Second Amended and Restated Stockholder Agreement
EXHIBIT 10.1
Second
Amended and Restated Stockholder Agreement
This
Second Amended and Restated Stockholder Agreement
(“Agreement”) is
made as of October 19, 2016 (“Effective Date”) by and among
Autobytel Inc., a Delaware corporation (the “Company”), Auto Holdings Ltd., a
British Virgin Islands business company (the “Original Restricted Stockholder”),
Manatee Ventures Inc., a British Virgin Islands business company
(“Manatee”),
Galeb3 Inc, a Florida corporation (“Galeb3”), Xxxxxx xx Xxxxxxx
(“xx Xxxxxxx”),
Xxxx Xxxxxx (“Xxxxxx”) and the parties set forth
on the signature pages hereto. The Company, the Original Restricted
Stockholder, Manatee, Galeb3, xx Xxxxxxx and Xxxxxx are referred to
herein collectively as the “Original Parties.” The Original
Parties and any additional parties to this Agreement are referred
to herein collectively as the “Parties” and sometimes each
individually as a “Party.”
Background
Pursuant to the
Note and Warrant Sale Agreement dated as of April 27, 2015 by and
among the Atrop, Inc., a Florida corporation (formerly
Autotropolis, Inc.), IBBF Ventures, Inc. a Florida corporation
(formerly Cyber Ventures, Inc.), the Original Restricted
Stockholder and the Company, the Original Restricted Stockholder
acquired approximately 14.25% of the Company’s outstanding
Common Stock. In connection with the Note and Warrant Sale
Agreement, the Original Parties entered into a Stockholder
Agreement dated as of April 27, 2015 (the “Original Agreement”).
As a
condition to and concurrently with the execution of that certain
Agreement and Plan of Merger, dated as of October 1, 2015 (the
“Merger
Agreement”) by and between the Company, New Horizon
Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of the Company, AutoWeb, Inc., a Delaware corporation
(“AutoWeb”), and
Xxxx Xxxxxx, an individual, solely in his capacity as the
initial Stockholder Representative thereunder, the Original Parties
amended and restated the Original Agreement as set forth in an
Amended and Restated Stockholder Agreement dated as of October 1,
2015 (the “Amended and
Restated Stockholder Agreement”). Pursuant to the
Merger Agreement, and as a condition to receipt of the Merger
Consideration (as defined in the Merger Agreement) each of the
stockholders of AutoWeb being paid Merger Consideration pursuant to
the Merger Agreement (each, an “AutoWeb Securityholder” and,
collectively the “AutoWeb
Securityholders”) executed and delivered the Amended
and Restated Stockholder Agreement.
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 (collectively the
“NOL Plan”). The
Board of Directors of the Company (the “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 (a
“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.
In
reliance upon the representations, warranties and obligations of
the Original Restricted Stockholder under the Original Agreement,
the Board granted the Original Restricted Stockholder a NOL Plan
Exemption solely with respect to the Original Restricted
Stockholder’s acquisition of the Derivative Securities and
the Initial Restricted Securities. Further, in reliance upon the
representations, warranties and obligations of the AutoWeb
Securityholders under the Amended and Restated Stockholder
Agreement, the Board granted the AutoWeb Securityholders a NOL Plan
Exemption solely with respect to the AutoWeb Securityholders’
acquisition of the AutoWeb Restricted Securities.
On May
20, 2016, PF Auto, Inc., an AutoWeb Securityholder and a British
Virgin Islands business company (“PF Auto”), distributed to its
shareholders, with the consent of the Company, all of the AutoWeb
Restricted Securities that it held. Concurrently with the foregoing
distribution, each shareholder of PF Auto, if such shareholder was
not already a party to the Amended and Restricted Stockholder
Agreement (the “Joining PF
Auto Stockholders”), executed a joinder to the Amended
and Restricted Stockholder Agreement.
On
September 21, 2016, the Board, contingent upon the execution of
this Agreement, granted under the Company’s Amended and
Restated 2014 Equity Incentive Plan options to purchase 65,000
shares of Common Stock to xx Xxxxxxx and options to purchase 65,000
shares of Common Stock to Xxxxxx in connection with xx
Xxxxxxx’ and Xxxxxx’ service to the Company as officers
of the Company (xx Xxxxxxx and Xxxxxx and collectively with the
Original Stockholders, the AutoWeb Securityholders, and the Joining
PF Auto Stockholders, the “Restricted Stockholders”).
Additionally, the Board authorized this Agreement to allow xx
Xxxxxxx and Xxxxxx, each individually, to purchase up to 100,000
shares of Common Stock in the open market; provided that any such
purchases comply with the terms of this Agreement, the Securities
Trading Policy (as defined below) and applicable Law. The Board
also authorized an increase in the Restricted Stockholders’
NOL Plan Exemption for the foregoing.
In
consideration of the mutual promises and covenants set forth
herein, the Parties hereto further agree as follows:
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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.
“Automotive Field” means the
automotive industry and all related products and services within
the automotive industry, including without limitation,
manufacturing, sales and distribution (including automotive
manufacturers and dealers) of automobiles, financing of
automobiles, automobile warranties, automobile insurance,
automobile parts and accessories, and automobile service and
repairs.
“Automotive Leads” shall
mean the electronic record, whether fulfilled or delivered by
online internet-based systems, SMS or similar messaging systems,
telephonic systems, or any other electronic means with the
combination of a consumer’s information and any vehicle
information for the purpose of furthering the consumer’s
interest in any service or product within the Automotive
Field.
“AutoWeb Restricted Securities”
means any Capital Stock acquired by any AutoWeb Securityholder in
connection with the transactions contemplated by the Merger
Agreement.
“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.
“Capital Stock” means any and all
shares, interests, rights to purchase, warrants, options,
participations or other equivalents of or interests in (however
designated) equity of the Company, including any Common Stock or
any series of preferred stock of the Company, but excluding any
debt securities convertible into such equity.
“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.
“Company Business” means the
origination, sale, licensing or distribution of Automotive
Leads.
“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.
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“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.
“Derivative Securities” means
collectively (i) that certain Convertible Subordinated Promissory
Note dated as of September 16, 2010 executed by Company as maker to
Atrop, Inc., and IBBF Ventures, Inc. in the original principal
amount of $5 million and (ii) the Warrant to acquire shares of
Common Stock issued by Company to Atrop, Inc., and IBBF Ventures,
Inc. and dated as of September 16, 2010.
“Designated Restricted Stockholder
Affiliates” means xx Xxxxxxx and Xxxxxx.
“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.
“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
(i) with respect to Common Stock, 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 and
(ii) with respect to Capital Stock other than Common Stock,
the weighted average of the Market Values of the Common Stock into
which such Capital Stock could be converted 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.
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“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.
“IDC” means Investment and
Development Finance Corp., a British Virgin Islands business
company.
“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 1,475,268 shares of Common Stock issued upon the
conversion and exercise, as applicable, of the Derivative
Securities.
“Irrevocable Proxy” means an
Irrevocable Proxy in the form of Exhibit A attached
hereto.
“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 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.
“Non-Restricted
Securities” for the purposes of this
Agreement, Non-Restricted Securities are Restricted Securities for
which all of the Stock Restrictions have expired or
terminated.
“Order” means any judgment,
decision, order, injunction, decree, award, or writ of any
Governmental Authority.
“Permitted Immediate Family Member
Transferee” means (i) an
individual Restricted Stockholder’s Immediate Family Member,
(ii) one or more trusts established solely for the benefit of the
Restricted Stockholder and/or one or more of the Restricted
Stockholder’s Immediate Family Members; or (iii) one or more
entities that are beneficially owned solely by Restricted
Stockholder and/or one or more of the Restricted
Stockholder’s Immediate Family Members.
