PORTIONS OF THIS DOCUMENT INDICATED BY AN [***] HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT OF SUCH INFORMATION.
EXHIBIT 4.3
BRIGHTSTAR CORP.
STOCKHOLDERS' AGREEMENT
DATED: DECEMBER 30,2003
TABLE OF CONTENTS
PAGE
----
1. DEFINITIONS................................................. 2
2. TRANSFER RESTRICTIONS....................................... 7
2.1. General Restrictions.................................. 7
2.2. Certain Permitted Transfers........................... 7
2.3. Preemptive Rights and Rights of First Offer........... 7
2.4. Right of Co-Sale...................................... 10
3. DRAG-ALONG RIGHTS........................................... 11
3.1. Sale of Control....................................... 11
3.2. Closing............................................... 11
4. REGISTRATION RIGHTS......................................... 12
4.1. Demand Registration Rights............................ 12
4.2. Piggyback Registration Rights......................... 14
4.3. Expenses of Registration.............................. 15
4.4. Registration Procedures and Obligations............... 15
4.5. Indemnification....................................... 17
5. BOARD OF DIRECTORS.......................................... 19
5.1. Size of Board......................................... 19
5.2. Right to Designate.................................... 19
5.3. Replacement of Director............................... 20
5.4. Certain Expenses...................................... 20
5.5. Election of Designees................................. 20
5.6. Board Meetings; Expenses; Indemnification; Insurance.. 20
5.7. Quorum; Act of the Board.............................. 21
5.8. Composition of Subsidiary Boards; Observer Rights..... 22
5.9. Fiduciary Duties...................................... 22
6. RIGHTS AND PREFERENCES OF THE SERIES A PREFERRED STOCK...... 22
7. COVENANT OF THE MANAGEMENT CONTROLLING STOCKHOLDERS......... 22
8. TERMINATION................................................. 22
9. RESTRICTIVE LEGEND.......................................... 23
10.INFORMATION RIGHTS; CONFIDENTIALITY......................... 23
i
11.MISCELLANEOUS PROVISIONS.................................... 25
11.1. Transferee Restrictions............................. 25
11.2. Notice.............................................. 25
11.3. Entire Agreement.................................... 26
11.4. Successors and Assigns.............................. 26
11.5. Amendments; Waiver.................................. 26
11.6. Applicable Law...................................... 26
11.7. Binding Effect; Benefits............................ 26
11.8. Counterparts........................................ 26
11.9. Severability........................................ 26
11.10. Headings............................................ 26
EXHIBIT A...................................................... A-l
EXHIBIT B...................................................... X-x
EXHIBIT C...................................................... C-1
ii
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (this "Agreement") is entered into and made
effective as of December 30, 2003, by and among BRIGHTSTAR CORP., a Delaware
corporation (the "Corporation"), and each of the individuals and entities listed
in Exhibit A. as amended from time to time (the "Preferred Stockholders"), and
each of the individuals and entities listed in Exhibit B. as amended from time
to time (the "Convertible Noteholders"), and the individuals and entities listed
in Exhibit C. as amended from time to time (the "Common Stockholders").
WITNESSETH:
WHEREAS, the Corporation is authorized to issue Fifty Five Million
(55,000,000) shares of capital stock of the Corporation, of which Fifty Million
(50,000,000) shares are designated as common stock, $0.0001 par value per share
("Common Stock"), and Five Million (5,000,000) shares are designated as
preferred stock, $0.0001 par value per share ("Preferred Stock"), of which Three
Million Seven Hundred Fifty Thousand (3,750,000) shares of Preferred Stock are
designated as Series A 8% Cumulative Convertible Preferred Stock ("Series A
Preferred Stock"); and
WHEREAS, each Preferred Stockholder holds the number of shares of Series A
Preferred Stock set forth opposite each such Preferred Stockholder's name on
Exhibit A attached hereto, which number collectively represents one hundred
percent (100%) of the issued and outstanding Series A Preferred Stock; and
WHEREAS, each Convertible Noteholder holds Convertible Senior Subordinated
Notes in the aggregate principal amount set forth opposite each such Convertible
Noteholder's name on Exhibit B attached hereto, which amount collectively
represents one hundred percent (100%) of the issued and outstanding Convertible
Senior Subordinated Notes; and
WHEREAS, each Common Stockholder holds the number of shares of Common
Stock set forth opposite each such Common Stockholder's name on Exhibit C
attached hereto, which collectively represents one hundred percent (100%) of the
issued and outstanding Common Stock; and
WHEREAS, in connection with the investment concurrently being made by the
Preferred Stockholders in the Series A Preferred Stock in the number of shares
of such Series A Preferred Stock as set forth opposite such Preferred
Stockholder's name on Exhibit A attached hereto, and the Convertible Noteholders
in the Convertible Senior Subordinated Notes in the amounts set forth opposite
such Convertible Noteholder's name on Exhibit B attached hereto, the Common
Stockholders, Convertible Noteholders and the Preferred Stockholders desire to
enter into this Agreement to provide for certain matters regarding the Covered
Securities and the governance of the Corporation.
