EXHIBIT 10.2
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STOCKHOLDERS' AGREEMENT
By and Among
R&D Systems Company,
Xxx X. Xxxxxx,
Xxxx X. Xxxxxx,
Xxx Xxxxxx Trust,
Xxxxx Xxxxxx Trust,
Xxxxx Xxxxxx Trust
and
The Investors
as defined herein and set forth
on the signature pages hereto
Dated as of March 14, 1996
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.........................................................2
Section 1.1. Construction of Terms.......................................2
Section 1.2. Terms Not Defined...........................................2
Section 1.3. Number of Shares of Stock...................................2
Section 1.4. Defined Terms...............................................2
ARTICLE II REPRESENTATIONS AND WARRANTIES.....................................4
Section 2.1. Representations and Warranties of the Investors.............4
Section 2.2. Representations and Warranties of the Founders..............5
ARTICLE III RESTRICTIONS ON TRANSFER; RIGHT OF LAST REFUSAL; CO-SALE
AND DRAG-ALONG PROVISIONS.................................................5
Section 3.1. Restrictions on Transfer....................................5
Section 3.2. Right of Last Refusal.......................................6
Section 3.3. Co-Sale Option..............................................8
Section 3.4. Drag-Along Obligations.....................................10
Section 3.5. Prohibited Transfers.......................................12
ARTICLE IV REGISTRATION RIGHTS...............................................12
Section 4.1. Piggyback Registration Rights..............................12
Section 4.2. Demand Registration Rights.................................13
Section 4.3. Form S-3...................................................14
Section 4.4. Further Obligations of the Company.........................15
Section 4.5. Information about Holders..................................17
Section 4.6. Indemnification; Contribution..............................17
Section 4.7. Rule 144 Requirements......................................20
Section 4.8. Market Stand-Off...........................................20
ARTICLE V ELECTION OF DIRECTORS OF THE COMPANY...............................20
Section 5.1. Voting of Shares for Election of Directors of the Company..20
Section 5.2. Committees of the Board....................................21
Section 5.3. Vacancies..................................................21
Section 5.4. Removal....................................................22
Section 5.5. No Waiver..................................................22
Section 5.6 Assignment.................................................22
Section 5.7 Term.......................................................22
(i)
ARTICLE VI MISCELLANEOUS PROVISIONS..........................................22
Section 6.1. Survival of Representations and Covenants..................22
Section 6.2. Legend on Securities.......................................22
Section 6.3. Amendment and Waiver.......................................23
Section 6.4. Notices....................................................23
Section 6.5. Headings...................................................27
Section 6.6. Counterparts...............................................27
Section 6.7. Remedies; Severability.....................................27
Section 6.8. Entire Agreement...........................................28
Section 6.9. Adjustments................................................28
Section 6.10. Law Governing..............................................28
Section 6.11. Successors and Assigns.....................................28
Exhibit A - Form of Joinder Agreement
Schedule 1.4 - Amended and Restated Certificate of Incorporation
(ii)
STOCKHOLDERS' AGREEMENT
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This Stockholders' Agreement is made as of this 14th day of March, 1996 by
and among R&D Systems Company, a Delaware corporation (the "Company"), Xxx X.
Xxxxxx, Xxxx X. Xxxxxx, Xxx Xxxxxx Trust, Xxxxx Xxxxxx Trust and Xxxxx Xxxxxx
Trust (collectively, the "Founders" and individually, a "Founder"), the
investment funds identified on the signature pages hereto as the TA Investors
(the "TA Investors"), the investment funds identified on the signature pages
hereto as the Summit Investors (the "Summit Investors"), the investment funds
identified on the signature pages hereto as the TL Investors (the "TL
Investors"), and any other stockholder or optionholder who from time to time
becomes party to this Agreement by execution of a Joinder Agreement in
substantially the form attached hereto as Exhibit A (the "Management
Stockholders"). The TA Investors, the Summit Investors and the TL Investors are
herein referred to collectively as the "Investors" and individually as an
"Investor," and the Founders and the Management Stockholders are herein referred
to collectively as the "Stockholders" and individually as a "Stockholder."
W I T N E S S E T H
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WHEREAS, reference is made to the Stock Purchase Agreement, dated as of the
date hereof, by and among, inter alia, the Company, the Founders and the
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Investors (the "Investment Agreement"), pursuant to which the Investors have
purchased 26,000 shares of Series A Convertible Participating Preferred Stock,
par value $.01 per share, of the Company (the "Series A Convertible Preferred
Stock"), which is convertible into 15,500 shares of the Company's authorized but
unissued Senior Redeemable Preferred Stock, par value $.01 per share (the
"Senior Redeemable Stock"), and 2,600,000 shares of the Company's Common Stock,
par value $.01 per share (the "Common Stock") (in each case adjusted
appropriately for stock splits, stock dividends, recapitalizations and the
like); and
WHEREAS, the effectiveness of this Agreement is a condition to the
consummation of the Investment Agreement; and
WHEREAS, concurrently with the funding under the Investment Agreement, the
Founders are receiving 6,500 shares of the Company's Series B Convertible
Participating Preferred Stock, par value $.01 per share (the "Series B
Convertible Preferred Stock"), which is convertible into 650,000 shares of
Common Stock, 3,875 shares of Senior Redeemable Stock and 2,625 shares of the
Company's Junior Redeemable Preferred Stock, par value $.01 per share (the
"Junior Redeemable Stock") (in each case appropriately adjusted for stock
splits, stock dividends, recapitalizations and the like); and
WHEREAS, the parties hereto desire to agree upon the terms upon which their
investment in the capital stock of the Company will be held, transferred and
voted.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I DEFINITIONS
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Section 1.1. Construction of Terms. As used herein, the masculine,
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feminine or neuter gender, and the singular or plural number, shall be deemed to
be or to include the other genders or number, as the case may be, whenever the
context so indicates or requires.
Section 1.2. Terms Not Defined. Capitalized terms used herein and not
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otherwise defined shall have the meanings ascribed to them in the Investment
Agreement.
Section 1.3. Number of Shares of Stock. Whenever any provision of this
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Agreement calls for any calculation based on a number of Shares held by a
Stockholder or Investor, the number of Shares deemed to be held by that
Stockholder or Investor shall be the total number of Shares of Common Stock then
owned by the Stockholder or Investor, plus the total number of Shares of Common
Stock issuable upon conversion of any Series A Convertible Preferred Stock or
Series B Convertible Preferred Stock or other convertible securities or exercise
of any options, warrants or subscription rights then owned by the Stockholder or
Investor.
Section 1.4. Defined Terms. The following capitalized terms, as used in
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this Agreement, shall have the meanings set forth below.
An "Affiliate" of any Person means a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by or is under
common control with the first mentioned Person. A Person shall be deemed to
control another Person if such first Person possesses directly or indirectly the
power to direct, or cause the direction of, the management and policies of the
second Person, whether through the ownership of voting securities, by contract
or otherwise.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company, as the context requires, and any other common equity securities now or
hereafter issued by the Company (but not including the Preferred Stock), and any
other shares of stock issued or issuable with respect thereto (whether by way of
a stock dividend or stock split or in exchange for or upon
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conversion of such shares or otherwise in connection with a combination of
shares, recapitalization, merger, consolidation or other corporate
reorganization).
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and the rules and regulations promulgated thereunder.
"Independent Third Party" means any person who, immediately prior to the
contemplated transaction, does not own in excess of 10% of the Company's Common
Stock on a fully-diluted basis, who is not controlling, controlled by or under
common control with any such 10% owner of the Company's Common Stock and who is
not the spouse or descendent (by birth or adoption) of any such 10% owner of the
Company's Common Stock.
"Investor Group" means with respect to the TA Investors, the Summit
Investors and the TL Investors, respectively, all of the Investors within such
group.
"Junior Redeemable Stock" means the Junior Redeemable Preferred Stock, par
value $.01 per share, of the Company.
"Person" means an individual, a corporation, an association, a partnership,
an estate, a trust, and any other entity or organization, governmental or
otherwise.