“PeopleFund” means PeopleFund,
Inc., a British Virgin Islands business company, which company is
directly or indirectly the beneficial owner of interests in the
Original Restricted Stockholder and in AutoWeb.
“Proposed Private Transfer” means a
proposed Transfer in a transaction not constituting a Proposed
Public Transfer.
“Proposed Private Transfer Qualified
Transferee” means a transferee of Shares or Capital
Stock pursuant to a Proposed Private Transfer after the end of the
Stock Restrictions Period that meets the following requirements:
(i) the transferee is not an Affiliate, Associate or Immediate
Family Member of any Restricted Stockholder, PeopleFund or IDC;
(ii) the transferee is not a competitor of Company;
(iii) the transferee is not a party to or bound by any voting
proxy, agreement, trust or other voting arrangement with any
Restricted Stockholder, PeopleFund, IDC or any Associate or
Affiliate of any of the foregoing; (iv) the transferee is not,
and will not become as a result of the transfer, the beneficial
owner of 4.9% or more of Company’s outstanding Common Stock
or an amount of Capital Stock that could, in any circumstance, be
convertible into 4.9% or more of Company’s outstanding Common
Stock; (v) the transferee provides Company a written
certification confirming the foregoing requirements; and
(vi) the transferee agrees to be bound by the standstill set
forth in Section 8.1.
“Proposed Public Transfer” means a
proposed Transfer to be implemented pursuant to (i) a
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 (i) ten (10)
days if the Restricted Stockholder is selling 147,526 Shares or
less or an amount of Capital Stock that could, in any circumstance,
be convertible into 147,526 Shares, (ii) thirty (30) days if the
Restricted Stockholder is selling more than 147,526 Shares but not
more than 368,817 Shares or an amount of Capital Stock that could,
in any circumstance, be convertible into more than 147,526 Shares
but not more than 368,817 Shares, and (iii) sixty (60) days if the
Restricted Stockholder is selling more than 368,817 Shares or an
amount of Capital Stock that could, in any circumstance, be
convertible into more than more than 368,817 Shares. For purposes
of the determination of the applicable Reply Period, proposed
Transfers shall be aggregated with all Transfers proposed during
the six-month period preceding the most recent proposed Transfer.
The foregoing Share numbers shall be adjusted proportionately in
the event of a share split, combination or similar transaction of
the Common Stock or Capital Stock.
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“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 a Restricted Stockholder.
“Restricted Securities” means (i)
the Initial Restricted Securities; (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; (iii) the
AutoWeb Restricted Securities; (iv) any other Capital Stock that
may be issued with respect to the AutoWeb Restricted Securities by
reason of any stock split, reverse split, stock dividend (including
any dividend or distribution of securities convertible into Capital
Stock), 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; (v) the
September 2016 Restricted Securities; (vi) any other Capital Stock
that may be issued with respect to the September 2016 Restricted
Securities by reason of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities
convertible into Capital Stock), 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 clauses (i), (ii), (iii), (iv),
(v) or (vi), until such time as all of the Stock Restrictions
expire or terminate with respect to such Shares or Capital
Stock.
“Registrable Securities” means
Restricted Securities (excluding the September 2016 Restricted
Securities) that are Common Stock.
“Restricted Stockholder Director”
means each director designated by the Restricted Stockholders,
including the directors initially designated pursuant to Section
2.1(b)(i).
“SEC” means the Securities and
Exchange Commission.
“SEC Rule 144” means Rule 144
promulgated by the SEC under the Securities Act.
“SEC Rule 145” means Rule 145
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 Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“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
xx Xxxxxxx and Xxxxxx, 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.
“September 2016 Restricted
Securities” means the September 2016 xx Xxxxxxx
Restricted Securities and the September 2016 Xxxxxx Restricted
Securities.
“September 2016 xx Xxxxxxx Restricted
Securities” means (i) the options to purchase 65,000
shares of Common Stock granted to xx Xxxxxxx by the Board on
September 21, 2016 and any shares of Common Stock issued upon
exercise of such options and (ii) up to 100,000 shares of Common
Stock that xx Xxxxxxx may purchase in the open market in compliance
with this Agreement, the Securities Trading Policy and applicable
Law.
“September 2016 Xxxxxx Restricted
Securities” means (i) the options to purchase 65,000
shares of Common Stock granted to Xxxxxx by the Board on September
21, 2016 and any shares of Common Stock issued upon exercise of
such options and (ii) up to 100,000 shares of Common Stock that
Xxxxxx may purchase in the open market in compliance with this
Agreement, the Securities Trading Policy and applicable
Law.
“Shares” means all issued and
outstanding shares of Common Stock that a 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.
“Stock 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.
“Stock Restrictions Period” means
the period commencing on October 1, 2015 and ending on October 1,
2017.
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“Stockholder Representative”
has the meaning set forth in the Merger Agreement.
“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.
“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
Capital Stock or any securities convertible into or exercisable or
exchangeable (directly or indirectly) for Shares or Capital Stock
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, Capital Stock or other securities, in cash, or
otherwise; or (iii) any Change in Control of a Restricted
Stockholder.
-6-
Article II
Governance
2.1 Corporate
Governance.
(a) Size
of Board. As of October 1,
2015, the authorized number of directors on the Board was increased
to nine (9) and shall be subject to increase or decrease by the
Board from time-to-time, in accordance with the Fifth Amended and
Restated Certificate of Incorporation of the Company, as amended,
the Bylaws of the Company and this Agreement.
(b) Restricted
Stockholder Directors.
(i) As of October 1, 2015, the members of the Board
shall elect and appoint two (2) persons designated by the
Restricted Stockholders to the Board as Restricted Stockholder
Directors; provided
that if no other persons are so
designated, the initial Restricted Stockholder Directors shall be
xx Xxxxxxx and Xxxxxx. Thereafter and subject to Section
2.1(b)(iii), the Restricted Stockholders shall be entitled to
designate the person or persons for nomination as a Restricted
Stockholder Director at each meeting of the Company’s
stockholders held for the election of directors at which a
Restricted Stockholder Director position is up for
election.
(ii) The
Company shall cause the nomination of each Restricted Stockholder
Director (to the extent that such Restricted Stockholder Director
would be up for election at such time) in connection with any
subsequent proxy statement or information statement pursuant to
which the Company intends to solicit stockholders with respect to
the election of directors and to have the Board recommend in
connection with such subsequent proxy statement or information
statement that the stockholders of the Company vote for the
election of each Restricted Stockholder Director up for election at
such time.
(iii) If
prior to the end of the term of any member of the Board that is a
Restricted Stockholder Director, a vacancy in the office of such
director shall occur by reason of death, resignation, removal or
disability, or for any other cause, such vacancy shall be filled by
the Restricted Stockholders with another Restricted Stockholder
Director, and the Restricted Stockholders shall have the right to
replace any Restricted Stockholder Director, at any time, with or
without cause.
(iv) The
Restricted Stockholders hereby designate the Stockholder
Representative to make any decision regarding the designation or
replacement of any Restricted Stockholder Director or as otherwise
required pursuant to Sections 2.1(b)(i) – (iii) above. The
Restricted Stockholders hereby acknowledge and agree that the
Company may rely on any such decision by the Stockholder
Representative as binding on all Restricted
Stockholders.