1
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Definitions.
As used in this Agreement, the following terms shall have the meanings
ascribed to them in this Section 1:
"Affiliate", as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting Securities or
by contract or otherwise. Except with respect to Section 2, for purposes of this
definition, a Person shall be deemed to be "controlled by" a Person if such
Person possesses, directly or indirectly, power to vote 10% or more of the
securities having ordinary voting power for the election of directors of such
Person.
"Agreement" has the meaning set forth in the preamble hereof.
"Board" means the Corporation's Board of Directors.
"Business Day" means any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of New York or is a day on which
banking institutions located in such state are authorized or required by law or
other governmental action to close.
"Closing Date" has the meaning set forth in Section 2.3.1.2 hereof.
"Common Stock" has the meaning set forth in the preamble hereof.
"Common Stock Equivalents" shall mean options, warrants, securities or
rights convertible into or exercisable for or otherwise entitling the holder
thereof to receive directly or indirectly, shares of Common Stock.
"Common Stockholders" has the meaning set forth in the preamble hereof.
"Conversion Price" means the conversion price as defined in each of the
Purchase Agreement and the Certificate of Designation as in effect from time to
time.
"Convertible Noteholders" has the meaning set forth in the preamble
hereof.
"Convertible Securities" means any indebtedness or shares of capital stock
(including Series A Preferred Stock and Convertible Senior Subordinated Notes)
convertible into or exchangeable for Common Stock, including Common Stock
Equivalents.
2
"Convertible Senior Subordinated Notes" shall mean those Convertible
Senior Subordinated Notes issued to the investors by the Corporation on the date
hereof in the principal amount of up to Thirty One Million Seven Hundred Fifty
Thousand Dollars ($31,750,000).
"Corporation" has the meaning set forth in the preamble hereof.
"Co-Sale Election" has the meaning set forth in Section 2.4.2 hereof.
"Co-Sale Notice" has the meaning set forth in Section 2.4.1 hereof.
"Co-Sale Pro Rata Portion" means, with respect to any Investor, a fraction
(A) the numerator of which is the sum of the number of shares of Common Stock
held by such Investor, plus all Common Stock acquirable pursuant to Common Stock
Equivalents held by such Investor, and (B) the denominator of which is the
aggregate number of shares of Common Stock, plus Common Stock acquirable
pursuant to Common Stock Equivalents held by all Investor and the Offering
Stockholder.
"Covered Securities" (i) shares of Common Stock, (ii) shares of Series A
Preferred Stock, (iii) Convertible Senior Subordinated Notes, (iv) any other
shares of capital stock of the Corporation, (v) any shares into which the
securities described in the foregoing (i), (ii), (iii) and (iv) may be
converted, reclassified, redesignated, subdivided, consolidated or otherwise
changed, including, without limitation, convertible securities, (vi) any shares
of capital stock of the Corporation or any successor thereto received by the
holders of such shares in a merger, consolidation or other reorganization of or
including the Corporation, (vii) any securities now or hereafter convertible or
exchangeable into securities described in the foregoing clauses (i), (ii),
(iii), (iv) or (vi), or (viii) any interest in the foregoing (i)-(vii).
"Demand Notice" has the meaning set forth in Section 4.1.1.3 hereof.
"Demand Shares" means (i) the Common Stock issued or issuable upon
conversion of the Series A Preferred Stock; (ii) the Common Stock issued or
issuable upon conversion of the Convertible Senior Subordinated Notes; and (iii)
any Common Stock issued as a dividend or other distribution with respect to, or
in exchange for or in replacement of, the Series A Preferred Stock, Convertible
Senior Subordinated Notes or Common Stock; provided, however, that the Demand
Shares shall not include those Covered Securities that have been effectively
registered under Section 5 of the Securities Act and disposed of pursuant to an
effective registration statement.