"Preferred Stock" means the Series A Convertible Preferred Stock, the
Series B Convertible Preferred Stock, the Junior Redeemable Stock and the Senior
Redeemable Stock, each issued or to be issued in accordance with and subject to
the terms of the Amended and Restated Certificate of Incorporation of the
Company substantially in the form attached hereto as Schedule 1.4 (the
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"Charter"), together with any other shares issued or issuable with respect
thereto (whether by way of a stock dividend, stock split or in exchange for or
in replacement or upon conversion of such shares or otherwise in connection with
a combination of shares, recapitalization, merger, consolidation or other
corporate reorganization).
"Qualified Public Offering" means the first underwritten public offering
pursuant to an effective registration statement under the Securities Act,
covering the offer and sale of Common Stock to the public in which the proceeds
received by the Company, net of underwriting discounts and commissions, equal or
exceed $30 million and at a price per share of no less than $20.00 (adjusted for
stock splits, stock dividends and recapitalization).
"Sale of the Company" means the sale of the Company to an Independent Third
Party or affiliated group of Independent Third Parties pursuant to which such
party or parties acquire (i) capital stock of the Company possessing the voting
power to elect a majority of the Board
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(whether by merger, consolidation or sale or transfer of the Company's capital
stock); or (ii) all or substantially all of the Company's assets determined on a
consolidated basis.
"Senior Redeemable Stock" means the Senior Redeemable Stock, par value $.01
per share, of the Company.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and the rules and regulations promulgated thereunder.
"Series A Convertible Preferred Stock" means the Series A Convertible
Participating Preferred Stock, par value $.01 per share, of the Company.
"Series B Convertible Preferred Stock" means the Series B Convertible
Participating Preferred Stock, par value $.01 per share, of the Company.
"Shares" means the shares of Common Stock, Preferred Stock and any other
equity securities now or hereafter issued by the Company, together with any
options thereon and any other shares of stock issued or issuable with respect
thereto (whether by way of a stock dividend, stock split or in exchange for or
upon conversion of such shares or otherwise in connection with a combination of
shares, recapitalization, merger, consolidation or other corporate
reorganization).
"Transfer" means any direct or indirect transfer, donation, sale,
assignment, pledge, hypothecation, grant of a security interest in or other
disposal or attempted disposal of all or any portion of a security or of any
rights. "Transferred" means the accomplishment of a Transfer, and "Transferee"
means the recipient of a Transfer.
ARTICLE II REPRESENTATIONS AND WARRANTIES
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Section 2.1. Representations and Warranties of the Investors. Each of the
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Investors, individually and not jointly, hereby represents, warrants and
covenants to the Company and to the Founders as follows: (a) such Investor has
full authority and power under its charter, by-laws, governing partnership
agreement or comparable document to enter into this Agreement; (b) this
Agreement constitutes the valid and binding obligation of such Investor; and (c)
the execution, delivery and performance by such Investor of this Agreement: (i)
does not and will not violate any laws, rules or regulations of the United
States or any state or other jurisdiction applicable to such Investor, or
require such Investor to obtain any approval, consent or waiver of, or to make
any filing with, any Person that has not been obtained or made; and (ii) does
not and will not result in a breach of, constitute a default under, accelerate
any obligation under or give rise to a
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right of termination of any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit, authorization,
order, writ, judgment, injunction, decree, determination or arbitration award to
which such Investor is a party or by which the property of such Investor is
bound or affected, or result in the creation or imposition of any mortgage,
pledge, lien, security interest or other charge or encumbrance on any of the
assets or properties of such Investor.
Section 2.2. Representations and Warranties of the Founders. Each of the
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Founders, individually and not jointly, hereby represents, warrants and
covenants to the Company and to the Investors as follows: (a) such Founder has
full authority, power and capacity to enter into this Agreement; (b) this
Agreement constitutes the valid and binding obligation of such Founder
enforceable against it in accordance with its terms; and (c) the execution,
delivery and performance by such Founder of this Agreement: (i) does not and
will not violate any laws, rules or regulations of the United States or any
state or other jurisdiction applicable to such Founder, or require such Founder
to obtain any approval, consent or waiver of, or to make any filing with, any
Person that has not been obtained or made; and (ii) does not and will not result
in a breach of, constitute a default under, accelerate any obligation under or
give rise to a right of termination of any indenture or loan or credit agreement
or any other material agreement, contract, instrument, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction, decree, determination
or arbitration award to which such Founder is a party or by which the property
of such Founder is bound or affected, or result in the creation or imposition of
any mortgage, pledge, lien, security interest or other charge or encumbrance on
any of the assets or properties of such Founder.
ARTICLE III RESTRICTIONS ON TRANSFER; RIGHT OF LAST REFUSAL; CO-SALE
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AND DRAG-ALONG PROVISIONS
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The following provisions of this Article III shall terminate immediately
upon the closing of a Qualified Public Offering or a Sale of the Company.
Section 3.1. Restrictions on Transfer. Each Stockholder agrees that it or
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he will not, without the prior written consent of two-thirds-in-interest of the
Investors, Transfer all or any portion of the Shares now owned or hereafter
acquired by it or him, except in connection with, and strictly in compliance
with the conditions of, any of the following:
(a) Transfers effected pursuant to Sections 3.2, 3.3 and
3.4, in each case made in accordance with the procedures set forth
therein;
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(b) Transfers by any Stockholder to his or her spouse
or children or to a trust of which he is the settlor and a trustee for
the benefit of his or her spouse or children, provided that any such
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trust does not require or permit distribution of such Shares during the
term of this Agreement, and provided further that the Transferee shall
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have entered into an enforceable written agreement consented to by
two-thirds-in-interest of the Investors, which consent shall not be
unreasonably withheld, providing that all Shares so Transferred shall
continue to be subject to all provisions of this Agreement as if such
Shares were still held by such Stockholder; and
(c) Transfers upon the death of any Stockholder to
his or her heirs, executors or administrators or to a trust under his
or her will or Transfers between such Stockholder and his or her
guardian or conservator, provided that the Transferee shall have
entered into an enforceable written agreement consented to by
two-thirds-in-interest of the Investors, which consent shall not be
unreasonably withheld, providing that all Shares so Transferred shall
continue to be subject to all provisions of this Agreement as if such
Shares were still held by such Stockholder.
Any permitted Transferee described in the preceding clauses (b) or (c)
shall be referred to herein as a "Permitted Transferee." Anything to
the contrary in this Agreement notwithstanding, Permitted Transferees
shall take any Shares so Transferred subject to all provisions of this
Agreement as if such Shares were still held by the Transferring
Stockholder, whether or not they so agree with the Transferring
Stockholder and/or the Company.
In addition to and without limitation of the other
restrictions on the Transfer of Shares, each Stockholder agrees that,
except as provided in Sections 3.1(b) and (c), he or it will not,
without the prior written consent of two-thirds-in-interest of the
Investors (which the Investors may withhold in their absolute
discretion), Transfer all or any portion of his or its Preferred Stock
to any Person unless all of the outstanding shares of Senior Redeemable
Stock held by the Investors have been redeemed in full by the Company
in accordance with the terms of the Amended and Restated Certificate of
Incorporation of the Company.
Section 3.2. Right of Last Refusal. In the event that any of the
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Stockholders, including any of their Permitted Transferees, receives a
bona fide offer to purchase all or any portion of the Shares held by
such Stockholder (a "Transaction Offer") from a non-Affiliate (the
"Offeror"), such Stockholder (a "Transferring Stockholder") may,
subject to the restrictions in the last paragraph of Section 3.1 and
the provisions of Section 3.3 hereof, Transfer such Shares pursuant to
and in accordance with the following provisions of this Section 3.2:
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(a) Such Transferring Stockholder shall cause the
Transaction Offer and all of the terms thereof to be reduced to writing
and shall notify each Investor (enclosing a copy of the Transaction
Offer) of its wish to accept the Transaction Offer and otherwise comply
with the provisions of this Section 3.2 and, if applicable, Section 3.3
(such notice, the "Offer Notice").
