AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
DATED AS OF OCTOBER 7,
2005
GREEN EQUITY INVESTORS II,
L.P.,
DIAMOND TRIUMPH AUTO GLASS,
INC.
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
THIS AMENDED AND
RESTATED STOCKHOLDERS AGREEMENT (this “ Agreement
”) is entered into as of October 7, 2005, by and among
Green Equity Investors II, L.P., a Delaware limited partnership
(“ GEI ”), Kenneth Levine (the “
Executive ”), and Diamond Triumph Auto Glass, Inc., a
Delaware corporation (the “ Company ”). Each of
the parties to this Agreement (other than the Company) and any
other individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or
political subdivision thereof (a “ Person ”) who
shall become a party to or agree to be bound by the terms of this
Agreement after the date hereof, including any GEI Transferee or
Executive Transferee, is sometimes hereinafter referred to as a
“ Stockholder .” Kenneth Levine, together with
his Permitted Transferees (as defined in Section 2.2(a)), is
sometimes hereinafter referred to as the “ Executive
Stockholders .” GEI, together with its Permitted
Transferees, is sometimes hereinafter referred to as the “
GEI Parties .”
In consideration
of the premises and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I.
ORGANIZATIONAL MATTERS
Section 1.1
Election of Directors .
(a) The
Board of Directors of the Company and each Subsidiary shall consist
of five members.
(b) The
Executive Stockholders and, to the extent nomination rights have
been assigned thereto, the Executive Transferees (as defined in
Section 3.3), collectively, shall have the right to designate
three individuals as nominees for election as directors of the
Company and as directors of each direct or indirect subsidiary of
the Company (each, a “ Subsidiary ”). Each
individual nominated by the Executive Stockholders and/or Executive
Transferees for election as a director of the Company pursuant to
this Section 1.1(b) is hereinafter called an “
Executive Director ” and, collectively, such
individuals are called the “ Executive Directors
.”
(c) GEI
and, to the extent nomination rights have been assigned thereto,
the GEI Transferees (as defined in Section 3.3), collectively,
shall have the right to designate two individuals as nominees for
election as directors of the Company and as directors of each
Subsidiary. Each individual nominated by GEI and/or the GEI
Transferees for election as a director of the Company pursuant to
this Section 1.1(c) is hereinafter called a “ GEI
Director ” and, collectively, such individuals are called
the “ GEI Directors .”
(d) For
the avoidance of doubt, each Executive Director must be reasonably
acceptable to (i) GEI, so long as GEI has retained the right to
nominate at least one GEI Director and/or (ii) any GEI
Transferee who is entitled to nominate at least one GEI Director.
Each GEI
Director must
be reasonably acceptable to (x) the Executive Stockholders so
long as they have retained the right to nominate at least one
Executive Director and/or (y) any Executive Transferee who is
entitled to nominate at least one Executive Director. For the
avoidance of doubt, (A) the individuals named in
Section 1.2 shall be deemed acceptable by GEI, the GEI
Transferees, the Executive Stockholders and the Executive
Transferees, as applicable, and (B) any individual who is an
employee, director, member or partner of GEI or any of its
Affiliates (other than a limited partner of GEI) shall be deemed
acceptable to the Executive Stockholders and the Executive
Transferees, as applicable.
(e) The
GEI Parties and GEI Transferees hereby agree to vote their shares
of Common Stock in favor of the election of the Executive
Directors. The Executive Stockholders and Executive Transferees
hereby agree to vote their shares of Common Stock in favor of the
election of the GEI Directors.
(f) If,
at any time, any Stockholder entitled to nominate at least one
director pursuant to Section 1.1(b) or Section 1.1(c)
shall notify the Company and the other Stockholders in writing of
such Stockholder’s desire to have removed from the board of
directors of the Company (the “ Board of Directors
”), with or without cause, any director such stockholder so
nominated, (i) the Company shall seek action by written
consent within two business days following such request to remove
such director from the Board of Directors, and the Stockholders
shall execute and deliver to the Company any such consent within
two business days of receipt thereof or request therefor or
(ii) if action by written consent of stockholders is not then
permitted by the certificate of incorporation and bylaws of the
Company, the Company shall cause a special meeting of stockholders
to be held proposing the removal of such director from the Board of
Directors as promptly as practicable, and the Stockholders shall,
at such meeting, vote their shares of Common Stock in favor of such
removal.
(g) In
the event that, following the Release Date (as defined in
Section 2.1(b)), any GEI Party Transfers (as defined in
Section 2.1) Common Stock to a GEI Transferee in accordance
with the provisions of Section 3.3 of this Agreement, GEI may
assign the right to nominate one or more GEI Directors pursuant to
Section 1.1(c) to such GEI Transferee; provided , that
(i) such Transfer is made in accordance with the provisions of
this Agreement and (ii) GEI notifies the Company and the other
Stockholders of the identity of the GEI Transferee to whom the
right to nominate one or more GEI Directors has been assigned and
the number of GEI Directors such GEI Transferee shall have the
right to nominate for election. In the event that, following the
Release Date, any GEI Transferee to whom a right to nominate one or
more GEI Directors has been assigned (a transferring party)
Transfers Common Stock to another GEI Transferee (a subsequent
transferee) in accordance with the provisions of Section 3.3
of this Agreement, the transferring party may assign any right it
may have to nominate one or more GEI Directors pursuant to
Section 1.1(c) to such subsequent transferee; provided
, that (i) such Transfer is made in accordance with the
provisions of this Agreement and (ii) the transferring party
notifies the Company and the other Stockholders of the identity of
the subsequent transferee to whom the right to nominate one or more
GEI Directors has been assigned and the number of GEI Directors
such subsequent transferee shall have the right to nominate for
election. In the event that, following the Release Date, any
Executive Stockholder Transfers Common Stock to an Executive
Transferee in accordance with the provisions of Section 3.3 of
this Agreement, the Executive Stockholders may assign the right to
nominate one or more Executive
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Directors
pursuant to Section 1.1(b) to such Executive Transferee;
provided , that (i) such Transfer is made in accordance with
the provisions of this Agreement and (ii) the Executive
Stockholders notify the Company and the other Stockholders of the
identity of the Executive Transferee to whom the right to nominate
one or more Executive Directors has been assigned and the number of
Executive Directors such Executive Transferee shall have the right
to nominate for election. In the event that, following the Release
Date, any Executive Transferee to whom a right to nominate one or
more Executive Directors has been assigned (a transferring party)
Transfers Common Stock to another Executive Transferee (a
subsequent transferee) in accordance with the provisions of
Section 3.3 of this Agreement, the transferring party may
assign any right it may have to nominate one or more Executive
Directors pursuant to Section 1.1(b) to such subsequent
transferee; provided , that (i) such Transfer is made
in accordance with the provisions of this Agreement and
(ii) the transferring party notifies the Company and the other
Stockholders of the identity of the subsequent transferee to whom
the right to nominate one or more Executive Directors has been
assigned and the number of Executive Directors such subsequent
transferee shall have the right to nominate for
election.