"Demand Stockholders" has the meaning set forth in Section 4.1.1 hereof.
"Fully Diluted Capital Stock" means the sum of (i) the Corporation's
outstanding Common Stock, (ii) the shares of Common Stock issuable upon
conversion of the Series A Preferred Stock, (iii) the shares of Common Stock
issuable upon conversion of the Convertible Senior Subordinated Notes; and (iv)
the shares of Common Stock issuable upon the exercise of all other outstanding
Convertible Securities.
"GAAP" means United States generally accepted accounting principles.
3
"Governing Body" means the board of directors or other body having the
power to direct or cause the direction of the management and policies of a
Person that is a corporation, partnership, trust or limited liability company.
"Industry Participant" means any Person and Affiliates of said Person that
is engaged in the business in which the Corporation and/or its Subsidiaries are
engaged in as of the last day of the last fiscal period for which audited annual
financial statements have been delivered to the Investors pursuant to Section 10
hereof; provided, however, that no Person shall be considered to be an Industry
Participant solely as the result of the ownership by such Person of capital
stock of any other Person that is an "Industry Participant" unless such
aforementioned person owns in excess of 10% of the voting power of the
outstanding common stock of such Industry Participant (or 20% of such voting
power if such Industry Participant's common stock is registered under the
Securities Exchange Act of 1934). Without limiting the foregoing, an Industry
Participant shall be deemed to include any customers, suppliers and competitors
of the Corporation. For purposes of this section, the term "customers" and
"suppliers" shall mean any current customer and supplier, respectively, of the
Corporation and any Person who has been a customer or supplier of the
Corporation at any time during or after the last fiscal period for which audited
annual financial statements have been delivered to the Investors pursuant to
Section 10 hereof.
"Investors" means Falcon Mezzanine Partners, L.P., Prudential Capital
Partners, L.P., Prudential Capital Partners Management Fund, L.P., [***], Arrow
Investment Partners and RCG Carpathia Master Fund, Ltd., and their respective
Permitted Transferees.
"Majority Noteholder Investors" means those Investors that have purchased
Convertible Senior Subordinated Notes under the Purchase Agreement and their
Permitted Transferees holding any combination of Convertible Senior Subordinated
Notes or shares of Common Stock issued or issuable upon conversion of the
Convertible Senior Subordinated Notes which represent a majority of the shares
of Common Stock issued or issuable upon conversion of the Convertible Senior
Subordinated Notes.
"Majority Preferred Investors" means those Investors that have purchased
Series A Preferred Stock under the Purchase Agreement and their Permitted
Transferees holding any combination of Series A Preferred Stock or shares of
Common Stock issued or issuable upon conversion of the Series A Preferred Stock
which represent a majority of the shares of Common Stock issuable upon
conversion of the Series A Preferred Stock.
"Management Controlling Stockholder" means R. Xxxxxxx Xxxxxx and Xxxxx
Xxxxxxxx, and any other Stockholder, other than the Investors, beneficially
owning as of the date hereof five percent (5%) or more of the Fully Diluted
Capital Stock and his Permitted Transferees.
"New Securities" means any preferred stock, Common Stock or other capital
stock of the Corporation, whether now authorized or not, and all Common Stock
Equivalents, provided, however, that the term "New Securities" shall not
include:
a) shares or Common Stock Equivalents issued to officers,
directors, employees or consultants of the Corporation
pursuant to stock
4
option or purchase plans or similar agreements approved by the
Board;
b) any shares of Series A Preferred Stock issued under the
Purchase Agreement and any shares of Common Stock of the
Corporation issuable upon conversion of such Series A
Preferred Stock or Convertible Senior Subordinated Notes;
c) any securities issued in connection with any stock split,
stock divided or other similar event in which all Stockholders
are entitled to participate in a pro rata basis;
d) any securities issued upon the exercise, conversion or
exchange of any security if such security constituted a New
Security when issued;
e) any securities issued in the Corporation's Qualified Public
Offering;
f) any securities issued pursuant to the acquisition of another
corporation or entity by the Corporation from a third party
that is not an Affiliate of the Corporation by consolidation,
merger, purchase of assets, or other reorganization in which
the Corporation acquires, in a single transaction or series of
related transactions, all or substantially all of the assets
of such other corporation or entity or all or substantially
all of the assets of a line of business or division of such
other corporation or entity, or fifty percent (50%) or more of
the voting power and equity ownership of such other entity and
in each case as approved by the Board.