(b) Each Investor shall have the right (the "Right of Last
Refusal") to offer to purchase that number of Shares covered by the
Transaction Offer as shall be equal to the product obtained by
multiplying (i) the total number of Shares subject to the Transaction
Offer by (ii) a fraction, the numerator of which is the total number of
shares of Common Stock owned by such Investor on the date of the Offer
Notice on an as converted basis (including any shares of Common Stock
that may be received upon conversion of the Series A Convertible
Preferred Stock), and the denominator of which is the total number of
Shares of Common Stock then held by all Investors on the date of the
Offer Notice on an as converted basis. (The number of Shares that each
Investor or its transferee is entitled to purchase under this Section
3.2 shall be referred to as its "Pro Rata Fraction"). Each Investor
shall have the right to transfer its right to any Pro Rata Fraction or
part thereof to any transferee. In the event an Investor does not wish
to purchase or to transfer its right to purchase its Pro Rata Fraction,
then any Investors who so elect shall have the right to offer to
purchase, on a pro rata basis with any other Investors who so elect,
any Pro Rata Fraction not purchased by an Investor or its transferee.
Each Investor shall have the right to accept the Transaction Offer as
to all or part of the Shares offered thereby within thirty (30) days
after receipt of the Offer Notice. In the event that an Investor shall
elect to purchase all or a part of the Shares covered by the
Transaction Offer, such Investor shall individually communicate in
writing such election to purchase to the Transferring Stockholder,
which communication shall be delivered by hand or mailed to such
Transferring Stockholder in accordance with Section 6.4 hereof and
shall, when taken in conjunction with the Transaction Offer, be deemed
to constitute a valid, legally binding and enforceable agreement for
the sale and purchase of the Shares covered thereby to the extent of
the number of Shares, if any, allocated to such Investor in accordance
with the following paragraph. In the event that the price set forth in
the Offer Notice is stated in consideration other than cash or cash
equivalents, the Board of Directors of the Company may determine the
fair market value of such consideration, reasonably and in good faith,
and the Investors may exercise their Right of Last Refusal by payment
of such fair market value in cash or cash equivalents. Notwithstanding
anything contained herein to the contrary, an Investor within an
Investor Group shall have the right to purchase any shares with respect
to which another Investor within the same Investor Group elects not to
exercise their Right of Last Refusal.
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Upon the expiration of thirty (30) days following receipt of
the Offer Notice by all Investors, the number of Shares to be purchased
by each Investor shall be determined as follows: (x) there shall first
be allocated to each Investor a number of Shares equal to the lesser of
(A) the number of Shares as to which such Investor accepted the
Transaction Offer or (B) such Investor's Pro Rata Fraction, and (y) the
balance, if any, not allocated under clause (x) above, shall be
allocated to those Investors who accepted the Transaction Offer as to a
number of Shares which exceeded their respective Pro Rata Fractions, in
each case on a pro rata basis in proportion to the amount of such
excess. The closing for any purchase of Shares to the Investors
hereunder shall take place within thirty (30) days after the expiration
of the first thirty (30) day period following the Investors' receipt of
the Offer Notice at the place and on the date specified by a
majority-in-interest of the Investors.
(c) In the event that the Investors do not elect to
exercise the Right of Last Refusal with respect to all of the Shares
proposed to be sold, the Investors shall not be entitled to purchase
any such Shares and the Transferring Stockholder may sell all such
Shares proposed to be sold to the Offeror on the terms and conditions
set forth in the Offer Notice, subject to the restrictions set forth in
the last paragraph of Section 3.1 and the further provisions of Section
3.3. If the Transferring Stockholder's transfer to an Offeror is not
consummated in accordance with the terms of the Transaction Offer
within the later of (i) ninety (90) days after the expiration of the
Right of Last Refusal and the Co-Sale Option set forth in Section 3.3
below, if applicable, and (ii) the satisfaction of all governmental
approval or filing requirements, the Transaction Offer shall be deemed
to lapse, and any Transfers of Shares pursuant to such Transaction
Offer shall be deemed to be in violation of the provisions of this
Agreement unless the Investors are once again afforded the Right of
Last Refusal provided for herein with respect to such Transaction
Offer.
Section 3.3. Co-Sale Option. In the event that any Transferring
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Stockholder receives a Transaction Offer from an Offeror, and the Right of Last
Refusal is not exercised, such Transferring Stockholder may Transfer such Shares
only pursuant to and in accordance with the following provisions of this Section
3.3:
(a) Each of the Investors shall have the right to
participate in the Transaction Offer on the terms and conditions herein
stated. The class of Shares with which the Investors shall have the
right to participate in the Transaction Offer shall be determined in
accordance with the following: (a) if the Transferring Stockholder
elects to Transfer Series B Convertible Preferred Stock then the
Investors shall have the right to participate in the Transaction Offer
with Series A Convertible Preferred Stock; (b) if the Transferring
Stockholder elects to Transfer Senior Redeemable Stock or Junior
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Redeemable Stock then the Investors shall have the right to participate
in the Transaction Offer with Senior Redeemable Stock; and (c) if the
Transferring Stockholder elects to Transfer Common Stock then the
Investors shall have the right to participate in the Transaction Offer
with Common Stock. The right to participate shall be exercisable upon
written notice (the "Acceptance Notice") to the Transferring
Stockholder within the later of (i) thirty (30) days after delivery to
it of the Offer Notice and (ii) ten (10) days after the Transferring
Stockholder notifies the Investors that the Investors have not elected
to exercise the Right of Last Refusal with respect to all of the Shares
proposed to be sold (the "Co-Sale Option"). The Acceptance Notice shall
indicate the maximum number of Shares such Investor wishes to sell
including the number of Shares it would sell if one or more other
Investors do not elect to participate in the sale on the terms and
conditions stated in the Offer Notice, except that any Investor who
holds Preferred Stock shall be permitted to sell to the relevant
purchaser Shares of Common Stock acquired upon conversion thereof or,
at its election, an option to acquire such Common Stock when it
receives the same upon such conversion at the election of such Investor
or as otherwise provided in the Charter with the same effect as if
Common Stock were being conveyed.
(b) Each of the Investors shall have the right to sell a
portion of its Shares pursuant to the Transaction Offer which is equal
to or less than the product obtained by multiplying (i) the total
number of Shares subject to the Transaction Offer by (ii) a fraction,
the numerator of which is the total number of shares of Common Stock
owned by such Investor on the date of the Offer Notice on an as
converted basis (including any Common Stock issuable upon exercise of
the Series A Convertible Preferred Stock), and the denominator of which
is the total number of shares of Common Stock then held by all
Investors and Stockholders on the date of the Offer Notice on an as
converted basis. To the extent one or more Investors elect not to sell,
or fail to exercise their right to sell, the full amount of such Shares
which they are entitled to sell pursuant to this Section 3.3, the other
Investors' rights to sell Shares shall be increased proportionately and
the other Investors shall have an additional five (5) days from the
date upon which they are notified of such election or failure to
exercise in which to increase the number of Shares to be sold by them
hereunder.
(c) Within ten (10) days after the date by which the
Investors were first required to notify the Transferring Stockholder of
their intent to participate, the Transferring Stockholder shall notify
each participating Investor of the number of Shares held by such
Investor that will be included in the sale and the date on which the
Transaction Offer will be consummated, which shall be no later than the
later of (i) thirty (30) days after the date by which the Investors
were required to notify the Transferring Stockholder of their intent to
participate and (ii) the satisfaction of any governmental approval or
filing requirements, if any.
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(d) Each of participating Investors may effect its
participation in any Transaction Offer hereunder by delivery to the
Offeror, or to the Transferring Stockholder for delivery to the
Offeror, of one or more instruments or certificates, properly endorsed
for transfer, representing the Shares it elects to sell therein. At the
time of consummation of the Transaction Offer, the Offeror shall remit
directly to each Investor that portion of the sale proceeds to which
each Investor is entitled by reason of its participation therein (less
any adjustments due to the conversion of any convertible securities or
the exercise of any exercisable securities).
(e) In the event that the Transaction Offer is not
consummated within the period required by subsection (c) hereof or the
Offeror fails timely to remit to each Investor its portion of the sale
proceeds, the Transaction Offer shall be deemed to lapse, and any
Transfers of Shares pursuant to such Transaction Offer shall be deemed
to be in violation of the provisions of this Agreement unless the
Transferring Stockholder once again complies with the provisions of
Section 3.2 and this Section 3.3 hereof with respect to such
Transaction Offer.