(h) The
composition of each committee of the board of directors (or similar
body) of the Company and each Subsidiary shall include a number of
GEI Directors proportionate to the number of GEI Directors then
serving on the Board of Directors and a number of Executive
Directors proportionate to the number of Executive Directors then
serving on the Board of Directors.
Section 1.2
Board of Directors and Senior Management .
(a) Immediately
following the execution of this Agreement, the Board of Directors
shall consist of the following members:
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Name of
Director
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Type of
Nominee
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Executive
Director
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Executive
Director
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Executive
Director
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GEI
Director
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GEI
Director
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Each of such
persons shall hold his or her office until his or her death,
resignation or removal or until his or her successor shall have
been duly elected and qualified. Each of the parties by signing
this Agreement hereby consents to the election of the nominees to
such initial Board of Directors as listed above, effective as of
immediately following the execution of this Agreement. Except as
otherwise agreed by a majority of the Executive Directors and a
majority of the GEI Directors, the boards of directors of each
Subsidiary shall consist of the same individuals as the Board of
Directors of the Company referred to above.
(b) Immediately
following the execution of this Agreement, the senior management of
the Company shall consist of the following officers:
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Name
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Title
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Chairman of the
Board
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Chief Executive
Officer
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President and
Chief Operating Officer
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Chief Financial
Officer
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Section 1.3
Vacancies; Action by Stockholders . If a vacancy is created
on the Board of Directors by reason of the death, disability,
removal or resignation of any director, the party, if any, which
under Section 1.1 is entitled to nominate the director whose
death, disability, removal or resignation resulted in such vacancy
shall be entitled to designate a new nominee to serve as director
and (a) the Company shall seek action by written consent, as
promptly as practicable following the identification of such
nominee, to the election of such nominee as a member of the Board
of Directors, and the Stockholders shall join in executing any such
consent as promptly as practicable following such request or
(b) if action by written consent of stockholders is not then
permitted by the certificate of incorporation and bylaws of the
Company, the Company shall cause a special meeting of stockholders
to be held proposing the election of such nominee to the Board of
Directors, and the Stockholders shall, at such meeting, vote their
shares of Common Stock in favor of such election.
Section 1.4
Conduct of Business . Notwithstanding the fact that no vote
of the Board of Directors or the Board of Directors of any
Subsidiary may be required by applicable law or the certificate of
incorporation or bylaws of the Company or such Subsidiary, or that
a lesser percentage vote may be specified by law, by the
certificate of incorporation or bylaws of the Company or such
Subsidiary, by any agreement with any national securities exchange
or otherwise, except as otherwise provided or contemplated in this
Agreement, the Company shall not and shall not permit any
Subsidiary, directly or indirectly, to take or consummate any of
the actions referred to in clauses (a) through (y) of
this Section 1.4 without the approval of a majority of the
Board of Directors and the affirmative approval of the GEI
Directors then in office:
(a) the
making, alteration, amendment or repeal of the certificate of
incorporation, articles of incorporation, bylaws, partnership
agreement, limited liability company agreement, operating
agreement, membership agreement or other constituent documents of
the Company or any Subsidiary, including the designations of any
preferred stock or resolutions establishing any preferred
stock;
(b)
(i) the sale of the Company or any Subsidiary or (ii) the
merger, consolidation or other business combination of the Company
or any Subsidiary with or into any other Person or a statutory
share exchange between the Company or any Subsidiary and any other
Person;
(c)
(i) the acquisition by the Company or any Subsidiary in any
one transaction or series of related transactions, by purchase of
securities or assets or otherwise, of
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any Person,
business or other enterprise, or any assets, for an amount in
excess of $1,000,000 (other than acquisitions of assets in the
ordinary course of business), (ii) the making of any
investment (exclusive of amounts on deposit with banks or lending
institutions and short term investments of excess cash) in any
Person (or group of related Persons) in excess of $1,000,000 in any
one transaction or series of related transactions (whether by way
of exchange, purchase, capital contribution or otherwise),
(iii) authorizing, or making, any loans, advances or
guarantees to or for the benefit of any Persons in excess of
$1,000,000, in the aggregate, or (iv) the acquisition by the
Company or any Subsidiary of an option to make any such acquisition
or investment;
(d) the
sale or divestiture in any one transaction or series of related
transactions of any division or other business enterprise, or any
assets, of the Company or any Subsidiary for an amount in excess of
$1,000,000 (other than the sale of inventory and other assets in
the ordinary course of business);
(e) the
creation of any material joint venture, partnership or other
non-wholly owned entity;
(f) the
declaration, setting aside or payment of any dividend or
distribution (whether in cash, stock or property) or capital return
in respect of any capital stock of the Company or any redemption,
purchase or other acquisition by the Company or any Subsidiary of
any shares of capital stock (other than (i) repurchases of
capital stock from employees pursuant to the terms of any agreement
entered into by the Company or any Subsidiary after the date
hereof, provided that such agreement has been approved pursuant to
Section 1.4(i), (ii) repurchases of Common Stock pursuant
to Section 3.1 and 3.2 and (iii) repurchases of Common
Stock pursuant to Article IX;
(g) the
issuance, delivery, sale, grant, pledge, encumbrance or transfer,
whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise, of any
shares, interests, participations, rights in, or other equivalents
(however designated and whether voting or non-voting) of capital
stock or other equity interests (including, without limitation,
partnership or membership interests or any other interest or
participation that confers on a Person the right to receive a share
of the profits and losses, or distributions of assets)
(collectively, “ Equity Interests ”) or any
securities convertible into or exercisable for Equity Interests,
other than the issuance of Common Stock pursuant to options
approved in accordance with Section 1.4(h);
(h) the
issuance or grant of any stock option or other stock related rights
or equity-based rewards pursuant to the Company Stock Option Plan
(as defined below) and the approval of any proposed transfer by the
employee of any Common Stock acquired thereunder for so long as
such transfer is restricted under the terms of the Company Stock
Option Plan;
(i) the
grant, enactment, implementation or authorization of any
compensation plan or arrangement, including any incentive or
