Stockholder Agreement
Certain
portions of Exhibit B in this Exhibit 10.2 have been
omitted in accordance with Item 601(b)(2) of Regulation S-K.
AutoWeb, Inc. will furnish supplementally a copy of any
omitted portions of the exhibit to the Securities and Exchange
Commission upon request; provided, however, that AutoWeb, Inc. may
request confidential treatment pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended, for any the portions
of the exhibit so furnished.
Exhibit
10.2
This
Stockholder Agreement (“Agreement”) is made as of October
5, 2017 (“Effective
Date”) by and among Autobytel Inc., a Delaware
corporation (“Company”), DealerX Partners, LLC,
a Florida limited liability company (“Restricted Stockholder”) and
Xxxxxxx Xxxxxxxx (“Designated
Restricted Stockholder Affiliate”). The Company,
Restricted Stockholder and Designated Restricted Stockholder
Affiliate are referred to herein collectively as the
“Parties” and
sometimes each individually as a “Party.”
Background
Designated
Restricted Stockholder Affiliate is the Manager and President of
Restricted Stockholder.
Concurrently with
and subject to the execution and delivery of this Agreement by the
Parties, pursuant to the terms of that certain Master License and
Services Agreement, dated as of October 5, 2017
(“License
Agreement”), by and among the Company and Restricted
Stockholder, Restricted Stockholder is acquiring a right to receive
the Initial Restricted Securities (as defined below) upon the
occurrence of the Market Capitalization Event. Upon the occurrence
of the Market Capitalization Event, the Initial Restricted
Securities will be issued, subject to the terms and conditions set
forth in the License Agreement and this Agreement, without
registration or qualification under the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder
(“Securities
Act”), or applicable state securities laws, in
accordance with applicable exemptions from such registration or
qualification requirements.
Effective as of May
26, 2010, the Company adopted a Tax Benefit Preservation Plan,
which plan was amended by Amendment No. 1 to Tax Benefit
Preservation Plan dated as of April 14, 2014 and by Amendment No. 2
to Tax Benefit Preservation Plan dated as of April 13, 2017
(collectively the “NOL
Plan”). The Board of Directors of the Company
(“Board”)
adopted the NOL Plan to protect stockholder value by preserving
important tax assets. The Company has generated substantial net
operating loss carryovers and other tax attributes for United
States federal income tax purposes (“Tax Benefits”) that can generally
be used to offset future taxable income and therefore reduce
federal income tax obligations. However, the Company’s
ability to use the Tax Benefits will be adversely affected if there
is an “ownership change” of the Company as defined
under Section 382 (“Section
382”) of the Internal Revenue Code (as defined below).
In general, an ownership change will occur if the Company’s
“5% shareholders” (as defined under Section 382)
collectively increase their ownership in the Company by more than
50% over a rolling three-year period. The NOL Plan was adopted to
reduce the likelihood that the Company’s use of its Tax
Benefits could be substantially limited under Section 382. The NOL
Plan is intended to deter any “Person” (as defined in the NOL
Plan) from becoming an “Acquiring Person” (as defined in
the NOL Plan) and thereby jeopardizing the Company’s Tax
Benefits. In general, an Acquiring Person is any Person, itself or
together with all Affiliates (as defined below) of such Person,
that becomes the “Beneficial
Owner” (as defined in the NOL Plan) of 4.9% or more of
the Company’s outstanding Common Stock. Under the NOL Plan,
the Board may, in its sole discretion, exempt any person from being
deemed an Acquiring Person for purposes of the NOL Plan
(“NOL Plan
Exemption”) if the Board determines that such
person’s ownership of Common Stock will not be likely to
directly or indirectly limit the availability of the
Company’s Tax Benefits or is otherwise in the best interests
of the Company. The Board does not have any obligation, implied or
otherwise, to grant such an exemption.
-1-
Either
upon entering into the License Agreement and obtaining the right to
receive the Market Capitalization Event Shares (as defined in the
License Agreement) or upon acquisition of the Initial Restricted
Securities, Restricted Stockholder would be deemed to be an
Acquiring Person under the NOL Plan. Restricted Stockholder has
requested that the Board consider whether the Board would exercise
its discretionary authority under the NOL Plan to deem Restricted
Stockholder and its Affiliates not to be an Acquiring Person by
reason of the acquisition of Beneficial Ownership of the Initial
Restricted Securities because the acquisition of Beneficial
Ownership of the Initial Restricted Securities by Restricted
Stockholder and its Affiliates will not be likely to directly or
indirectly limit the availability to the Company of the Tax
Benefits or otherwise is in the best interests of the Company
(“NOL Plan
Exemption”). The Board has considered Restricted
Stockholder’s request and is prepared to grant Restricted
Stockholder and its Affiliates a NOL Plan Exemption, subject to and
in reliance upon Restricted Stockholder and the Designated
Restricted Stockholder Affiliate entering into and remaining in
compliance with the terms and conditions of this
Agreement.
In
consideration of the mutual promises and covenants set forth
herein, the Parties hereto further agree as follows:
Article
I
Definitions
As used
in this Agreement, the following defined terms shall have the
meanings ascribed below:
“Action or Proceeding” means any
complaint, claim, demand, prosecution, indictment, action,
litigation, lawsuit, arbitration, proceeding, hearing, inquiry,
audit, or investigation (whether civil, criminal, judicial or
administrative, and whether formal or informal, and whether public
or private) made or brought by any Person or brought or heard by or
before any Governmental Authority.
“Affiliate” means (i) an Affiliate
as defined in the NOL Plan; and (ii) with respect to any specified
Person, any other Person who or which, directly or indirectly,
controls, is controlled by, or is under common control with such
specified Person.
“Associate” shall be as defined in
the NOL Plan.
“Beneficial Ownership” shall be as
defined in the NOL Plan.
“Business Day” means any day other
than a Saturday, Sunday or any other day on which commercial banks
in Delaware are authorized or required by law to
close.
“Change in Control” means with
respect to any Person the first to occur of any of the following
(in one transaction or a series of related transactions): (i)
consummation of a sale of, directly or indirectly, all or
substantially all of the Person’s assets, (ii) any
“person” (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than a trustee or other fiduciary
holding securities of the Person under an employee benefit plan of
the Person, becomes the “beneficial owner” (as defined
in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of the Person representing 50% or more of
(A) the outstanding equity securities of the Person or (B) the
combined voting power of the Person’s then outstanding
securities, or (iii) the Person is party to a consummated merger or
consolidation which results in the voting securities of the Person
outstanding immediately prior thereto failing to continue to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving or another entity) at least
fifty (50%) percent of the combined voting power of the voting
securities of the Person or such surviving or other entity
outstanding immediately after such merger or
consolidation.
“Code” means the U.S. Internal
Revenue Code of 1986, as amended, and the Treasury regulations
promulgated thereunder.
“Common Stock” means the
Company’s common stock, $0.001 par value per
share.
-2-
“Confidential Information” means
(i) Company’s trade secrets, business plans, strategies,
methods and/or practices; (ii) Company’s software,
technology, computer systems architecture and network
configurations; (iii) any other information relating to Company
that is not generally known to the public, including information
about Company’s personnel, products, customers, suppliers,
financial information, marketing and pricing strategies, services
or future business plans; (iv) material, non-public information
related to Company; and (v) any and all analyses, compilations,
studies, notes or other materials prepared which contain or are
based on other Confidential Information of Company.
“Consent” means any approval,
consent, permission, ratification, waiver, or other authorization
of any Person (including any Governmental Authority).
“Contract” means any agreement,
contract, obligation, promise, note, bond, mortgage, undertaking,
indenture, purchase order, sales order, instrument, lease,
franchise, license, permit, understanding, arrangement, commitment
or undertaking, whether written or oral, or express or implied, and
in each case, including all amendments thereto.
“Control” means the possession,
directly or indirectly, of the power to direct or cause the
direction of management policies of a Person, whether through
ownership of voting securities, by contract, or
otherwise.
“Damages” means any loss, damage,
or liability (joint or several) to which a Party hereto may become
subject under the Securities Act, the Exchange Act, or other
foreign, federal, state or local law, insofar as such loss, damage,
or liability (or any action in respect thereof) arises out of or is
based upon (i) any untrue statement or alleged untrue statement of
a material fact contained in any registration statement of Company,
including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto; (ii) an omission
or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not
misleading; or (iii) any violation or alleged violation by the
indemnifying Party (or any of its agents or Affiliates) of the
Securities Act, the Exchange Act, any state or foreign securities
law, or any rule or regulation promulgated under the Securities
Act, the Exchange Act, or any state or foreign securities law;
provided, however, that Damages shall not include any loss, damage,
or liability resulting from use of a preliminary prospectus if the
loss, damage, or liability arises after the Company makes a
correcting preliminary or final prospectus available, and any such
loss, damage, or liability would have been avoided by delivery of
such correcting preliminary or final prospectus.
“Dispute Resolution Venue” means
(i) Miami, Florida in the case of any action or proceeding
initiated or filed by Company; and (ii) Tampa, Florida in the case
of any action or proceeding initiated or filed by Restricted
Stockholder or Designated Restricted Stockholder
Affiliate.
“Electronic Transmission” means a
communication (i) delivered by facsimile, telecommunication or
electronic mail when directed to the facsimile number of record or
electronic mail address of record, respectively, which the intended
recipient has provided to the other Party for sending notices
pursuant to the Agreement and (ii) that creates a record of
delivery and receipt that is capable of retention, retrieval, and
review, and that may thereafter be rendered into clearly legible
tangible form.
“Encumbrance” means any mortgage,
charge, claim, condition, equitable interest, community or other
marital property interest, lien, option, pledge, security interest,
right of first refusal, right of first option, easement,
right-of-way, encroachment, or restriction of any kind, including
any restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership and including any
conditional sale or other title retention agreement, any lease in
the nature thereof and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any
jurisdiction, and including any lien or charge arising by statute
or other Laws or which secures the payment of a debt (including any
Taxes due and payable) or the performance of an
obligation.
“Exchange Act” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
-3-
“Excluded Registration” means (i) a
registration relating to the sale of securities to employees of the
Company or a subsidiary pursuant to a stock option, stock purchase,
or similar plan; (ii) a registration relating to an SEC Rule 145
transaction; (iii) a registration on any form that does not include
substantially the same information as would be required to be
included in a registration statement covering the sale of the
Restricted Securities; (iv) a registration in which the only Common
Stock being registered is Common Stock issuable upon conversion of
debt securities that are also being registered; or (v) a
registration in which the only Company securities being registered
are debt securities.
“Fair Market Value” means the
weighted average of the Market Values of the Common Stock for the
thirty consecutive trading day period preceding the applicable date
for the determination of the Fair Market Value, except in the case
of subsection (iii) of the definition of Market Value, in which
case Fair Market Value shall be Market Value determined as of the
applicable date for determination of Fair Market
Value.
“Form S-3” means such form under
the Securities Act as in effect on the date hereof or any
registration form under the Securities Act subsequently adopted by
the SEC that permits incorporation of substantial information by
reference to other documents filed by the Company with the
SEC.
“Governing Documents” means
(i) with respect to a corporate Person, such Person’s
(1) certificate or articles of incorporation or other
formation document, as amended to date, and (2) bylaws or
similar document; (ii) with respect to a limited liability
company Person, such Person’s (1) certificate of
formation or organization or other formation document, and
(2) operating or similar agreement or document;
(iii) with respect to a business company Person, such
Person’s memorandum and articles of association or other
formation documents; or (iv) with respect to any other Person
(other than a natural person), such Person’s (1) certificate
of formation or organization or other formation document, and (2)
operating or similar agreement or document.
