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Exhibit 10.15
Execution Copy
MXENERGY INC.
THIRD AMENDED AND RESTATED
STOCKHOLDERS’ AGREEMENT
This Third Amended and Restated Stockholders’ Agreement is
made and entered into as of June 25, 2004, by and among MxEnergy
Inc., a Delaware corporation (the " Company "), Charter Mx
LLC, a Delaware limited liability company (" Charter Mx "),
the parties listed on Exhibit A annexed hereto (the "
Investors ," and together with the Charter Mx, the "
Series A Investors "), Lathi LLC, a Delaware limited
liability company (" Lathi "), Jeffrey A. Mayer, Carol R.
Artman-Hodge and Daniel P. Burke, Sr. (each an " Original
Stockholder " and collectively, the " Original
Stockholders ") and the individuals and entities listed on
Exhibit B annexed hereto (collectively the " Other
Stockholders " and individually an " Other Stockholder
"). The Series A Investors, Lathi, the Original Stockholders and
the Other Stockholders are referred to herein collectively as the "
Stockholders " and individually as a " Stockholder
."
WITNESSETH:
WHEREAS, following the execution and delivery of this Agreement,
the Company will issue and sell to the Series A Investors, and the
Series A Investors will purchase from the Company, shares of Series
A Convertible Preferred Stock, par value $0.01 of the Company (the
" Series A Stock "), pursuant to the terms and conditions
set forth in that certain Series A Convertible Preferred Stock
Purchase Agreement, dated June 25, 2004 (the " Purchase
Agreement "), by and among the Company and the Series A
Investors; and
WHEREAS, it is a condition precedent to the obligations of the
Series A Investors under the Purchase Agreement that parties to
that certain Second Amended and Restated Shareholders Agreement
dated as of March 5, 2001 by and among the Company, Lathi, the
Original Stockholders and the Other Stockholders, as amended on May
31, 2002 and November 14, 2003 (the " Existing Shareholders
Agreement ") terminate such agreement as of the date hereof;
and
WHEREAS, it is a condition precedent to the obligations of the
Series A Investors under the Purchase Agreement that the Company,
Lathi, the Original Stockholders, the Other Stockholders and the
Series A Investors enter into this Agreement; and
WHEREAS, the Company, Lathi, the Original Stockholders, the
Other Stockholders and the Series A Investors desire to enter into
this Agreement for the purpose of regulating certain aspects of the
relationship of the Original Stockholders, the Other Stockholders,
Lathi and the Series A Investors as stockholders of the Company;
and
WHEREAS, it is in the best interests of the Company and the
Stockholders that such aspects of their relationship be so
regulated.
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1.
Definitions . As used in this Agreement, the following terms
shall have the following respective meaning (such meanings being
equally applicable to both the singular and plural form of the
terms defined):
" 10% Owner " means any Person who, immediately prior to
the contemplated transaction, owns in excess of 10% of the Stock on
a Fully Diluted Basis, such percentage subject to appropriate
adjustment for stock splits, reverse stock splits, combinations and
other recapitalizations.
" 15% Owner " means any Person who, immediately prior to
the contemplated transaction, owns in excess of 15% of the Stock on
a Fully Diluted Basis, such percentage subject to appropriate
adjustment for stock splits, reverse stock splits, combinations and
other recapitalizations.
" Affiliate " means, with respect to any Person, any
other Person that directly or indirectly through one or more
intermediaries Controls, is controlled by or is under common
control with such Person and, as to any Person that is an
individual, such individual’s Family Members and any trust
for the benefit of any such Persons.
" Agreement " means this Third Amended and Restated
Stockholders’ Agreement, including all amendments,
modifications and supplements hereto and any exhibits or schedules
to any of the foregoing, and shall refer to this Agreement as the
same may be in effect at the time such reference becomes
operative.
" Approved Sale " has the meaning ascribed thereto in
Section 3.7 hereof.
" Auction " has the meaning ascribed thereto in
Section 3.5(c) hereof.
" Auction Offeree(s) " has the meaning ascribed thereto
in Section 3.5(c)(i) hereof.
" Audit Committee " means the Audit Committee of the
Board of Directors.