(v) The
Restricted Stockholders’ right to designate Restricted
Stockholder Directors to the Board shall terminate: (A) as to both
Restricted Stockholder Director seats, at such time as the
Restricted Stockholders and all of their Affiliates and Associates,
individually and as a group, Beneficially Own less than 4.9% of the
Company’s outstanding Common Stock (including any amount of
Common Stock into which any Capital Stock Beneficially Owned could,
under any circumstance, be convertible); and (B) as to one
Restricted Stockholder Director seat, at such time as the
Restricted Stockholders and all of their Affiliates and Associates,
individually and as a group, Beneficially Own less than 15.0% of
the Company’s outstanding Common Stock (including any amount
of Common Stock into which any Capital Stock Beneficially Owned
could, under any circumstance, be convertible). Upon the occurrence
of subsection (A) of the foregoing, both Restricted Stockholder
Directors shall immediately tender their resignations to the Board.
Upon the occurrence of subsection (B) in the foregoing, the
Restricted Stockholder Director that was appointed to the director
class that was most recently voted upon for election by the
stockholders of the Company shall immediately tender his or her
resignation to the Board.
(c) Additional
Independent Director. As of October 1, 2015, the members of the Board
appointed Xxxxxx X. Xxxxx to the Board.
(d) Governance
Standards. The nomination, appointment and election of any
Restricted Stockholder Director or of any additional directors
shall be subject to all legal requirements and the Company’s
governance standards regarding service as a director of the Company
and to the approval of the Corporate Governance and Nominations
Committee of the Board.
2.2 Intentionally
Omitted.
2.3 Intentionally
Omitted.
-7-
2.4 Grant
of NOL Plan Exemptions
(a) Exemption
for the Derivative Securities and the Initial Restricted
Securities. Subject to and in
reliance upon the representations, warranties and obligations of
the Original Restricted Stockholder under the Original Agreement,
the Board granted the Original Restricted Stockholder a NOL Plan
Exemption solely with respect to the Original Restricted
Stockholder’s acquisition of the Derivative Securities and
the Initial Restricted Securities. As long as the Original
Restricted Stockholder remains in full compliance with this
Agreement, the 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 or Capital Stock by the
Original Restricted Stockholder or any of its Affiliates or
Associates.
(b) Exemption
for the AutoWeb Restricted Securities. Subject to and in reliance upon the
representations, warranties and obligations of the applicable
AutoWeb Securityholder(s) and the Original Restricted Stockholder
under the Amended and Restated Stockholder Agreement, the Board
granted such AutoWeb Securityholders and the Original Restricted
Stockholder a NOL Plan Exemption solely with respect to such
AutoWeb Securityholders’ acquisition of the AutoWeb
Restricted Securities. As long as each of such AutoWeb
Securityholders and the Original Restricted Stockholder remain in
full compliance with this Agreement, the Company shall maintain the
NOL Plan Exemption in effect with respect to the AutoWeb Restricted
Securities. This NOL Plan Exemption, without the express written
approval of the Company in each such case, is not applicable to the
acquisition of Beneficial Ownership of any other or additional
Shares or Capital Stock by the Original Restricted Stockholder or
any AutoWeb Securityholders or any of their respective Affiliates
or Associates.
(c) Exemption
for the September 2016 Restricted Securities. Subject to and in reliance upon the
representations, warranties and obligations of the Restricted
Stockholders under this Agreement, the Board has granted the
Restricted Stockholders a NOL Plan Exemption solely with respect to
xx Xxxxxxx’ and Xxxxxx’ acquisition of the September
2016 xx Xxxxxxx Restricted Securities and the September 2016 Xxxxxx
Restricted Securities, as applicable. As long as the Restricted
Stockholders remain in full compliance with this Agreement, the
Company shall maintain the NOL Plan Exemption in effect with
respect to the September 2016 Restricted Securities. This NOL Plan
Exemption, without the express written approval of the Company in
each such case, is not applicable to the acquisition of Beneficial
Ownership of any other or additional Shares or Capital Stock by any
Restricted Stockholder or any of their respective Affiliates or
Associates.
2.5 Governmental
Filings. Upon request by
Company, each Restricted Stockholder and its Affiliates and
Associates shall cooperate with Company and furnish to Company such
information regarding such Restricted Stockholder and its
Affiliates and Associates, including information regarding the
beneficial ownership of such Restricted Stockholder and its
Affiliates and Associates.
2.6 Legends.
(a) Restricted
Securities, excluding the September 2016 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 Capital 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.”
“THE
SECURITIES EVIDENCED HEREBY ARE SUBJECT TO AN AMENDED AND RESTATED
STOCKHOLDER AGREEMENT DATED AS OF OCTOBER 1, 2015, 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
AMENDED AND RESTATED STOCKHOLDER AGREEMENT, INCLUDING CERTAIN
RESTRICTIONS ON TRANSFER, REPURCHASE RIGHTS, STANDSTILL PROVISIONS
AND VOTING ARRANGEMENTS, INCLUDING AN IRREVOCABLE PROXY, SET FORTH
THEREIN.”
-8-
THE
SECURITIES EVIDENCED HEREBY ARE SUBJECT TO THE TERMS OF AN
AGREEMENT AND PLAN OF MERGER DATED AS OF OCTOBER 1, 2015
(“MERGER AGREEMENT”) AND ARE SUBJECT TO VARIOUS RIGHTS
OF OFFSET BY THE COMPANY UNDER THE MERGER AGREEMENT.
(c) The
September 2016 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 September 2016
Restricted Securities; and (ii) such other legends and restrictions
as are applicable to the Capital Stock generally. Further, in order
to ensure the required legends are borne on the September 2016
Restricted Securities, xx Xxxxxxx and Xxxxxx are required to hold
all September 2016 Restricted Securities directly in xx
Xxxxxxx’ or Xxxxxx’ name, as applicable, or take other
actions as may be required in order to permit Company’s
transfer agent of record to denote the September 2016 Restricted
Securities as Restricted Securities under this
Agreement.
“THE
SECURITIES EVIDENCED HEREBY ARE SUBJECT TO A SECOND AMENDED AND
RESTATED STOCKHOLDER AGREEMENT DATED AS OF OCTOBER 19, 2016, 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
SECOND AMENDED AND RESTATED STOCKHOLDER AGREEMENT, INCLUDING
CERTAIN RESTRICTIONS ON TRANSFER, REPURCHASE RIGHTS, STANDSTILL
PROVISIONS AND VOTING ARRANGEMENTS, INCLUDING AN IRREVOCABLE PROXY,
SET FORTH THEREIN.”
2.7 Stop
Transfer Instructions. So long
as Restricted Securities remain subject to the Stock Restrictions
and other provisions of this Agreement, 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. Each Restricted Stockholder hereby represents
and warrants to Company as follows:
(a) Organization
and Good Standing. Such
Restricted Stockholder is, as applicable, (i) an entity, duly
formed and organized, validly existing, and in good standing under
the Laws of its jurisdiction of domicile or (ii) a natural
person.
(b) Power
and Authorization. Such
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 such Restricted
Stockholder of this Agreement and the consummation by such
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 such Restricted Stockholder or any other Person is
necessary to authorize the execution, delivery, and performance by
such Restricted Stockholder of this Agreement.
(c) Execution
and Performance of Agreement; Validity and Binding
Nature. This Agreement has been
duly executed and delivered by such Restricted Stockholder and
constitutes the legal, valid, and binding obligations of such
Restricted Stockholder, enforceable against such 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 such
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 such Restricted Stockholder’s Governing
Documents, if applicable, or any Laws to which such 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 such 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 such 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 such 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.
-9-
(e) Intentionally
Omitted.
(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 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. Other than with
respect to: (i) the Derivative Securities and the Initial
Restricted Securities acquired in connection with the Original
Agreement and (ii) the AutoWeb Restricted Securities, prior to the
grant of the options to purchase Common Stock to xx Xxxxxxx and
Xxxxxx at the meeting of the Board on September 21, 2016, such
Restricted Stockholder Beneficially Owned no shares of Common Stock
or Capital Stock. Following the grant of the options to purchase
Common Stock to xx Xxxxxxx and Xxxxxx at the meeting of the Board
on September 21, 2016, the Restricted Securities are and will be
the only Shares, or options to purchase Shares, Beneficially Owned
by the Restricted Stockholders together with their Affiliates and
Associates.