deferred compensation, vacation benefits, insurance coverage
(including any self-insured arrangements), severance benefits and
post-employment or retirement benefits (including compensation,
pension, health, medical or life insurance benefits) for the
members of senior management of the Company or any
Subsidiary
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(which shall be
deemed to include the Executive Stockholders) or entering into any
agreement that provides for the acquisition by the Company or any
Subsidiary of any shares of Common Stock;
(j)
(i) the election, appointment, removal or other termination of
any member of senior management or change in any material respect
the duties of such member, or (ii) the entry into, amendment
or termination of, or waiver of any material provisions under, any
employment, severance, consulting or other agreement with any
member of senior management;
(k)
(i) the incurrence, creation, assumption, guarantee or
otherwise becoming liable with respect to any indebtedness for
borrowed money (including, without limitation, capitalized lease
obligations) in excess of $1,000,000 aggregate principal amount,
except pursuant to the Company’s existing revolving credit
facility (the “ Credit Agreement ”),
(ii) the amendment or modification of, or seeking or obtaining
of any waiver under, the Credit Agreement, (iii) the issuance
or sale of any debt securities of the Company or any Subsidiary,
(iv) the assumption, guarantee or endorsement, or otherwise
becoming liable or responsible (whether directly, contingently or
otherwise) for, the obligations of any Person (other than as
permitted in Section 1.4(c)(iii), obligations of Subsidiaries,
and the endorsements of negotiable instruments for collection in
each such case in the ordinary course of business),
(v) refinancing, refunding, substituting or renewing existing
indebtedness, or (vi) entering into or materially amending any
contract, agreement, commitment or arrangement to effect any of the
transactions prohibited by this clause (k);
(l) the
creation, incurrence, assumption of, or the suffering to exist of,
any lien, pledge, charge, security interest or encumbrance of any
kind (“ Lien ”) upon assets of the Company
having an aggregate fair market value in excess of $1,000,000
(excluding Liens pursuant to the Credit Agreement upon the assets
of the Company or any Subsidiary);
(m)
(i) the approval or amendment of the consolidated annual
operating and capital budgets of the Company and its Subsidiaries
or (ii) the making of any capital expenditures not otherwise
provided for in the approved capital budget in excess of $1,000,000
in the aggregate;
(n) engaging
in any business which was not being conducted by the Company or any
Subsidiary as of the date of this Agreement, other than reasonably
related extensions of the businesses conducted by the Company and
any Subsidiary on the date of this Agreement, or ceasing to be
engaged in any material line of business engaged in by the Company
or any Subsidiary as of the date of this Agreement;
(o) entering
into, amending, modifying, terminating or making any determination
with respect to the extension or termination of any agreement,
contract or arrangement with GEI, any Executive Stockholder, any
GEI Transferee, any Executive Transferee or any of their respective
Affiliates (as defined in Section 2.6(a));
(p) engaging,
retaining, paying or agreeing to pay the fees or expenses of any
third party consultant or advisor other than in the ordinary course
of business consistent with past practice;
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(q) instituting,
voluntarily dismissing, terminating or settling any litigation or
arbitration against the Company, any Subsidiary or any other Person
involving claims or damages to the Company or any Subsidiary in
excess of $250,000;
(r) filing
any petition by or on behalf of the Company or any Subsidiary
seeking relief, or consenting to the institution of any proceeding
against the Company or any Subsidiary seeking to adjudicate it as
bankrupt or insolvent, under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors;
(s) liquidating,
dissolving, reorganizing or recapitalizing the Company or any
Subsidiary;
(t) selecting,
or changing, the auditors of the Company or any Subsidiary or
changing or modifying the accounting policies of the Company or any
Subsidiary other than as required by United States generally
accepted accounting principles (“ GAAP
”);
(u) entering
into any contract or other agreement or arrangement (or series of
related contracts, agreements or arrangements) involving
anticipated receipts or expenditures or otherwise having a total
value over the term of such contract, agreement or arrangement
(without any present value discount) greater than $1,000,000,
except for those contracts or other agreements or arrangements
entered into by the Company or any Subsidiary in the ordinary
course of business;
(v) any
increase or decrease in the number of persons constituting the
Board of Directors of the Company or any Subsidiary;
(w) the
authorization of any public offering of securities of the Company
for the account of the Company or any other person;
(x)
(i) the approval of the
provision of indemnification on behalf of any officer or director
of the Company or its Subsidiaries or (ii) the selection or
approval of counsel to the Company; or
(y) except
as otherwise contemplated by this Section 1.4, the entering
into of any contract, agreement, arrangement or commitment to do,
the authorization, approval, ratification or confirmation of, or
the delegation of the power to act on behalf of the Company or any
Subsidiary or the Board of Directors in respect of, any of the
foregoing.
For purposes of
this Agreement, “ Company Stock Option Plan ”
means a stock option plan which may be adopted by the Company
relating to the issuance of options (to acquire Common Stock of the
Company) to employees of the Company or a Subsidiary.
Section 1.5
Meetings of Board of Directors . The Board of Directors
shall meet on a regular basis, but in no event less than once every
calendar quarter.
Section 1.6
Information Reporting . The Company will deliver, or cause
to be delivered to GEI, each Executive Stockholder and each GEI
Transferee or Executive Transferee, if applicable, (a) as
promptly as practicable, such financial and operating information
as each
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shall
reasonably request and (b) as promptly as practicable, but in
no event later than the date specified with respect to the relevant
report, financial or other information in the Company’s
Credit Agreement, such reports, financial and other information
required to be delivered by the Company or any Subsidiary to the
lenders pursuant to the Company’s Credit Agreement. In the
event the Company’s Credit Agreement is terminated, the
Company will continue to deliver such reports, financial and other
information to GEI, each Executive Stockholder and each GEI
Transferee or Executive Transferee, if applicable, on the timetable
that would have been applicable had the Company’s Credit
Agreement not been terminated. The recipients of such reports,
financial and other information shall keep such materials and
information confidential.
Section 2.1
Restrictions on Transfer .
(a) Each
Stockholder agrees that it will not, directly or indirectly, sell,
hypothecate, give, convey, bequeath, transfer, assign, pledge or in
any other way whatsoever encumber or dispose of (any such event, a
“ Transfer ”) any shares of Common Stock now
owned or hereafter acquired by such Person (or any interest
therein) to any other Person, except as expressly permitted by this
Agreement.
(b) Any
GEI Party or GEI Transferee may Transfer Common Stock if (i)
(a) the Transfer occurs subsequent to the first anniversary of
this Agreement (the “ Release Date ”),
(b) such GEI Party or GEI Transferee complies with the other
terms and conditions of this Agreement (including Article III) and
(c) such Transfer is for consideration consisting solely of
cash and/or Marketable Securities or (ii) the Transfer is
pursuant to Article IX hereof.