“Governmental Authority” means any:
(i) nation, state, county, city, town, or other jurisdiction of any
nature; (ii) federal, state, local, municipal, foreign, or other
government; (iii) governmental or quasi-governmental authority of
any nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal); (iv)
multi-national organization or body; (v) stock exchange or
quotation service; (vi) body exercising, or entitled to exercise,
any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature; (vii)
arbitrator or mediator; or (viii) any official or authorized
representative of any of the foregoing.
“Governmental Authorization” means
any Consent, permit, license, Order or other authorization issued,
granted, given, or otherwise made available by or under the
authority, or any requirement, of any Governmental Authority or
pursuant to any Laws, including Environmental Permits.
“Group” shall have the meaning set
forth in Section 13(d)(3) of the Exchange Act and Rule 13d-5 of the
General Rules and Regulations under the Exchange Act.
“Immediate Family Member” means a
child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, of a natural person referred to
herein.
“Initial Restricted Securities”
means the Market Capitalization Event Shares (as defined in the
License Agreement) acquired by Restricted Stockholder in connection
with the transactions contemplated by the License
Agreement.
“Initial Restricted Securities Issuance
Date” means the date the Initial Restricted Securities
are issued to Restricted Stockholder.
“Irrevocable Proxy” means an
Irrevocable Proxy in the form of Exhibit A attached
hereto.
-4-
“Law” means any federal, state,
local, municipal, foreign, international, multinational, or other
order, constitution, law, ordinance, principle of common law,
regulation, statute, rule, treaty, permit, license, certificate,
judgment, Order, decree, award or other decision or requirement of
any arbitrator or Governmental Authority.
“Market Capitalization Event” means
the Market Capitalization Event as defined in the License
Agreement.
“Market Value” means, with respect
to the Common Stock as of any date, (i) the closing price of the
Common Stock as reported on the principal U.S. national securities
exchange on which the Common Stock is listed and traded on that
date, or, if there is no closing price on that date, then on the
last preceding date on which a closing price was reported; (ii) if
the Common Stock is not listed on any U.S. national securities
exchange but are quoted in an inter-dealer quotation system on a
last sale basis, the final ask price of the Common Stock reported
on the inter-dealer quotation system for such date, or, if there is
no sale on that date, then on the last preceding date on which a
sale was reported; or (iii) if the Common Stock is neither listed
on a U.S. national securities exchange nor quoted on an
inter-dealer quotation system on a last sale basis, the amount
reasonably determined by the Company to be the fair market value of
the Common Stock as determined by the Company in good faith and in
light of all available information.
“Member of the Restricted Stockholder
Group” means each of Restricted Stockholder and
Designated Restricted Stockholder Affiliate.
“Non-Restricted
Securities” for the purposes of this
Agreement, Non-Restricted Securities are Restricted Securities for
which all of the Securities Restrictions have expired or
terminated.
“No Transfer Period” means the
six-month period commencing on the Initial Restricted Securities
Issuance Date and ending on the six-month anniversary of the
Initial Restricted Securities Issuance Date.
“Order” means any judgment,
decision, order, injunction, decree, award, or writ of any
Governmental Authority.
“Person” means any natural person,
corporation (including any non-profit corporation), general or
limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other
entity, or a Governmental Authority.
“Proposed Public Transfer” means a
proposed Transfer to be implemented pursuant to (i) Restricted
Stockholder’s exercise of the registration rights as
described in Article IV; or (ii) Rule 144; provided, however,
that no proposed Transfer under clauses (i) or (ii) of this
definition shall constitute a Proposed Public Transfer if the
transaction constitutes a directed sale or a block sale to known or
designated buyers or any known or designated group of
buyers.
“Reply Period” means sixty (60)
days.
“Representative” means, as to any
Person, such Person’s Affiliates and its and their directors,
officers, employees, agents, representatives, debt and equity
financing sources, and advisors (including, without limitation,
financial and investment banking advisors, attorneys, consultants,
counsel and accountants and any representatives of such
advisors).
“Repurchase Option Event” means any
Change in Control of Restricted Stockholder.
“Restricted Securities” means (i)
the Initial Restricted Securities; and (ii) any other Shares that may be
issued with respect to the Initial Restricted Securities by reason
of any stock split, reverse split, stock dividend (including any
dividend or distribution of securities convertible into Shares),
combination, reorganization, recapitalization or other like change,
conversion or exchange of shares, or any other change in the
corporate or capital structure of the Company, in each case under
clause (i) or (ii), until such
time as all of the Securities Restrictions expire or terminate with
respect to such Shares.
-5-
“Restricted Securities Transfer
Proceeds” means all cash, securities, property (real
or personal) or other proceeds from any Transfer of the Restricted
Securities.
“Restricted Stockholder Disclosure
Schedule” means Exhibit B attached
hereto.
“SEC” means the Securities and
Exchange Commission.
“SEC Rule 144” means Rule 144
promulgated by the SEC under the Securities Act.
“Section 382 5% Shareholder” means
a “5-percent shareholder” as defined under Section 382
and the rules and regulations thereunder.
“Securities Restrictions” means the
securities Laws restrictions, and the transfer restrictions and
obligations, voting proxy, right of first refusal and repurchase
option under Articles V, VI and VII.
“Securities Restrictions Period”
means the period commencing on the Effective Date and ending on the
fifth anniversary of the Effective Date.
“Securities Trading Policy” means
the Company’s then-current Securities Trading Policy as it
may be amended from time to time and furnished or made available to
Restricted Stockholder and Designated Restricted Stockholder
Affiliate, including via the Company’s website and/or
intranet.
“Selling Expenses” means all
underwriting discounts, selling commissions, and stock transfer
taxes applicable to the sale of Restricted Securities in a
transaction described in Article IV, and fees and disbursements of
counsel for Restricted Stockholder.
“Shares” means all issued and
outstanding shares of Common Stock that Restricted Stockholder or
any of its Affiliates or Associates are collectively deemed to
Beneficially Own (as defined in the NOL Plan). In the event of any
change in the number of issued and outstanding shares of Common
Stock by reason of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible
into Shares), combination, reorganization, recapitalization or
other like change, conversion or exchange of shares, or any other
change in the corporate or capital structure of the Company, the
term “Shares”
shall be deemed to refer to and include the Shares as well as all
such stock dividends and distributions and any shares of capital
stock into which or for which any or all of the Shares may be
changed or exchanged.
“Subsidiary” of any Person shall mean any
corporation or other entity of which a majority of the voting power
of the voting equity securities or equity interest is owned,
directly or indirectly, by such Person.
“Tax” or “Taxes” means any federal, state,
local, or foreign income, gross receipts, license, payroll,
employment, occupation, sales, use, excise, severance, stamp,
occupancy, premium, windfall profits, environmental (including
Taxes under Section 59A of the Code), customs duties, capital
stock, franchise, profits, net proceeds, transfer, withholding,
social security or similar, unemployment, disability, greenmail,
real and personal property (tangible and intangible), production,
escheat, registration, value added, alternative or add-on minimum,
estimated or other similar taxes, or other tax, charge, fee, levy,
deficiency or other assessment of whatever kind or nature, imposed
by any Tax Authority, together with any interest, penalties or
additions to tax relating thereto, and including an obligation to
indemnify or assume or otherwise succeed to or otherwise be liable
for the tax liability of any other Person (including any
predecessor) as a transferee or successor or
otherwise.
“Tax Authority” means any branch,
office, department, agency, instrumentality, court, tribunal,
officer, employee, designee, representative, or other Person that
is acting for, on behalf or as a part of any Governmental Authority
that is engaged in or has any power, duty, responsibility or
obligation relating to the legislation, promulgation,
interpretation, enforcement, regulation, monitoring, supervision or
collection of or any other activity relating to any Tax or Tax
Return.
-6-
“Tax Return” means any return,
election, declaration, report, schedule, information return,
document, information, opinion, statement, or any attachment or
amendment to any of the foregoing (including any consolidated,
combined or unitary return) submitted or required to be submitted
to any Tax Authority and any claims for refund of Taxes
paid.
“Transfer” means (i) to sell,
assign, lend; offer; pledge; contract to sell; sell any option or
contract to purchase; purchase any option or contract to sell;
grant any option, right, or warrant to purchase; or otherwise
transfer or dispose of, directly or indirectly, any Shares or any
securities convertible into or exercisable or exchangeable
(directly or indirectly) for Shares or (ii) to enter into any swap
or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of such
securities, whether any such transaction described in clause (i) or
this clause (ii) is to be settled by delivery of Shares or other
securities, in cash, or otherwise; or (iii) any Change in Control
of Restricted Stockholder.
Article
II
NOL Plan
Exemption
2.1
Grant
of NOL Plan Exemption. Subject
to and in reliance upon the representations, warranties and
obligations of Restricted Stockholder under this Agreement, the
Board granted Restricted Stockholder a NOL Plan Exemption solely
with respect to Restricted Stockholder’s acquisition of the
Initial Restricted Securities. As long as Restricted Stockholder
and Designated Restricted Stockholder Affiliate remains in full
compliance with this Agreement, Company shall maintain the NOL Plan
Exemption in effect with respect to the Initial Restricted
Securities. This NOL Plan Exemption is not applicable to the
acquisition of Beneficial Ownership of any other or additional
Shares by Restricted Stockholder or any of its Affiliates or
Associates.
2.2
Governmental
Filings. Upon request by
Company, Restricted Stockholder and its Affiliates and Associates
shall cooperate with Company and furnish to Company such
information regarding Restricted Stockholder and its Affiliates and
Associates, including information regarding the beneficial
ownership of Restricted Stockholder and its Affiliates and
Associates, as Company requires to comply with the filing
requirements of any applicable Law.
2.3
Legends.
(a) The
Initial Restricted Securities shall be subject to and bear the
legends set forth below together with (i) any other legends
required by the securities laws of any state or other jurisdiction
to the extent such laws are applicable to the Restricted
Securities; and (ii) such other legends and restrictions as are
applicable to the Common Stock generally.
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (“SECURITIES ACT”), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND OTHER
APPLICABLE STATE SECURITIES LAWS WITH RESPECT TO SUCH SECURITY IS
THEN IN EFFECT, OR SUCH REGISTRATION UNDER THE SECURITIES ACT AND
OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED DUE TO AVAILABLE
EXEMPTIONS FROM SUCH REGISTRATION. SHOULD THERE BE ANY UNCERTAINTY
OR DISAGREEMENT BETWEEN THE COMPANY AND THE HOLDER AS TO THE
AVAILABILITY OF SUCH EXEMPTIONS, THEN THE HOLDER SHALL BE REQUIRED
TO DELIVER TO THE COMPANY AN OPINION OF COUNSEL (SKILLED IN
SECURITIES MATTERS, SELECTED BY THE HOLDER AND REASONABLY
SATISFACTORY TO THE COMPANY) IN FORM AND SUBSTANCE SATISFACTORY TO
COMPANY TO THE EFFECT THAT SUCH OFFER, SALE, TRANSFER, ASSIGNMENT,
PLEDGE, OR HYPOTHECATION IS IN COMPLIANCE WITH AN AVAILABLE
EXEMPTION UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES
LAWS.”
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“THE
SECURITIES EVIDENCED HEREBY ARE SUBJECT TO A STOCKHOLDER AGREEMENT
DATED AS OF OCTOBER 5, 2017, AS MAY BE AMENDED FROM TIME TO TIME,
(A COPY OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST FROM THE
COMPANY), AND BY ACCEPTING ANY INTEREST IN SUCH SECURITIES THE
PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND
SHALL BECOME BOUND BY ALL THE PROVISIONS OF THAT STOCKHOLDER
AGREEMENT, INCLUDING CERTAIN RESTRICTIONS ON TRANSFER, REPURCHASE
RIGHTS, STANDSTILL PROVISIONS AND VOTING ARRANGEMENTS, INCLUDING AN
IRREVOCABLE PROXY, SET FORTH THEREIN.”