"Permitted Transfer" has the meaning set forth in Section 2.2 hereof.
"Permitted Transferee" means the transferee in a Permitted Transfer.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.
"Preferred Stock" has the meaning set forth in the preamble hereof.
"Preferred Stockholders" has the meaning set forth in the preamble hereof.
"Primary Shares" means, at any time, the authorized but unissued shares of
Common Stock of the Corporation.
5
"Purchase Agreement" means that certain Purchase Agreement of even date
herewith by and between, among others, the Corporation and the Investors.
"Qualified Public Offering" of the Corporation means the consummation of a
bona fide underwritten initial public offering of the Common Stock of the
Corporation pursuant to an effective Registration Statement filed with the
Securities and Exchange Commission in accordance with the Securities Act
(whether alone or in conjunction with a secondary public offering), resulting in
gross proceeds of at least $50,000,000.
"Refusal Period" has the meaning set forth in Section 2.3.1.1 hereof.
"Register" "Registered" and "Registration" refer to a registration
effected by preparing and filing a Registration Statement and the declaration or
ordering of the effectiveness of such Registration Statement.
"Registrable Shares" means (i) all Common Stock issued or issuable upon
conversion of the Series A Preferred Stock; (ii) all Common Stock issued or
issuable upon conversion of the Convertible Senior Subordinated Notes; and (iii)
all Common Stock issued as a dividend or other distribution with respect to, or
in exchange for or in replacement of, the Series A Preferred Stock or Common
Stock ; provided, however, that the Registrable Shares shall not include those
Covered Securities that have been effectively registered under Section 5 of the
Securities Act and disposed of pursuant to an effective registration statement.
"Registration Date" means the date of the Corporation's initial Registered
public offering.
"Registration Statement" means a registration statement on Form X-0, XX-0
or S-3, or any successor form thereto, in compliance with the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
subsequent similar Federal statute, and the rules and regulations of the
Securities and Exchange Commission thereunder, all as the same shall be in
effect from time to time. References to a particular section of the Securities
Act shall include a reference to the comparable section, if any, of any
subsequent similar Federal statute.
"Series A Preferred Stock" has the meaning set forth in the preamble
hereof.
"Stockholders" means the Common Stockholders, the Preferred Stockholders
and the Convertible Noteholders collectively.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association, Joint Venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the members of the Governing Body is
at the time owned or controlled, directly or indirectly, by that Person or one
or more of the other Subsidiaries of that Person or a combination thereof.
6
"Transfer" or "Transferred" means any sale, transfer, gift, pledge,
assignment, distribution, encumbrance, hypothecation, mortgage, granting of a
security interest, charge or lien in or other disposition, including, without
limitation, any transfer of bankruptcy assets pursuant to the U.S. Bankruptcy
Code.
2. Transfer Restrictions.
2.1. General Restrictions. No Covered Security now owned
(beneficially or otherwise) or subsequently acquired (directly or indirectly) by
any Stockholder shall be Transferred, except in accordance with this Agreement.
Every Transfer of Covered Securities by a Stockholder shall be subject to the
condition that the proposed transferee, if not already bound by this Agreement,
shall first agree in writing, in form reasonably satisfactory to the
Corporation, to be bound by the terms hereof.
2.2. Certain Permitted Transfers.
2.2.1. Subject to the last sentence of Section 2.1 hereof,
each Stockholder may, at any time, Transfer any of his or its Covered
Securities, without the consent of any other party hereto and without first
complying with the provisions of Section 2.4 hereof (each, together with a
Transfer permitted under Section 2.2.2. below, a "Permitted Transfer") to (i)
its Affiliates; (ii) his or her spouse (other than in connection with a divorce
proceeding), parents, children (natural or otherwise), stepchildren or
grandchildren, or a trust or similar vehicle solely for the benefit of any such
person or persons; (iii) such Stockholder's stockholders, officers or directors,
partners or members, as applicable, on a pro-rata basis in connection with any
dividend, distribution or upon liquidation thereof; (iv) to any other
Stockholder, or (v) in the case of any Investor, to a pledgee that is a
commercial bank or other financial institution providing financing to such
Investor, which such pledgee is taking a security interest in such Investor's
Covered Securities in connection with such financing; provided, however, that,
in any such above described event, such transferring Stockholder shall notify
the Corporation, in writing, prior to such Permitted Transfer.