(c) Any
Executive Stockholder or Executive Transferee may Transfer Common
Stock if (a) the Transfer occurs subsequent to the Release
Date, (b) such Executive Stockholder or Executive Transferee
complies with the other terms and conditions of this Agreement
(including Article III) and (c) such Transfer is for
consideration consisting solely of cash and/or Marketable
Securities.
Section 2.2
Permitted Transfers .
(a) Notwithstanding
anything to the contrary contained in this Agreement (but subject
to Section 2.3 and Section 2.4 hereof), the Executive or
a GEI Party may, without complying with the obligations of
Sections 3.1-3.3 hereof or Article IV hereof, Transfer
Common Stock to any Permitted Transferee (as hereinafter defined)
of such Stockholder; provided , however , that such
Transfer shall be subject to the Permitted Transferee’s
delivery to the Company and the other Stockholders of a duly
executed agreement to be bound by the terms of this Agreement to
the same extent applicable to the transferor and to Transfer the
Transferred Common Stock back to the transferor if the Permitted
Transferee ceases to be a Permitted Transferee of such Stockholder.
“ Permitted Transferee ” means (a) in the
case of the Executive, (i) any successor by death,
(ii) any corporation or other entity at least fifty-one
percent (51%) of the equity securities of which are owned,
beneficially and of record, by the Executive and over which the
Executive has the sole right to elect or appoint at least a
majority
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of the members
of the board of directors or Persons performing similar functions,
or (iii) any trust, partnership, limited liability company or
other entity established for the benefit of the Executive and/or
members of the Executive’s immediate family, provided that
the Executive or his current spouse is the sole trustee of (or are
the only individuals having similar controlling positions with
respect to) such trust or other entity and (b) in the case of
a GEI Party, an Affiliate of GEI. Any notice or/other document
required to be delivered to a Permitted Transferee pursuant to this
Agreement shall be deemed delivered for all purposes if delivered
to the Stockholder who Transferred Common Stock to such Permitted
Transferee. Each Permitted Transferee shall be deemed a Stockholder
for all purposes of this Agreement.
(b) Notwithstanding
anything to the contrary contained in this Agreement (but subject
to Section 2.3 and Section 2.4 hereof), an Executive
Transferee or GEI Transferee may, without complying with the
obligations of Sections 3.1-3.3 hereof or Article IV
hereof, Transfer Common Stock to any controlled Affiliate of such
an Executive Transferee or GEI Transferee; provided ,
however , that such Transfer shall be subject to the
transferee’s delivery to the Company and the other
Stockholders of a duly executed agreement to be bound by the terms
of this Agreement to the same extent applicable to the transferor
and to Transfer the Transferred Common Stock back to the transferor
if such transferee ceases to be a controlled Affiliate of the
transferor.
Section 2.3
Compliance with Securities Laws . No Stockholder shall
Transfer any Common Stock, and the Company shall not transfer on
its books any shares of Common Stock, unless:
(a)
(i) such Transfer is pursuant to an effective registration
statement under the Securities Act of 1933, as amended (together
with the rules and regulations promulgated thereunder, the “
Securities Act ”), and is in compliance with any
applicable state securities or blue sky laws or (ii) such
Stockholder shall have furnished the Company with an opinion of
counsel, which opinion and counsel shall be reasonably satisfactory
to the Company, to the effect that no such registration is required
because of the availability of an exemption from registration under
the Securities Act and any applicable state securities or blue sky
laws and such Transfer shall not require the Company to register
(or result in the Company being required to register) any
securities (or any Transfer thereof) pursuant to the Securities Act
or the Securities Exchange Act of 1934, as amended, together with
the rules and regulations promulgated by the U.S. Securities and
Exchange Commission (the “ Commission ”)
thereunder (the “ Exchange Act ”);
and
(b) the
certificates, if any, representing such Common Stock issued to the
transferee shall bear the following legend (or one to substantially
similar effect):
“The
shares represented by this certificate (the “ Shares
”) have not been registered under the U.S. Securities Act of
1933, as amended (the “Securities Act”). The Shares
have been acquired for investment and may not be sold, pledged or
hypothecated in the United States in the absence of an effective
registration statement for the Shares under the Securities Act or
an exemption thereunder. The Shares are subject to restrictions
contained in a Stockholders Agreement, dated as of August ___,
2005. The
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Stockholders
Agreement contains, among other things, certain provisions relating
to the transfer of the Shares. No transfer, sale, assignment,
pledge, hypothecation or other disposition of the Shares, directly
or indirectly, may be made except in accordance with the provisions
of such Stockholders Agreement. The holder of this certificate, by
acceptance of this certificate, agrees to be bound by all of the
provisions of such Stockholders Agreement applicable to the
Shares.”
provided , however , that the conditions set forth
in Section 2.3(b) shall not apply to any sale of Common Stock
pursuant to (x) an effective registration statement under the
Securities Act or (y) Rule 144 promulgated under the
Securities Act (“ Rule 144 ”);
provided , that such sale is not made prior to a Public
Offering Event (as defined in Section 5.1).
Section 2.4
Improper Transfer . Any attempt to Transfer or otherwise
encumber any Common Stock in violation of this Agreement shall be
null and void and neither the Company nor any registrar or transfer
agent of such Common Stock shall give any effect to such attempted
Transfer or encumbrance in its stock records.
Section 2.5
Involuntary Transfer . In the case of any Transfer of title
or beneficial ownership of Common Stock upon default, foreclosure,
forfeit, court order or otherwise than by a voluntary decision on
the part of a Stockholder (an “ Involuntary Transfer
”), such Stockholder, as the case may be (or such
Stockholder’s legal representatives, as the case may be)
shall promptly (but in no event later than two (2) business
days after such Involuntary Transfer) furnish written notice to the
Company and the other Stockholders, indicating that the Involuntary
Transfer has occurred, specifying the name of the Person to whom
such Common Stock has been Transferred, giving a detailed
description of the circumstances giving rise to, and stating the
legal basis for, the Involuntary Transfer. Nothing in this
Section 2.5 shall be deemed to vest any Person who becomes a
holder of Common Stock pursuant to an Involuntary Transfer with any
rights under this Agreement. A Transfer effected by GEI pursuant to
Article XI hereof shall not constitute an Involuntary Transfer
hereunder.
Section 2.6
Certain Definitions . For purposes of this
Agreement:
(a) An
“ Affiliate ” of any Person means any other
Person directly or indirectly controlling, controlled by or under
common control with the first Person.