(h) Purchase
Entirely for Own Account. The
Restricted Securities acquired pursuant to the Merger Agreement are
being acquired by such 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. Such Restricted Stockholder has no present intention
of selling, granting any participation in, or otherwise
distributing the Restricted Securities. Such 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 Restricted Securities.
(i) Disclosure
of Information and Due Diligence. In addition to reviewing Company’s public
filings under the Exchange Act and Securities Act, such 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 such Restricted Stockholder or any
Affiliate or Associate thereof and to conduct such other due
diligence as such 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 Restricted Securities.
(j) Accredited
Investors. Such Restricted
Stockholder is an accredited investor as defined in Rule 501(a) of
Regulation D promulgated under the Securities
Act.
(k) Foreign
Investor. To the extent such
Restricted Stockholder is not a United States person (as defined by
Section 7701(a)(30) of the Code), such Restricted Stockholder has
satisfied itself as to the full observance of the Laws of its
jurisdiction in connection with its acquisition of the Restricted
Securities, including (i) the legal requirements within its
jurisdiction for the purchase of the Restricted Securities, (ii)
any foreign exchange restrictions applicable to such purchase,
(iii) any governmental or other Consents that may need to be
obtained, and (iv) the income tax and other tax consequences, if
any, that may be relevant to the purchase, holding, redemption,
sale, or transfer of the Restricted Securities. Such Restricted
Stockholder’s subscription and payment for and continued
Beneficial Ownership of the Restricted Securities will not violate
any applicable securities or other laws of such Restricted
Stockholder’s jurisdiction.
(l) Purchase
Entirely for Own Account (xx Xxxxxxx and Xxxxxx). The September 2016 Restricted Securities
acquired by xx Xxxxxxx and Xxxxxx, as applicable, following the
meeting of the Board on September 21, 2016 are being acquired by
such 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. Such
Restricted Stockholder has no present intention of selling,
granting any participation in, or otherwise distributing the
September 2016 Restricted Securities. Such 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 September 2016 Restricted
Securities.
-10-
3.2 Representations
and Warranties of Company.
Company hereby represents and warrants to the Restricted
Stockholders 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.
(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 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.
-11-
Article IV
Registration
Rights
The
Restricted Stockholders are granted the following registration
rights after October 1, 2018 with regard to Registrable Securities
held by the Restricted Stockholders.
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 one or more Restricted Stockholders
(“Requesting Restricted
Stockholders”) that the
Company file a Form S-3 registration statement with respect to
outstanding Registrable Securities held by the Requesting
Restricted Stockholders having an anticipated aggregate offering
price, net of Selling Expenses, of at least five million dollars
($5,000,000.00) (a “Demand Registration
Request”), then the
Company shall as soon as practicable, and in any event within
ninety (90) days after the date the Demand Registration 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 the Requesting
Restricted Stockholders, subject to the limitations of Section
4.1(b), 4.1(c), and Section 4.3. The Company shall use reasonable
best 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 any Restricted Stockholder pursuant
to this Section 4.1 is referred to in this Agreement as a
“Demand
Registration.”
(b) Notwithstanding the foregoing obligations, if the
Company furnishes to the applicable Requesting Restricted
Stockholders 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 Demand Registration Request; provided,
however, that the Company may not invoke this right more than once
with respect to any given Requesting Restricted Stockholders 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 the Requesting Restricted
Stockholders withdraw their 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) The
Restricted Stockholders as a group shall only be entitled to two
(2) Demand Registrations under this Section 4.1.
(e) Promptly
after receipt of any Demand Registration Request, the Company shall
give written notice of such request to all other Restricted
Stockholders. Upon the request in writing of a Restricted
Stockholder given within twenty (20) days after such notice is
given by the Company, the Company shall use, subject to the
provisions of Section 4.3, its commercially reasonable efforts to
register, in accordance with the provisions of this Agreement, all
the Registrable Securities that have been properly requested to be
registered in such Demand Registration.
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
Stockholders) 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 each
Restricted Stockholder notice of such registration. Upon the
request in writing of a 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 Registrable Securities that such 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 any
Restricted Stockholder has elected to include Registrable
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.
-12-
4.3 Underwriting
Requirements.
(a) If, pursuant to Section 4.1, the Requesting
Restricted Stockholders intend to distribute Registrable Securities
covered by the Demand Registration Request by means of an
underwriting, the Requesting Restricted Stockholders shall so
advise the Company as a part of the Demand Registration Request.
The underwriter(s) will be selected by the Requesting Restricted
Stockholders subject to the reasonable approval of Company. In such
event, the right of any Restricted Stockholders to include its
Registrable Securities in such registration shall be conditioned
upon the Restricted Stockholder’s participation in such
underwriting and the inclusion of the Restricted
Stockholder’s Registrable Securities in the underwriting to
the extent provided herein. The Requesting Restricted Stockholders
(and any other Restricted Stockholders participating in the Demand
Registration pursuant to Section 4.1(e) (the Requesting Restricted
Stockholders and such additional Restricted Stockholders
participating in the Demand Registration are collectively referred
to herein as “Participating Restricted
Stockholders”)) 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) the Participating Restricted Stockholders in writing that
marketing factors require a limitation on the number of shares to
be underwritten, then the number of Registrable Securities that may
be included in the underwriting shall be reduced to the number of
Registrable Securities determined by the managing underwriter(s),
which securities will be so included in the following order of
priority: (i) first, all Registrable Securities of the Requesting
Restricted Stockholders, (ii) second, all Registrable Securities of
any other Participating Restricted Stockholder, pro rata on the
basis of the aggregate number of Registrable Securities owned by
each such Person, and (iii) third, any other securities of the
Company that have been requested to be so included, subject to the
terms of this Agreement.
(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 Registrable Securities
of any Restricted Stockholder in such underwriting unless such
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 Registrable
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 Registrable 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 Registrable
Securities requested to be registered can be included in such
offering, then the Registrable 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 Registrable 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 Third
Party 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 Participating Restricted
Stockholder that is a partnership, limited liability company, or
corporation, the partners, members, retired partners, retired
members, stockholders, and Affiliates of such Participating
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 Participating Restricted
Stockholder,” and any pro rata reduction with respect to such
Participating Restricted Stockholder” shall be based upon the
aggregate number of Registrable Securities owned by all Persons
included in such Participating Restricted Stockholder.
(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 Registrable
Securities that the Requesting Restricted Stockholders have
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 Registrable Securities, the Company shall,
as expeditiously as reasonably possible:
(a) prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its
commercially reasonable efforts to cause such registration
statement to become effective and, upon the request of the
Participating Restricted Stockholders, 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 the Participating Restricted Stockholders
refrain, 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 Registrable 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 Registrable 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 the Participating Restricted Stockholders such numbers of copies
of a prospectus, including a preliminary prospectus, as required by
the Securities Act, and such other documents as the Participating
Restricted Stockholder may reasonably request in order to
facilitate the disposition of the Registrable
Securities;
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(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 any Participating
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;
(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 Registrable
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 Registrable Securities
registered pursuant to this Agreement and provide a CUSIP number
for all such Registrable Securities, in each case not later than
the effective date of such registration;
(h) promptly
make available for inspection by the Participating Restricted
Stockholders, 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 the Participating Restricted
Stockholders, 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
the Participating Restricted Stockholders, 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 the
Participating Restricted Stockholders 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 Registrable
Securities of any Restricted Stockholder that the Restricted
Stockholder shall furnish to the Company such information regarding
the Restricted Stockholder, the Registrable Securities held by the
Restricted Stockholder, and the intended method of disposition of
such securities as is reasonably required to effect the
registration of the Restricted Stockholder’s Registrable
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
the Participating Restricted Stockholders (in which case the
Participating Restricted Stockholders shall bear such expenses),
unless the Participating Restricted Stockholders agree 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, the Participating Restricted Stockholders have
learned of a material adverse change in the condition, business, or
prospects of Company from that known to the Participating
Restricted Stockholders at the time of its request and has
withdrawn the request with reasonable promptness after learning of
such information, then the Participating Restricted Stockholders
shall not be required to pay any of such expenses and shall not
forfeit the right to one (1) registration pursuant to Section 4.1.