2.2.2. Subject to the last sentence of Section 2.1 hereof,
each Stockholder may, at any time, Transfer any of his or its Covered Securities
to any Person, without the consent of any other party hereto, but subject to
Section 2.4 hereof (a "Permitted Transfer"); provided, however, that no Investor
may Transfer any of his or its Covered Securities to an Industry Participant,
except as otherwise provided in Section 2.3.2 hereof.
2.3. Preemptive Rights and Rights of First Offer.
2.3.1. Preemptive Rights Upon Corporate Issuances.
2.3.1.1. Preemptive Rights. At any time prior to a
Qualified Public Offering, if the Corporation shall propose to issue any New
Securities, the Corporation first shall offer, by written notice, to the
Investors the right, for a period of thirty (30) days (the "Refusal Period"), to
purchase for cash at an amount equal to the price or fair market value of other
consideration for which such New Securities are to be issued, a number of such
New Securities offered in such proposed issuance so that, after giving effect to
such issuance (and the conversion, exercise or exchange into or for, whether
directly or indirectly, shares of Common
7
Stock of all such New Securities that are so convertible, exercisable or
exchangeable), each of the Investors will continue to maintain his or its same
proportionate ownership of the Fully Diluted Capital Stock as of the date of
such notice (treating each of such Investors, for the purpose of such
computation, as the holder of the number of shares of Common Stock that would be
issuable to such party upon the conversion, exercise or exchange of all
Convertible Securities held by such party on the date such offer is made into or
for (whether directly or indirectly) shares of Common Stock and assuming the
like conversion, exercise or exchange of all such other Convertible Securities
held by other persons).
2.3.1.2. Mechanics of Preemptive Right. The closing of
any purchase of any New Securities proposed to be issued pursuant to this
Section 2.3 shall take place at the principal office of the Corporation within
ninety (90) days after the date of the Corporation's written notice to the
Investors (each, a "Closing Date"). The Corporation's written notice to the
Investors shall describe the New Securities proposed to be issued by the
Corporation and specify the number of New Securities to be offered to the
Investors (determined pursuant to Section 2.3.1.1 hereof), price and payment
terms. Each Investor may accept the Corporation's offer as to the full number of
New Securities (as determined pursuant to Section 2.3.1.1), or any lesser
number, by written notice thereof given by such Investor to the Corporation
prior to the expiration of the Refusal Period, in which event the Corporation
shall sell and such Investor shall buy, upon the terms specified, the number of
New Securities agreed to be purchased by such Investor by the Closing Date and
concurrent with the sale by the Corporation of the remainder of such New
Securities as hereinafter provided. In its written notice of acceptance to the
Corporation, each Investor may, indicate the maximum number of New Securities
such Investor would purchase in excess of such Investor's Pro Rata Share (the
"Excess Amount"). For purposes of this Section 2.3.1.2, "Pro-Rata Share" shall
mean, with respect to each Investor, the percentage equal to (i) the number of
Covered Securities owned by such Investor divided by (ii) the aggregate number
of Covered Securities owned by all Investors. If one or more Investors declines
to participate in such purchase or elects to purchase less than such Investor's
Pro Rata Share, then such rejected New Securities shall automatically be deemed
to be accepted by the Investors who specified an Excess Amount in their
respective notice of acceptance, allocated among such Investors in proportion to
their respective Pro Rata Share determined based only on the participating
Investors but in no event shall an amount greater than an Investor's Excess
Amount be allocated to such Investor. Any excess New Securities shall be
allocated among the remaining participating Investors whose specified Excess
Amount has not been satisfied in proportion to their respective Pro Rata Share,
determined based only on the participating Investors, and such procedure shall
be employed until the entire Excess Amount of each participating Investor has
been satisfied or all New Securities have been allocated. The Corporation shall
be free at any time during the period of sixty (60) days after the Refusal
Period to offer and sell to a purchaser, in one transaction or a series of
transactions, the remainder of the New Securities proposed to be issued by the
Corporation (including, but not limited to, the New Securities not agreed by the
Investors to be purchased by them), at a price and on payment terms no more
favorable to such purchaser than those specified in such notice of offer to the
Investors. However, if such sale or sales is or are not consummated within such
sixty (60) day period as to any number of New Securities, the Corporation shall
not sell such New Securities as shall not have been purchased within such period
without again complying with this Section 2.3.1.