(b) The
term “ control ” (including, with correlative
meanings, the terms “ controlling ,” “
controlled by ” and “ under common control
with ”), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person,
whether though the ownership of voting securities, by contract or
otherwise. For the avoidance of doubt, an individual human being
cannot be “ controlled by ” another Person and
no Executive Stockholder shall be deemed an Affiliate of any GEI
Party.
(c)
“ Marketable Securities ” means any securities
that are freely tradable by the holder thereof on one or more
established public markets, including, but not limited to, any
securities (A) which are listed or traded on a United States
national securities exchange or the
10
NASDAQ Stock
Market or (B) quoted on an established quotation system within
or outside the United States that supports sufficient trading
activity and volume to allow for the orderly disposition of such
securities by the holders thereof.
TRANSFER PROCEDURE; RIGHT OF
FIRST REFUSAL
Section 3.1
Right of First Refusal .
(a) If,
(i) following the Release Date, the Executive shall have
received, and desires to accept, a bona fide arms’ length
written offer (a “ Bona Fide Offer ”) from one
or more Outside Parties (as hereinafter defined) for the purchase
of Common Stock, (or the Executive shall have made a Bona Fide
Offer for the sale of Common Stock and one or more Outside Parties
desires to accept such Bona Fide Offer) for consideration
consisting of cash or Marketable Securities, or (ii) an Executive
Stockholder permits or suffers an Involuntary Transfer of any or
all of such Executive Stockholder’s shares of Common Stock of
the Company, then such Stockholders shall give a notice in writing
(the “ Transfer Notice ”) to the Company and GEI
setting forth such desire or providing notice of such Involuntary
Transfer, which notice, in the case of a Bona Fide Offer, shall
include the name and address of the Outside Party or Outside
Parties making such Bona Fide Offer and the price and other
material terms and conditions thereof and shall be accompanied by a
copy of the Bona Fide Offer and, in the case of an Involuntary
Transfer, shall contain the information required to be set forth in
such notice by Section 2.5. Upon receipt of such Transfer
Notice, GEI shall have an option to purchase, in the aggregate, all
(but not part) of the Common Stock described in the Transfer Notice
(i) in the case of a Bona Fide Offer, at the per share cash
price specified in the Transfer Notice or, if the Transfer Notice
describes a Transfer of Common Stock for Marketable Securities, for
a cash price to be determined in accordance with Section 3.5
(the “ Share Price ”) or (ii) in the case
of an Involuntary Transfer, at a purchase price (the “
Involuntary Transfer Price ”) equal to (A) prior
to a Public Offering Event, the fair market value of such shares,
as determined by the Board of Directors in good faith or
(B) if there shall be a public market for the Common Stock,
the average of the daily market prices for each day during the 30
consecutive trading days commencing 45 business days before such
date as of which such a price can be established in the manner set
forth in the following sentence. The market price for each such
business day shall be the last sale price on such day as reported
in the consolidated last sale reporting system or as quoted in the
National Association of Securities Dealers Automated Quotation
System, or if such last sale price is not available, the average of
the closing bid and asked prices as reported, or in any other case
the highest bid price quoted for such day as reported by The Wall
Street Journal and the National Quotation Bureau pink sheets. If
GEI desires to exercise the option set forth in the preceding
sentences, it shall deliver a notice (an “ Election
Notice ”) to the relevant Stockholder and the Company
within twenty (20) days of receipt of the Transfer Notice (the
“ Election Period ”). In the event GEI does not
deliver an Election Notice before the end of the Election Period,
then the Company shall have the option to purchase, in the
aggregate, all (but not part) of the Common Stock described in the
Transfer Notice at the Share Price or Involuntary Transfer Price,
as applicable, by delivery of an Election Notice to the relevant
Stockholder within ten (10) days after the expiration of the
Election Period. For the avoidance of doubt, GEI may assign the
right to exercise all or part of the option to purchase Common
Stock described in
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a particular
Transfer Notice to one or more of its Affiliates, in which case
(a) the Election Notice shall specify the Persons exercising
such option and the number of shares of Common Stock to be acquired
by each such assignee (provided that, in any event, all shares of
Common Stock specified in the relevant Transfer Notice shall be
purchased) and (b) references to GEI in this Article III
shall be deemed to refer to such assignees (or GEI and such
assignees, as applicable) as appropriate to reflect such
assignment. With respect to any Stockholder, an “ Outside
Party ” means a third Person who is not an Affiliate of
such Stockholder.
(b) If,
(i) following the Release Date, any GEI Party shall have
received, and desires to accept, a Bona Fide Offer from one or more
Outside Parties for the purchase of Common Stock, (or any GEI Party
shall have made a Bona Fide Offer for the sale of Common Stock and
one or more Outside Parties desires to accept such Bona Fide Offer)
for consideration consisting of cash or Marketable Securities or
(ii) a GEI Party permits or suffers an Involuntary Transfer of
any or all of such GEI Party’s shares of Common Stock of the
Company, then such Stockholders shall give a Transfer Notice to the
Company and the Executive setting forth such desire or providing
notice of such Involuntary Transfer, which notice, in the case of a
Bona Fide Offer, shall include the name and address of the Outside
Party or Outside Parties making such Bona Fide Offer and the price
and other material terms and conditions thereof and shall be
accompanied by a copy of the Bona Fide Offer and, in the case of an
Involuntary Transfer, shall contain the information required to be
set forth in such notice by Section 2.5. Upon receipt of such
Transfer Notice, the Executive shall have an option to purchase, in
the aggregate, all (but not part) of the Common Stock described in
the Transfer Notice at the Share Price or Involuntary Transfer
Price, as applicable. If the Executive desires to exercise the
option set forth in the preceding sentence, he shall deliver an
Election Notice to GEI and the Company within the Election Period.
In the event the Executive does not deliver an Election Notice
before the end of the Election Period, then the Company shall have
the option to purchase, in the aggregate, all (but not part) of the
Common Stock described in the Transfer Notice at the Share Price or
Involuntary Transfer Price, as applicable, by delivery of an
Election Notice to GEI within ten (10) days after the
expiration of the Election Period. For the avoidance of doubt, the
Executive may assign the right to exercise all or part of the
option to purchase Common Stock described in a particular Transfer
Notice to one or more Permitted Transferees of the Executive, in
which case (a) the Election Notices shall specify the Persons
exercising such option and the number of shares of Common Stock to
be acquired by each such assignee (provided that, in any event, all
shares of Common Stock specified in the relevant Transfer Notice
shall be purchased) and (b) references to the Executive in
this Article III shall be deemed to refer to such assignees as
appropriate to reflect such assignment.
