A CERTAIN STOCKHOLDERS AGREEMENT BY AND AMONG THE STOCKHOLDER,
THE CORPORATION AND CERTAIN OTHER HOLDERS OF STOCK OF THE CORPORATION. COPIES
OF
SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE
CORPORATION.
11
9.2 Stop
Transfer Order.
Each
Stockholder agrees that that, in order to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate “stop
transfer” instructions to its transfer agent, if any, and that, if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records.
10. Term.
This
Agreement shall be effective as of the date hereof and shall continue in
effect
until and shall terminate upon the earlier to occur of:
(a) the
written agreement of Stockholders whose outstanding shares of Capital Stock
are
sufficient to amend this Agreement pursuant to Section 12.1;
(b) the
consummation of the Company’s first underwritten public offering of its Common
Stock (other than a registration statement relating either to the sale of
securities to employees of the Company pursuant to its stock option, stock
purchase or similar plan or a transaction subject to Rule 145 under the
Securities Act of 1933, as amended);
(c) the
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Company (whether pursuant to a proceeding under the United States
bankruptcy code or any similar law, Federal or state, whether now or hereafter
existing), or the general assignment by the Company of all or substantially
all
of its property for the benefit of creditors; or
(d) the
merger of the Company into or the consolidation of the Company with one or
more
corporations not Affiliated with (i) the Company or (ii) Stockholders then
owning a majority of the outstanding Capital Stock.
Except
as
provided herein, if a Stockholder transfers all of such Stockholder’s Capital
Stock to third parties in accordance with this Agreement, such Stockholder
shall
no longer be subject to, or have any liability under, this Agreement until
such
time as such Stockholder may thereafter acquire any Capital Stock.
11. Specific
Enforcement.
Each
Party acknowledges and agrees that each other Party will be irreparably damaged
in the event any of the provisions of this Agreement are not performed by
the
Parties in accordance with their specific terms or are otherwise breached.
Accordingly, it is agreed that each of the Company and the Stockholders shall
be
entitled to an injunction to prevent breaches of this Agreement and to specific
enforcement of this Agreement and its terms and provisions, in addition to
any
other remedy to which a Party may be entitled at law or in equity (without
the
posting of any bond or other security and without having to prove actual
damages), and if any action shall be brought in equity to enforce any of
the
provisions of this Agreement, none of the Parties shall raise the defense
that
there is an adequate remedy at law.
12. Miscellaneous.
12.1 Amendment.
(a)
This Agreement may be amended or modified and the observance of any term
hereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively) only by a written instrument
executed:
(i)
if
the Investor owns in the aggregate Capital Stock representing a majority
of the
Voting Power of the shares of Capital Stock then outstanding, by (x) the
Investor and (y) Minority Investors whose shares of Capital Stock in the
aggregate represent a majority of the Voting Power of the shares of Capital
Stock then outstanding and owned by the Minority Investors (as defined in
Section 12.1(b));
12
(ii)
if
the Investor owns in the aggregate Capital Stock representing less than a
majority of the Voting Power of the shares of Capital Stock then outstanding
but
at least twenty-five percent (25%) of such Voting Power, by (x) the Investor,
(y) Stockholders whose shares of Capital Stock in the aggregate represent
a
majority of the Voting Power of the shares of Capital Stock then outstanding
(which may include shares of Capital Stock owned by the Investor and the
other
Investors) and (z) to the extent provided in 12.1(b), Minority Investors
whose
shares of Capital Stock in the aggregate represent a majority of the Voting
Power of the shares of Capital Stock then outstanding and owned by the Minority
Investors; and
(iii)
if
the Investors own in the aggregate Capital Stock representing less than
twenty-five percent (25%) of the Voting Power of the shares of Capital Stock
then outstanding, by (x) Stockholders whose shares of Capital Stock in the
aggregate represent a majority of the Voting Power of the shares of Capital
Stock then outstanding and (y) to the extent provided in Section 12.1(b),
Minority Investors whose shares of Capital Stock in the aggregate represent
a
majority of the Voting Power of the shares of Capital Stock then outstanding
and
owned by the Minority Investors.