" Bankruptcy Code " has the meaning ascribed thereto in
Section 9.7 hereof.
" Bid Price " has the meaning ascribed thereto in
Section 3.5(c)(i) hereof.
" Board of Directors " means the Board of Directors of
the Company.
" Business Day " has the meaning ascribed thereto in
Section 3.5(c)(i) hereof.
" Bylaws " means the Amended and Restated Bylaws of the
Company in the form attached as Exhibit D to the Purchase
Agreement.
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" Certificate of Incorporation " means the Certificate of
Incorporation of the Company, as amended.
" Charter Mx " has the meaning ascribed thereto in the
introduction hereof.
" Claims " has the meaning ascribed thereto in
Section 8.2 hereof.
" Committees " has the meaning ascribed thereto in
Section 2.2 hereof.
" Common Share Equivalents ," at any time, means Common
Stock at the time outstanding or issuable upon conversion or
exercise of the Series A Stock or any other securities convertible
into or exercisable for Common Stock.
" Common Stock " means the shares of Common Stock, par
value $0.01, of the Company.
" Company " has the meaning ascribed thereto in the
introduction hereof.
" Company Notice " has the meaning ascribed thereto in
Section 3.5(c)(ii) hereof.
" Company Securities " means (i) any shares of its Common
Stock, (ii) any other capital stock or other equity securities of
the Company or equity-linked securities, including, without
limitation, shares of Series A Stock, (iii) any option, warrant or
other right to subscribe for, purchase or otherwise acquire any
capital stock or other equity securities of the Company, or (iv)
any debt or other securities directly or indirectly convertible
into capital stock or other equity securities of the Company.
"Company Securities" shall not include (x) those options,
warrants, convertible securities or shares of Common Stock excluded
from the definition of Additional Common Stock pursuant to
Section (B)4(d)(i)(4) of the Series A Certificate of
Designation; or (y) any securities issued upon exercise or
conversion of any other securities, provided that the
preemptive rights provided herein applied with respect to the
initial sale or issuance of such other securities or such other
securities are specifically excluded from the definition of Company
Securities pursuant to this clause (x) of this sentence.
" Compensation Committee " means the Compensation
Committee of the Board of Directors.
" Consent Right Holders " has the meaning ascribed
thereto in Section 6.1 hereof.
" Controls " including, with correlative meanings, the
terms "controlled by" and "under common control with," means, as to
any Person, the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by
contract or otherwise.
" Conversion Price " has the meaning set forth in the
Series A Certificate of Designation.
" Equivalent Price " shall be determined as
follows: with respect to (A) any share of Series A Stock
proposed to be sold, the Equivalent Price for a share of Common
Stock shall be the lesser of (i) the amount determined by dividing
the amount payable in respect of such share of
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Series A Stock by the number of Common Share Equivalents
represented by such share of Series A Stock and (ii) the fair
market value of a share of Common Stock (as determined in good
faith by the Board of Directors, taking into account the
liquidation preference of the Series A Stock) and (B) any share of
Common Stock proposed to be sold, the Equivalent Price for a share
of Series A Stock shall be equal to the product of (x) the amount
payable in respect of such share of Common Stock and (y) the number
of Common Share Equivalents represented by such share of Series A
Stock.
" Exchange Act " means the Securities Exchange Act of
1934, as amended.
" Executive Committee " means the Executive Committee of
the Board of Directors.
" Existing Other Stockholders " has the meaning ascribed
thereto in Section 5.1.
" Existing Shareholders Agreement " has the meaning
ascribed thereto in the recitals hereof.
" Family Member " means a spouse (or domestic partner),
lineal descendant (by birth or adoption), father, mother, brother,
sister, niece, nephew or lineal descendant of father or mother (by
birth or adoption) of a Stockholder.
" Follow-up Offer " has the meaning ascribed thereto in
Section 4.3 hereof.
" Fully Diluted Basis " means the amount of Common Stock
outstanding calculated as if all securities convertible into or
exchangeable for Common Stock at such time has been fully converted
into or exchanged for shares of Common Stock, and any outstanding
vested warrants, options or other rights for the purchase of Common
Stock or securities convertible into Common Stock had been fully
exercised as of such time, in each case, without regard to whether
such instruments are then exercisable or convertible.