Section 3.4. Drag-Along Obligations.
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(a) In the event that two-thirds-in-interest of the
Investors determine to sell or otherwise dispose of all or
substantially all of the assets of the Company or all or substantially
all of the capital stock of the Company owned by the Investors to any
non-Affiliate(s) of the Company or any of the Investors, or to cause
the Company to merge with or into or consolidate with any non-
Affiliate(s) of the Company or any of the Investors (in each case, the
"Buyer") in a bona fide negotiated transaction (a "Sale"), each of the
Stockholders, including any of their respective Permitted Transferees
(collectively, the "Non-Investor Stockholders"), shall be obligated to
and shall upon the written request of two-thirds-in-interest of the
Investors: (i) sell, transfer and deliver, or cause to be sold,
transferred and delivered, to the Buyer, his, her or its Shares
(including for this purpose all of such Non-Investor Stockholder's
Shares that presently or as a result of any such transaction may be
acquired upon the exercise of options (following the payment of the
exercise price therefore)) on substantially the same terms applicable
to the Investors (with appropriate adjustments to reflect the
conversion of convertible securities, the redemption of redeemable
securities and the exercise of exercisable securities as well as the
relative preferences and priorities of the Preferred Stock); and (ii)
execute and deliver such instruments of conveyance and transfer and
take such other action, including voting such Shares in favor of any
Sale proposed by the Investors and executing any purchase agreements,
merger agreements, indemnity agreements, escrow agreements or related
documents, as the Investors or the Buyer may reasonably require in
order to carry out the terms and provisions of this Section 3.4.
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(b) In the event of a Sale to a Buyer as contemplated
in Section 3.4(a) above, each Founder shall in the event that the
Investors do not exercise their "drag- along" rights in Section 3.4(a)
above, have the right to require the Investors to include such
Founder's Shares in the Sale on the same terms as the Investors' Shares
(with appropriate adjustments to reflect the conversion of convertible
securities, the redemption of redeemable securities and the exercise of
exercisable securities as well as the relative priorities and
preferences of the Preferred Stock and the terms of any options issued
by the Company), which such right shall be exercisable by the delivery
of written notice to the Company and each of the Investors at least
twenty (20) days prior to the date proposed for the closing of the
Sale.
(c) Not less than thirty (30) days prior to the date
proposed for the closing of any Sale, the Investors shall give written
notice to each Non-Investor Stockholder, setting forth in reasonable
detail the name or names of the Buyer, the terms and conditions of the
Sale, including the purchase price, and the proposed closing date. In
furtherance of the provisions of this Section 3.4, each of the
Non-Investor Stockholders hereby (i) irrevocably appoints TA
Associates, Inc. as its agent and attorney-in-fact (the "Agent") (with
full power of substitution) to execute all agreements, instruments and
certificates and take all actions necessary or desirable to effectuate
any Sale hereunder; and (ii) grants to the Agent a proxy (which shall
be deemed to be coupled with an interest and irrevocable) to vote the
Shares held by such Non-Investor Stockholder and exercise any consent
rights applicable thereto in favor of any Sale hereunder; provided,
however, that the Investors shall not exercise such powers-of-attorney
or proxies with respect to any Non-Investor Stockholder unless such
Non-Investor Stockholders are in breach of their obligations under this
Section 3.4.
Section 3.5. Prohibited Transfers. If any Transfer is made or attempted
----------- --------------------
contrary to the provisions of this Agreement, such purported Transfer shall be
void ab initio; the Company, the Investors and the other Stockholders shall
have, in addition to any other legal or equitable remedies which they may have,
the right to enforce the provisions of this Agreement by actions for specific
performance (to the extent permitted by law); and the Company shall have the
right to refuse to recognize any Transferee as one of its stockholders for any
purpose. Without limitation to the foregoing, each of the Investors and
Stockholders further agrees that the provisions of Section 6.7 shall apply in
the event of any violation or threatened violation of this Agreement.
ARTICLE IV REGISTRATION RIGHTS
---------- -------------------
The Company's obligation to register shares of Common Stock under this
Article IV shall terminate seven (7) years following the closing by the Company
of its first underwritten public
11
offering pursuant to a registration statement under the Securities Act (an
"IPO") or, with respect to shares held by particular Investors or the Founders
and commencing on the first anniversary of any IPO, whenever such shares can be
fully transferred under Rule 144(k) of the Securities Act.
Section 4.1. Piggyback Registration Rights. If at any time or times
----------- -----------------------------
after the date hereof, the Company shall determine to register any shares of its
Common Stock or securities convertible into or exchangeable or exercisable for
shares of Common Stock under the Securities Act (whether in connection with a
public offering of securities by the Company (a "primary offering"), a public
offering of securities by stockholders (a "secondary offering"), or both, but
not in connection with a registration effected solely to implement an employee
benefit plan or a transaction to which Rule 145 or any other similar rule of the
Commission under the Securities Act is applicable or a registration effected
pursuant to Sections 4.2 or 4.3 hereof), the Company will promptly give written
notice thereof to the Investors and the Founders. In connection with any such
registration, if within thirty (30) days after their receipt of such notice any
Investor or Founder requests the inclusion in such registration of some or all
of the Common Stock owned by such Investor or Founder, or into which any Shares
held by such Investor or Founder are convertible or exchangeable (the
"Registrable Shares"), the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Shares which all such
Investors and Founders so request; provided, however, that in the case of an
-------- -------
underwritten public offering, if the underwriter determines that a limitation on
the number of shares to be underwritten is required, and (i) if such
registration is the first registered offering of the Company's securities to the
public, the underwriter may (subject to the allocation priority set forth below)
exclude from such registration and underwriting some or all of the Registrable
Shares which would otherwise be underwritten pursuant to the notice described
herein, and (ii) if such registration is other than the first registered
offering of the sale of the Company's securities to the public, the underwriter
may (subject to the allocation priority set forth below) limit the number of
Registrable Shares to be included in the registration and underwriting to not
less than thirty percent (30%) of the securities included therein (based on
aggregate market values). The Company shall advise all Investors and Founders
promptly after such determination by the underwriter, and the number of shares
of Registrable Shares that may be included in the registration and underwriting
shall be allocated among all Investors and Founders in proportion, as nearly as
practicable, to their respective holdings of Registrable Shares. If the Company
includes in such registration any Registrable Shares to be offered by it, all
expenses of the registration and offering and the reasonable fees and expenses
of one independent counsel for all of the Investors as a group on the one hand,
and the Founders as a group on the other, shall be borne by the Company, except
that the Investors and the Founders shall bear underwriting and selling
commissions attributable to their Registrable Shares being registered and
transfer taxes on Shares being sold by such Investors and Founders.
12
Section 4.2. Demand Registration Rights. If on any two (2) occasions
----------- --------------------------
(which occasions shall in no event be less than six months apart from each
other) after the earlier of (i) two (2) years after the date of this Agreement
or (ii) six (6) months after the closing of the Company's first public offering
pursuant to a registration statement under the Securities Act, holders of an
aggregate of at least 40% of the Registrable Shares shall notify the Company in
writing that it or they intend to offer or cause to be offered for public sale
all or any portion of its or their Registrable Shares, the Company will notify
all of the Investors and the Founders of its receipt of such notification from
such Investor(s) or Founder(s). If within thirty (30) days after their receipt
of such notice any Investor or Founder requests the inclusion of some or all of
the Registrable Shares owned by such Investor or Founder in such registration,
the Company will use its best efforts to cause such Registrable Shares so
requested (including the Registrable Shares held by the Investor(s) or
Founder(s) giving the initial notice of intent to register hereunder) to be
registered under the Securities Act in accordance with the terms of this Section
4.2; provided, however, that unless such registration becomes effective, the
-------- -------
Investors and the Founders shall be entitled to require an additional
registration pursuant to this Section 4.2; and, provided further that if such
-------- -------
registration is underwritten and the underwriter determines that a limitation on
the number of shares to be underwritten is required, the first shares to be
excluded from such registration should be any shares registered for the benefit
of the Company, and thereafter any shares which the Investors and the Founders
have requested to be registered shall be limited, to the extent necessary, based
upon their respective holdings of Registrable Shares.