2.4
Stop
Transfer Instructions. So long
as Restricted Securities remain subject to the Securities
Restrictions and other provisions of this Agreement, the Restricted
Securities shall be held in a restricted account at Company’s
transfer agent, and Company may maintain appropriate “stop
transfer” orders with respect to such securities represented
thereby on its books and records and with its transfer
agent.
Article
III
Representations and
Warranties of Parties
3.1
Representations
and Warranties of Restricted Stockholder. Restricted Stockholder hereby represents and
warrants to Company as follows:
(a) Organization
and Good Standing. Restricted
Stockholder is a limited liability company, duly formed and
organized, validly existing, and in good standing under the Laws of
the State of Florida.
(b) Power
and Authorization. Restricted
Stockholder has the requisite power and lawful authority to enter
into and to perform its obligations under this Agreement and to
consummate the transactions contemplated by this Agreement. The
execution, delivery, and performance by Restricted Stockholder of
this Agreement and the consummation by Restricted Stockholder of
the transactions contemplated by this Agreement have been duly and
properly authorized in accordance with applicable Laws, and no
other action, entity or otherwise, on the part of Restricted
Stockholder or any other Person, is necessary to authorize the
execution, delivery, and performance by Restricted Stockholder of
this Agreement.
(c) Execution
and Performance of Agreement; Validity and Binding
Nature. This Agreement has been
duly executed and delivered by Restricted Stockholder and
constitutes the legal, valid, and binding obligations of Restricted
Stockholder, enforceable against Restricted Stockholder in
accordance with its terms, except (i) to the extent that such
enforceability is limited by (1) bankruptcy, receivership,
moratorium, conservatorship, insolvency, fraudulent conveyance,
reorganization Laws or other Laws of general application affecting
the rights of creditors generally, or (2) Laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies; and
(ii) that the indemnification provisions contained in this
Agreement may be limited by applicable federal or state securities
laws.
(d) No
Conflicts/Consents. The
execution, delivery and performance of this Agreement by Restricted
Stockholder does not and will not (with or without the passage of
time or the giving of notice): (i) violate or conflict with any
provision of Restricted Stockholder’s Governing Documents or
any Laws to which Restricted Stockholder or its business, assets or
properties are subject or bound; (ii) violate or conflict with,
result in a breach of any provision of, or constitute a default, or
otherwise cause any loss of any benefit under any material Contract
or other material obligation to which Restricted Stockholder is a
party or by which any of its business, assets or properties are
subject or bound; (iii) result in the termination or cancellation
of any material Contract to which Restricted Stockholder is a party
or by which any of its assets or properties are subject or bound;
(iv) give any Governmental Authority or other Person the right to
challenge this Agreement or any aspect of the transactions
contemplated hereby or to exercise any remedy or obtain any relief
under any Law to which Restricted Stockholder, or any of its
business, assets or properties may be subject or bound; (v) require
any Governmental Authorization, Consent or registration,
notification, filing and/or declaration with, or requirement of,
any Governmental Authority or other Person; (vi) result in,
require, or permit the creation or imposition of any Encumbrance
upon or with respect to any of the Restricted Securities; or (vii)
cause Company or any of its Affiliates to become subject to, or to
become liable for the payment of, any Tax.
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(e) Governing
Documents; Directors and Officers; Equity
Ownership. True and complete
copies of the Governing Documents of Restricted Stockholder in
effect as of the Effective Date will be delivered to Company if
required by applicable Law. Restricted Stockholder Disclosure
Schedule contains an accurate and complete list of all directors,
officers, and managers of Restricted Stockholder. The beneficial
and record owners of all of the issued and outstanding capital
stock, membership interests, ownership interests and other
securities of Restricted Stockholder (including all options,
warrants, convertible securities and rights to acquire any
securities of Restricted Stockholder) are set forth on the
Restricted Stockholder Disclosure Schedule, and no other Person
holds or has any rights to acquire any securities of Restricted
Stockholder.
(f) Actions
or Proceedings. There is no Action or Proceeding pending or, to
the knowledge of Restricted Stockholder, threatened with respect to
Restricted Stockholder’s ownership of the Initial Restricted
Securities, nor is there any judgment, decree, injunction or order
of any applicable Governmental Entity or arbitrator outstanding
which would prevent the carrying out by Restricted Stockholder of
its obligations under this Agreement or any of the transactions
contemplated hereby, declare unlawful the transactions contemplated
hereby or cause such transactions to be
rescinded.
(g) Beneficial
Ownership. Prior to the execution of the License Agreement,
neither Restricted Stockholder nor any Affiliate or Associate of
Restricted Stockholder Beneficially Owned any shares of Common
Stock. Following the execution of the License Agreement and upon
the Market Capitalization Event as set forth therein, the Initial
Restricted Securities will be the only Shares Beneficially Owned by
Restricted Stockholder (together with its Affiliates and
Associates).
(h) Purchase
Entirely for Own Account. The
Initial Restricted Securities are being acquired by Restricted
Stockholder for investment for Restricted Stockholder’s own
account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof. Restricted Stockholder
has no present intention of selling, granting any participation in,
or otherwise distributing the Initial Restricted Securities.
Restricted Stockholder does not presently have any contract,
undertaking, agreement or arrangement with any Person to sell,
transfer or grant participations to such Person or to any third
Person, with respect to any of the Initial Restricted
Securities.
(i) Disclosure
of Information and Due Diligence. In addition to reviewing Company’s public
filings under the Exchange Act and Securities Act, Restricted
Stockholder and each Affiliate or Associate thereof has had full
opportunity to discuss the Company’s business, management,
financial condition and results of operation, and affairs with
Company’s management, review such Contracts and other
documents as deemed warranted by Restricted Stockholder or any
Affiliate or Associate thereof and to conduct such other due
diligence as Restricted Stockholder or any Affiliate or Associate
thereof has deemed warranted and has acquired sufficient
information about Company to reach an informed and knowledgeable
decision to acquire the Initial Restricted
Securities.
(j) Accredited
Investors. Each owner of any
equity in Restricted Stockholder is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
3.2
Representations
and Warranties of Company.
Company hereby represents and warrants to Restricted Stockholder as
follows:
(a) Organization
and Good Standing. Company is a
corporation duly formed and organized, validly existing, and in
good standing under the Laws of the State of
Delaware.
(b) Power
and Authorization. Company has
the requisite power and lawful authority to enter into and to
perform its obligations under this Agreement and to consummate the
transactions contemplated by this Agreement. The execution,
delivery, and performance by Company of this Agreement and the
consummation by Company of the transactions contemplated by this
Agreement have been duly and properly authorized in accordance with
applicable Laws, and no other action, entity or otherwise, on the
part of Company or any other Person, is necessary to authorize the
execution, delivery, and performance by Company of this
Agreement.
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(c) Execution
and Performance of Agreement; Validity and Binding
Nature. This Agreement has been
duly executed and delivered by Company and constitutes the legal,
valid, and binding obligations of Company, enforceable against
Company in accordance with its terms, except (i) to the extent that
such enforceability is limited by (1) bankruptcy, receivership,
moratorium, conservatorship, insolvency, fraudulent conveyance,
reorganization Laws or other Laws of general application affecting
the rights of creditors generally, or (2) Laws relating to the
availability of specific performance, injunctive relief, or other
equitable remedies; and (ii) that the indemnification provisions
contained in this Agreement may be limited by applicable federal or
state securities laws.
(d) No
Conflicts/Consents. The
execution, delivery and performance of this Agreement by Company
will not (with or without the passage of time or the giving of
notice): (i) violate or conflict with any provision of
Company’s Governing Documents or any Laws to which Company or
its business, assets or properties are subject or bound; (ii)
violate or conflict with, result in a breach of any provision of,
or constitute a default, or otherwise cause any loss of any benefit
under any material Contract or other obligation to which Company is
a party or by which any of its business, assets or properties are
subject or bound; (iii) result in the termination or cancellation
of any material Contract to which Company is a party or by which
any of its assets or properties are subject or bound; (iv) give any
Governmental Authority or other Person the right to challenge this
Agreement or any aspect of the transactions contemplated hereby or
to exercise any remedy or obtain any relief under any Law to which
Company, or any of its business, assets or properties may be
subject or bound; (v) require any Governmental Authorization,
Consent or registration, notification, filing and/or declaration
with, or requirement of, any Governmental Authority or other
Person; (vi) result in, require, or permit the creation or
imposition of any Encumbrance upon or with respect to any of the
Restricted Securities; or (vii) cause Company or any of its
Affiliates to become subject to, or to become liable for the
payment of, any Tax.
(e) Actions
or Proceedings. There is no Action or Proceeding pending or, to
the knowledge of Company, threatened with respect to Restricted
Stockholder’s ownership of the Initial Restricted Securities,
nor is there any judgment, decree, injunction or order of any
applicable Governmental Entity or arbitrator outstanding which
would prevent the carrying out by Company of its obligations under
this Agreement or any of the transactions contemplated hereby,
declare unlawful the transactions contemplated hereby or cause such
transactions to be rescinded.
Article
IV
Registration
Rights
Restricted
Stockholder is granted the following registration rights after the
Initial Restricted Securities Issuance Date with regard to
Restricted Securities held by Restricted Stockholder.
4.1
Demand
Registration.
(a) If
at any time the Company is eligible to use a Form S-3 registration
statement, the Company receives a request in writing from
Restricted Stockholder that the Company file a Form S-3
registration statement with respect to outstanding Restricted
Securities held by Restricted Stockholder having an anticipated
aggregate offering price, net of Selling Expenses, of at least five
million dollars ($5,000,000.00), then the Company shall as soon as
practicable, and in any event within ninety (90) days after the
date such request is received by the Company, file a Form S-3
registration statement under the Securities Act covering all
Restricted Securities requested to be included in such registration
by Restricted Stockholder, subject to the limitations of Section
4.1(b), 4.1(c), and Section 4.3. The Company shall use its commercially reasonable
efforts to cause such Form S-3 registration statement to be
declared effective by the SEC as soon as practicable after filing.
Any registration requested by Restricted Stockholder pursuant to
this Section 4.1 is referred to in this Agreement as a
“Demand
Registration.”
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(b) Notwithstanding
the foregoing obligations, if the Company furnishes to Restricted
Stockholder a certificate signed by the Company’s chief
executive officer stating that in the good faith judgment of the
Board it would be materially detrimental to the Company and its
stockholders for such registration statement to either become
effective or remain effective for as long as such registration
statement otherwise would be required to remain effective, because
such action would: (i) materially interfere with a significant
acquisition, corporate reorganization, or other similar transaction
involving the Company; (ii) require premature disclosure of
material information that the Company has a bona fide business
purpose for preserving as confidential; or (iii) render the Company
unable to comply with requirements under the Securities Act or
Exchange Act, then the Company
shall have the right to defer taking action with respect to such
filing, and any time periods with respect to filing or
effectiveness thereof shall be tolled correspondingly, for a period
of not more than ninety (90) days after the request of Restricted Stockholder
is given; provided,
however, that the Company may not invoke this right more than once
in any twelve (12) month period; and provided further
that the Company shall not register
any securities for its own account or that of any other stockholder
during such ninety (90) day period other than an Excluded Registration.