" Future Issuance " has the meaning ascribed thereto in
Section 5.1 hereof.
" Greenhill Funds " means Greenhill Capital Partners,
L.P., a Delaware limited partnership, Greenhill Capital Partners
(Cayman), L.P., a Cayman Islands limited partnership, Greenhill
Capital Partners (Executives), L.P., a Delaware limited partnership
and Greenhill Capital, L.P., a Delaware limited partnership.
" Governmental Authority " means any nation or
government, any state or other political subdivision thereof and
any Person exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government.
" Independent Third Party " means any Person who is not a
15% Owner, who is not controlling, controlled by or under common
control with any such 15% Owner and who is not a Family Member of
any such 15% Owner or a trust for the benefit of such 15% Owner or
such other Person.
" Investors " has the meaning ascribed thereto in the
introduction hereof.
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" Joining Price " has the meaning ascribed thereto in
Section 3.6(b) hereof.
" Joining Terms " has the meaning ascribed thereto in
Section 3.6(b) hereof.
" Key Employees " has the meaning ascribed thereto in
Section 7.3 hereof.
" Knowledge " of a particular fact or other matter means,
in the case of an individual that a prudent individual could be
expected to discover or otherwise become aware of such fact or
other matter in the course of conducting a reasonably comprehensive
investigation concerning the existence of such fact or other matter
and, in the case of a Person other than an individual, that any
individual who is serving, or who has at any time served, as a
director, officer, partner, member, manager, executor, or trustee
of such Person (or in any similar capacity) has, or at any time
had, Knowledge of such fact or other matter.
" Lathi " has the meaning ascribed thereto in the
introduction hereof.
" Lathi Dilutive Sale " has the meaning ascribed thereto
in Section 5.1 hereof.
" Lathi Loan Agreement " means that certain Loan
Agreement dated as of September 1, 2001 between Lathi and the
Company, as amended on July 2, 2002, as amended and restated by
that certain Amended and Restated Loan Agreement dated as of
November 14, 2003 between Lathi and the Company, as amended on
March 25, 2004 and as the same may be amended from time to
time.
" Liquidation Event " has the meaning set forth in the
Series A Certificate of Designation.
" Lowest-Bid-Price Offeree " has the meaning ascribed
thereto in Section 3.5(c)(iii)(2) hereof.
" Minimum Acceptable Price " has the meaning ascribed
thereto in Section 3.5(c) hereof.
" Notice of Acceptance " has the meaning ascribed thereto
in Section 4.2 hereof.
" Notice of Auction Commencement " has the meaning
ascribed thereto in Section 3.5(c)(ii)(2) hereof.
" Notice of Offer " has the meaning ascribed thereto in
Section 3.5(b) hereof.
" Offer " has the meaning ascribed thereto in
Section 4.1 hereof.
" Offer Price " has the meaning ascribed thereto in
Section 3.5(b) hereof.
" Offered Shares " has the meaning ascribed thereto in
Section 3.5(b) hereof.
" Original Issue Date " means the date on which the
Series A Stock was first issued.
" Original Series A Stock Issue Price " has the meaning
set forth in the Series A Certificate of Designation.
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" Original Stockholder(s) " has the meaning ascribed
thereto in the introduction hereof.
" Other Stockholder(s) " has the meaning ascribed thereto
in the introduction hereof.
" Other Stockholders Dilutive Sale " has the meaning
ascribed thereto in Section 5.1 hereof.
" Permitted Transferees " has the meaning ascribed
thereto in Section 3.4 hereof.
" Person " means an individual or a corporation, limited
liability company, partnership, trust, incorporated or
unincorporated association, joint venture, joint stock company,
Governmental Authority or other entity of any kind.
" Preemptive Right Holder(s) " has the meaning ascribed
thereto in Section 4.1 hereof.
" Proportionate Percentage " has the meaning ascribed
thereto in Section 4.1 hereof.
" Purchase Agreement " has the meaning ascribed thereto
in the recitals hereof.
" Purchase Offer " has the meaning ascribed thereto in
Section 3.6(b) hereof.