All Selling Expenses relating to Registrable Securities registered
pursuant to this Article IV shall be borne and paid by the
Participating Restricted Stockholders.
4.7 Delay
of Registration. No Restricted
Stockholder shall 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 Registrable 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 the Participating
Restricted Stockholders, and the Affiliates, Associates, partners,
members, officers, directors, and stockholders of the Participating
Restricted Stockholders; legal counsel and accountants for the
Participating Restricted Stockholders; any underwriter (as defined
in the Securities Act) for the Participating Restricted
Stockholders; and each Person, if any, who controls the
Participating Restricted Stockholders or underwriter within the
meaning of the Securities Act or the Exchange Act, against any
Damages, and Company will pay to each such Participating 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 any such Participating Restricted Stockholder,
underwriter, controlling Person, or other aforementioned Person
expressly for use in connection with such
registration.
(b) To
the extent permitted by applicable Law, each Participating
Restricted Stockholder, severally and not jointly, 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
such Participating Restricted Stockholder expressly for use in
connection with such registration; and such Participating
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 such Participating 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
such Participating Restricted Stockholder (net of any Selling
Expenses paid by such Participating Restricted Stockholder), except
in the case of fraud or willful misconduct by such Participating
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.
(d) Notwithstanding anything else herein to the
contrary, the foregoing indemnity agreements of Company and the
Participating Restricted Stockholders 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.
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(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) each Participating Restricted
Stockholder will not be required to contribute any amount in excess
of the public offering price of all Registrable Securities offered
and sold by such Participating 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 such
Participating Restricted Stockholder’s liability pursuant to
this Section 4.8(e), when combined with the amounts paid or payable
by such Participating Restricted Stockholder pursuant to Section
4.8(b), exceed the proceeds from the offering received by such
Participating Restricted Stockholder (net of any Selling Expenses
paid by such Participating Restricted Stockholder), except in the
case of willful misconduct or fraud by such Participating
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 the Restricted Stockholders under this Section 4.8
shall survive the completion of any offering of Registrable
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 the Restricted Stockholders the benefits of
SEC Rule 144 and any other rule or regulation of the SEC that may
at any time permit the Restricted Stockholders 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
(c) furnish
to any Restricted Stockholder, so long as such Restricted
Stockholder owns any Registrable 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 such 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.
Each 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 the Company under the
Securities Act and ending on the date specified by the 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 the 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 or
Capital Stock 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. Each 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.
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4.11 Addition
of Third Party Registrable Securities. Notwithstanding any other provision of this
Article IV, in the event the Company grants to any third parties
any rights to register their securities under the Securities Act
(“Third Party Registrable
Securities”), such rights
may be granted by the Company on a pari passu basis with the rights
granted to the Restricted Stockholders under this Agreement. Any
such Third Party Registrable Securities may be included in any
registration statement in which Registrable Securities are included
on the same terms and conditions as set forth in this Article IV as
if the Third Party Registrable Securities were Registrable
Securities and the holders of the Third Party Registrable
Securities were Restricted Stockholders, subject to customary
provisions for pro rata participation, allocations and cutbacks of
securities included any such registrations. Upon request by the
Company, the Parties shall amend this Article IV to provide for
such combined participation by holders of Third Party 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. No
Restricted Stockholder shall be entitled to exercise any right
provided for in this Article IV after the earlier of (i) October 1,
2020; and (ii) such time as all Registrable Securities held by such
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.
The registration rights granted to the Restricted Stockholders
under this Article IV are personal to each Restricted Stockholder
and may not be transferred or assigned to any subsequent holder of
Registrable Securities, except that a permitted transferee of
Registrable 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 any such registrations. Each
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.
Article V
Transfer Restrictions
5.1 Restriction
Under Securities Laws.
(a) Each Restricted Stockholder understands that
Restricted Securities (excluding the September 2016 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 the Restricted Stockholder’s
representations and warranties made to Company. Each Restricted
Stockholder understands that the Restricted Securities (excluding
the September 2016 Restricted Securities) are
“restricted
securities” under
applicable U.S. federal and state securities Laws and that,
pursuant to these Laws, each Restricted Stockholder must hold
the Restricted Securities (excluding the September
2016 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.
Each Restricted Stockholder acknowledges that Company has no
obligation to register or qualify the Restricted Securities for
resale except as set forth in this Agreement. Each 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 the
Restricted Stockholder’s or the Company’s control, and
which Company is under no obligation and may not be able to
satisfy.
(b) Before
any proposed Transfer of any Restricted Securities by any
Restricted Stockholder to a permitted purchaser, pledgee, assignee
or transferee, unless there is in effect a registration statement
under the Securities Act covering the proposed transaction, such
Restricted Stockholder shall give notice to Company of such
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, such 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 such Restricted Stockholder as to
the availability of such exemptions, then such Restricted
Stockholder shall be required to deliver to Company an opinion of
counsel (skilled in securities matters, selected by such 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 a
Restricted Stockholder in compliance with the Securities Trading
Policy generally applicable to officers, directors or employees of
the Company as long as the Restricted Stockholder is subject to
such Securities Trading Policy or as long as any manager, officer,
director or controlling Person of the Restricted Stockholder is
subject to such Securities Trading Policy.
(d) Each
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, each Restricted Stockholder
acknowledges that such Restricted Stockholder and any Affiliates of
such Restricted Stockholder may be deemed “affiliates”
of Company under applicable securities Laws, and if so, such
Restricted Stockholder will be subject to additional restrictions
on Transfers under applicable securities Laws by reason of such
Restricted Stockholder’s status as an “affiliate”
of the Company, which, among other things, may result in such
Restricted Stockholder being deemed to be an underwriter or in
possession of material, non-public information of Company. Each
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. Each Restricted Stockholder further agrees
to comply with all applicable securities Laws in connection with
(i) any Transfers of Restricted Securities that are otherwise
permitted under this Article V and (ii) any acquisitions of
Restricted Securities.
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5.2 No
Transfers During Stock Restrictions Period.
(a) No
Restricted Stockholder shall, without the prior written consent of
the Company, Transfer any Restricted Securities to any Person
during the Stock Restrictions Period; provided, however, that
Transfers to Permitted Immediate Family Member Transferees shall be
permitted during the Stock Restrictions Period, subject to
compliance with the other provisions of this Article V except for
Section 5.3.
(b) The
restriction on Transfers set forth in Section 5.2(a) shall
terminate upon the expiration of the Stock Restrictions
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, a Restricted Stockholder shall first give written notice
(“Offer Notice”) to Company specifying (i) such 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 the
Restricted Stockholder proposes to sell (“Offered
Securities”), (iv) the
price for which such 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 such 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 such 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 (or the volume-weighted average closing price of
the amount of Common Stock into which the Capital Stock is
convertible) 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 such
Restricted Stockholder. Within fifteen (15) days after delivery of
the Acceptance Notice to such 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 such Restricted Stockholder of a
certificate or certificates representing the Offered Securities (or
book-entry account transfer instructions) 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, such 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 Stock
Restrictions Period; and (ii) such time as the Restricted
Stockholders and all of their Affiliates and Associates,
individually and as a group, Beneficially Own less than 4.9% of the
Company’s outstanding Common Stock (including any amount of
Common Stock into which any Capital Stock Beneficially Owned could,
under any circumstance, be convertible).