(c) The
Company shall not be obligated to effect, or to take any action to
effect, any registration pursuant to Section 4.1(a) (i) during the
period that is ninety (90) days before the Company’s good
faith estimate of the date of filing of, and ending on a date that
is ninety (90) days after the effective date of, a
Company-initiated registration, provided that the Company is
actively employing in good faith commercially reasonable efforts to
cause such registration statement to become effective; or (ii) if
the Company has effected a registration pursuant to Section 4.1(a)
within the twelve (12) month period immediately preceding the date
of such request. A registration
shall not be counted as “effected” for purposes of
this Section
4.1(c) until such time as the applicable registration
statement has been declared effective by the SEC, unless Restricted
Stockholder withdraws its request for such registration, elects not
to pay the registration expenses therefor, and forfeits its right to one demand registration
statement pursuant to this
Section 4.1 as provided in
Section 4.6, in which case such
withdrawn registration statement shall be counted as
“effected” for purposes of this Section
4.1(c).
(d) Restricted
Stockholder shall only be entitled to two (2) Demand Registrations
under this Section 4.1.
4.2
Company
Registration. If the Company
proposes to register (including, for this purpose, a registration
effected by the Company for stockholders other than Restricted
Stockholder) any of its capital
stock or other securities under
the Securities Act in connection with the public offering of such
securities solely for cash (other than in an Excluded
Registration), the Company shall, at such time, promptly give
Restricted Stockholder notice of such registration. Upon the
request in writing of Restricted Stockholder given within twenty
(20) days after such notice is given by the Company, the Company
shall, subject to the provisions of Section 4.3, cause to
be registered all of the Restricted Securities that Restricted
Stockholder has properly requested to be included in such
registration. The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section 4.2
before the effective date of such registration, whether or not
Restricted Stockholder has elected to include Restricted Securities
in such registration. The expenses (other than Selling Expenses) of such withdrawn registration shall be borne by
the Company in accordance with Section 4.6.
4.3
Underwriting
Requirements.
(a) If,
pursuant to Section 4.1,
Restricted Stockholder intends to
distribute Restricted Securities covered by its request by means of
an underwriting, Restricted Stockholder shall so advise the Company
as a part of its request made pursuant to Section
4.1. The
underwriter(s)
will be selected by Restricted
Stockholder subject to the reasonable approval of Company. In such
event, the right of Restricted Stockholder to include Restricted
Stockholder’s Restricted Securities in such registration
shall be conditioned upon Restricted Stockholder’s
participation in such underwriting and the inclusion of Restricted
Stockholder’s Restricted Securities in the underwriting to
the extent provided herein. Restricted Stockholder shall (together
with the Company as provided in Section 4.4(e)) enter
into an underwriting agreement in customary form with the
underwriter(s) selected for such
underwriting. Notwithstanding any other provision of this
Section 4.3,
if the managing underwriter(s)
advise(s) Restricted Stockholder in writing that marketing factors
require a limitation on the number of shares to be underwritten,
then the number of Restricted Securities that may be included in
the underwriting shall be reduced to the number of Restricted
Securities determined by the managing
underwriter(s).
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(b) In
connection with any offering involving an underwriting of shares of
the Company’s capital stock pursuant to Section 4.2, the
Company shall not be required to include any of Restricted
Stockholder’s Restricted Securities in such underwriting
unless Restricted Stockholder accepts the terms of the underwriting
as agreed upon between the Company and the underwriters, and then
only in such quantity as the underwriters in their sole discretion
determine will not jeopardize the success of the offering by the
Company. If the total number of securities, including Restricted
Securities, requested by stockholders to be included in such
offering exceeds the number of securities to be sold (other than by
the Company) that the underwriters in their reasonable discretion
determine is compatible with the success of the offering, then the
Company shall be required to include in the offering only that
number of such securities, including Restricted Securities, which
the underwriters and the Company in their sole discretion determine
will not jeopardize the success of the offering.
If the managing underwriter(s)
determine that less than all of the Restricted Securities requested
to be registered can be included in such offering, then the
Restricted Securities that are included in such offering shall
be reduced to the number
determined by the managing underwriter(s). Notwithstanding the foregoing, in no event
shall the number of Restricted
Securities included in the offering be reduced unless all other
securities (other than securities to be sold by the Company) are
first entirely excluded from the offering or, subject to Section
4.11, cutback proportionately with Other Registrable Securities (as
defined in Section 4.11) requested to be registered. For purposes
of the provision in this Section 4.3(b)
concerning apportionment, for any selling Restricted
Stockholder that is
a partnership, limited liability
company, or corporation, the partners, members, retired partners,
retired members, stockholders, and Affiliates of Restricted
Stockholder, or the estates and Immediate Family Members of any
such partners, retired partners, members, and retired members and
any trusts for the benefit of any of the foregoing Persons, shall
be deemed to be a single “selling Restricted
Stockholder,” and any pro rata reduction with respect to such
“selling Restricted Stockholder” shall be based upon
the aggregate number of Restricted Securities owned by all Persons
included in such “selling Restricted Stockholder,” as
defined in this sentence.
(c) For
purposes of Section 4.1,
a registration shall not be counted as
“effected” if, as a result of an exercise of the
underwriter’s cutback provisions in Section
4.3(b), fewer than fifty percent (50%) of the total
number of Restricted Securities that Restricted Stockholder has
requested to be included in such registration statement are
actually included.
4.4
Obligations
of the Company. Whenever required under this Article IV to effect the registration of any
Restricted Securities, the Company shall, as expeditiously as
reasonably possible:
(a) prepare
and file with the SEC a registration statement with respect to such
Restricted Securities and use its commercially reasonable
efforts to cause such
registration statement to become effective and, upon the request of
Restricted Stockholder, keep such registration statement effective
for a period of at least one hundred eighty (180) days or, if
earlier, until the distribution contemplated in the registration
statement has been completed; provided,
however, that (i) such one
hundred eighty (180) day period shall be extended for a period of
time equal to the period Restricted Stockholder refrains, at the
request of an underwriter of securities of the Company, from
selling any securities included in such registration, and (ii) in
the case of any registration of Restricted Securities on Form S-3
that are intended to be offered on a continuous or delayed basis,
subject to compliance with applicable SEC rules, such one hundred
eighty (180) day period shall be extended, if necessary, to keep
the registration statement effective until all such Restricted
Securities are sold;
(b) prepare
and file with the SEC such amendments and supplements to such
registration statement, and the prospectus used in connection with
such registration statement, as may be necessary to comply with the
Securities Act in order to enable the disposition of all securities
covered by such registration statement;
(c) furnish
to Restricted Stockholder such numbers of copies of a prospectus,
including a preliminary prospectus, as required by the Securities
Act, and such other documents as Restricted Stockholder may
reasonably request in order to facilitate the disposition of the
Restricted Securities;
(d) use
its commercially reasonable efforts to register and qualify the
securities covered by such registration statement under such other
securities or blue-sky laws of such jurisdictions as shall be
reasonably requested by Restricted Stockholder; provided that
the Company shall not be required to
qualify to do business or to file a general consent to service of
process in any such states or jurisdictions, unless the Company is already subject to service
in such jurisdiction and except as may be required by the
Securities Act;
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(e) in
the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual
and customary form, with the underwriter(s) of such
offering;
(f) use
its commercially reasonable efforts to cause all such Restricted
Securities covered by such registration statement to be listed on a
national securities exchange or trading system and each securities
exchange and trading system (if any) on which similar securities
issued by the Company are then listed;
(g) provide
a transfer agent and registrar for all Restricted Securities
registered pursuant to this Agreement and provide a CUSIP number
for all such Restricted Securities, in each case not later than the
effective date of such registration;
(h) promptly
make available for inspection by Restricted Stockholder, any
managing underwriter(s)
participating in any disposition
pursuant to such registration statement, and any attorney or
accountant or other agent retained by any such underwriter or
selected by Restricted Stockholder, all financial and other
records, pertinent corporate documents, and properties of the
Company, and cause the Company’s officers, directors,
employees, and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney,
accountant, or agent, in each
case, as necessary or advisable to verify the accuracy of the
information in such registration statement and to conduct
appropriate due diligence in
connection therewith;
(i) notify
Restricted Stockholder, promptly after the Company receives notice
thereof, of the time when such registration statement has been
declared effective or a supplement to any prospectus forming a part
of such registration statement has been filed; and
(j) after
such registration statement becomes effective, notify Restricted
Stockholder of any request by the SEC that the Company amend or
supplement such registration statement or prospectus.
4.5
Furnish
Information. It shall be a
condition precedent to the obligations of Company to take any
action pursuant to this Article
IV with respect to the Restricted Securities of Restricted
Stockholder that Restricted Stockholder shall furnish to the
Company such information regarding itself and its Affiliates and
Associates, the Restricted Securities held by it, and the intended
method of disposition of such securities as is reasonably required
to effect the registration of Restricted Stockholder’s
Restricted Securities.
4.6
Expenses
of Registration.
All expenses (other than Selling
Expenses) incurred in connection with registrations, including
without limitation, those expenses for filings, or qualifications
pursuant to Article IV,
including all registration, filing, and qualification fees;
printers’ and accounting fees; fees and expenses of
compliance with securities laws or blue sky laws; and fees and
disbursements of counsel for Company shall be borne and paid by Company; provided,
however, that Company shall not be required to pay for any expenses
of any registration proceeding begun pursuant to Section 4.1
if the registration request is
subsequently withdrawn at the request of Restricted Stockholder (in
which case Restricted Stockholder shall bear such expenses), unless
Restricted Stockholder agrees to forfeit the right to one (1)
registration pursuant to Section 4.1, as the
case may be; provided
further that if, at the time of
such withdrawal, Restricted Stockholder has learned of a material
adverse change in the condition, business, or prospects of Company
from that known to Restricted Stockholder at the time of its
request and has withdrawn the request with reasonable promptness
after learning of such information, then Restricted Stockholder
shall not be required to pay any of such expenses and shall not
forfeit its right to one (1) registration pursuant to Section
4.1. All Selling Expenses
relating to Restricted Securities registered pursuant to this
Article IV shall be borne and paid by Restricted
Stockholder.
4.7
Delay
of Registration. Restricted
Stockholder shall not have any right to obtain or seek an
injunction restraining or otherwise delaying any registration
pursuant to this Agreement as the result of any controversy that
might arise with respect to the interpretation or implementation of
this Article
IV.
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4.8
Indemnification.
If any Restricted Securities are
included in a registration statement under this Article
IV:
(a) To
the maximum extent permitted by applicable Law, Company will
indemnify and hold harmless Restricted Stockholder, and the
Affiliates, Associates, partners, members, officers, directors, and
stockholders of Restricted Stockholder; legal counsel and
accountants for Restricted Stockholder; any underwriter (as defined
in the Securities Act) for Restricted Stockholder; and each Person,
if any, who controls Restricted Stockholder or underwriter within
the meaning of the Securities Act or the Exchange Act, against any
Damages, and Company will pay to Restricted Stockholder,
underwriter, controlling Person, or other aforementioned Person any
legal or other expenses reasonably incurred thereby in connection
with investigating or defending
any Action or
Proceeding from which Damages
may result, as such expenses are incurred; provided,
however,
that the indemnity agreement contained in this Section
4.8(a) shall not apply to amounts paid in settlement
of any such Action or
Proceeding if such settlement
is effected without the consent of the Company, which consent shall
not be unreasonably withheld, nor shall the Company be liable for
any Damages to the extent that they arise out of or are based upon
actions or omissions made in reliance upon and in conformity with
written information furnished by or on behalf of Restricted
Stockholder, underwriter, controlling Person, or other
aforementioned Person expressly for use in connection with such
registration.