" Qualified Public Offering " means the Company’s
sale of shares of its Common Stock in a bona fide firm commitment
underwritten public offering pursuant to a registration statement
on Form S-1 (or a successor form) under the Securities Act, which
results in an aggregate offering price of not less than $75,000,000
and a per share offering price of not less than (x) one and
one-half (1.5) times the Conversion Price (appropriately adjusted
to reflect the occurrence of any stock split, dividend, combination
or similar event) for offerings occurring on or prior to the first
anniversary of the Original Issue Date and (y) two (2) times the
Conversion Price (appropriately adjusted to reflect the occurrence
of any stock split, dividend, combination or similar event) for
offerings occurring after the first anniversary of the Original
Issue Date.
" Qualifying Bid " has the meaning ascribed thereto in
Section 3.5(c)(i) hereof.
" Remaining Company Securities " has the meaning ascribed
thereto in Section 4.3 hereof.
" RFR Acceptance Notice " has the meaning ascribed
thereto in Section 3.5(c) hereof.
" RFR Option Period " has the meaning ascribed thereto in
Section 3.5(c) hereof.
" RFR Participant(s) " has the meaning ascribed thereto
in Section 3.5(c) hereof.
" Rule 144 Sales " means open market sales pursuant to
Rule 144 under the Securities Act (or any successor rule or
regulation) and in compliance with the requirements of paragraphs
(c), (e) and (f) of such Rule, without giving effect to paragraph
(k) of such Rule.
" Securities Act " means the Securities Act of 1933, as
amended.
" Selling Party " has the meaning ascribed thereto in
Section 3.6(a) hereof.
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" Selling Stockholder " has the meaning ascribed thereto
in Section 3.5(b) hereof.
" Series A Certificate of Designation " means the
Certificate of Designation of Series A Stock of the Company
attached as Exhibit A to the Purchase Agreement, as the same may be
amended from time to time.
" Series A Director " means the director(s) appointed by
the Series A Investors.
" Series A Investors " has the meaning ascribed thereto
in the introduction hereof.
" Series A Share Equivalents " means the Series A Stock
and any Common Stock issued and outstanding as a result of the
conversion or exercise of the Series A Stock.
" Series A Stock " has the meaning ascribed thereto in
the recitals hereof.
" Stock " means, collectively, the Common Stock and the
Series A Stock whenever or however acquired.
" Stockholder(s) " has the meaning ascribed thereto in
the introduction hereof.
" Tag-Along Right Holders " has the meaning ascribed
thereto in Section 3.6 hereof.
" Third-Party Transferee " has the meaning ascribed
thereto in Section 3.5(e) hereof.
" Tier " has the meaning ascribed thereto in
Section 3.5(c)(i) hereof.
" Voting Stock " means capital stock of any class or
classes of the Company, the holders of which are entitled to
participate generally in the election of the members of the Board
of Directors, and shall include, without limitation, the Common
Stock and the Series A Stock.
2.
Voting Rights .
2.1
Board of Directors . Each Stockholder shall vote (or shall
cause to be voted) all shares of Voting Stock owned or controlled
by such Stockholder (including any shares of Voting Stock hereafter
acquired), at any regular or special meeting of stockholders of the
Company, shall take all action by written consent in lieu of such
meeting of stockholders, and shall take all other actions
necessary, to ensure that:
(a)
the Board of Directors of the Company and each of its subsidiaries
shall consist of at least six (6) members but no more than fifteen
(15) members;
(b)
members of the Board of Directors of the Company and each of its
subsidiaries shall be elected as follows:
(i)
for so long as the outstanding Series A Stock represents 10% or
more of the Common Stock, on a Fully Diluted Basis, the holders of
the outstanding shares of Series A Stock, voting as a separate
class, shall be entitled, as provided in Section (B)5(b) of the
Series A Certificate of Designation, to elect a number of directors
equal to the
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largest whole number that is less than or equal to the number of
directors comprising the entire Board of Directors divided by five,
but in no event less than one (1) director;
(ii)
for so long as Lathi holds 10% or more of the Common Stock, on a
Fully Diluted Basis, the holders of the Series A Stock and the
Common Stock, voting together as a single class, one (1) director
designated by Lathi; and
(iii) the
holders of the Series A Stock and the Common Stock, voting together
as a single class, shall elect the remaining number of directors
authorized; provided , however , that these rights
may be modified pursuant to Section (B)5(c) of the Series A
Certificate of Designation.