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. 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,
the applicable Restricted Stockholder and the applicable
underwriters in accordance with Article IV.
5.5 Restrictions
Related to NOL Plan and Section 382 Compliance. No Restricted Stockholder will Transfer any
Beneficial Ownership in any Shares or Capital Stock to any Person
who the 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 (including any amount of Common Stock into
which any Capital Stock Beneficially Owned could, under any
circumstance, be convertible); provided,
that the obligation of due inquiry set forth in this Section 5.5
shall not apply to any Proposed Public
Transfer.
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5.6 Permitted
Transfers. Any permitted
successor of any 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 a Restricted Stockholder; provided,
however, that (i) any Proposed Private Transfer Qualified
Transferee shall not be subject to the Company’s right of
repurchase under Article VII nor required to execute the
Irrevocable Proxy under Article VI; and (ii) any Transfer to a
Permitted Immediate Family Member Transferee will not be subject to
the Company’s right of first refusal under Section 5.3 and
such Transfer shall not be deemed to trigger a Repurchase Option
Event for purposes of Article VII. 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 Transfers
Pursuant to Certain Events.
(a) Provided
that the Company has not elected to exercise its right of first
refusal under Section 5.3 with respect to Restricted Securities
proposed to be Transferred in a Proposed Public Transfer after the
Stock Restrictions Period has ended, the right of first refusal set
forth in Section 5.3 shall terminate, and the provisions of Section
5.6 shall not apply, as to such Restricted Securities on the date
such Restricted Securities are sold pursuant to such Proposed
Public Transfer.
(b) The
restrictions on Transfers contained in this Article V shall not
prohibit any Transfers of Shares or Capital Stock by Restricted
Stockholder to the acquirer in connection with any Change in
Control of the Company that has been approved by the Board and such
Transfer is made in accordance with the terms and conditions of the
Board-approved transaction agreement that provides for the Transfer
of shares of Capital Stock of the Company to the acquirer by all
holders of the Company’s Capital Stock on the same
basis.
5.8 Termination
of Remaining Restrictions. Any
and all remaining restrictions on Transfers set forth in this
Article V that have not already terminated or expired according to
any other more specific terms herein shall terminate on October 1,
2020, except that the provisions of Sections 5.1 and 5.5 shall
remain in effect beyond such termination date for all proposed
Transfers.
Article VI
Voting
Proxy
6.1 Irrevocable
Proxy. Concurrently with the
execution and delivery of this Agreement, each Restricted
Stockholder has executed and delivered an Irrevocable Proxy with
respect to the Shares currently owned or to be acquired in the
future upon conversion of other Restricted Securities.
Notwithstanding the foregoing, any references to the Amended and
Restated Stockholder Agreement set forth in any Irrevocable Proxy
previously executed by any Restricted Stockholder shall be deemed
to refer to this Agreement.
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 Stock Restrictions Period; and
(ii) such time as the Restricted Stockholders and all of their
Affiliates and Associates, individually and as a group,
Beneficially Own less than 4.9% of the Company’s outstanding
Common Stock (including any amount of Common Stock into which any
Capital Stock Beneficially Owned could, under any circumstance, be
convertible). In addition, if not sooner terminated pursuant to the
preceding sentence, the irrevocable proxy granted under Section 6.1
shall terminate (i) 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; (ii) as to Restricted Securities proposed to be
Transferred to a Proposed Private Transfer Qualified Transferee, on
the date such Restricted Securities are transferred to such
Proposed Private Transfer Qualified Transferee; and (iii) as to all
Restricted Securities on October 1, 2020.
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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 any
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.
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
the applicable 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 the 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 Stock Restrictions Period;
and (ii) such time as the Restricted Stockholders and all of their
Affiliates and Associates, individually and as a group,
Beneficially Own less than 4.9% of the Company’s outstanding
Common Stock (including any amount of Common Stock into which any
Capital Stock Beneficially Owned could, under any circumstance, be
convertible). In addition, the Repurchase Option granted under this
Article VII shall terminate (i) 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; and (ii) as to Restricted Securities proposed to
be Transferred to a Proposed Private Transfer Qualified Transferee,
on the date such Restricted Securities are transferred to such
Proposed Private Transfer Qualified Transferee.
Article VIII
Standstill
8.1 Agreement
to Standstill.
(a) No
Restricted Stockholder nor any Affiliate or Associate of any
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.
(b) Section
8.1 shall not be interpreted to preclude the Restricted Stockholder
Directors, acting solely in their capacities as directors of the
Company, from exercising their fiduciary duties in fulfilling their
duties and responsibilities as members of the Board. The Restricted
Stockholders and the Restricted Stockholder Directors acknowledge
that the fiduciary duties of the Restricted Stockholder Directors
are owed to the Company and all of its stockholders and not solely
to the other Restricted Stockholders, and that conflicts or
appearances of conflicts may arise, in which case they may be faced
with a decision to abstain from participation in any matter that
may result in a conflict or have the appearance of a
conflict.
8.2 Expiration
of Standstill. The standstill
provisions of Section 8.1 shall terminate at such time as the
Restricted Stockholders and all of their Affiliates and Associates,
individually and as a group, Beneficially Own less than 4.9% of the
Company’s outstanding Common Stock (including any amount of
Common Stock into which any Capital Stock Beneficially Owned could,
under any circumstance, be convertible).
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Article IX
Non-Competition and
Other Restrictions
9.1 Non-Competition.
Each Restricted Stockholder and each 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 engage in, invest in (either directly or
indirectly, whether as an agent, stockholder, creditor, advisor,
consultant or otherwise), operate or acquire any business in the
world that competes with the Company Business. Notwithstanding the
foregoing, each Restricted Stockholder, each Designated Restricted
Stockholder and any of their respective Affiliates or Associates
may (i) own, directly or indirectly, solely as an investment,
securities of any corporation or other entity traded on any
national securities exchange if neither Restricted Stockholder, any
Designated Restricted Stockholder Affiliate nor any of their
respective Affiliates or Associates do not, directly or indirectly,
collectively own 5% or more of any class of securities of such
corporation or other entity; or (ii) engage in, invest in or
acquire any business that competes with the Company Business where
(1) the adverse impact on the Company Business from such competing
business is not material to the Company Business; or (2) the
competing business is not the primary business of the third party
company and the competing business is not the primary purpose for
Restricted Stockholder, a Designated Restricted Stockholder
Affiliate or any of their respective Affiliates or Associates
engaging in, investing in or acquiring the third
party.
9.2 Non-Interference.
Without the prior written consent of Company, each Restricted
Stockholder and each Designated Restricted Stockholder Affiliate
will not, and will use commercially reasonable efforts to cause
each of their respective Affiliates and Associates to not, directly
or indirectly, cause, induce, influence, encourage or solicit any
material business relationship or any other customer, vendor or
supplier of Company to terminate or modify in any respect any such
relationship with Company.