(b) To
the maximum extent permitted by applicable Law, Restricted
Stockholder will indemnify and hold harmless Company, and each of
its directors, each of its officers who has signed the registration
statement, each Person (if any), who controls Company within the
meaning of the Securities Act, legal counsel and accountants for
Company, any underwriter (as defined in the Securities Act), any
other Person selling securities in such registration statement, and
any controlling Person of any such underwriter or other selling
Person, against any Damages, in each case only to the extent that
such Damages arise out of or are based upon actions or omissions
made in reliance upon and in conformity with written information
furnished by or on behalf of Restricted Stockholder expressly for
use in connection with such registration; and Restricted
Stockholder will pay to Company and each other aforementioned
Person any legal or other expenses reasonably incurred thereby in
connection with investigating or defending any claim or proceeding from which Damages may result, as such
expenses are incurred; provided, however, that the indemnity
agreement contained in this Section 4.8(b) shall
not apply to amounts paid in settlement of any such
claim or proceeding if such settlement is effected
without the consent of Restricted Stockholder, which consent shall
not be unreasonably withheld; and provided further that in no event
shall any indemnity under this Section 4.8(b) exceed
the proceeds from the offering received by Restricted Stockholder
(net of any Selling Expenses
paid by Restricted
Stockholder), except in the case of fraud or willful
misconduct by Restricted Stockholder.
(c) Promptly
after receipt by an indemnified party under this Section
4.8 of notice of the commencement of any Action or
Proceeding (including any governmental Action or Proceeding) for
which a party may be entitled to indemnification hereunder, such
indemnified party will, if a claim in respect thereof is to be made
against any indemnifying party under this Section
4.8, give the indemnifying party notice of the
commencement thereof. The indemnifying party shall have the right
to participate in such Action or Proceeding and, to the extent the
indemnifying party so desires, participate jointly with any other
indemnifying party to which notice has been given, and to assume
the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party (together
with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one (1)
separate counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by
the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests
between such indemnified party and any other party represented by
such counsel in such action. Failure to give notice to the
indemnifying party within a reasonable time of the commencement of
any such action shall not relieve such indemnifying party of any
liability to the indemnified party under this Section
4.8, to the extent that such failure does not
materially prejudice the indemnifying party’s ability to
defend such action.
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(d) Notwithstanding
anything else herein to the contrary, the foregoing indemnity agreements of Company and
Restricted Stockholder are subject to the condition that, insofar
as they relate to any Damages arising from any untrue statement or
alleged untrue statement of a material fact contained in, or
omission or alleged omission of a material fact from, a preliminary
prospectus (or necessary to make the statements therein not
misleading) that has been corrected in the form of prospectus
included in the registration statement at the time it becomes
effective, or any amendment or supplement thereto filed with the
SEC pursuant to Rule 424(b) under the Securities Act
(“Final
Prospectus”), such
indemnity agreement shall not inure to the benefit of any Person if
a copy of the Final Prospectus was furnished to the indemnified
party and such indemnified party failed to deliver, at or before
the confirmation of the sale of the shares registered in such
offering, a copy of the Final Prospectus to the Person asserting
the loss, liability, claim, or damage in any case in which such
delivery was required by the Securities Act.
(e) To
provide for just and equitable contribution to joint liability
under the Securities Act in any case in which either (i) any party
otherwise entitled to indemnification hereunder makes a claim for
indemnification pursuant to this Section 4.8 but it is judicially determined (by
the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be
enforced in such case, notwithstanding the fact that this
Section 4.8 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part
of any party hereto for which indemnification is provided under
this Section 4.8,
then, and in each such case, such
parties will contribute to the aggregate losses, claims, damages,
liabilities, or expenses to which they may be subject (after
contribution from others) in such proportion as is appropriate to
reflect the relative fault of each of the indemnifying party and the indemnified party in
connection with the statements, omissions, or other actions that
resulted in such loss, claim, damage, liability, or expense, as
well as to reflect any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified
party shall be determined by reference to, among other things,
whether the untrue or allegedly untrue statement of a material
fact, or the omission or alleged omission of a material fact,
relates to information supplied by the indemnifying party or by the
indemnified party and the parties’ relative intent,
knowledge, access to information, and opportunity to correct or
prevent such statement or omission; provided,
however,
that, in any such case, (x) Restricted Stockholder will not be
required to contribute any amount in excess of the public offering
price of all Restricted Securities offered and sold by Restricted
Stockholder pursuant to such registration statement except in the
case of willful misconduct or fraud, and (y) no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) will be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation;
and provided,
further,
that in no event shall Restricted
Stockholder’s liability pursuant to this Section
4.8(e), when combined with the amounts paid or
payable by Restricted Stockholder pursuant to Section
4.8(b), exceed the proceeds from the offering
received by Restricted
Stockholder (net of any Selling
Expenses paid
by Restricted
Stockholder), except in the case of willful misconduct or
fraud by Restricted Stockholder.
(f) Notwithstanding
the foregoing, to the extent that the provisions on indemnification
and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in
conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(g) Unless
otherwise superseded by an underwriting agreement entered into in
connection with the underwritten public offering, the obligations
of Company and Restricted Stockholder under this Section
4.8 shall survive the completion of any offering of
Restricted Securities in a registration under this Article IV, and
otherwise shall survive the termination of this
Agreement.
4.9
Reports
Under Exchange Act. With a view
to making available to Restricted Stockholder the benefits of SEC
Rule 144 and any other rule or regulation of the SEC that may at
any time permit Restricted Stockholder to sell securities of the
Company to the public without registration or pursuant to a
registration on Form S-3, the Company shall:
(a) make
and keep available adequate
current public
information, as those terms are
understood and defined in SEC Rule 144;
(b) use
commercially reasonable efforts to file with the SEC in a timely
manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act (at any time after
the Company has become subject to such reporting requirements);
and
-15-
(c) furnish
to Restricted Stockholder, so long as Restricted Stockholder owns
any Restricted Securities, forthwith upon request (i)
to the extent accurate,
a written statement by the Company
that it has complied with the reporting requirements of SEC Rule
144, the Securities Act, and the Exchange Act, or that it qualifies
as a registrant whose securities may be resold pursuant to Form S-3
(at any time after Company so qualifies); (ii) a copy of the most
recent annual or quarterly report of Company and such other reports
and documents so filed by Company; and (iii) such other information
as may be reasonably requested in availing Restricted Stockholder
of any rule or regulation of the SEC that permits the selling of
any such securities without registration (at any time after the
Company has become subject to the reporting requirements under the
Exchange Act) or pursuant to Form S-3 (at any time after Company so qualifies
to use such form).
4.10
“Market
Stand-off” Agreement. Restricted
Stockholder hereby agrees that it will not, without the prior
written consent of the managing underwriter(s), during the period
commencing on the date of the final prospectus relating to a
registration of equity
securities of Company under the Securities Act and
ending on the date specified by Company and the managing
underwriter(s) (such period not to exceed (x) one hundred eighty
(180) days, which period may be extended upon the request of the
managing underwriter(s) for an additional period of up to fifteen
(15) days if Company issues or proposes to issue an earnings or
other public release within fifteen (15) days of the expiration of
the 180-day lockup period), Transfer
any Shares held immediately before the effective date of the
registration statement for such offering. The foregoing provisions of this Section
4.10 shall not apply to the sale of any securities to
an underwriter pursuant to an underwriting agreement. The
underwriters in connection with such registration are intended third-party beneficiaries of this
Section 4.10 and shall have the right, power, and authority
to enforce the provisions hereof as though they were a party
hereto. Restricted Stockholder further agrees to execute such
agreements as may be reasonably requested by the underwriters
in connection with such
registration that are
consistent with this Section 4.10 or that
are necessary to give further effect thereto.
4.11
Addition
of Other Registrable Securities. Notwithstanding any other provision of this
Article IV, in the event Company grants to any third parties any
rights to register their securities under the Securities Act
(“Other Registrable
Securities”), such rights
may be granted by Company on a pari passu basis with the rights
granted to Restricted Stockholder under this Agreement. Any such
Other Registrable Securities may be included in any registration
statement in which Restricted Securities are included on the same
terms and conditions as set forth in this Article IV as if the
Other Registrable Securities were Restricted Securities and the
holders of the Restricted Securities were Restricted Stockholders,
subject to customary provisions for pro rata participation,
allocations and cutbacks of securities included in any such
registrations. Upon request by Company, the Parties shall amend
this Article IV to provide for such combined participation by
holders of Other Registrable Securities or terminate the provisions
of this Article IV and enter into a separate agreement providing
for such combined participation.
4.12
Termination
of Registration Rights.
Restricted Stockholder shall not be entitled to exercise any right
provided for in this Article IV after the earlier of (i) the
expiration of the Securities Restrictions Period; (ii) such time as
all Restricted Securities held by Restricted Stockholder, together
with its Affiliates, may be sold in a three (3)-month period
without registration pursuant to SEC Rule 144, subject to the
volume limitations contained in such rule; and (iii) the date
Company ceases to have a security registered (1) on a national
securities exchange under Section 12(b) of the Exchange Act, or (2)
with the SEC under Section 12(g) of the Exchange Act.
The registration rights granted to
Restricted Stockholder under this Article IV are personal to
Restricted Stockholder and may not be transferred or assigned to
any subsequent holder of Restricted Securities, except that a
permitted transferee of Restricted Securities that becomes a party
to this Agreement as an additional Restricted Stockholder in
accordance with Section 5.6 will be entitled to the registration
rights under this Article IV with all other Restricted Stockholders
(and other third parties holding registration rights as provided in
Section 4.11), subject to customary provisions for pro rata
participation, allocations and cutbacks of securities included in
any such registrations. Restricted Stockholder acknowledges that
any request for registration under the Securities Act pursuant to
this Agreement shall give rise to the right of first refusal set
forth in Section 5.3, to the extent such right has not been
previously terminated.
-16-
Article
V
Transfer
Restrictions
5.1
Restrictions
Under Securities Laws.
(a) Restricted
Stockholder understands that Restricted Securities have not been,
and will not be, registered under the Securities Act, by reason of
a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona
fide nature of the investment intent and the accuracy of Restricted
Stockholder’s representations and warranties made to Company.
Restricted Stockholder understands that the Restricted Securities
are “restricted
securities” under
applicable U.S. federal and state securities Laws and that,
pursuant to these Laws, Restricted Stockholder must hold the
Restricted Securities indefinitely unless they are registered with
the SEC and qualified by state authorities or an exemption from
such registration and qualification requirements is available.
Restricted Stockholder acknowledges that Company has no obligation
to register or qualify the Restricted Securities for resale except
as set forth in this Agreement. Restricted Stockholder further
acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various
requirements including, but not limited to, the time and manner of
sale, the holding period for the Restricted Securities, and on
requirements relating to Company which are outside of Restricted
Stockholder’s or Company’s control, and which Company
is under no obligation and may not be able to
satisfy.
(b) Unless
there is in effect a registration statement under the Securities
Act covering the proposed transaction, before any proposed Transfer
of any Restricted Securities to a permitted purchaser, pledgee,
assignee or transferee, Restricted Stockholder shall give notice to
Company of Restricted Stockholder’s intention to effect such
Transfer. Each such notice shall describe the manner and
circumstances of the proposed sale, pledge, or transfer in
sufficient detail. If at the time of the proposed Transfer of
Restricted Securities no registration statement is in effect with
respect to such shares under applicable provisions of the
Securities Act and other applicable securities laws, Restricted
Stockholder hereby agrees that it will not Transfer all or any part
of the Restricted Securities unless there shall be available
exemptions from such registration requirements. Should there be any
uncertainty or disagreement between Company and Restricted
Stockholder as to the availability of such exemptions, then
Restricted Stockholder shall be required to deliver to Company an
opinion of counsel (skilled in securities matters, selected by
Restricted Stockholder and reasonably satisfactory to Company) in
form and substance satisfactory to Company to the effect that such
Transfer is in compliance with an available exemption under the
Securities Act and other applicable securities
laws.