2.2
Committees of the Board . The Company shall establish the
following committees (collectively, the " Committees ") of
the Board of Directors: an Executive Committee, a
Compensation Committee and an Audit Committee. Such Committees
shall have the powers and duties set forth in the resolutions of
the Board of Directors authorizing the establishment of such
Committees. The Board of Directors may establish any other
committees if it determines that the creation of any such
committees is in the best interests of the Company. The Board of
Directors shall delegate to any such committees those duties and
powers as are customarily performed by committees of such type. No
Committee shall have more than three (3) members. At least one (1)
director appointed by the holders of the Series A Stock shall serve
on each Committee.
2.3
Removal . The Bylaws shall provide that: (a) a director
designated and elected pursuant to Section 2.1 may be removed
from the Board of Directors during such director’s term of
office, either for or without cause by, and only by, the
affirmative vote of the holders of a majority of the shares of such
class or classes, as applicable, given at a special meeting of the
stockholders duly called or by an action by written consent for
that purpose; and (b) any director (regardless of how
designated) may be removed for cause. Each holder of shares of such
Voting Stock hereby agrees to vote all such shares then owned or
held of record by him, or to take action by written consent, to
effect the removal described in clause (a) of this
Section 2.3.
2.4
Vacancies . In the event that a vacancy is created on the
Board of Directors or the respective boards of directors of the
Company’s subsidiaries by the death, disability, retirement,
resignation or removal (with or without cause) of a director or
otherwise there shall exist or occur any vacancy on the Board of
Directors or the respective boards of directors of the
Company’s subsidiaries, each Stockholder hereby agrees to
vote or take action by written consent, in each case, to the extent
such Stockholder shall be entitled to do so, to cause the vacancy
to be filled by a designee of the particular class or classes of
stock who had designated or was entitled to designate the director
whose position has become vacant, provided that such
designee was not previously a director of the Company or any of its
subsidiaries who was removed for cause from the Board of Directors
or the respective boards of directors of the Company’s
subsidiaries.
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2.5
Observer Rights . For so long as the Greenhill Funds owns no
less than all of the Series A Stock owned by the Greenhill Funds on
the Original Issue Date, the Company shall invite and permit a
representative of the Greenhill Funds to attend all meetings of the
Board of Directors (and all committees thereof) in a nonvoting
observer capacity and, in this respect, shall give such
representative copies of all notices, minutes, consents and other
material that is provided to its directors; provided ,
however , that the Company reserves the right to exclude
such representative from access to any material, meeting or portion
thereof if the Company believes upon advice of counsel that such
exclusion is reasonably necessary to preserve the attorney-client
privilege. Such representative may participate in discussion of
matters brought to the Board of Directors and may address the Board
of Directors.
2.6
No Proxies . Each Stockholder covenants and agrees that,
except (i) as a result of transfers permitted by, and pursuant to
and in accordance with, this Agreement, (ii) as otherwise provided
in the last sentence of Section 2.8 hereof, or (iii) as
provided pursuant to a duly called stockholders meeting where such
Stockholder grants its proxy to a Board designated proxy holder for
the purposes of such meeting (which such proxy permits such
designee to vote solely in accordance with the terms of this
Agreement), such Stockholder will have sole voting power with
respect to such Stockholder’s Voting Stock and will not grant
any proxy with respect to such Voting Stock, enter into any voting
trust or other voting agreement or arrangement with respect to such
Voting Stock or grant any other rights to vote such Voting Stock
other than the agreement to vote such Voting Stock set forth
herein.
2.7
Director Expenses . The Company shall bear all reasonable
out-of-pocket travel and related expenses incurred in accordance
with the Company’s written policies regarding employees by
each non-employee member of the Board of Directors or the
respective boards of directors of any of the Company’s
subsidiaries associated with attending board meetings and any
Committees thereof.