(c) In
the event that the Executive or GEI (an “ Assignor
”) assigns the right to exercise all or any part of a right
of first refusal described in this Section 3.1 to an Affiliate
or Permitted Transferee, the ability of such Affiliate or Permitted
Transferee to exercise the right of first refusal and purchase
Common Stock pursuant thereto shall be subject to such
Affiliate’s or such Permitted Transferee’s agreement to
be bound by the terms and conditions of this Agreement to the same
extent as the Assignor and to Transfer any Common Stock so acquired
back to the Assignor in the event that the Affiliate or Permitted
Transferee ceases to be an Affiliate or Permitted Transferee of the
Assignor.
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(d) Any
determination (a “ Purchase Determination ”) to
be made by the Company with respect to whether the Company will
exercise the right to purchase shares of Common Stock pursuant to
Section 3.1 and Section 3.2 shall be made (i) by a
majority of the GEI Directors, in the case of a proposed Transfer
by any Executive Stockholder and (ii) by a majority of the
Executive Directors in the case of a proposed Transfer by any GEI
Party. In the event the approval of a greater number of members of
the Board of Directors is required under applicable law in order
for the Company to make a Purchase Determination, then (x) in
the case of a proposed Transfer by any Executive Stockholder, each
Executive Director shall vote in the same manner as the majority of
the GEI Directors votes in respect of such Purchase Determination
and (y) in the case of a proposed Transfer by any GEI Party,
each GEI Director shall vote in the same manner as the majority of
Executive Directors votes in respect of such Purchase
Determination. The GEI Parties and the Executive Stockholders shall
cause each of the GEI and Executive Directors, respectively, to
comply with the provisions of this Section 3.1(d).
Section 3.2
Obligation to Purchase and Sell; Closing . If any Executive
Stockholder, GEI or the Company delivers an Election Notice, then
it shall be obligated to purchase, and the relevant Stockholder
shall be obligated to sell, the Common Stock described in such
Election Notice at the cash price and on the other terms indicated
in the Bona Fide Offer (subject to Section 3.5), except that
the closing of such purchase and sale shall be held on the
twentieth business day after the expiration of the Election Period
at 10:30 a.m., local time, at the principal executive office
of the Company in Pennsylvania, or at such other time and place as
the parties to such purchase and sale may mutually
agree.
Section 3.3
Transfer to Outside Party . In the event that, following the
Release Date, a Stockholder has complied with the provisions of
Section 3.1 and no Election Notice is delivered pursuant
thereto, such Stockholder may, subject to the provisions of
Section 2.2 and Section 2.3 hereof and compliance with
the provisions of Article IV hereof, Transfer the Common Stock
described in the Transfer Notice to the Outside Party specified
therein, but only for consideration consisting solely of cash
and/or Marketable Securities and on terms and conditions that are
no more favorable in any material respect to the Outside Party than
those specified in such Transfer Notice; provided , that
(a) such Outside Party shall duly execute and deliver to the
Company and the other Stockholders an agreement to be bound by the
terms of this Agreement as a “GEI Transferee” or
“Executive Transferee”, as applicable (and not as an
Executive Stockholder or GEI Party), and (b) the closing of
such Transfer takes place within ninety (90) business days of
the termination of the Election Period. In addition, subject to the
limitations contained in Section 5.2(a), in connection with any
such Transfer to an Outside Party, the transferring Stockholder may
assign the right to effect Demands (as defined in Section 5.2)
and/or participate in piggyback registrations pursuant to
Article V hereof. Any election by the Company or a Stockholder
not to exercise its rights under this Article III in any
particular instance, shall not constitute a waiver of its rights
under Article II or this Article III in connection with
any other proposed Transfer of Common Stock. For purposes of this
Agreement, “ GEI Transferee ” means any Outside
Party to whom a GEI Party (or a prior GEI Transferee) Transfers
Common Stock pursuant to this Section 3.3, and “ Executive
Transferee ” means any Outside Party to whom an Executive
Stockholder (or a prior Executive Transferee) Transfers Common
Stock pursuant to this Section 3.3.
Section 3.4
Actions at Closing . At any closing held pursuant to this
Article III:
13
(a) The
purchase price for the purchase for the relevant shares of Common
Stock shall be paid in cash (by wire transfer of immediately
available funds to an account specified in writing by the
recipients thereof at least three (3) business days prior to
the date of such closing) or by certified or official bank
check.
(b) The
relevant Stockholders shall deliver all certificates, if any, which
represent the shares of Common Stock to be sold at such closing,
duly endorsed for transfer with signatures guaranteed, to the
purchasers thereof and shall authorize the Company (or the
Company’s transfer agent, if any) to record in the
Company’s books and records the transfer to such purchasers
of the shares of Common Stock to be sold, including any shares of
Common Stock not evidenced by certificates.
(c) The
relevant Stockholders shall take all actions the purchasers shall
reasonably request as necessary to vest in the applicable
purchasers all shares of Common Stock being sold, whether in
certificated or uncertificated form, free and clear of all liens,
charges and encumbrances of any kind.
(d) In
the event a purchase of Common Stock pursuant to Section 3.2
by the Company shall be prohibited by law or would cause a default
under the terms of any indenture or loan agreement or other
instrument to which the Company or any of its Subsidiaries may be a
party, the obligations of the Executive, GEI and the Company
pursuant to this Article III shall be suspended until the
earlier of (i) the date that is the date that is 180 days
after the delivery of the Election Notice, and (ii) such time
as such prohibition first lapses or is waived and no such default
would be caused.
Section 3.5
Consideration . If a Transfer Notice or Preemptive Rights
Notice (as defined in Section 4.7(c)) specifies consideration
consisting of Marketable Securities, then such consideration shall
be valued based upon the closing price for such Marketable
Securities on the primary market therefor on the day prior to the
date of the Transfer Notice or Preemptive Rights Notice, as
applicable.
Section 4.1
Right to Participate in Sale .