(c) In
addition to the other restrictions set forth in this Article V,
Restricted Securities may only be acquired or Transferred by
Restricted Stockholder in compliance with the Securities Trading
Policy generally applicable to officers and directors of the
Company.
(d) Restricted
Stockholder acknowledges that the United States securities Laws
prohibit any person or entity from: (i) purchasing or selling a
security, in breach of a fiduciary duty or other relationship of
trust and confidence, while in possession of material, nonpublic
information about the security, or (ii) tipping material nonpublic
information in breach of such a fiduciary duty or other
relationship. In addition, Restricted Stockholder acknowledges that
Restricted Stockholder and any Affiliates of Restricted Stockholder
will be deemed “affiliates” of Company under applicable
securities Laws, and as such, Restricted Stockholder will be
subject to additional restrictions on Transfers under applicable
securities Laws by reason of Restricted Stockholder’s status
as an “affiliate” of the Company, which, among other
things, may result in Restricted Stockholder being deemed to be an
underwriter or in possession of material, non-public information of
Company. Restricted Stockholder agrees that it will not: (i)
purchase or sell any security of Company while in possession of, or
on the basis of, material, nonpublic information about those
securities or Company (other than in connection with any purchase
of Company securities direct from the Company with the consent of
the Company), or (ii) tip material nonpublic information about the
Company’s securities or Company in violation of the United
States securities Laws. Restricted Stockholder further agrees to
comply with all applicable securities Laws in connection with any
Transfers of Restricted Securities that are otherwise permitted
under this Article V.
-17-
5.2
No
Transfers During Securities Restrictions Period. Restricted Stockholders shall not Transfer any
Restricted Securities to any Person during the No Transfers
Period.
5.3
Right
of First Refusal.
(a) Prior
to any intended Transfer of any Restricted Securities that is
otherwise permitted by the provisions of this Article V, Restricted
Stockholder shall first give written notice
(“Offer Notice”) to Company specifying (i) Restricted
Stockholder’s bona fide intention to sell or otherwise
transfer such Restricted Securities, (ii) the name and address of
the proposed purchaser(s) or transferee(s) and their beneficial
owners (if different from the proposed purchaser(s) or
transferee(s), (iii) the number of Restricted Securities Restricted
Stockholder proposes to sell (“Offered
Securities”), (iv) the
price for which Restricted Stockholder proposes to sell the Offered
Securities, and (v) all other material terms and conditions of the
proposed sale or other transfer. Notwithstanding the foregoing, if
Restricted Stockholder proposes to Transfer Restricted Securities
pursuant to a Proposed Public Transfer, the name, address and price
of the Offered Securities may not be applicable or available. In
case of a Proposed Public Transfer under Rule 144, the Offer Notice
shall include only the information specified in items (i), (iii)
and (v) above, and, in the case of a demand pursuant to Section 4.1
or request for registration pursuant to Section 4.2, Restricted
Stockholder’s demand or request will constitute its Offer
Notice. In the case of any Proposed Public Transfer, the purchase
price for purposes of this Section 5.3 will be the volume-weighted
average closing price of the Common Stock over the thirty 30 days
preceding Restricted Stockholder’s delivery of the Offer
Notice.
(b) Within
the applicable Reply Period after receipt of the Offer Notice,
Company or its nominee(s) may elect to purchase all (but not less
than all) of the Offered Securities at the price and on the terms
and conditions set forth in the Offer Notice by delivery of written
notice (“Acceptance
Notice”) to Restricted
Stockholder. Within fifteen (15) days after delivery of the
Acceptance Notice to Restricted Stockholder, Company and/or its
nominee(s) shall deliver a check or wire transfer (or, at the
discretion of Company, such other form of consideration set forth
in the Offer Notice) in the amount of the purchase price of the
Offered Securities to be purchased pursuant to this Section 5.3,
against delivery by Restricted Stockholder of book-entry account
transfer instructions representing the Offered Securities to be
purchased, duly endorsed for transfer to Company or such
nominee(s), as the case may be. If Company and/or its nominee(s) do
not elect to purchase the Offered Securities, Restricted
Stockholder shall be entitled to sell the Offered Securities to the
purchaser(s) named in the Offer Notice or in accordance with the
Proposed Public Transfer at the price specified in the Offer Notice
or at a higher price and substantially on the same terms and
conditions set forth in the Offer Notice, provided,
however, that a private sale or
a Proposed Public Transfer under Rule 144 must be consummated
within sixty (60) days from the date of the earlier of (i)
expiration of the applicable Reply Period for the Offer Notice and
(ii) if applicable, the Company’s election not to exercise
its right of first refusal, and any proposed sale after such sixty
(60) day period may be made only by again complying with the
procedures set forth in this Section 5.3; and provided,
further, that a Proposed Public
Transfer under Section 4.1 or 4.2 herein shall be conducted in
accordance with the terms described in Article IV, and shall not be
subject to the above sixty-day limitation.
(c) The
right of first refusal set forth in this Section 5.3 shall
terminate upon the later of (i) the expiration of the Securities
Restrictions Period; and (ii) such time as Restricted Stockholder
and all of its Affiliates and Associates, individually and as a
group, Beneficially Own less than 4.9% of the Company’s
outstanding Common Stock. In addition, provided that the Company
has not elected to exercise its right of first refusal under this
Section 5.3, the right of first refusal granted under this Section
5.3 shall terminate as to Restricted Securities proposed to be
Transferred in a Proposed Public Transfer on the date such
Restricted Securities are sold pursuant to such Proposed Public
Transfer.
5.4
Limitation
on Number of Transfers of Restricted Securities. Notwithstanding any other provision of this
Agreement, the number of Restricted Securities that may be resold
or otherwise Transferred to the public or through any public
securities trading market at any time may not exceed the volume
limitations contained in SEC Rule 144; provided, that the number of
Restricted Securities that may be sold pursuant to a registered
offering under Article IV of this Agreement shall be determined
among the Company, Restricted Stockholder and the applicable
underwriters in accordance with Article IV. The Transfer volume
limitations set forth in this Section 5.4 shall terminate upon the
later of (i) the expiration of the Securities Restrictions Period;
(ii) such time as Restricted Stockholder and all of its Affiliates
and Associates, individually and as a group, Beneficially Own less
than 4.9% of the Company’s outstanding Common Stock; and
(iii) such time as Restricted Stockholder is no longer subject to
the volume limitations for Transfers under SEC Rule
144.
-18-
5.5
Restrictions
Related to NOL Plan and Section 382 Compliance. Restricted Stockholder will not Transfer any
Beneficial Ownership in any Shares to any Person who Restricted
Stockholder reasonably believes after due inquiry Beneficially Owns
or as a result of such transaction would Beneficially Own 4.9% or
more of the Company’s then outstanding Common Stock;
provided,
that the obligation of due inquiry set forth in this Section 5.5
shall not apply to any Proposed Public
Transfer.
5.6
Permitted
Transferees Subject to Restrictions. Any permitted successor of Restricted
Stockholder, and any other permitted transferee of Restricted
Securities pursuant to this Article V (other than transferees in
Proposed Public Transfers), as a condition to such Transfer shall
execute and become a party to this Agreement as an additional
Restricted Stockholder, execute and deliver an Irrevocable Proxy
with respect to the Restricted Securities Transferred to such
permitted transferee or successor and hold the Restricted
Securities subject to the terms and conditions of this Agreement as
if the permitted successor or other transferee were Restricted
Stockholder. Upon request by Company, the parties to this Agreement
shall enter into such amendment or modifications to this Agreement
as the Company may deem necessary to facilitate the inclusion of
additional Restricted Stockholders as parties to this Agreement. No
further Transfer of Restricted Securities may be made without
complying with the provisions of this
Agreement.
5.7
Escrow
and Pro-Rata Release of Proceeds From Transfers of Restricted
Securities. In the event of any
Transfer of the Restricted Securities, including a Transfer to the
Company as a result of the Company’s exercise of its right of
first refusal under Section 5.3, all Restricted Securities Transfer
Proceeds from the Transfer shall be deposited directly into an
escrow established prior to the consummation of the Transfer with a
financial institution reasonably acceptable to the Company and the
Restricted Stockholder; provided that in the event a Transfer
occurs following the first anniversary of the Effective Date,
subject to any unresolved claims made by the Company against the
Restricted Securities or the escrowed Restricted Securities
Transfer Proceeds, Restricted Stockholder shall receive a pro rata
portion of the Restricted Securities Transfer Proceeds in an amount
equal to the product of: (i) the aggregate amount of the Restricted
Securities Transfer Proceeds multiplied by (ii) the number of
anniversaries of the Effective Date that have occurred since the
Effective Date multiplied by (iii) twenty percent (20%). The escrow
instructions shall provide that, subject to any unresolved claims
made by Company against the Restricted Securities or the escrowed
Restricted Securities Transfer Proceeds, an amount equal to twenty
percent (20%) of the aggregate amount of Restricted Securities
Transfer Proceeds initially escrowed shall be released to
Restricted Stockholder upon each anniversary of the Effective
Date.
Article
VI
Voting
Proxy
6.1
Irrevocable
Proxy. Concurrently with, and
as a condition to, the issuance of the Initial Restricted
Securities, Restricted Stockholder will execute and deliver an
Irrevocable Proxy with respect to the Restricted
Securities.
6.2
Termination
of Irrevocable Proxy. The
Irrevocable Proxy granted in Section 6.1 shall terminate upon the
later of (i) the expiration of the Securities Restrictions Period;
and (ii) such time as Restricted Stockholder and all of its
Affiliates and Associates, individually and as a group,
Beneficially Own less than 4.9% of the Company’s outstanding
Common Stock. In addition, the Irrevocable Proxy granted under this
Article VI shall terminate as to Restricted Securities proposed to
be Transferred in a Proposed Public Transfer on the date such
Restricted Securities are sold pursuant to such Proposed Public
Transfer.
Article
VII
Repurchase
Option
7.1
Right
to Repurchase. Effective
immediately upon the occurrence of a Repurchase Option Event,
Company shall have the right and option (but not the obligation) to
purchase, all or part, of the Restricted Securities from Restricted
Stockholder that is the subject of the Repurchase Option Event
(“Repurchase
Option”). The purchase
price for the Restricted Securities to be purchased under the
Repurchase Option shall be the Fair Market Value determined as of
the date of the occurrence of the applicable Repurchase Option
Event.
-19-
7.2
Exercise
of Repurchase Option. For
ninety (90) days after the occurrence of a Repurchase Option Event
(“Repurchase Option Exercise
Period”), the Company
shall have the right to exercise the Repurchase Option by giving to
Restricted Stockholder written notice of such exercise, specifying
the number of Restricted Securities to be repurchased by the
Company and the aggregate purchase price thereof. Such notice shall
be accompanied by the Company’s payment in immediately
available funds. Notwithstanding the foregoing, the Repurchase
Option Exercise Period shall be tolled until such time as
Restricted Stockholder that is the subject of the Repurchase Option
Event provides notice of the occurrence of the Repurchase Option
Event to the Company.