(b)
For
purposes of this Section 12.1, “Minority
Investors”
means
the following Holders: Zygot, LLC. Notwithstanding the foregoing sentence,
from
and after the time the foregoing Holders, collectively, cease to own at least
65% of the Capital Stock owned by them on the date hereof (including as being
owned for this purpose any shares issuable to such Persons pursuant to the
stock
options referred to in the Stock Option Exchange Agreements between the Company
and certain of such Persons dated on or before the date of this Agreement)
(x)
for purposes of Section 12(a)(i) “Minority
Investors”
shall
mean the Holders, (y) Section 12.1(a)(ii) will not be applicable and (z)
Section
12.a(a)(iii) will not be applicable.
(c)
Any
amendment, modification or waiver so effected shall be binding upon the Company,
the Investor, each Holder and each of their respective successors and permitted
assigns whether or not such Person entered into or approved such amendment,
modification or waiver. Notwithstanding the foregoing, Schedule A and Schedule
B
hereto may be amended by the Company from time to time in accordance with
Section 12.2 to add information regarding additional Holders and Investors
without the consent of the other Parties. The Company shall give prompt written
notice of any amendment or modification hereof or waiver hereunder to any
Party
that did not consent in writing to such amendment or waiver.
12.2 Successors
and Assigns.
(a) Except
as
otherwise expressly provided herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors,
permitted assigns, heirs, executors and administrators of the Parties. Except
as
expressly set forth herein or in connection with an assignment by the Company
by
operation of law to the acquirer of the Company, the rights and obligations
of
the Company and the Stockholders hereunder may not be assigned or delegated
under any circumstances
without
the prior written consent of the Investor; provided,
however,
that
(i) the Investor may assign or delegate its rights or obligations hereunder
(A)
in connection with a Transfer by it of Capital Stock made in accordance with
this Agreement or (B) in connection with a transfer of all or substantially
all
of its business, and (ii) any Party may assign and delegate its rights and
obligations hereunder to any Person to whom such Party Transfers all of its
Capital Stock, provided such Transfer is in accordance with this Agreement.
Any
assignment or delegation of rights or obligations made in violation of the
provisions of this Section 12.2 shall be void. If the Investor assigns, in
accordance with this Agreement, any of the rights granted to it specifically
under this Agreement (including its rights under Section 2, 7, 12.1, this
12.2,
12.4 or 12.19), or if there is a successor to the Investor by operation of
law
or otherwise, then from and after the time of such assignment or succession,
such rights shall be exercisable by such successor or assign.
13
(b) Each
transferee or assignee of Capital Stock subject to this Agreement shall continue
to be subject to the terms hereof applicable to such Person’s transferor or
assignor, provided that all such Transfers of the securities of the Company
shall be effected in accordance with the terms and restrictions set forth
herein, and, as a condition to the Company’s recognizing such Transfer, each
transferee or assignee shall agree in writing to be subject to each of the
terms
of this Agreement by executing and delivering an Adoption Agreement
substantially in the form attached hereto as Exhibit A. Upon the execution
and
delivery of an Adoption Agreement by any transferee, such transferee shall
be
deemed to be a Party hereto as if such transferee’s signature appeared on the
signature pages of this Agreement. By execution of this Agreement or of any
Adoption Agreement each of the Parties appoints the Company as its attorney
in
fact solely for the purpose of executing any Adoption Agreement that may
be
required to be delivered under the terms of this Agreement and amending Schedule
A or Schedule B, as appropriate.
(c) Notwithstanding
the foregoing provisions of this Section 12.2, if any Capital Stock is
Transferred from a Holder to the Investor in accordance with this Agreement,
then from and after the date of such Transfer such Capital Stock shall only
be
subject to the provisions of this Agreement applicable to Investor (and not
the
provisions of this Agreement applicable only to Holders). In addition, from
and
after the time the Company acquires any Capital Stock from a Stockholder
in
accordance with this Agreement, then, solely in its capacity as the assignee
or
transferee and holder of the Capital Stock so acquired, the Company will
not be
bound by the provisions of this Agreement; provided that the Company shall
not
subsequently Transfer any of such Capital Stock except in accordance with
Section 12.16.