2.8
Further Assurances . In order to effectuate the provisions
of this Section 2, the Stockholders hereby agree that when any
action or vote is required to be taken by such Stockholders
pursuant to this Agreement, such Stockholders shall use their
respective commercially reasonable efforts to call, or cause the
appropriate officers and directors of the Company to call, a
special or annual meeting of stockholders of the Company, as the
case may be, or execute or cause to be executed a consent in
writing in lieu of any such meetings pursuant to the Delaware
General Corporation Law, to effectuate such stockholder action. In
addition, if any Stockholder shall fail to vote as required by the
specific terms of this Section 2, such Stockholder shall be
deemed to have irrevocably constituted and appointed the other
Stockholders as his proxy coupled with an interest to vote such
Stockholder’s Voting Stock on a pro rata basis in accordance
with the terms of this Section 2.
3.
Restrictions on Transfer .
3.1
General Restrictions .
(a)
In addition to each other restriction on transfer contained in this
Agreement, except for (i) Rule 144 Sales, (ii) a sale of shares in
a registered public offering and
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(iii) a transfer to the Company, no Stockholder shall sell,
assign, transfer, pledge, or otherwise encumber or dispose of any
Stock or any interest therein to any Person (regardless of the
manner in which such Stockholder initially acquired such Stock),
unless (a) the certificates representing the securities issued to
the transferee bear appropriate legends reflecting the restrictions
on transfer contained in this Agreement substantially to the
following effect:
-
-
-
-
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE PROVISIONS OF A STOCKHOLDERS’ AGREEMENT DATED AS OF JUNE
25, 2004 (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY) AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE
PROVISIONS OF SUCH STOCKHOLDERS’ AGREEMENT.
and (b) the transferee (if not already a party to this
Agreement) shall have executed and delivered to the Company, as a
condition to its acquisition of any such securities, an executed
signature page in the form of Exhibit C to this Agreement
and such additional documentation as reasonably requested by the
Company, confirming that such transferee takes such securities
subject to all the terms and conditions of this Agreement. During
the term of this Agreement, each certificate representing
securities of the Company held by a Stockholder or any Permitted
Transferee shall bear the foregoing legend upon its face.
3.2
In addition to each other restriction on transfer contained in this
Agreement, no Stockholder shall sell, assign, transfer, pledge or
otherwise encumber or dispose of any shares of Stock, or any
interest therein, to any Person unless such sale, assignment,
transfer, pledge or other encumbrance or disposition is pursuant to
an effective registration statement under the Securities Act and
under applicable state securities laws or an exemption from such
registration is available.
3.3
(a) The
restrictions on transfer contained in this Agreement are in
addition to, and not in limitation of, each other restriction on
transfer contained in any other agreement between the Company and
any Stockholder.
(b)
Any transfer of any shares of Stock pursuant to this Agreement
shall be subject in all cases to the receipt of any required
regulatory approvals.
3.4
Certain Permitted Transfers . Notwithstanding anything in
this Agreement to the contrary, the restrictions contained in
Sections 3.5 through 3.7 of this Agreement with respect to
transfers of Stock shall not apply to any one or more
transfers:
(a)
pursuant to a registered public offering;
(b)
without consideration by a Stockholder who is a natural person to a
Family Member of such Stockholder or to a trust, corporation,
partnership, limited liability
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company or other entity of which there are no principal
beneficiaries, shareholders, partners or equity holders other than
the Family Members of such Stockholder;
(c)
to a legal representative in the event any Stockholder who is a
natural person becomes mentally incompetent;
(d)
by a Stockholder to an Affiliate of such Stockholder (including,
without limitation, any transfer by Charter Mx or any of the
Greenhill Funds to any of their respective members or partners or
to the partners of their Affiliates and by Lathi to Sowood
Commodity Partners LP or any of its Affiliates); and
(e)
by a Stockholder to the Company pursuant to any agreement between
the Company and that Stockholder.