2.3.2. Transfer to Industry Participant.
8
2.3.2.1. If a Default or Event of Default has occurred
and is continuing under the Purchase Agreement and/or a Protective Default,
Payment Default or Outside Date Default has occurred and is continuing under the
Certificate of Designation (collectively, a "Default"), and then only during
such period as the Corporation is in Default under the said instrument, an
Investor (for purposes of this Section 2.3.2, the "Offering Stockholder") may
Transfer to an Industry Participant all or any portion of the Covered Securities
covered by such instrument and held by such Offering Stockholder, and if such
Transfer is prior to a Qualified Public Offering, the Offering Stockholder shall
deliver written notice to the Corporation of its intent to Transfer all or a
portion of its Covered Securities (the "Offered Securities") to an Industry
Participant. The written notice (the "Request for Offer") shall include a
request that the Corporation make a written offer to the Offering Stockholder to
purchase the Offered Securities. The Corporation shall have a period of thirty
(30) calendar days in which to make a written offer (the "Corporation Offer") to
the Offering Stockholder to purchase all but not less than all of the Offered
Securities, which Corporation Offer shall include the proposed purchase price
per security for the Offered Securities and all other material terms and
conditions of the Corporation Offer. The Corporation shall, within fifteen (15)
calendar days after delivery of the Corporation Offer provide written evidence
to the Offering Stockholder that it is ready, willing and able to purchase the
Offered Securities, such written evidence to be satisfied by verified account
statements reflecting that the Corporation maintains sufficient cash or cash
equivalents on-hand to cover the aggregate purchase price for the Offered
Securities or a written financing commitment from a lender reasonably acceptable
to the Offering Stockholder.
2.3.2.2.The Offering Stockholder shall have the right
for a period of fifteen (15) calendar days after receipt of the financial
information described in the last sentence of Section 2.3.2.1. to accept the
Corporation Offer. The Offering Stockholder's right to accept the Corporation
Offer shall be exercised by delivering written notice (the "Offering Stockholder
Acceptance") to such effect to the Corporation. An Offering Stockholder
Acceptance shall be deemed to be an irrevocable commitment to Transfer the
Offered Securities to the Corporation at the price and on all other terms and
conditions set forth in the Corporation Offer and in this Section 2.3.2. The
failure of the Offering Stockholder to exercise its right to accept the
Corporation Offer within such fifteen (15) calendar day period shall be deemed
to be a waiver of its right to accept the Corporation Offer.
2.3.2.3.If the Offering Stockholder accepts the
Corporation Offer, the purchase and sale of the Offered Securities to the
Corporation shall occur at such time as requested by the Offering Stockholder;
provided, however, that such date shall not be earlier than five (5) Business
Days following the Offering Stockholder Acceptance or later than ninety (90)
days following the date on which the Request for Offer was received by the
Corporation. Such sale shall be effected by the Offering Stockholder's delivery
to the Corporation of certificates evidencing the Offered Securities purchased,
duly endorsed for transfer, against payment to the Offering Stockholder of the
purchase price therefor by the Corporation.
2.3.2.4.If the Offering Stockholder rejects the
Corporation Offer under this Section 2.3, and the Offering Stockholder elects to
Transfer the Offered Securities to an Industry Participant, the Transfer must be
consummated within one hundred twenty (120) days following the date on which the
Request for Offer was received by the Corporation and the
9
purchase price paid or payable by the Industry Participant for the Offered
Securities shall be greater than the purchase price set forth in the Corporation
Offer.
2.3.2.5. Nothing in this Section 2.3 shall entitle the
Corporation to have a right of first offer on any Covered Securities held by any
Investor except in the specific circumstance described in Section 2.3.2.1.