9.3 Non-Solicitation.
Without the prior written consent of Company, each Restricted
Stockholder and each Designated Restricted Stockholder Affiliate
will not, and will use commercially reasonable efforts to cause
each of their respective Affiliate and Associate to not, directly
or indirectly, solicit for employment or hire or engage any
employee or independent contractor of Company while such employee
or independent contractor is employed or engaged by Company or any
of its Affiliates or any employee or independent contractor who was
employed or engaged by Company or any of its Affiliates within six
(6) months prior to such time, or cause, induce, influence or
encourage to terminate, reduce or modify any employee’s or
independent contractor’s relationship with Company or any of
its Affiliates while so employed or engaged. Notwithstanding the
foregoing, neither Restricted Stockholder, Designated Restricted
Stockholder Affiliate nor any of their respective Affiliates or
Associates shall be deemed to have violated the covenants in this
Section 9.3 (i) by publishing or running advertisements and general
solicitations in or through any print, broadcast, internet, direct
mail or other medium to generally solicit qualified job applicants
to apply for employment opportunities within Restricted
Stockholder, either Designated Restricted Stockholder Affiliate or
any of their respective Affiliates or Associates and not
specifically directed to any employee or independent contractor of
Company or any of its Affiliates, (ii) hiring or engaging any
employee or independent contractor of Company or any of its
Affiliates who is terminated by Company or its Affiliates, provided
that no breach of the foregoing provisions of this Section 9.3 has
occurred with respect to such employee or independent
contractor.
9.4 Restrictions
Reasonable. The Parties
acknowledge that the restrictions contained in this Article IX
are reasonable and necessary to protect the legitimate interests of
Company and constitute a material inducement to Company to enter
into this Agreement and consummate the transactions contemplated by
this Agreement. In the event that any covenant contained in this
Article IX should ever be adjudicated to exceed the time,
geographic, product or service or other limitations permitted by
applicable Law in any jurisdiction, then any court is expressly
empowered to reform such covenant, and such covenant shall be
deemed reformed, in such jurisdiction to the maximum time,
geographic, product or service or other limitations permitted by
applicable Law. The covenants contained in this Article IX and each
provision hereof are severable and distinct covenants and
provisions. The invalidity or unenforceability of any such covenant
or provision as written shall not invalidate or render
unenforceable the remaining covenants or provisions hereof, and any
such invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such covenant or provision in
any other jurisdiction.
9.5 Termination
of Restrictions. The
restrictions set forth in this Article IX shall terminate two (2)
years after the later of (i) the expiration of the Stock
Restrictions Period; (ii) such time as the Restricted Stockholders
and all of their Affiliates and Associates, individually and as a
group, Beneficially Own less than 4.9% of the Company’s
outstanding Common Stock (including any amount of Common Stock into
which any Capital Stock Beneficially Owned could, under any
circumstance, be convertible); and (iii) the date the Restricted
Stockholders no longer have the right to designate a representative
or representatives to sit on the Board pursuant to Section
2.1(b).
9.6 Several
Liability. The liability of
each Restricted Stockholder and each Designated Restricted
Stockholder Affiliate for any breach of the provisions of this
Article IX by one of them, but not the others, shall be limited
solely to the breaching party, and not jointly with the
non-breaching parties.
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Article X
Confidentiality
10.1 Confidentiality
Obligations. Unless otherwise
agreed to in writing by Company, each Restricted Stockholder agrees
(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 its Representatives) to any Person other than the
Representatives of Restricted Stockholder who are performing
services for Restricted Stockholder directly or indirectly related
to the management of Restricted Stockholder’s investment in
Company and who have the need to know the Confidential Information
for such purpose and who are subject to confidentiality obligations
consistent with the obligations set forth in this Article X; and
(ii) not to use Confidential Information for any purpose other than
in connection with the management of its investment in Company and
more specifically not to use Confidential Information to compete
with Company. Each Restricted Stockholder acknowledges that it is
aware, and that it has advised or will advise any Person to whom or
which Restricted Stockholder divulges, furnishes or otherwise
discloses any of Confidential Information 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. Each Restricted Stockholder will be
responsible for any breach of the terms of this Article X by any
Representative of Restricted Stockholder.
10.2 Limitation
on Confidentiality Obligations.
The confidentiality obligations set forth in Section 10.1 shall not
apply to any Confidential Information held by any Restricted
Stockholder that (i) is or becomes generally available to the
public other than as a result of a disclosure by such Restricted
Stockholder or any of its Representatives; (ii) was available to
such Restricted Stockholder on a nonconfidential basis prior to its
disclosure to such Restricted Stockholder by Company; (iii) becomes
available to such Restricted Stockholder on a nonconfidential basis
from a Person other than Company or its Representatives who is not
known by such 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 such Restricted Stockholder
without use of the Confidential Information.
10.3 Disclosure
Required by Law. In the event
any Restricted Stockholder is required by applicable Law or legal
process (other than as a result of an affirmative action taken by
such Restricted Stockholder or any of its Affiliates, Associates or
Representatives that triggers the disclosure obligation) to
disclose any Confidential Information, such Restricted Stockholder
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 such Restricted Stockholder 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, such Restricted Stockholder
will use such Restricted Stockholder’s 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 two (2)
years after the later of (i) the expiration of the Stock
Restrictions Period; (ii) such time as the Restricted Stockholders
and all of their Affiliates and Associates, individually and as a
group, Beneficially Own less than 4.9% of the Company’s
outstanding Common Stock (including any amount of Common Stock into
which any Capital Stock Beneficially Owned could, under any
circumstance, be convertible); and (iii) the date the Restricted
Stockholders longer have the right to designate a representative or
representatives to sit on the Board pursuant to Section
2.1(b).
Article XI
Consent
and Agreement of AutoWeb Securityholders to Merger
Agreement
11.1 Approval,
Adoption and Consent to Merger Agreement. Each AutoWeb Securityholder has irrevocably
approved, adopted, and consented to the Merger and the terms and
provisions of the Merger Agreement in accordance with
Section 251(c) of Delaware General Corporation
Law.
11.2 Agreement
to Merger Agreement Provisions.
Each AutoWeb Securityholder hereby agrees to the provisions of the
Merger Agreement in all respects and to be bound thereby,
including, without limitation, (a) the obligations of the AutoWeb
Securityholders to submit to cancellation of shares if required
under Section 2.13 of the Merger Agreement (Post-Closing
Adjustment of Merger Consideration) and (b) the obligations of the
AutoWeb Securityholders to indemnify the Company and certain other
Persons as specified in Article V of the Merger Agreement. Each
AutoWeb Securityholder further agrees (x) to be bound by the
provisions of any ancillary agreement to the Merger Agreement or
other related agreement as applicable to such AutoWeb
Securityholder and (y) to be bound by any properly executed
amendment, extension or waiver to the Merger
Agreement.
11.3 Appointment
of Stockholder Representative.
Subject to the terms and conditions of the Merger Agreement, each
AutoWeb Securityholder hereby (a) irrevocably appoints and
constitutes the Stockholder Representative (and any successor
Stockholder Representative appointed in accordance with the terms
of the Merger Agreement) as its agent, proxy and attorney-in-fact
to the full extent specified in Section 2.14 of the Merger
Agreement, including specifically the authorization to act on
behalf of the AutoWeb Securityholders in any other respect as set
forth in Sections 2.13, 2.14, 5.1, 5.4 and 6.2 of the Merger
Agreement, including without limitation representing the AutoWeb
Securityholders with respect to indemnification claims under the
Merger Agreement, (b) agrees to be bound by all decisions and
actions taken by the Stockholder Representative in accordance with
the Merger Agreement and the ancillary agreements to the Merger
Agreement, (c) adopts, ratifies, confirms and approves in all
respects all such decisions and actions taken prior to the date
hereof and (d) acknowledges and agrees to the limitations on
the Stockholder Representative’s liability and duties and the
Stockholder Representative’s right to indemnification set
forth in Section 2.14 of the Merger Agreement. The AutoWeb
Securityholders, by approving the Merger Agreement, further agree
that such agency, proxy and attorney-in-fact are coupled with an
interest, are therefore irrevocable, except as provided in Section
2.14(c) of the Merger Agreement, and shall be binding upon the
successors, heirs, executors, administers and legal representatives
of each AutoWeb Securityholder and shall not be affected by, and
shall survive, the death, incapacity, bankruptcy, dissolution or
liquidation of any AutoWeb Securityholder.