(a) Subject
to Section 4.6, if any Executive Stockholder or GEI Party (a
“ Transferring Party ”) proposes to Transfer
shares of Common Stock (a “ Tag-Along Sale ”) to
a third party that is not a Permitted Transferee and such shares
are not acquired pursuant to Section 3.1 or Section 3.2,
then the Transferring Party shall afford the relevant Tag-Along
Stockholders (as hereinafter defined) the opportunity to
participate proportionately in such Tag-Along Sale in accordance
with this Article IV. “ Tag-Along Stockholder
” means (i) with respect to any proposed Transfer by an
Executive Stockholder, the GEI Parties, GEI Transferees, the other
Executive Stockholders and any Executive Transferee to whom
tag-along rights were granted in connection with the Transfer of
Common Stock to such Executive Transferee and (ii) with
respect to any proposed Transfer by a GEI Party, the Executive
Stockholders, Executive Transferees, the other GEI Parties and any
GEI Transferee to whom tag-along rights were
14
granted in
connection with the Transfer of Common Stock to such GEI Transferee
. Each Tag-Along Stockholder shall have a proportionate
right, but not the obligation, to participate in such Tag-Along
Sale. The number of shares of Common Stock (the “
Tag-Along Allotment ”), that each Tag-Along
Stockholder will be entitled to include in such Tag-Along Sale
shall be determined by multiplying (a) the number of shares of
Common Stock beneficially owned by such Tag-Along Stockholder as of
the close of business on the day immediately prior to the Tag-Along
Notice Date by (b) a fraction (the “ Tag-Along
Fraction ”), the numerator of which shall equal the
number of shares of Common Stock proposed by the Transferring Party
to be sold or otherwise disposed of pursuant to the Tag-Along Sale
and the denominator of which shall equal the total number of shares
of Common Stock that are beneficially owned by the Transferring
Party (and, to the extent Common Stock has been Transferred thereto
by the Transferring Party, its Permitted Transferees or Affiliates,
as applicable) as of the close of business on the day immediately
prior to the Tag-Along Notice Date.
Section 4.2
Sale Notice . The Transferring Party shall provide each
Tag-Along Stockholder with written notice (the “ Tag-Along
Sale Notice ”) not more than sixty (60) nor less
than twenty-five (25) days prior to the proposed date of the
Tag-Along Sale (the “ Tag-Along Sale Date ”).
Each Tag-Along Sale Notice shall set forth: (i) the number of
shares of Common Stock proposed to be transferred or sold by the
Transferring Party; (ii) the proposed amount and form of
consideration to be paid for such shares and the terms and
conditions of payment offered by each proposed purchaser;
(iii) the aggregate number of shares of Common Stock held of
record by the Transferring Party as of the close of business on the
day immediately preceding the date of the Tag-Along Notice (the
“ Tag-Along Notice Date ”); (iv) such
Tag-Along Stockholder’s Tag-Along Allotment(s) assuming such
Stockholder elected to sell the maximum number of shares of Common
Stock as possible; (v) confirmation that the proposed
purchaser or transferee has been informed of the “
Tag-Along Rights ” provided for in this
Article IV and has agreed to purchase the Common Stock in
accordance with the terms hereof; and (vi) the Tag-Along Sale
Date.
Section 4.3
Tag-Along Notice .
(a) If
a Stockholder entitled to do so wishes to participate in the
Tag-Along Sale, such Stockholder shall provide written notice (the
“ Tag-Along Notice ”) to the Transferring
Stockholder with copies to the other Tag-Along Stockholders at the
address for notices determined in accordance with Article VII,
within fifteen (15) days following the receipt of the
Tag-Along Sale Notice. The Tag-Along Notice shall set forth the
number of shares of Common Stock, that such Stockholder elects to
include in the Tag-Along Sale, which shall not exceed such
Stockholder’s Tag-Along Allotment. The Tag-Along Notice shall
also specify the aggregate number of additional shares of Common
Stock, as applicable, owned of record as of the close of business
on the day immediately preceding the Tag-Along Notice Date by such
Stockholder, if any, which such Stockholder desires also to include
in the Tag-Along Sale (“ Additional Shares ”) in
the event there is any under-subscription for the entire amount of
all Stockholders’ Tag-Along Allotments. The Tag-Along Notice
given by each Stockholder shall constitute such Stockholder’s
binding agreement to sell the Common Stock specified in such
Tag-Along Notice (including any Additional Shares to the extent
such Additional Shares are to be included in the Tag-Along Sale
pursuant to the apportionment described herein) on the terms and
conditions applicable to the Tag-Along Sale, subject to the
provisions of Section 4.4;
15
provided , however , that in the event that there
is any material change in the terms and conditions of such
Tag-Along Sale applicable to any Stockholder after such Stockholder
gives its Tag-Along Notice, then, notwithstanding anything herein
to the contrary, such Stockholder shall have the right to withdraw
from participation in the Tag-Along Sale with respect to all of its
Common Stock affected thereby.
(b) If
the aggregate number of shares of Common Stock proposed to be
included by the Stockholders in any Tag-Along Sale (without taking
into account any Additional Shares) is less than the aggregate
Tag-Along Allotments of all of the Stockholders entitled to
participate therein (such difference, the “ Excess
Allotment ”), then the Excess Allotment shall be
allocated among the Transferring Party and the Stockholders who
have indicated a desire to sell Additional Shares pursuant to a
Tag-Along Notice pro rata based upon the number of shares of Common
Stock beneficially owned by each of them as of the close of
business on the day immediately prior to the Tag-Along Notice Date;
provided that if application of the foregoing provision does
not result in allocation of the entire Excess Allotment, then the
balance shall be allocated among the Transferring Party and the
Stockholders with remaining Additional Shares pro rata based upon
the number of shares of Common Stock, beneficially owned by each of
them as of the close of business on the day immediately prior to
the Tag-Along Notice Date and so on until the entire Excess
Allotment has been allocated. The Transferring Party shall notify
each Stockholder with Additional Shares to be included in the
Tag-Along Sale of the number of such Additional Shares to be so
included no later than the fifth (5 th )
day prior to the Tag-Along Sale Date.
(c) If
a Tag-Along Notice is not received by a Transferring Party from any
Stockholder within the 15-day period specified above, the
Transferring Party shall have the right to sell or otherwise
transfer the number of shares specified in the Tag-Along Notice to
the proposed purchaser or transferee without any participation by
such Stockholder, but only on terms and conditions which are no
more favorable in any material respect to the Transferring Party,
as applicable, than as are stated in the Tag-Along Notice and only
if such Tag-Along Sale occurs on a date within sixty (60) business
days of the Tag-Along Sale Date. If such Tag-Along Sale does not
occur within such sixty-day period, the Common Stock that was to be
subject to such Tag-Along Sale thereafter shall continue to be
subject to all of the provisions of this
Article IV.
(d) All
calculations and allocations of Tag-Along Allotments and Excess
Allotments shall be made by aggregating shares of Common Stock held
by the Transferring Party and, to the extent Common Stock has been
Transferred thereto by the Transferring Party, its Permitted
Transferees and/or Affiliates, on the one hand, and any particular
Stockholder and, to the extent Common Stock has been Transferred
thereto by such Stockholder, its Permitted Transferees and/or
Affiliates, on the other hand. Once such calculation and/or
allocation has been determined, the particular Stockholder and its
Permitted Transferees and/or Affiliates may determine among
themselves, which shall participate in any particular Tag-Along
Sale and the number of shares of Common Stock (within the relevant
allotment) to be sold by each of them; provided , that such
allocation shall be specified in the Tag-Along Notice.