All expenses of such registrations and offerings and the reasonable
fees and expenses of one independent counsel for all of the Investors as a group
on the one hand, and the Founders as a group on the other, shall be borne by the
Company. The Company may postpone the filing of any registration statement
required hereunder for a reasonable period of time, not to exceed 180 days
during any twelve month period, if the Company determines in good faith that
such filing would require the disclosure of a material transaction or other
matter and the Company determines reasonably and in good faith that such
disclosure would have a material adverse effect on the Company or otherwise
would not be in the best interest of the Company. The Company shall not be
required to cause a registration statement requested pursuant to this Section
4.2 to become effective prior to 180 days following the effective date of a
Registration Statement initiated by the Company, if the request for registration
has been received by the Company subsequent to the giving of written notice by
the Company, made in good faith, to the Investors and the Founders to the effect
that the Company is commencing to prepare a Company-initiated Registration
Statement (other than a registration effected solely to implement an employee
benefit plan or a transaction to which Rule 145 or any other similar rule of the
Commission under the Securities Act is applicable); provided, however, that the
Company shall use its best efforts to achieve such effectiveness promptly
following such 180-day period if the request pursuant to this Section 4.2 has
been made prior to the expiration of such 180-day period. If so requested by any
Investor or Founder in connection with a registration under this paragraph, the
13
Company shall take such steps as are required to register the Investors' and the
Founders' Registrable Shares for sale on a delayed or continuous basis under
Rule 415, and also take such steps as are required to keep any registration
effective until all of the Investors' and the Founders' Registrable Shares
registered thereunder are sold. Notwithstanding the foregoing, the Company shall
have no obligation to keep any registration effective more than 120 days after
the initial date of effectiveness of such registration.
Section 4.3. Form S-3. If the Company becomes eligible to use Form S-3
----------- --------
under the Securities Act or a comparable successor form, (a) the Company shall
use its best efforts to continue to qualify at all times for registration of its
capital stock on Form S-3 or such successor form, and (b) holders of an
aggregate of not less than twenty percent (20%) of the Registrable Shares shall
have the right to request and have effected one (1) registration of Shares on
Form S-3 or such successor form (such requests shall be in writing and shall
state the number of Shares to be disposed of and the intended method of
disposition of such Shares by such Investor(s) or Founder(s)) within any
consecutive twelve (12) month period. The Company will use its best efforts to
effect promptly the registration of all Shares on Form S-3 or such successor
form to the extent requested by such Investor(s) or Founder(s). If so requested
by such Investor(s) or Founder(s) in connection with a registration under this
Section 4.3, the Company shall take such steps as are required to register such
Investor's or Founder's Registrable Shares for sale on a delayed or continuous
basis under Rule 415, and to keep such registration effective until all of such
Investor's or Founder's Registrable Shares registered thereunder are sold.
Notwithstanding the foregoing, the Company shall have no obligation to keep any
registration effective more than 120 days after the initial date of
effectiveness of such registration. All expenses incurred in connection with a
registration requested pursuant to this Section 4.3 and the reasonable fees and
expenses of one independent counsel for all of the Investors as a group on the
one hand, and all of the Founders as a group on the other shall be borne by the
Company. The Company may postpone the filing of any Registration Statement
required hereunder for a reasonable period of time, not to exceed 180 days, if
the Company determines in good faith that such filing would require the
disclosure of a material transaction or other factor and the Company determines
reasonably and in good faith that such disclosure would have a material adverse
effect on the Company. The Company shall not be required to cause a Registration
Statement requested pursuant to this Section 4.3 to become effective prior to
180 days following the effective date of a Registration Statement initiated by
the Investors pursuant to Section 4.2 or by the Company, if the request for
registration has been received by the Company subsequent to the giving of
written notice by the Company, made in good faith, to the Investors and the
Founders to the effect that the Company is commencing to prepare a Company-
initiated Registration Statement (other than a registration effected solely to
implement an employee benefit plan or a transaction to which Rule 145 or any
other similar rule of the Commission under the Securities Act is applicable);
provided, however, that the Company shall use its best efforts to achieve such
-------- -------
effectiveness
14
promptly following such 180-day period if the request pursuant to this Section
4.3 has been made prior to the expiration of such 180-day period.
Section 4.4. Further Obligations of the Company. Whenever, under the
----------- ----------------------------------
provisions of Sections 4.1, 4.2 or 4.3 of this Agreement, the Company is
required to register any Registrable Shares, it agrees that it shall also do the
following:
(a) Use its best efforts to diligently prepare and file
with the Commission a registration statement and such amendments, post-
effective amendments and supplements to said registration statement and
the prospectus used in connection therewith as may be necessary to keep
said registration statement effective and to comply with the provisions
of the Securities Act with respect to the sale of securities covered by
said registration statement for the period necessary to complete the
proposed public offering;
(b) Furnish to each selling Investor or Founder such
copies of each preliminary and final prospectus and such other
documents as such Investor or Founder may reasonably request to
facilitate the public offering of its Registrable Shares;
(c) Enter into any reasonable underwriting agreement
required by the proposed underwriter for the selling Investors or
Founders, if any;
(d) Use its commercially reasonable efforts to register
or qualify the securities covered by said registration statement under
the securities or "blue-sky" laws of such jurisdictions as any selling
Investors or Founders may reasonably request, provided that the Company
shall not be required to register or qualify the securities in any
jurisdictions which require it to qualify to do business or subject
itself to general service of process therein;
(e) Immediately notify each selling Investor or Founder,
at any time when a prospectus relating to his Registrable Shares is
required to be delivered under the Securities Act, of the happening of
any event as a result of which such prospectus contains an untrue
statement of a material fact or omits any material fact necessary to
make the statements therein not misleading, and, at the request of any
such selling Investor or Founder, prepare a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of
such Registrable Shares, such prospectus will not contain any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading;
15
(f) Cause all such Registrable Shares to be listed on or
included in each securities exchange or quotation system on which
similar securities issued by the Company are then listed;
(g) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and make generally
available to its stockholders, in each case as soon as practicable, but
not later than 30 days after the close of the period covered thereby an
earnings statement of the Company which will satisfy the provisions of
Section 11(a) of the Securities Act;
(h) The Company shall cooperate with each Investor and
Founder and each underwriter participating in the disposition of
Registrable Shares and their respective counsel in connection with any
filings required to be made with the National Association of Securities
Dealers, Inc.;
(i) The Company shall, during the period when the
Prospectus is required to be delivered under the Securities Act,
promptly file all documents required to be filed with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act;
(j) The Company shall appoint a transfer agent and
registrar for all Registrable Shares covered by a Registration
Statement not later than the effective date of such Registration
Statement; and
(k) In connection with an underwritten offering, the
Company will participate, to the extent reasonably requested by the
managing underwriter for the offering or the Investors or the
Stockholders, in customary efforts to sell the securities under the
offering, including without limitation, participating in "road shows."
Section 4.5. Information about Holders. Each holder of Registrable
----------- -------------------------
Shares shall furnish to the Company such information regarding such holder
(including a statement as to whether such holder believes or has reason to
believe that the Company is in default under any of its agreements with such
holder) and the distribution proposed by such holder as the Company may request
in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement.
Section 4.6. Indemnification; Contribution.