7.3
Termination
of Repurchase Option. The
Repurchase Option granted in this Article VII shall terminate upon
the later of (i) the expiration of the Securities Restrictions
Period; and (ii) such time as Restricted Stockholder and all of its
Affiliates and Associates, individually and as a group,
Beneficially Own less than 4.9% of the Company’s outstanding
Common Stock. In addition, the Repurchase Option granted under this
Article VII shall terminate as to Restricted Securities proposed to
be Transferred in a Proposed Public Transfer on the date such
Restricted Securities are sold pursuant to such Proposed Public
Transfer.
Article
VIII
Standstill
8.1
Agreement
to Standstill. Neither
Restricted Stockholder, Designated Restricted Stockholder Affiliate
nor any Affiliate or Associate of Restricted Stockholder will,
without the prior written consent of the Company (i) acquire, offer
to acquire, propose (whether publicly or otherwise) to acquire,
announce any intention to effect or cause or participate in or in
any way assist or encourage any other person to effect or seek,
offer or propose (whether publicly or otherwise) to acquire or
agree to acquire, directly or indirectly, by purchase or otherwise,
any securities (or beneficial ownership thereof) or direct or
indirect rights to acquire any securities of the Company or any
subsidiary thereof, or of any successor to or person in control of
the Company, or any assets of the Company or any subsidiary or
division thereof or of any such successor or controlling person;
(ii) participate in (1) any tender or exchange offer, merger or
other business combination involving the Company or any of its
affiliates; (2) any recapitalization, restructuring, liquidation,
dissolution or other extraordinary transaction with respect to the
Company or any of its affiliates; or (3) any
“solicitation” of “proxies” (as such terms
are used in the proxy rules of the SEC) or consents to vote any
voting securities of the Company or any of its affiliates; (iii)
form, join or in any way participate in a “group” as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, in connection with any of the foregoing; (iv) otherwise
act, alone or in concert with others, to seek to control or
influence the management, Board or policies of the Company or any
of its affiliates; (v) nominate or seek to nominate any person to
the Board or otherwise act, alone or in concert with others, to
seek to control or influence the management, the Board or policies
of the Company; (vi) request that any part of this Section 8.1 be
waived; (vii) participate in any special meeting or written consent
of stockholders of the Company; (vii) request any list of
stockholders of the Company; (viii) enter into any voting agreement
with respect to the Company’s Common Stock or any other
voting securities; (ix) initiate any stockholder proposals; (x)
participate in any financing for the acquisition by any Person of
securities or assets of the Company; (xi) seek to influence any
person with respect to voting of any Company securities; (xii) seek
any changes in composition of the Board or management; (xiii) take
any actions that may impede the acquisition of control of the
Company or any other Person; (xiv) cause the Common Stock to be
eligible for termination of registration under Section 12 of the
Exchange Act; (xv) take any action which might force the Company to
make a public announcement regarding any of the types of matters
set forth in clauses (i)-(xiv) above; or (xvi) enter into any
discussions or arrangements with any third party with respect to
any of the foregoing.
8.2
Expiration
of Standstill. The standstill
provisions of Section 8.1 shall terminate at such time as
Restricted Stockholder and all of its Affiliates and Associates,
individually and as a group, Beneficially Own less than 4.9% of the
Company’s outstanding Common Stock.
Article
IX
Operational and
Other Restrictions
9.1
License
Agreement Restrictions. Each of
Restricted Stockholder and Designated Restricted Stockholder
Affiliate covenants and agrees that, without the express written
consent of the Company, it will not, nor will it cause or knowingly
permit any of its Affiliates or Associates to, directly or
indirectly violate any of the provisions of Section 2.6 of the
License Agreement.
9.2
Termination
of Restrictions. The
restrictions set forth in this Article IX shall terminate if and
when the restrictions in the License Agreement
terminate.
-20-
Article
X
Confidentiality
10.1
Confidentiality
Obligations. Unless otherwise
agreed to in writing by Company, Restricted Stockholder and
Designated Restricted Stockholder Affiliate agree (i) to keep all
Confidential Information confidential and not to disclose or reveal
any Confidential Information (or the fact that Confidential
Information has been made available to Restricted Stockholder or
Designated Restricted Stockholder Affiliate) to any Person; and
(ii) not to use Confidential Information for any purpose other than
in connection with the management of Restricted Stockholder’s
investment in Company and more specifically not to use Confidential
Information to compete with Company. Restricted Stockholder and
Designated Restricted Stockholder Affiliate each acknowledge that
they are aware that, in general, the United States securities laws
prohibit any person or entity who or which possesses material,
non-public information regarding a publicly-held company such as
Company from purchasing or selling securities of such company or
from communicating the information to any person or
entity.
10.2
Limitation
on Confidentiality Obligations.
The confidentiality obligations set forth in Section 10.1 shall not
apply to any Confidential Information that (i) is or becomes
generally available to the public other than as a result of a
disclosure by Restricted Stockholder or Designated Restricted
Stockholder Affiliate; (ii) was available to Restricted Stockholder
or Designated Restricted Stockholder Affiliate on a nonconfidential
basis prior to its disclosure to Restricted Stockholder or
Designated Restricted Stockholder Affiliate by Company; (iii)
becomes available to Restricted Stockholder or Designated
Restricted Stockholder Affiliate on a nonconfidential basis from a
Person other than Company or its Representatives who is not known
by Restricted Stockholder to be otherwise bound by a
confidentiality agreement with, or other obligation of
confidentiality or duty to, Company or any of its Representatives;
or (iv) is independently developed by Restricted Stockholder or
Designated Restricted Stockholder Affiliate without use of the
Confidential Information.
10.3
Disclosure
Required by Law. In the event
Restricted Stockholder or Designated Restricted Stockholder
Affiliate is required by applicable Law or legal process (other
than as a result of an affirmative action taken by Restricted
Stockholder, Designated Restricted Stockholder Affiliate or any of
their respective Affiliates, Associates or Representatives that
triggers the disclosure obligation) to disclose any Confidential
Information, Restricted Stockholder and Designated Restricted
Stockholder Affiliate will provide Company with prompt notice of
such requirement (to the extent permitted by such applicable Law or
legal process) in order to enable Company to seek an appropriate
protective order or other remedy, to consult with Restricted
Stockholder and Designated Restricted Stockholder Affiliate with
respect to Company taking steps to resist or narrow the scope of
such required disclosure, or to waive compliance, in whole or in
part, with the terms of this Article X. In any event, Restricted
Stockholder and Designated Restricted Stockholder Affiliate will
use their respective best efforts to ensure that all Confidential
Information that is so disclosed will be accorded confidential
treatment.
10.4
Termination
of Restrictions. The
restrictions set forth in this Article X shall terminate three (3)
years after the later of (i) the expiration of the Securities
Restrictions Period; and (ii) such time as Restricted Stockholder
and all of its Affiliates and Associates, individually and as a
group, Beneficially Own less than 4.9% of the Company’s
outstanding Common Stock.
Article
XI
General
Provisions
11.1
Entire
Agreement. This Agreement
(including any Exhibits attached hereto, each of which is
incorporated herein by reference) constitutes and contains the
entire agreement and understanding of the Parties with respect to
the subject matter hereof and supersedes any and all prior
negotiations, correspondence, agreements, understandings, duties or
obligations between the Parties respecting the subject matter
hereof.
11.2
Amendments
and Waivers. This Agreement may
be amended, modified, superseded, or cancelled, and the terms and
conditions hereof may be waived, only by a written instrument
signed by the Parties hereto or, in the case of a waiver, by the
Party waiving compliance. No delay on the part of any Party in
exercising any right, power, or privilege hereunder will operate as
a waiver thereof, nor will any waiver on the part of any Party of
any right hereunder, nor any single or partial exercise of any
rights hereunder, preclude any other or further exercise thereof or
the exercise of any other right hereunder.
-21-
11.3
Assignment.
Neither Party may assign or otherwise transfer or delegate this
Agreement or any of a Party’s rights, duties or obligations
under this Agreement to another person or entity without the prior
written consent of the other Party. Notwithstanding the foregoing,
this Agreement may be assigned or transferred by a Party to any
person or entity that succeeds the Party by operation of law or
that controls, is controlled by or is under common control of the
Party without the consent of the other Party; provided,
that in the case of Restricted Stockholder, Restricted Stockholder
has complied with the restrictions on Transfer set forth in this
Agreement that are applicable to any such Transfer. Nothing herein
will prohibit or restrict a Change in Control of either Party or
any party controlling, controlled by or under common control with
such Party or require the consent of the other Party to any
assignment or transfer of this Agreement in connection with any
Change in Control; provided, that in the case of Restricted
Stockholder, Restricted Stockholder has complied with the
restrictions on Transfer set forth in this Agreement that are
applicable to any such Transfer. This Agreement will be binding on
and inure to the benefit of each Party hereto and to each
Party’s respective permitted successors and
assigns.
11.4
Notices.
Any notice required or permitted under this Agreement will be
considered to be effective in the case of (i) certified U.S. mail,
when sent postage prepaid and addressed to the Party for whom it is
intended at its address of record, three (3) days after deposit in
the U.S. mail; (ii) by courier or messenger service, upon receipt
by recipient as indicated on the courier’s receipt; or (iii)
upon receipt of an Electronic Transmission by the Party that is the
intended recipient of the Electronic Transmission. All notices
hereunder shall be delivered to the addresses set forth below, or
pursuant to such other instructions as may be designated in writing
by the Party to receive such notice:
(a)
if
to the Company, to:
Autobytel
Inc.
00000
XxxXxxxxx Xxxx., Xxxxx 000
Xxxxxx,
Xxxxxxxxxx 00000-0000
Attention:
Xxxxx X. Xxxxxx
Executive
Vice President, Chief Legal and
Administrative
Officer and Secretary
Facsimile:
949.862.323
Email: xxxxxx@xxxxxxxxx.xxx
(b)
if
to Restricted Stockholder or Designated Restricted Stockholder
Affiliate, to:
DealerX
Partners, LLC
000
Xxxxx Xxxxx, Xxxxx 0000X
Xxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx
Xxxxxxxx
Manager
and President
Facsimile:
Email:
xxxx@xxxxxxx.xxx
With
copy to:
Xxxx
Xxxxxxxxxx
Xxxxxxxx Xxxxxx
& Winchester
000
Xxxxx 000 Xxxx
Xxxx
Xxxx Xxxx, Xxxx 00000
Facsimile:
801.935.4936
Email:
xxx@xxxxxxxxxx.xxx
And
a copy to:
Xxxxxx
X. Xxxxxx
Xxxxx
Xxxxxxxx
One
Centre Square, Fifth Floor
000
Xxxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxxxx 00000
Facsimile:
865.523.6529
Email:
xxxxxxx@xxxxxxxxxxxxx.xxx
-22-
11.5
Choice
of Law. This Agreement, its
construction and the determination of any rights, duties or
remedies of the Parties arising out of or relating to this
Agreement will be governed by, enforced under and construed in
accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of
conflicts of laws of such state.
11.6
Dispute
Resolution,Forum.