2.4. Right of Co-Sale.
2.4.1. At any time prior to the consummation of the
Corporation's Qualified Public Offering, if any Management Controlling
Stockholder (for purposes of this Section 2.4, the "Offering Stockholder")
proposes to Transfer its or his Covered Securities to a Person not a Permitted
Transferee described in clauses (i) or (ii) of Section 2.2.1. in a transaction
otherwise permitted under and in compliance with Sections 2.1 or 2.2.2. hereof,
then each Investor shall be afforded the opportunity, pursuant to a written
notice from such Offering Stockholder (the "Co-Sale Notice") delivered at least
twenty (20) Business Days prior to the consummation thereof, to join in such
Transfer by selling its Covered Securities in accordance with Section 2.4.2
below. The Co-Sale Notice shall include: (i) the number of Covered Securities
that the Offering Stockholder owns and wishes to sell (for purposes of this
Section 2.4, the "Offered Shares"), (ii) the proposed purchase price per share
for the Offered Shares (the offer to purchase such shares shall be in cash or
cash equivalent only), (iii) the identity of the proposed transferee, (iv)
written evidence that the proposed transferee has made a bona fide offer for the
Offered Shares and is ready, willing and able to purchase the Offered Shares at
the price specified and (v) all other terms and conditions of the offer made by
the proposed purchaser of the Offered Shares.
2.4.2. Each participating Investor may notify, within ten (10)
Business Days after the date of the Co-Sale Notice, the Offering Stockholder of
its election to sell a portion of its Covered Securities to the proposed
purchaser in an amount not exceeding the number of Offered Shares multiplied by
such participating Investor's Co-Sale Pro Rata Portion (the "Co-Sale Election").
The Co-Sale Election shall be deemed to be an irrevocable commitment to sell to
the proposed purchaser the number of Covered Securities that the participating
Investor has elected to sell pursuant to the Co-Sale Election. The sale and
purchase of Covered Securities contemplated by the Co-Sale Election shall be on
the same terms set forth in the Co-Sale Notice. The number of Offered Shares
sold to the proposed purchaser by the Offering Stockholder shall be reduced by
the number of Covered Securities purchased by the proposed purchaser from the
participating Investor under this Section 2.4. The closing of the sale of
Covered Securities by the participating Investor to the proposed purchaser shall
occur simultaneously with the closing of the sale of Offered Shares by the
Offering Stockholder to the proposed purchaser. Any such sale within one hundred
twenty (120) days after the date of receipt of the Co-Sale Notice shall be made
only to persons identified in the Co-Sale Notice and at the same price and upon
the same terms and conditions as those set forth in the Co-Sale Notice. In the
event such Offering Stockholder has not sold the Offered Shares within such 120-
day period, the Offering Stockholder shall not thereafter sell any Covered
Securities without first complying with the provisions of this Section 2.4.
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2.4.3. The Corporation shall register any Transfer of any
Offered Shares in its records and shall issue the applicable share certificates
to any transferee.
2.4.4. The participating Investor shall not be responsible for
any costs incurred by the Corporation or any other party as a result of the
participating Investor exercising its rights under this Section 2.4, except for
any legal fees, expenses and selling commissions personally incurred or
contracted for by the participating Investor.
3. Drag-Along Rights.
3.1. Sale of Control. At any time prior to the consummation of the
Corporation's Qualified Public Offering, if the Stockholders holding a majority
of the voting power of the outstanding Fully Diluted Capital Stock of the
Corporation (the "Control Stockholders") shall propose to sell to a third party
that is not an Affiliate of the Company or any Stockholder (a "Sate of Control")
all or substantially all of their Covered Securities (provided that shares
representing at least a majority of the voting power of the Corporation shall
have been transferred), at a purchase price per share not less than 200% of the
Conversion Price, which consideration shall be at least 90% in cash or
securities registered under the Securities Act and listed on a national exchange
or on the Nasdaq National Market, then the Control Stockholders shall have the
right (but not the obligation) to cause each Stockholder to sell or cause to be
sold the same proportionate part of the Covered Securities owned by such
Stockholder as are proposed to be sold by such Control Stockholders, for the
same consideration per Share and otherwise on the same terms and conditions
obtained by such Control Stockholders in the Sale of Control.