----------- -----------------------------
(a) Incident to any registration statement referred to in this
Article IV, and subject to applicable law, the Company will indemnify and hold
harmless each underwriter, each
16
Investor or Founder who offers or sells any such Registrable Shares in
connection with such registration statement (including its partners (including
partners of partners and stockholders of any such partners), and directors,
officers, employees and agents of any of them (a "Selling Stockholder"), and
each person who controls any of them within the meaning of Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934 (the
"Exchange Act") (a "Controlling Person"), from and against any and all losses,
claims, damages, expenses and liabilities, joint or several (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities arise out of or are based on (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement
(including any related preliminary or definitive prospectus, or any amendment or
supplement to such registration statement or prospectus), (ii) any omission or
alleged omission to state in such document a material fact required to be stated
in it or necessary to make the statements in it not misleading, or (iii) any
violation by the Company of the Securities Act, any state securities or "blue
sky" laws or any rule or regulation thereunder in connection with such
registration; provided, however, that the Company will not be liable to the
extent that such loss, claim, damage, expense or liability arises from and is
based on an untrue statement or omission or alleged untrue statement or omission
made in reliance on and in conformity with information furnished in writing to
the Company by such underwriter, Selling Stockholder or Controlling Person
expressly for use in such registration statement. With respect to such untrue
statement or omission or alleged untrue statement or omission in the information
furnished in writing to the Company by such Selling Stockholder expressly for
use in such registration statement, such Selling Stockholder will indemnify and
hold harmless each underwriter, the Company (including its directors, officers,
employees and agents), each Founder, each other Investor (including its partners
(including partners of partners and stockholders of such partners) and
directors, officers, employees and agents of any of them) so registered, and
each person who controls any of them within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages, expenses and liabilities, joint or several, to which
they, or any of them, may become subject under the Securities Act, the Exchange
Act or other federal or state statutory law or regulation, at common law or
otherwise to the same extent provided in the immediately preceding sentence. In
no event, however, shall the liability of a Selling Stockholder for
indemnification under this Section 4.6(a) in its capacity as such (and not in
its capacity as an officer or director of the Company) exceed the lesser of (i)
that proportion of the total of such losses, claims, damages or liabilities
indemnified against equal to the proportion of the total securities sold under
such registration statement which is being sold by such Selling Stockholder or
(ii) the proceeds received by such Selling Stockholder from its sale of
Registrable Shares under such registration statement.
17
(b) If the indemnification provided for in Section 4.6(a)
above for any reason is held by a court of competent jurisdiction to be
unavailable to an indemnified party in respect of any losses, claims, damages,
expenses or liabilities referred to therein, then each indemnifying party under
this Section 4.6, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, expenses or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, the other Selling Stockholders and the underwriters from the offering
of the Registrable Shares or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company, the other Selling Stockholders and the
underwriters in connection with the statements or omissions which resulted in
such losses, claims, damages, expenses or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, the Selling Stockholders and the underwriters shall be deemed to be in
the same respective proportions that the net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Stockholders and the
underwriting discount received by the underwriters, in each case as set forth in
the table on the cover page of the applicable prospectus, bear to the aggregate
public offering price of the Registrable Shares. The relative fault of the
Company, the Selling Stockholders and the underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Stockholders or the
underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders, and the underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 4.6(b) were determined by pro rata or per capita allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. In no event,
however, shall a Selling Stockholder be required to contribute any amount under
this Section 4.6(b) in excess of the lesser of (i) that proportion of the total
of such losses, claims, damages or liabilities indemnified against equal to the
proportion of the total Registrable Shares sold under such registration
statement which are being sold by such Selling Stockholder or (ii) the proceeds
received by such Selling Stockholder from its sale of Registrable Shares under
such registration statement. No person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not found guilty of
such fraudulent misrepresentation.
(c) The amount paid by an indemnifying party or payable to an
indemnified party as a result of the losses, claims, damages and liabilities
referred to in this Section 4.6 shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses
18
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim, payable as the same are incurred. The
indemnification and contribution provided for in this Section 4.6 will remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified parties or any officer, director, employee, agent or controlling
person of the indemnified parties.
(d) Any person entitled to indemnification hereunder will (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification, but the failure to do so shall not relieve
the indemnifying party from any liability, except to the extent it is actually
prejudiced by the failure or delay in giving such notice, and (ii) unless in
such indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party will not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party with respect to such claim, unless
in the reasonable judgment of any indemnified party a conflict of interest may
exist between such indemnified party and any other of such indemnified parties
with respect to such claim.
Section 4.7. Rule 144 Requirements. If the Company becomes subject to
----------- ---------------------
the reporting requirements of either Section 13 or 15(d) of the Exchange Act,
the Company will use its best efforts thereafter to file with the Commission
such information as is specified under either of said Sections for so long as
any of the Investors hold any Registrable Shares; and in such event, the Company
shall use its best efforts to take all action as may be required as a condition
to the availability of Rule 144 under the Securities Act (or any successor or
similar exemptive rules hereafter in effect). The Company shall furnish to any
holder of Registrable Shares upon request a written statement executed by the
Company as to the steps it has taken to comply with the current public
information requirement of Rule 144 or such successor rules.
Section 4.8. Market Stand-Off. Each Investor and Founder agrees, if
----------- ----------------
requested by the Company and an underwriter of Registrable Shares of the
Company, not to sell or otherwise transfer or dispose of any Shares held by it
for such period, not to exceed 180 days following the effective date of any
registration statement (other than a registration effected solely to implement
an employee benefit plan or a transaction to which Rule 145 or any other similar
rule of the Commission under the Securities Act is applicable) of the Company
filed under the Securities Act as the Company or such underwriter shall specify
reasonably and in good faith.
19
ARTICLE V ELECTION OF DIRECTORS OF THE COMPANY
--------- ------------------------------------
Section 5.1. Voting of Shares for Election of Directors of the
----------- -------------------------------------------------
Company. With respect to each election or removal of members of the Board of
-------
Directors of the Company (including, without limitation, any replacement
members), whether at an annual or special meeting of stockholders (which special
meeting may be called, solely for purposes specified under this Section 1.5, by
a majority in interest of the Founders or a majority in interest of the
Investors) or by written consent of stockholders, each of the parties to this
Agreement (including all Management Stockholders and Permitted Transferees)
agrees to vote his, her or its Shares (and any Shares over which he, she or it
exercises voting control) and to take such other action as may be necessary to
fix the number of Directors of the Company at seven (7) and to elect as
Directors of the Company and to keep in office as such, the persons selected as
follows: (a) one (1) person designated by the TA Investors; (b) one (1) person
designated by the Summit Investors; (c) the person elected and serving from time
to time as the Company's Chief Executive Officer; (d) two (2) persons who shall
not be Affiliates of the Company or any of the Investors and who shall be
selected by two-thirds-in-interest of all of the Investors, subject to the
consent of a majority-in-interest of the Founders, which shall not be
unreasonably withheld; and (e) two (2) persons who shall not be Affiliates of
the Company or the Founders and who shall be selected by a majority-in-interest
of the Founders, subject to the consent of two-thirds-in-interest of all of the
Investors, which shall not be unreasonably withheld; provided, however, that if
-------- -------
Xxx X. Xxxxxx ceases to serve as the Company's Chief Executive Officer, then he
may be selected by a majority-in-interest of the Founders to serve as a Director
of the Company pursuant to this clause (e) in replacement of one of the
Founders' non-Affiliate designees thereunder. Each of the Investors, the
Stockholders and/or their Permitted Transferees, if any, further agrees to vote
his, her or its Shares (and any Shares over which he, she or it exercises voting
control) for the removal of any such designee upon the request of the parties
designating such designee, and for the election of a substitute designee
nominated by such parties upon request therefor.
Section 5.2. Committees of the Board. The Company and each of Investors
----------- -----------------------
and Stockholders (including all Management Stockholders and Permitted
Transferees) further agrees to use their best efforts to cause the Board of
Directors to establish a Compensation Committee (which shall be charged with
exclusive authority over all compensation and employment matters) and an Audit
Committee (which shall be charged with reviewing the Company's financial
statements and accounting practices), consisting in each case of three (3)
Directors, two (2) of whom shall have been designated by the Investors
(including individuals designated by the Investors) and one (1) of whom shall be
the Company's Chief Executive Officer; provided, that if the Company's Stock
--------
Option Plan must be administered solely by outside directors in order to comply
with relevant tax and securities law requirements, the Chief Executive Officer
shall be permitted to consult with the Compensation Committee without being a
voting member thereof
20
and the Compensation Committee shall consult with the Chief Executive Officer on
such matters.