provided that in each of cases (b), (c) and (d), it shall
be a condition to any such transfer that each transferee execute
the signature page attached as Exhibit C hereto and any
other agreement in form and substance reasonably satisfactory to
the Company pursuant to which such transferee agrees in writing to
take such Stock subject to, and to comply with, all terms and
conditions contained in this Agreement. In addition, none of the
restrictions on transfers of Stock contained in this Agreement
shall apply to a transfer by a Stockholder who is a natural person
upon his or her death, by will, by the laws of descent or by
operation of law, except that it shall be a condition to any such
transfer that each transferee execute the signature page attached
as Exhibit C hereto and any other agreement in form and
substance reasonably satisfactory to the Company pursuant to which
such transferee agrees in writing to take such Stock subject to,
and to comply with, all terms and conditions contained in this
Agreement. Any transfer of Stock, or any interest therein, pursuant
to and in compliance with this Section 3.4 shall be a
permitted transfer under this Agreement, any transferee of Stock,
or any interest therein, pursuant to and in compliance with this
Section 3.4 (other than the Company) is herein referred to as
a " Permitted Transferee ," and if not previously a
Stockholder, shall, upon consummation of the transfer, be deemed a
Stockholder and shall be included in the class of Stockholders in
which the transferring Stockholder was included under this
Agreement (for example, the Series A Investors).
3.5
Right of First Refusal . Except as otherwise permitted under
Section 3.4 of this Agreement, and except for Rule 144 Sales
and sales of shares in registered public offerings, a Stockholder
may sell or otherwise transfer shares of Stock, or any interest
therein, only in compliance with the provisions of this
Section 3.5.
(a)
No Stock, or any interest therein (including, without limitation,
any equity-linked security), shall be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of, directly or
indirectly, by any Stockholder except in accordance with the
provisions of this Agreement, the Bylaws, the Certificate of
Incorporation and the Series A Certificate of Designation, as
applicable. The Company shall not transfer upon its books and
records any Stock purported to be transferred to any Person in
violation of this Section 3.5.
(b)
If any one or more Stockholders (each, a " Selling
Stockholder ") wishes to transfer any of its Stock in
compliance with this Section 3.5, the Selling Stockholder
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shall first deliver written notice to the Company (the "
Notice of Offer "), which Notice of Offer shall specify (i)
the number of shares of Stock owned by the Selling Stockholder
which it wishes to sell (the " Offered Shares "); (ii) the
proposed consideration per share for the Offered Shares (the "
Offer Price "); and (iii) all other terms and conditions of
the offer.
(c)
If a Selling Stockholder desires to sell Offered Shares pursuant to
Section 3.5 hereof, it may, in its sole discretion, elect in
its Notice of Offer delivered pursuant to Section 3.5(b)
hereof to authorize the Company to conduct a declining-clock Dutch
auction in accordance with the procedures set forth in this
Section 3.5(c) (an " Auction "). Any Selling
Stockholder making such an election shall be deemed irrevocably to
have agreed, for the benefit of the Auction Offerees (as defined
below) to whom Offered Shares are allocated pursuant to the Auction
procedures set forth in this Section 3.5(c), to sell the
Offered Shares that are so allocated to such Auction Offerees at
the prices (which shall not be less than the Minimum Acceptable
Price (as defined below)) determined by the Auction procedures. The
Offer Price indicated in the Notice of Offer shall be considered
the " Minimum Acceptable Price " for purposes of this
Section 3.5(c). Notwithstanding the Selling
Stockholder’s election, the Board of Directors (with the
consent of the Series A Director) may in its sole discretion
determine that the Company should decline to conduct an Auction, in
which case the provisions of Section 3.5(d) through (g) hereof
shall apply to the sale of such Selling Stockholder’s Offered
Shares. No Auction Offeree shall be precluded from communicating
with any other potential Auction Offeree concerning an Auction
conducted pursuant to this Section 3.5(c).
(i)
Certain defined terms:
(1)
" Qualifying Bid " within any Tier (as defined below) means
a bid submitted by an Auction Offeree in that Tier that:
a. is timely submitted under the
provisions of this Section 3.5(c).
b. offers a bid price (the " Bid
Price ") at or above the Minimum Acceptable Price.
c. states a number of Offered Shares
that such Auction Offeree wishes to purchase, which shall not be in
excess of the total number of Offered Shares offered to Auction
Offerees in that Tier.
d. irrevocably offers to purchase all
Offered Shares allocated to such Auction Offeree in accordance with
the Auction procedures set forth in this Section 3.5(c).