12.3 No
Third Party Beneficiaries.
Nothing
in this Agreement, express or implied, is intended to confer upon any Person
other than the Parties or their respective executors, administrators, heirs,
legal representatives, successors and permitted assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except
as
expressly provided in this Agreement.
12.4 Notices.
All
notices and other communications given or made pursuant to this Agreement
shall
be in writing, shall be transmitted to the appropriate Party by hand delivery,
by registered or certified mail, return receipt requested, postage prepaid
or by
overnight delivery by a nationally recognized overnight courier and shall
be
addressed to such Party at his, her or its address shown on the signature
page,
Schedule A or Schedule B hereof or as shown on the stock records of the Company.
Any Party may designate by written notice given to all Parties a new address
to
which any notice, demand or other communication hereunder shall thereafter
be
given. Each notice or other communication transmitted in the manner described
in
this Section 12.4 shall be deemed to have been given and received for all
purposes: (a) upon personal delivery to the Party to be notified, (b) five
(5)
days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, (c) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt or (d) upon receipt of a confirmation notification
if
such delivery is made by facsimile transmission. If notice is given to the
Company, a copy shall also be given to the Investor.
12.5 Further
Assurances.
Each
Party agrees to execute such additional documents or instruments as may be
reasonably necessary or desirable in order to carry out the provisions of
this
Agreement.
12.6 Severability.
The
determination by a court of competent jurisdiction that any provision of
this
Agreement is invalid or unenforceable shall in no way affect the validity
or
enforceability of any other provision of this Agreement, which shall remain
in
full force and effect in the same manner and to the same extent as if the
invalid or unenforceable provision had not been contained in this Agreement.
If
any such invalidity or unenforceability of a provision of this Agreement
becomes
known or apparent to any of the Parties, the Parties shall negotiate promptly
and in good faith in an attempt to make appropriate changes and adjustments
to
such provisions specifically and this Agreement generally to achieve as closely
as possible, consistent with applicable law, the intent and spirit of such
provision specifically and this Agreement generally.
14
12.7 Waiver.
No
delay or omission to exercise any right, power or remedy accruing to any
Party
under this Agreement, upon any breach or default of any other Party under
this
Agreement, shall impair any such right, power or remedy of such non-breaching
or
non-defaulting Party 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 Party of any breach or default under this
Agreement, or any waiver on the part of any Party 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 afforded to any Party, shall be cumulative
and not alternative.
12.8 Entire
Agreement.
This
Agreement (including the Schedules and Exhibits hereto) contains the entire
agreement of the Parties with respect to the subject matter hereof, and
supersedes any prior communications, understandings or agreements of the
Parties
with respect to the subject matter hereof. The words “hereof”, “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified herein, the term “or” has the inclusive
meaning represented by the term “and/or” and the term “including” is not
limiting. All references to “Sections” shall be to Sections of this Agreement
unless otherwise specifically provided.
12.9 Execution
by the Company.
The
Company agrees that it will cause the certificates evidencing the shares
of
Capital Stock to bear the legend required by Section 9, and it shall supply,
free of charge, a copy of this Agreement to any holder of a certificate
evidencing shares of Capital Stock upon written request from such holder
to the
Company at its principal office. The failure to cause the certificates
evidencing the shares of Capital Stock to bear the legend required by Section
9
and the failure of the Company to supply, free of charge, a copy of this
Agreement as provided under this Section 12.9 shall not affect the validity
or
enforcement of this Agreement.
12.10 Manner
of Voting; Grant of Proxy.
The
voting of Capital Stock pursuant to this Agreement may be effected in person,
by
proxy, by written consent or in any other manner permitted by applicable
law.
Each Party hereby grants to the Secretary of the Company, in the event that
such
Party fails to vote such Party’s Capital Stock as required by this Agreement, a
proxy coupled with an interest in all shares of Capital Stock beneficially
owned
by such Party, which proxy is irrevocable until this Agreement terminates
pursuant to its terms or this Section 12.10 is amended to remove such grant
of a
proxy.