Section 5.3. Vacancies. Each of the Investors, Stockholders and/or
----------- ---------
their Permitted Transferees, if any, agrees to vote his, her or its Shares (and
any Shares over which he, she or it exercises voting control), to the extent
required by Section 5.1, in such manner as shall be necessary or appropriate so
as to ensure that any vacancy occurring for any reason in the Board of Directors
of the Company held by designees of parties hereto shall be filled only by an
individual who (a) is nominated directly or indirectly by the party or parties
that nominated directly or indirectly the director whose departure created the
vacancy, and that remains entitled at the time such vacancy is filled to
nominate directly or indirectly and have elected the director who had held such
directorship before such vacancy arose and (b) causes the requirements described
in Section 5.1 relating to the composition of the Company's Board of Directors
to be satisfied.
Section 5.4. Removal. The removal from the Board of Directors (with or
----------- -------
without cause) of any representative designated hereunder by any Investors or
the Founders shall be at such Investors' or the Founders' request, respectively,
but only upon such written request and under no other circumstances (in the case
of any of the Investors, determined by the vote of two- thirds-in-interest of
such Investors, and in the case of the Founders, determined by the vote of a
majority-in-interest of the Founders).
Section 5.5. No Waiver. Any failure by any of the parties hereto to
----------- ---------
fully exercise their rights to designate one or more Directors under this
Article V at any time shall not be construed to waive or limit their rights to
designate such Director(s) hereunder at any time thereafter.
Section 5.6 Assignment. Each of the Investors, Stockholders and
----------- ----------
Founders agrees, as a condition to any transfer of its shares, to cause the
transferee to agree to the provisions of this Article V, whereupon such
transferee shall be subject to the provisions hereof.
Section 5.7 Term. This Article V shall remain in effect until the
----------- ----
closing of a Qualified Public Offering or the Sale of the Company or, if sooner,
the latest date after the date hereof permitted by law.
ARTICLE VI MISCELLANEOUS PROVISIONS
---------- ------------------------
Section 6.1. Survival of Representations and Covenants. Each of the
----------- -----------------------------------------
parties hereto agrees that each representation, warranty, covenant and agreement
made by each of them in this Agreement or in any certificate, instrument or
other document delivered pursuant to this Agreement is material, shall be deemed
to have been relied upon by the other parties and shall
21
remain operative and in full force and effect after the date hereof regardless
of any investigation. This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties hereto and their
respective successors and permitted assigns to the extent contemplated herein.
Section 6.2. Legend on Securities. The Company, the Investors and the
----------- --------------------
Stockholders acknowledge and agree that the following legend shall be typed on
each certificate evidencing any of the securities issued hereunder held at any
time by any of the Investors, Stockholders or their Permitted Transferees:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE ASSIGNED EXCEPT PURSUANT TO (1) A REGISTRATION
STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT OR
(2) AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SUCH ACT RELATING TO THE
DISPOSITION OF SECURITIES. THESE SECURITIES ARE ALSO SUBJECT TO THE PROVISIONS
OF A CERTAIN STOCKHOLDERS' AGREEMENT, DATED AS OF MARCH 14, 1996, INCLUDING
CERTAIN RESTRICTIONS ON TRANSFER SET FORTH THEREIN. A COMPLETE AND CORRECT COPY
OF SUCH AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE
COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE.
Section 6.3. Amendment and Waiver. Any party may waive any provision
----------- --------------------
hereof intended for its benefit in writing. No failure or delay on the part of
any party hereto in exercising any right, power or remedy hereunder shall
operate as a waiver thereof. The remedies provided for herein are cumulative and
are not exclusive of any remedies that may be available to any party hereto at
law or in equity or otherwise. This Agreement may be amended with the prior
written consent of the Company, a majority-in-interest of the Founders and
two-thirds-in-interest of the Investors; provided, however, that any amendment
-------- -------
which directly, materially and adversely affects any right specifically granted
to a particular Investor in a manner different than other Investors shall not be
effective unless such Person has consented to that amendment. All actions by the
Company hereunder shall be taken by or upon the direction of a majority of the
Directors designated, from time to time, pursuant to Article V hereof.
Section 6.4. Notices. All notices and other communications provided for
----------- -------
herein shall be in writing and shall be deemed to have been duly given,
delivered and received (a) if delivered personally or (b) if sent by telex or
facsimile, registered or certified mail (return receipt requested) postage
prepaid, or by courier guaranteeing next day delivery, in each case to the party
to whom it is directed at the following addresses (or at such other address for
any party as shall
22
be specified by notice given in accordance with the provisions hereof, provided
that notices of a change of address shall be effective only upon receipt
thereof). Notices delivered personally shall be effective on the day so
delivered, notices sent by registered or certified mail shall be effective three
days after mailing, notices sent by telex shall be effective when answered back,
notices sent by facsimile shall be effective when receipt is acknowledged, and
notices sent by courier guaranteeing next day delivery shall be effective on the
earlier of the second business day after timely delivery to the courier or the
day of actual delivery by the courier:
(a) if to the Company:
R&D Systems Company
0000 X. Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxx X. Xxxxxx
Chief Executive Officer
with a copy to:
TA Associates, Inc.
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxx Xxxxx
TA Associates, Inc.
000 Xxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
23
and to:
Xxxxxxx, Procter & Xxxx
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxx, Esq.
H. Xxxxx Xxxxxx, Esq.
and to:
Holland & Xxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx Arkell, Esq.
(b) if to the Founders:
Xxx X. Xxxxxx
00000 X. Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
with a copy to:
------------------------
------------------------
------------------------
(c) if to the TA Investors:
TA Associates, Inc.
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxx Xxxxx
24
TA Associates, Inc.
000 Xxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
with a copy to:
Xxxxxxx, Procter & Xxxx
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxx, Esq.
H. Xxxxx Xxxxxx, Esq.
(d) if to the Summit Investors:
Summit Partners
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxx
with a copy to:
Xxxxxxx, Procter & Xxxx
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxx, Esq.
H. Xxxxx Xxxxxx, Esq.
25
(e) if to the TL Investors:
Technology Leaders Management, Inc.
800 The Safeguard Building
000 Xxxxx Xxxx Xxxxx
Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx
with a copy to:
Xxxxxxx, Procter & Xxxx
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxx, Esq.
H. Xxxxx Xxxxxx, Esq.
(f) if to Management Stockholders:
The address set forth in the Joinder Agreement
executed by any such Management Stockholder at the
time he/she becomes a Management Stockholder.
Section 6.5. Headings. The Article and Section headings used or
----------- --------
contained in this Agreement are for convenience of reference only and shall not
affect the construction of this Agreement.
Section 6.6. Counterparts. This Agreement may be executed in one or
----------- ------------
more counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
together shall be deemed to constitute one and the same agreement.
Section 6.7. Remedies; Severability. It is specifically understood and
----------- ----------------------
agreed that any breach of the provisions of this Agreement by any Person subject
hereto will result in irreparable injury to the other parties hereto, that the
remedy at law alone will be an inadequate remedy for such breach, and that, in
addition to any other legal or equitable remedies which they may have, such
other parties may enforce their respective rights by actions for specific
performance (to the extent permitted by law) and the Company may refuse to
recognize any unauthorized Transferee as one of its stockholders for any
purpose, including, without limitation, for purposes of dividend
26
and voting rights, until the relevant party or parties have complied with all
applicable provisions of this Agreement.
In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
Section 6.8. Entire Agreement. This Agreement, together with the
----------- ----------------
Investment Agreement and other agreements specifically contemplated hereby and
thereby, is intended by the parties as a final expression of their agreement and
intended to be complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein. This Agreement and the Investment Agreement and other
agreements contemplated hereby and thereby (including the exhibits hereto and
thereto) supersede all prior agreements and understandings between the parties
with respect to such subject matter.
Section 6.9. Adjustments. All references to share prices and amounts
----------- -----------
herein shall be equitably adjusted to reflect stock splits, stock dividends,
recapitalizations and similar changes affecting the capital stock of the
Company.
Section 6.10. Law Governing. This Agreement shall be construed and
------------ -------------
enforced in accordance with and governed by the laws of The Commonwealth of
Massachusetts (without giving effect to principles of conflicts of law), except
that any Delaware corporate law matters relating to the Company shall be
construed and enforced in accordance with and governed by the Delaware General
Corporation Law (without giving effect to principles of conflicts of law). Each
party also waives trial by jury in any action relating to this Agreement.