(2)
" Tier " refers to any of the successive stages of an
Auction conducted in accordance with this Section 3.5(c)
involving offers to successive groups of Auction Offerees as
provided under the definition of Auction Offeree (as defined
below).
(3)
" Auction Offeree " means any of the holders of capital
stock of the Company who may be offered the opportunity to purchase
Offered Shares
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under the provisions of this Section 3.5(c) who, if offered
the opportunity to purchase Offered Shares under the provisions of
this Section 3.5(c), will be offered such opportunity in the
following order (in all cases, other than the Selling
Stockholders):
a. if the Offered Shares are shares of
Common Stock:
i.
First-Tier Auction Offeree: the Company.
ii. Second-Tier
Auction Offerees: the holders of shares of Series A Stock and
Lathi.
iii. Third-Tier
Auction Offerees: the Original Stockholders.
iv. Fourth-Tier
Auction Offerees: the Other Stockholders.
b. if the Offered Shares are shares of
Series A Stock:
i.
First-Tier Auction Offeree: the Company.
ii. Second-Tier
Auction Offerees: the holders of shares of Series A
Stock.
iii. Third-Tier
Auction Offerees: Lathi.
iv. Fourth-Tier
Auction Offerees: the Original Stockholders.
v. Fifth -Tier
Auction Offerees: the Other Stockholders.
(4)
" Business Day " means any day other than a Saturday, Sunday
or day on which national banks in New York City are authorized to
close.
(ii)
Within five Business Days of receipt by the Company of a Notice of
Offer from a Selling Stockholder pursuant to Section 3.5(b)
hereof containing an election to authorize the Company to conduct
an Auction, the Company shall provide written notice (the "
Company Notice ") to the Selling Stockholder to the effect
that the Board of Directors (with the consent of the Series A
Director) has determined that the Company either (a) elects to
proceed with an Auction pursuant to this Section 3.5(c), or
(b) declines to proceed with an Auction pursuant to this
Section 3.5(c). If the Board of Directors determines that the
Company elects to proceed with an Auction:
(1)
If the Company, as the First Tier Auction Offeree, wishes to
purchase any Offered Shares (as determined by the Board of
Directors, with the consent of the Series A Director), it shall
allocate to itself the number of Offered Shares it wishes
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to purchase and shall provide written notice to the Selling
Stockholder within five Business Days of the date of the Company
Notice. Such notice shall set forth the number of Offered Shares
the Company has allocated to itself and the price per share that
the Company will pay for such Offered Shares, which shall not be
less than the Minimum Acceptable Price.
(2)
If the Company, as the First Tier Auction Offeree, does not wish to
purchase any or all of the Offered Shares, the Company shall
provide written notice to each Second Tier Auction Offeree of the
commencement of the Auction for such Tier (" Notice of Auction
Commencement ") within five Business Days of the date of the
Company Notice. The Notice of Auction Commencement delivered to
each Second Tier Auction Offeree (and to the Auction Offerees of
each subsequent Tier) shall set forth the number and class of
Offered Shares being offered to Auction Offerees in such Tier, the
amount of the Minimum Acceptable Price and the deadline for
submission of a Qualifying Bid. Any Second Tier Auction Offeree who
wishes to purchase Offered Shares must submit a Qualifying Bid to
the Company within five Business Days of the date of the Notice of
Auction Commencement. In the event all Offered Shares are not
allocated to Second Tier Auction Offerees who have submitted
Qualifying Bids within three Business Days of the conclusion of the
five Business-Day period referred to above for Second Tier Auction
Offerees (and within three Business Days of the conclusion of a
similar five Business-Day period for successive Auction Tiers), the
Company shall send successive Notices of Auction Commencement to
Auction Offerees in each successive Tier, provided that no
further Notices shall be sent following the allocation hereunder of
all of the Offered Shares.
(iii)
Offered Shares shall be allocated among each Tier’s Auction
Offerees submitting Qualified Bids in the following
manner:
(1)
If Qualifying Bids are submitted by Auction Offerees in any Tier
that offer to take up fewer than, or exactly,
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