(a) If
a dispute or claim arises between the Parties relating to this
Agreement, before either Company or a Member of the Restricted
Stockholder Group pursues other available remedies, the Party
asserting the dispute or claim shall notify the other Party of the
nature of the dispute or claim and request that persons with
decision making authority regarding the dispute or claim from each
Party (together with their respective counsel) confer, at a
mutually convenient date and time, by a mutually convenient means
(e.g., in person or by telephone, video conferencing, or other
electronic means), and at a mutually convenient place (in the event
an in person meeting is agreed upon by the Parties), to attempt to
a resolve the dispute or claim. No such attempt to resolve the
dispute or claim shall be deemed to vitiate or reduce the
obligations and liabilities of Company or a Member of the
Restricted Stockholder Group hereunder or be deemed a waiver by
Company or a Member of the Restricted Stockholder Group of any
remedies to which Company or a Member of the Restricted Stockholder
Group would otherwise be entitled hereunder. Any offers of
settlement or compromise made during such attempt to resolve the
dispute or claim shall be inadmissible in any court or arbitration
proceeding to prove a Party’s liability with respect to the
dispute or claim, nor shall any offer of settlement or compromise
constitute or be construed as an admission of any liability with
respect to the dispute or claim. Notwithstanding the foregoing,
either Party may seek specific performance and injunctive relief
from a court of competent jurisdiction in the Dispute Resolution
Venue in order to maintain the status quo while the procedure set
forth in this Section 11.6(a) is being followed. If the Parties are
unable to agree upon a mutually convenient date and time, means, or
place to confer within three (3) days after the asserting
Party’s notice of dispute or claim is effective in accordance
with Section 11.4, or if the Parties confer and do not reach a
resolution of the dispute or claim, each of the Parties shall be
entitled to purse arbitration under Section 11.6(b).
(b) In
the event a dispute or claim is not resolved under the procedure
set forth in Section 11.6(a), the Parties consent to and agree that
any dispute or claim arising out of, or in any way related to, this
Agreement shall be submitted to binding arbitration in the Dispute
Resolution Venue, and conducted in accordance with the Judicial
Arbitration and Mediation Service (“JAMS”) rules of practice then in
effect or such other procedures as the Parties may agree in
writing, and the Parties expressly waive any right they may
otherwise have to cause any such action or proceeding to be brought
or tried elsewhere. The Parties further agree that (i) any request
for arbitration shall be made in writing and must be made within a
reasonable time after the claim, dispute, or other matter in
question has arisen; provided however, that in no event shall the
demand for arbitration be made after the date that institution of
legal or equitable proceedings based on such claim, dispute, or
other matter would be barred by the applicable statue(s) of
limitations; (ii) the appointed arbitrator must be a former or
retired judge or attorney at law with at least ten (10)
years’ experience in commercial matters; (iii) costs and fees
of the arbitrator shall be borne by the Parties equally, unless the
arbitrator or arbitrators determine otherwise; (iv) depositions may
be taken and other discovery may be obtained during such
arbitration proceedings to the same extent as authorized in civil
judicial proceedings; and (v) the award or decision of the
arbitrator, which may include equitable relief, shall be final, and
judgment may be entered on such award in accordance with applicable
law in any court having jurisdiction over the matter. The
arbitrator shall be required to follow applicable law in rendering
the arbitrator’s decision.
(c) TO
THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(d) The
Parties acknowledge and agree that money damages may not be a
sufficient remedy for a breach of certain provisions of this
Agreement, including but not limited to Articles X, and
accordingly, a non-breaching Party may be entitled to specific
performance and injunctive relief as remedies for such violation.
Accordingly, the Parties agree that a non-breaching party may seek
relief in a court of competent jurisdiction in the Dispute
Resolution Venue for the purposes of seeking equitable relief
hereunder, and that such remedies shall not be deemed to be
exclusive remedies for a violation of the terms of this Agreement
but shall be in addition to all other remedies available to the
non-breaching party at law or in equity.
-23-
(e) In
any action or other proceeding by which a Party either seeks to
enforce its rights under this Agreement, or seeks a declaration of
any rights or obligations under this Agreement, the prevailing
party will be entitled to reasonable attorneys’ fees, and
subject to Section 11.6(b) above, reasonable costs and expenses
incurred to resolve such dispute and to enforce any final
judgment.
(f) No
remedy conferred on a Party by any of the specific provisions of
this Agreement is intended to be exclusive of any other remedy, and
each and every remedy will be cumulative and will be in addition to
every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise. The election of one or
more remedies by a Party will not constitute a waiver of the right
to pursue other available remedies.
11.7
Severability.
Each term, covenant, condition or provision of this Agreement will
be viewed as separate and distinct, and in the event that any such
term, covenant, condition or provision will be deemed to be invalid
or unenforceable, the arbitrator or court finding such invalidity
or unenforceability will modify or reform this Agreement to give as
much effect as possible to the terms and provisions of this
Agreement. Any term or provision which cannot be so modified or
reformed will be deleted and the remaining terms and provisions
will continue in full force and effect.
11.8
Delays
or Omissions. 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 nonbreaching or nondefaulting Party, nor shall it be
construed to be a waiver of or acquiescence to any such breach or
default, or to 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. All remedies, whether under this Agreement or by law or
otherwise afforded to any Party, shall be cumulative and not
alternative.
11.9
Further
Assurances. Each Party agrees
to execute and deliver any and all further documents, and to
perform such other acts, as may be reasonably necessary or
expedient to carry out and make effective this
Agreement.
11.10
Interpretation.
Every provision of this Agreement is the result of full
negotiations between the Parties, both of whom have either been
represented by counsel throughout or otherwise been given an
opportunity to seek the aid of counsel. Each Party hereto further
agrees and acknowledges that it is sophisticated in legal affairs
and has reviewed this Agreement in detail. Accordingly, no
provision of this Agreement shall be construed in favor of or
against any Party hereto by reason of the extent to which any such
Party or its counsel participated in the drafting thereof. Captions
and headings of sections contained in this Agreement are for
convenience only and shall not control the meaning, effect or
construction of this Agreement. Time periods used in this Agreement
shall mean calendar periods (i.e., days, months, and years) in the
State of California, USA unless otherwise expressly indicated. All
references to fees, expenses, costs and payments thereof are U.S.
Dollars. The English language shall apply to any interpretation of
this Agreement.
11.11
Counterparts;
Facsimile or PDF Signature.
This Agreement may be executed in counterparts, each of which will
be deemed an original hereof and all of which together will
constitute one and the same instrument. This Agreement may be
executed by facsimile or PDF signature by either Party and such
signature shall be deemed binding for all purposes hereof, without
delivery of an original signature being thereafter
required.
[Remainder of Page Intentionally Left Blank;
Signature Page and Exhibits Follow]
-24-
IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first written above.
|
|
Company
Autobytel
Inc.
|
|
|
|
By:
|
/s/ Xxxxx X.
Xxxxxx
|
|
|
|
Name:
Xxxxx X. Xxxxxx
|
|
|
|
Title:
Executive Vice President, Chief Legal and Administrative Officer
and Secretary
|
|
|
Restricted Stockholder
DealerX Partners,
LLC, a Florida limited liability company
|
||
|
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By:
|
/s/ Xxxxxxx
Xxxxxxxx
|
|
|
|
|
Name:
Xxxxxxx Xxxxxxxx
|
|
|
|
|
Title:
Manager and President
|
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|
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Designated Restricted Stockholder Affiliate
|
|
|
Xxxxxxx
Xxxxxxxx
/s/ Xxxxxxx
Xxxxxxxx
|
|
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Xxxxxxx
Xxxxxxxx
|
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|
|
-25-
Exhibit A
Irrevocable Proxy
The
undersigned stockholder (“Restricted Stockholder”) of
Autobytel Inc., a Delaware corporation (“Company”), hereby irrevocably
appoints and constitutes the Company’s Chief Executive
Officer, Chief Financial Officer and Chief Legal Officer
(collectively, the “Proxyholders”), and each of them
individually, the agents, attorneys-in-fact and proxies of the
undersigned, with full power of substitution and resubstitution, to
the full extent of the undersigned’s rights with respect to
all Shares (as defined in that certain Stockholder Agreement dated
as of October 5, 2017, by and between Company and Restricted
Stockholder (“Stockholder
Agreement”)) beneficially owned by Restricted
Stockholder (including any Shares acquired by Restricted
Stockholder on or after the date hereof and before the date this
proxy terminates) to vote the Shares as follows:
The
Proxyholders named above, or each of them individually, are
empowered at any time before termination of this proxy to exercise
all voting rights of the undersigned at any meeting (whether annual
or special and whether or not an adjourned or postponed meeting) of
stockholders of the Company, and in any action by written consent
of the stockholders of the Company, in accordance with the
recommendations of or instructions provided by the Company’s
Board of Directors.
The
proxy granted by Restricted Stockholder to the Proxyholders hereby
is granted as of the date of this Irrevocable Proxy in order to
secure the obligations of Restricted Stockholder set forth in
Section 6.1 of the Stockholder Agreement and, as such, is coupled
with an interest and is irrevocable in accordance with subdivision
(e) of Section 212 of the Delaware General Corporation
Law.
This
proxy shall survive the insolvency, incapacity, death, liquidation
or dissolution of the undersigned and shall terminate as provided
in Section 6.2 of the Stockholder Agreement in accordance with its
terms.
Upon
the execution and delivery hereof, all prior proxies given by the
undersigned with respect to the Shares are hereby revoked, and
until such time as this proxy shall be terminated in accordance
with its terms, Restricted Stockholder shall not purport to grant
any other proxy or power of attorney with respect to any Shares,
deposit any of Shares into a voting trust or enter into any
agreement, arrangement or understanding with any person, directly
or indirectly, to vote, grant any proxy or give instructions with
respect to the voting of any Shares.
Any
obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
Dated:
_________________
Restricted
Stockholder
DealerX
Partners, LLC, a Florida limited liability company
|
By:
|
___________________
Name: Xxxxxxx
Xxxxxxxx
Title: Manager and
President
|
-26-
Portions of this Exhibit have been omitted in accordance with Item
601(b)(2) of Regulation S-K. AutoWeb, Inc. will furnish
supplementally a copy of any omitted portions of the exhibit to the
Securities and Exchange Commission upon request; provided, however,
that AutoWeb, Inc. may request confidential treatment pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for
the portions of the exhibit so furnished.
Exhibit B
Restricted Stockholder Disclosure Schedule
This Restricted Stockholder Disclosure Schedule is
made and delivered pursuant to Section
3.1(e) of that certain
Stockholder Agreement, dated as of October 5, 2017
(“Agreement”), by and between Autobytel Inc., a
Delaware corporation (“Company”), DealerX Partners, LLC, a Florida limited
liability company (“Restricted
Stockholder”), and
Xxxxxxx Xxxxxxxx (“Designated Restricted
Stockholder Affiliate”). All capitalized terms used
but not defined herein shall have the meanings given to such terms
in the Agreement, unless otherwise provided herein. The
section numbers below correspond to the section numbers of the
representations and warranties in the
Agreement; provided , however ,
that any information disclosed in this Restricted Stockholder
Disclosure Schedule under any section number shall be deemed to be
disclosed and incorporated into any other section number under the
Agreement where such disclosure would be reasonably appropriate on
the face of the disclosure.
Nothing
in this Restricted Stockholder Disclosure Schedule is intended to
broaden the scope of any representation or warranty contained in
the Agreement or to create any covenant. Inclusion of
any item in this Restricted Stockholder Disclosure Schedule shall
not constitute, or be deemed to be, an admission to any third party
concerning such item and does not represent a determination that
(i) such item is material or establish a standard of materiality,
(ii) such item did not arise in the ordinary course of business or
(iii) the transactions contemplated by the Agreement require the
consent of third parties. This Restricted Stockholder
Disclosure Schedule includes brief descriptions or summaries of
certain agreements and instruments, copies of which are available
upon reasonable request. Such descriptions do not
purport to be comprehensive, and are qualified in their entirety by
reference to the text of the documents described.
Section 3.1(e)
Directors, Officers
and Managing Members of Restricted Stockholder:
Manager and President: Xxxxxxx
Xxxxxxxx
Beneficial and
record owners of all of the issued and outstanding capital stock or
membership interests of Restricted Stockholder:
[This information has been omitted in accordance with Item
601(b)(2) of Regulation S-K.]
-27-