Section 4.4
Terms of Tag-Along Sale; Cooperation . The participating
Stockholders shall cooperate in good faith with the Transferring
Party and the Company in
16
connection with
the consummation of any Tag-Along Sale. Any sales of Common Stock
by a Stockholder as a result of the “Tag-Along Rights”
provided under this Article IV shall be on the same terms and
conditions as the proposed Tag-Along Sale by the Transferring
Party; provided that no Stockholder seeking to sell its
Common Stock in a Tag-Along Sale shall be required to make
representations and warranties other than with respect to title to
such Stockholder’s Common Stock, authority to enter into the
relevant transaction and other customary matters as to which a
seller of a minority interest would make representations and
warranties in a similar situation.
Section 4.5
Authority to Record Transfer/Delivery of Certificates . On
the Tag-Along Sale Date, each Stockholder, if a participant in the
applicable Tag-Along Sale, (a) authorizes the Company (or the
Company’s transfer agent, if any) to record in the
Company’s books and records the transfer of all of such
Stockholder’s Common Stock included in such Tag-Along Sale
which are not represented by one or more certificates, from the
Stockholder to the purchaser in the Tag-Along Sale and
(b) shall deliver all certificates, if any, which represent
Common Stock owned by such Stockholder included in such Tag-Along
Sale, duly endorsed for transfer with signatures guaranteed, to the
purchaser in the Tag-Along Sale, in the manner and at the address
indicated in the Tag-Along Notice, in each case against delivery of
the purchase price for such shares. In addition, each Stockholder,
if a participant in the applicable Tag-Along Sale, shall take all
action the Transferring Party or the purchaser in the Tag-Along
Sale shall reasonably request as necessary to vest in the purchaser
in the Tag-Along Sale all Common Stock owned by such Stockholder
included in such Tag Along Sale, whether in certificated or
uncertificated form, free and clear of all liens, charges and
encumbrances of any kind.
Section 4.6
Exempt Transfers . The provisions of this Article IV
shall not apply to (a) any sale of Common Stock in an
underwritten public offering of Common Stock pursuant to an
effective registration statement under the Securities Act, either
in connection with or following the consummation of a Public
Offering Event, or following the consummation of a Public Offering
Event, pursuant to Rule 144 thereunder or as trades effected
on any stock exchange or quotation system after the restrictions of
Rule 144 no longer apply; (b) any GEI Distribution (as
defined in Article XI) or any transaction pursuant to
Article IX.
Section 4.7
Preemptive Rights .
(a) In
the event of a Company Preemptive Rights Transaction (as defined
below), the Executive Stockholders, the GEI Parties and each GEI
Transferee and Executive Transferee (the “ Preemptive
Rights Holders ”) shall have the preemptive right (the
“ Preemptive Right ”) to purchase Covered
Securities (as defined below) on the terms and subject to the
conditions of this Section 4.7. The Company agrees that it
will not issue or sell Covered Securities in a Company Preemptive
Rights Transaction without first complying with the provisions of
this Section 4.7.
(b) For
purposes of this Section 4.7:
(i) The “
Aggregate Percentage ” of a Preemptive Rights Holder
with respect to Common Stock, as of a specified date, means the
percentage determined by dividing (A) the aggregate number of
outstanding shares of
17
Common Stock
held by such Preemptive Rights Holder on such date by (B) the
aggregate number of outstanding shares of Common Stock, (other than
treasury shares) as of such date.
(ii) A “
Company Preemptive Rights Transaction ” means any
issuance by the Company of Covered Securities (other than the sale
of Common Stock to the Executive on the date hereof) prior to the
occurrence of a Public Offering Event; provided ,
however , that none of the following shall be deemed to be a
Company Preemptive Rights Transaction: (A) the issuance to
directors, officers, employees and consultants of the Company and
Subsidiaries of restricted Common Stock and/or stock options
exercisable for shares of Common Stock pursuant to the Company
Stock Option Plan, as well as the issuance of Common Stock upon the
exercise of such options; or (B) the issuance of Covered
Securities in connection with (1) any arms-length merger,
consolidation, share exchange or similar transaction of the Company
or any of its Subsidiaries with any other Person or (2) the
arms-length strategic acquisition by the Company or any of its
Subsidiaries of the capital stock (or other equity interests) or
assets of any other Person.
(iii) “
Covered Security ” means any equity security of the
Company and any Derivative Security.
(iv) “
Derivative Security ” means any security of the
Company or any of its Subsidiaries exercisable for, or convertible
or exchangeable into, an equity security of the Company, including
options, warrants and convertible debt securities.
(c) Such
Preemptive Right will be offered to each Preemptive Rights Holder
(such offer, the “ Preemptive Rights Offer ”)
pursuant to a written notice from the Company, delivered no less
than 30 days and no more than 60 days prior to the proposed
Company Preemptive Rights Transaction, offering such Preemptive
Rights Holders the Covered Securities on the same terms and
conditions as offered to the other proposed purchaser(s) in the
Company Preemptive Rights Transaction (such written notice, the
“ Preemptive Rights Notice ”). The Preemptive
Rights Notice will specify the material terms and conditions of the
offering, including (i) the aggregate offering amount and
offering price per share, (ii) the identity of each proposed
purchaser, (iii) the number of Covered Securities proposed to
be acquired by each proposed purchaser, and (iv) all written
financial information and other disclosures provided by the Company
to any other proposed purchaser in such offering.
(d) Each
Preemptive Rights Holder will have 20 days from the date of
the Preemptive Rights Notice to notify the Company and other
Preemptive Rights Holders in writing of its binding acceptance of
such Preemptive Rights Offer (a “ Subscription Notice
”), on the same terms and conditions as set forth in such
Preemptive Rights Offer, with respect to all or any portion of the
Covered Securities which is offered to such Preemptive Rights
Holder pursuant to the Preemptive Rights Offer; provided ,
that, if at the time of the delivery of the Preemptive Rights
Notice, the Company is unable to specify the price or other
consideration for which the Covered Securities are to be sold, then
(i) the Company shall (A) use commercially
reasonable
18
efforts to
include in the Preemptive Rights Notice as much information as
possible regarding the contemplated pricing of the transaction and
(B) notify the Preemptive Rights Holders as promptly as
practicable after delivery of the Preemptive Rights Notice of the
final pricing and (ii) each Preemptive Rights Holder shall
have at least 5 business days following the receipt of final
pricing information to deliver a Subscription Notice.
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