12.11 Jurisdiction.
EACH
PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS AND AGREES TO SUBMIT
TO
THE EXCLUSIVE JURISDICTION OF THE STATE OR FEDERAL COURTS IN THE STATE OF
DELAWARE (THE “DELAWARE
COURTS”)
FOR
ANY LITIGATION BETWEEN THEM ARISING OUT OF OR RELATING TO THIS AGREEMENT
AND THE
TRANSACTIONS CONTEMPLATED HEREBY (AND AGREES NOT TO COMMENCE ANY LITIGATION
RELATING THERETO EXCEPT IN THE DELAWARE COURTS), WAIVES ANY OBJECTION TO
THE
LAYING OF VENUE OF ANY SUCH LITIGATION IN THE DELAWARE COURTS AND AGREES
NOT TO
PLEAD OR CLAIM IN ANY COURT THAT SUCH LITIGATION BROUGHT IN THE DELAWARE
COURTS
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HEREBY IRREVOCABLY
AND
UNCONDITIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY SUCH
LITIGATION.
15
12.12 Governing
Law.
THIS
AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED
BY THE
LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ITS CONFLICT OF LAWS
RULES OR PRINCIPLES.
12.13 Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used for convenience only
and
are not to be considered in construing or interpreting this
Agreement.
12.14 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. This Agreement may also be executed and delivered by facsimile
signature and 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.
12.15 Additional
Stockholders.
In the
event that after the date of this Agreement, the Company issues shares of
Capital Stock to any Person other than a Party, the Company shall cause such
Person to execute a counterpart signature page hereto as a Stockholder, and
such
Person shall thereby be a Party and bound by, and subject to, all the terms
and
provisions of this Agreement applicable to an Investor or Holder, as the
case
may be.
12.16 Stock
Splits, Stock Dividends, etc.
In the
event of any issuance of Capital Stock after the date of this Agreement to
the
Stockholders (including, without limitation, in connection with any stock
split,
stock dividend, recapitalization, reorganization, or the like), such Capital
Stock shall become subject to this Agreement and shall be endorsed with the
legend set forth in Section 9.
12.17 Spousal
Consent.
If
any
Stockholder
is
married on the date of this Agreement, such Stockholder’s
spouse
shall execute and deliver to the Company a consent of spouse in the form
of
Exhibit B hereto (“Consent
of Spouse”).
Notwithstanding the execution and delivery thereof, such consent shall not
be
deemed to confer or convey to the spouse any rights in such
Stockholder’s
Capital Stock that do not otherwise exist by operation of law or the agreement
of the Parties. If any Stockholder
should
marry or remarry subsequent to the date of this Agreement, such
Stockholder
shall
within thirty (30) days thereafter obtain his/her new spouse’s acknowledgement
of and consent to the existence and binding effect of all restrictions contained
in this Agreement by causing such spouse to execute and deliver a Consent
of
Spouse acknowledging the restrictions and obligations contained in this
Agreement and agreeing and consenting to the same.
12.18 No
Effect Upon Lending Relationships.
Anything herein to the contrary notwithstanding, nothing contained in this
Agreement shall affect, limit or impair the rights and remedies of the Investor
(individually, a “Subject
Entity”
and
collectively, the “Subject
Entities”),
any
of their respective affiliates, funding or financing sources or any other
lenders in their capacities as lenders to the Company or any of its subsidiaries
pursuant to any agreement under which the Company or any of its subsidiaries
has
or from time to time will have borrowed money. Without limiting the generality
of the foregoing, neither any Subject Entity nor any such other Person, in
exercising its rights as a lender or other creditor, including making its
decision on whether to foreclose on any collateral security, shall have any
duty
to consider (a) its status as a direct or indirect equityholder of the Company,
(b) the interests of the Company or any of its subsidiaries or (c) any duty
it
may have to any other direct or indirect equityholder of the Company, except
as
may be required under the applicable loan documents or by commercial law
applicable to creditors generally.