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11.4 Waiver
of Appraisal Rights; Notice.
Each AutoWeb Securityholder hereby irrevocably (a) waives any and
all right of appraisal, any dissenters rights and any similar
rights relating to the Merger that such AutoWeb Securityholder may
have by virtue of, or with respect to, any shares of capital stock
of the AutoWeb owned by such AutoWeb Securityholder (including
those rights pursuant to Section 262 of the Delaware General
Corporation Law), (b) withdraws all written objections to the
Merger and demands for appraisal, if any, with respect to the
shares of capital stock of AutoWeb owned by such AutoWeb
Securityholder, to the full extent permitted by law and (c) waives
the requirement for any advance notice of the record date for any
provision under this Article XI and any advance notice that may be
required in connection with the Merger Agreement, the Merger and
the other transactions contemplated thereby under AutoWeb’s
certificate of incorporation, bylaws, applicable law or
otherwise.
11.5 Irrevocability.
Each AutoWeb Securityholder hereby agrees that the provisions of
this Article XI are irrevocable until the termination of the Merger
Agreement in accordance with its terms.
Article XII
General
Provisions
12.1 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 supersede any and all prior
negotiations, correspondence, agreements, understandings, duties or
obligations between the parties respecting the subject matter
hereof.
12.2 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.
12.3 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 any Restricted Stockholder, such 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 any
party or any party controlling, controlled by or under common
control with such party or require the consent of any other party
to any assignment or transfer of this Agreement in connection with
any Change in Control; provided,
that in the case of any Restricted Stockholder, such 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.
12.4 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: (000) 000-0000
Email: xxxxxx@xxxxxxxxx.xxx
with a copy (which shall not constitute
notice) to:
Xxxxxx, Xxxx & Xxxxxxxx
LLP
0000 Xxxxxxx Xxxx Xxxx, Xxxxx
0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
E-mail: xxxxxx@xxxxxxxxxx.xxx
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(b) if
to Restricted Stockholder(s) or Designated Restricted Stockholder
Affiliates, to:
c/o Stockholder
Representative
0000 XX 0xx Xxxxxx, Xxxxx 000
Xxxxx, XX 00000
Attention: Xxxx Xxxxxx
Facsimile: (000) 000-0000
E-mail:
xxxx@xxxxxxxxxx.xxx.xxx
with a copy (which shall not constitute
notice) to:
TangoLaw LLC
0000 000xx Xxxxxx XX
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxx, Esq.
E-mail: xxxx@xxxxxxxx.xxx
12.5 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.
12.6 Dispute
Resolution.
(a) The
parties consent to and agree that any dispute or claim arising
hereunder shall be submitted to binding arbitration in New Castle
County, Delaware, 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 preceding to be
brought or tried elsewhere. The parties hereunder 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
statute(s) of limitations; (ii) the appointed arbitrator must be a
former or retired judge or an attorney at law with at least ten
(10) years’ experience in corporate law matters; (iii) costs
and fees of the arbitrator shall be borne by both 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.
(b) 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.
(c) The
parties acknowledge and agree that money damages may not be a
sufficient remedy for a breach of certain provisions of the
Agreement, and accordingly, a non-breaching party may be entitled
to specific performance and injunctive relief as remedies for such
violation. Accordingly, notwithstanding the other provisions of
this Section 11.6, the parties agree that a non-breaching party may
seek relief in the federal and state courts of the State of
Delaware located in New Castle County 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 the
Agreement but shall be in addition to all other remedies available
to the non-breaching party at law or in equity.
(d) In
any action, arbitration, or other proceeding by which one party
either seeks to enforce its rights under the Agreement, or seeks a
declaration of any rights or obligations under the Agreement, the
prevailing party will be entitled to reasonable attorneys’
fees, and subject to Section 11.6(a), reasonable costs and expenses
incurred to resolve such dispute and to enforce any final
judgment.
(e) No
remedy conferred on either 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.
12.7 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.
-24-
12.8 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.
12.9 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.
12.10 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.
12.11 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]
-25-
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
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Company
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By:
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/s/
Xxxxx X. Xxxxxx
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Name:
Xxxxx X. Xxxxxx
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Title:
Executive Vice President, Chief Legal and Administrative Officer
and Secretary
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Restricted Stockholders
Auto
Holdings Ltd., a British Virgin Islands business
company
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By:
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/s/
Xxxxxx xx Xxxxxxx
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Xxxxxx
xx Xxxxxxx,
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Co-Managing
Director and President
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By:
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/s/
Xxxx Xxxxxx
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Name:
Xxxx Xxxxxx,
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Title:
Co-Managing Director and Secretary
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Ceiba
International Corp., a British Virgin Islands business
company
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By:
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/s/
Xxxxx Xxxxx
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Name:
Xxxxx Xxxxx
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Title:
Managing Director
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Picua
Limited, a British Virgin Islands business company
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By:
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/s/
Xxxxxx Xxxx
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Name:
Xxxxxx Xxxx
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Title:
Director
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Xxxxxxx
X. Xxxx, an individual
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/s/
Xxxxxxx X. Xxxx
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Xxxxxxx
X. Xxxx
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Xxxxxx
X. Xxxxx, Xx., an individual
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/s/
Xxxxxx X. Xxxxx, Xx.
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Xxxxxx
X. Xxxxx, Xx.
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-26-
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Galeb3
Inc, a Florida corporation
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By:
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/s/
Xxxx Xxxxxx
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Name:
Xxxx Xxxxxx
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Title:
President
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Manatee
Ventures Inc., a British Virgin Islands
business
company
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By:
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/s/
Xxxxxx xx Xxxxxxx
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Name:
Xxxxxx xx Xxxxxxx
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Title:
Director
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Xxxxx
Xxxxxxxx Xxxxxxxxxxx, an individual
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/s/
Xxxxx Xxxxxxxx Arrivillaga
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Xxxxx
Xxxxxxxx Xxxxxxxxxxx
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Xxxxxxx
Xxxxxxxx, an individual
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/s/
Xxxxxxx Xxxxxxxx
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Xxxxxxx
Xxxxxxxx
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Xxxx
Xxxxxx, an individual
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/s/
Xxxx Xxxxxx
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Xxxx
Xxxxxx
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Xxxxxx
xx Xxxxxxx, an individual
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/s/
Xxxxxx xx Xxxxxxx
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Xxxxxx
xx Xxxxxxx
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Del
Saler Inc.
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By:
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/s/
Xxxxx Xxxxxxxx Xxxxxxxxxxx
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Name:
Xxxxx Xxxxxxxx Arrivillaga
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Title:
Director
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PF
Holding, Inc.
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By:
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/s/
Xxxxx Xxxxxxxx Xxxxxxxxxxx
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Name:
Xxxxx Xxxxxxxx Arrivillaga
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Title:
Director
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People
F, Inc.
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By:
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/s/
Xxxxxx xx Xxxxxxx
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Name:
Xxxxxx xx Xxxxxxx
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Title:
Director
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-27-
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Designated Restricted Stockholder Affiliates
Xxxxxx
xx Xxxxxxx
Xxxx
Xxxxxx
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/s/
Xxxxxx
xx Xxxxxxx
Xxxxxx
xx Xxxxxxx
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/s/
Xxxx
Xxxxxx
Xxxx
Xxxxxx
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-28-
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
Second Amended and Restated Stockholder Agreement dated as of
October 19, 2016 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:
October ___, 2016
Restricted Stockholder
___________________________,
a _______________________
By:
Name:_____________________
Title:
_____________________