Section 6.11. Successors and Assigns. This Agreement shall be binding
------------ ----------------------
upon and inure to the benefit of the respective successors and assigns of the
parties hereto, but may not be assigned by any Stockholder without the prior
written consent of two-thirds-in-interest of the Investors, and without such
prior written consent any attempted transfer shall be null and void.
[Remainder of Page Intentionally Left Blank]
27
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
R&D SYSTEMS COMPANY
By: /s/ XXX X. XXXXXX
-----------------------------------
President
FOUNDERS:
/s/ XXX X. XXXXXX
--------------------------------------
Xxx X. Xxxxxx
/s/ XXXX X. XXXXXX
--------------------------------------
Xxxx X. Xxxxxx
XXX XXXXXX TRUST
By: /s/ XXX X. XXXXXX
-----------------------------------
Trustee
XXXXX XXXXXX TRUST
By: /s/ XXX X. XXXXXX
-----------------------------------
Trustee
XXXXX XXXXXX TRUST
By: /s/ XXX X. XXXXXX
-----------------------------------
Trustee
28
TA INVESTORS:
ADVENT VII L.P.
By: TA Associates VII L.P.,
its General Partner
By: TA Associates, Inc.,
its General Partner
By: *
-----------------------------------
ADVENT ATLANTIC AND
PACIFIC II L.P.
By: TA Associates AAP II Partners,
its General Partner
By: TA Associates, Inc.,
its General Partner
By: *
-----------------------------------
ADVENT ATLANTIC AND PACIFIC
III, L.P.
By: TA Associates AAP III Partners,
its General Partner
By: TA Associates, Inc.,
its General Partner
By: *
-----------------------------------
29
ADVENT NEW YORK L.P.
By: TA Associates VI L.P.,
its General Partner
By: TA Associates, Inc.,
its General Partner
By: *
-----------------------------------
TA VENTURE INVESTORS LIMITED
PARTNERSHIP
By: *
-----------------------------------
* /s/ XXXXXXXXXX X. XXXXX
--------------------------
By Xxxxxxxxxx Xxxxx
Address for each of the above TA Investors is as follows:
c/o TA Associates, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
SUMMIT INVESTORS:
SUMMIT VENTURES IV, L.P.
By: Summit Partners IV, L.P.
Its General Partner
By: Stamps, Xxxxxxx & Co., IV
Its General Partner
By: /s/ XXXXXXX X. XXXX
-----------------------------------
General Partner
30
SUMMIT INVESTORS III, L.P.
By: /s/ XXXXXXX X. XXXX
-----------------------------------
General Partner
TL INVESTORS:
TECHNOLOGY LEADERS II L.P.
By: Technology Leaders II Management
L.P., the General Partner
By: Technology Leaders Management,
Inc., a General Partner
By: /s/ SIGNATURE ILLEGIBLE
-----------------------------------
Managing Director
TECHNOLOGY LEADERS II
OFFSHORE C.V.
By: Technology Leaders II Management
L.P., a General Partner
By: Technology Leaders Management,
Inc., a General Partner
By: /s/ SIGNATURE ILLEGIBLE
-----------------------------------
Managing Director
31
EXHIBIT A
---------
Form of Joinder Agreement
-------------------------
The undersigned hereby agrees, effective as of the date hereof, to
become a party to that certain Stockholders' Agreement (the "Agreement") dated
as of March 14, 1996 by and among R&D Systems Company (the "Company") and the
parties named therein and for all purposes of the Agreement, the undersigned
shall be included within the term "Management Stockholder" and "Stockholder"
(each as defined in the Agreement). As of the date hereof the undersigned makes
each of the representations and warranties set forth in Section 2.2 of the
Agreement. The address and facsimile number to which notices may be sent to the
undersigned is as follows:
---------------------------------------------------------------------------
Facsimile No. .
--------------------
------------------------------
[NAME OF UNDERSIGNED]
FIRST AMENDMENT TO
STOCKHOLDERS AGREEMENT
THIS FIRST AMENDMENT TO STOCKHOLDERS AGREEMENT, dated as of January 2,
1997 ("First Amendment") is made to the Stockholders Agreement (the
"Stockholders Agreement") dated as of March 14, 1996, by and among NxTrend
Technology, Inc. (f/k/a R&D Systems Company) (the "Company"), the Founders and
the Investors (as those terms are defined in the Stockholders Agreement).
Capitalized terms not otherwise defined in this First Amendment have the
meanings given to them in the Stockholders Agreement.
WHEREAS, the Company is purchasing substantially all of the assets of Saber
Systems, Inc., a Minnesota corporation ("Saber") for cash and shares of the
Company's common stock, $.01 par value (the "NxTrend Common");
WHEREAS, one of the conditions to the sale of the assets by Saber is that
Saber receive piggyback registration rights with respect to the NxTrend Common
it is acquiring; and
WHEREAS, the Stockholders Agreement must be amended in order to grant the
piggyback registration rights;
NOW, THEREFORE, in consideration of the foregoing, the parties agree as
follows:
(1) The Stockholders Agreement is amended to provide that Saber shall be
included within the term "Founder" and "Founders" in the introductory paragraph
to Article 4 and Sections 4.1, 4.3, 4.4, 4.5, 4.6, 4.7 and 4.8 of the
Stockholders Agreement.
(2) For purposes of Section 6.4 of the Stockholders Agreement, all notices
and other communications to Saber should be sent to the following address:
Xxxxxxx Xxxxxxxx
Saber Systems, Inc.
00000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
The General Counsel, Ltd.
00000 00xx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
(3) All other terms and conditions of the Stockholders Agreement shall
remain in full force and effect.
(4) In accordance with Section 6.3 of the Stockholders Agreement, this
First Amendment shall be effective when signed by the Company, a majority-in-
interest of the Founders and two-thirds in interest of the Investors.
IN WITNESS WHEREOF, the undersigned have executed this First Amendment.
COMPANY:
NxTREND TECHNOLOGY, INC.
By: /s/ XXX X. XXXXXX
------------------------------
President
FOUNDERS:
/s/ XXX X. XXXXXX
------------------------------
Xxx Xxxxxx
/s/ XXXX X. XXXXXX
------------------------------
Xxxx X. Xxxxxx
XXX XXXXXX TRUST
By: /s/ XXX X. XXXXXX
------------------------------
Trustee
XXXXX XXXXXX TRUST
By: /s/ XXX X. XXXXXX
------------------------------
Trustee
XXXXX XXXXXX TRUST
By: /s/ XXX X. XXXXXX
------------------------------
Trustee
2
TA INVESTORS:
ADVENT VII L.P.
By: TA Associates VII L.P.,
its General Partner
By: TA Associates, Inc.
its General Partner
By: *
---------------------------
ADVENT ATLANTIC AND
PACIFIC II L.P.
By: TA Associates AAP II Partners,
its General Partner
By: TA Associates, Inc.,
its General Partner
By: *
----------------------------
ADVENT NEW YORK L.P.
By: TA Associates VI L.P.,
its General Partner
By: TA Associates, Inc.
its General Partner
* By:/s/ XXXXXXXXXX XXXXX By: *
-------------------- ----------------------------
Xxxxxxxxxx Xxxxx
3
SUMMIT INVESTORS:
SUMMIT VENTURES IV, L.P.
By: Summit Partners IV, L.P.
Its General Partner
By: Stamps, Xxxxxxx & Co., IV
Its General Partner
By:______________________________
General Partner
SUMMIT INVESTORS III, L.P.
By:______________________________
TL INVESTORS:
TECHNOLOGY LEADERS II L.P.
By: Technology Leaders II Management
L.P., the General Partner
By: Technology Leaders Management,
Inc., a General Partner
By:______________________________
Managing Director
TECHNOLOGY LEADERS II
OFFSHORE C.V.
By: Technology Leaders II Management
L.P., the General Partner
By: Technology Leaders Management,
Inc., a General Partner
By:_______________________________
Managing Director
0
XXXXXX XXXXXX INVESTOR:
MARKET STREET PARTNERS
By:_______________________________
HH:745407 v2 _______________________________
5