16
12.19 Construction.
The
Parties agree that this Agreement is the product of negotiations between
sophisticated parties and individuals, all of whom were represented by counsel,
and each of whom had an opportunity to participate in, and did participate
in,
the drafting of each provision hereof. Accordingly, ambiguities in this
Agreement, if any, shall not be construed strictly or in favor of or against
any
Party but rather shall be given fair and reasonable construction without
regard
to the rule of contra proferentem. As used in this Agreement, the masculine
gender shall include the feminine and neuter gender.
12.20 Aggregation
of Shares.
All
shares of Capital Stock held by any Person and such Person’s Affiliates shall be
aggregated for purposes of determining the availability of any rights under
this
Agreement.
[signature
page follows]
17
IN
WITNESS WHEREOF, the Parties have executed this Stockholders Agreement as
of the
date first above written.
DBSXMEDIA,
INC.
By:
Name:
Title:
Address
for Notices:
ZYLOC,
LLC:
By:
Name:
Title:
NETFRAN
DEVELOPMENT CORP. (UNDER NAME CHANGE TO ARIEL WAY, INC):
By:
Name:
Title:
18
SCHEDULE
A
HOLDERS
|
Name
and Address for Notices
|
Number
of Shares Held and Number of
Shares (identified by stock certificate number) Representing Co-Investment Shares |
|
|
Zygot,
LLC
|
1,000
shares of Common Stock
|
|
SCHEDULE
B
INVESTOR
|
Name
and Address for Notices
|
Number
of Shares Held
|
|
Netfran
Development Corp. (Under Name Change to Ariel Way, Inc.)
0000
Xxxxxx Xxxxxxxx Xxxxx
Xxxxx
0000
Xxxxxx,
XX 00000
|
1,500
shares of Common Stock
|
EXHIBIT
A
ADOPTION
AGREEMENT
This
Adoption Agreement (“Adoption
Agreement”)
is
executed by the undersigned (the “Transferee”)
pursuant to the terms of that certain Stockholders Agreement dated as of
February 21, 2005 (the “Agreement”)
by and
among the Company and certain of its stockholders. Capitalized terms used
but
not defined in this Adoption Agreement shall have the respective meanings
ascribed to such terms in the Agreement. By the execution of this Adoption
Agreement, the Transferee agrees as follows:
1. Acknowledgement.
Transferee acknowledges that Transferee is acquiring certain shares of the
capital stock of the Company (the “Stock”),
subject to the terms and conditions of the Agreement.
2 Agreement.
Transferee (i) agrees that the Stock acquired by Transferee shall be bound
by
and subject to the terms of the Agreement, and (ii) hereby adopts the Agreement
with the same force and effect as if Transferee were originally a party
thereto.
3.
Status
Under the Agreement.
Transferee acknowledges that the transferor of its Stock was Zygot, LLC under
the Agreement and that Transferee will have the same status under the
Agreement.
3 Notice.
Any
notice required or permitted by the Agreement shall be given to Transferee
at
the address listed beside Transferee’s signature below.
Dated:
_____________________
ZYGOT,
LLC:
By:
Name
and
Title
Address:
Accepted
and Agreed:
DBSXMEDIA,
INC.
By:
Title:
EXHIBIT
B
CONSENT
OF SPOUSE
I,
[____________________], spouse of [______________], acknowledge that I have
read
the Stockholders Agreement, dated as of February 21,
2005,
to
which this Consent is attached as Exhibit B (the “Agreement”),
and
that I know the contents of the Agreement. I am aware that the Agreement
contains provisions regarding the voting and transfer of shares of capital
stock
of the Company which my spouse may own, including any interest I might have
therein.
I
hereby
agree that my interest, if any, in any shares of capital stock of the Company
subject to the Agreement shall be irrevocably bound by the Agreement and
further
understand and agree that any community property interest I may have in such
shares of capital stock of the Company shall be similarly bound by the
Agreement.
I
am
aware that the legal, financial and related matters contained in the Agreement
are complex and that I am free to seek independent professional guidance
or
counsel with respect to this Consent. I have either sought such guidance
or
counsel or determined after reviewing the Agreement carefully that I will
waive
such right.
Dated:
_______________________________
[Name
of Stockholder’s Spouse]