3.2. Closing. The closing of any sale under this Section 3 shall be
on a date determined by the Control Stockholders, which date shall not be less
than twenty (20) Business Days after the date the written notice of the Sale of
Control shall be given. A Stockholder participating in the sale pursuant to this
Section shall deliver to the transferee(s) at the closing, one or more
certificates, properly endorsed for transfer or accompanied by stock transfer
powers duly endorsed for transfer, with all stock transfer taxes paid and stamp
affixed, which represent the Covered Securities owned by such Stockholder and
required to be transferred pursuant to Section 3.1 above. In the event that the
Stockholders are required by the Control Stockholders to make any
representations, warranties or indemnities for the benefit of the purchaser in
connection with a Sale of Control, then (x) no Stockholder will be liable for
more than the total net proceeds (net of taxes paid in respect of such proceeds)
received by such Stockholder in connection with such Sale of Control and (y) no
Stockholder shall be required, in its capacity as a Stockholder, to make any
representations or warranties other than representations, warranties and
indemnities made by a Stockholder concerning that Stockholder's valid ownership
of its Covered Securities, free of liens and encumbrances, and that
Stockholder's authority, power and right to enter into and consummate such Sale
of Control, but all Stockholders shall jointly, but subject to the provisions of
the preceding clause (x), provide the indemnities required by the Control
Stockholders relating to the breach of any representation or warranty made by
the Corporation (but not any representation or warranty made by any other
Stockholder). In addition, such Stockholders shall reasonably cooperate in order
to effect the Sale of Control described in this Section 3.2, and the Corporation
and such Stockholders shall provide
11
reasonable assistance to the Control Stockholders in connection with the
preparation of disclosure schedules relating to representations and warranties
to be made to the transferee(s).
4. Registration Rights.
4.1. Demand Registration Rights.
4.1.1. Demand Registration Rights, (a) The Majority Note
holder Investors shall collectively have the right by written notice at any one
time after the earlier to occur of (i) consummation of an initial public
offering; and (ii) the maturity date of the Convertible Senior Subordinated
Notes to request that the Corporation effect a Registration under the Securities
Act of its shares of Common Stock underlying, or previously converted into
pursuant to the terms of, the Convertible Senior Subordinated Notes; and (b) the
Majority Preferred Investors shall collectively have the right by written notice
at any one time after the earlier to occur of (i) consummation of an initial
public offering; and (ii) September 30, 2009, to request that the Corporation
effect a Registration under the Securities Act of its shares of Common Stock
underlying, or previously converted into pursuant to the terms of, the Series A
Preferred Stock. The Corporation shall use its reasonable best efforts to effect
the Registration under the Securities Act of the Demand Shares that the
Corporation has been so requested by the Investors (the "Demand Stockholders")
to Register (including, without limitation, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations under the Securities Act and any other governmental
requirements or regulations) in accordance with this Section 4.1:
4.1.1.1. Limitations. The Corporation shall not be
required to file and cause to become effective (i) any registration statement,
the reasonably anticipated aggregate price to the public of which would not
exceed $10,000,000, (ii) any registration statement during any period in which
any other registration statement (other than on Form S-4 or Form S-8 promulgated
under the Securities Act or any successor forms thereto) pursuant to which
Primary Shares are to be or were sold has been filed and not withdrawn or has
been declared effective within the prior ninety (90) days and in which the
holders of Registrable Shares may include Registrable Shares pursuant to Section
4.2, and (iii) any registration that would require an audit of the Corporation
to be performed outside of the ordinary course of business.
4.1.1.2. Delay. The Corporation may delay the filing or
effectiveness of any registration statement after the date of a request for
registration pursuant to this Section 4 if at the time of such request (i) the
Corporation is engaged, or has fixed plans to engage, within thirty (30) days of
the time of such request, in a firm commitment underwritten public offering of
Primary Shares in which the holders of Registrable Shares may include
Registrable Shares pursuant to Section 4.2 hereof or (ii) the Corporation
provides to the Demand Stockholders a written certificate, signed by the
President of the Corporation, stating that in the good faith determination of
the Board, such registration and offering would be seriously detrimental to any
material transaction involving the Corporation; provided, however, that the
Corporation may delay the filing or effectiveness of a registration statement
pursuant to this Section 4.2.1.2. no more than two (2) times during the term of
this Agreement, and then, as to each, for a period not in excess of ninety (90)
days from the effective date of such offering, or the date of commencement of
such other transaction, as the case may be, but in no event more
12
than one hundred twenty (120) days from the date of a request for registration
pursuant to this Section 4.
4.1.1.3. Registration Mechanics; Allocation of Shares in
Demand Registration. Following receipt of a written request by the Demand
Stockholders to effect a Registration under the Securities Act of its shares of
Common Stock pursuant to Section 4.1.1 hereof (each a "Demand Notice"), the
Corporation shall notify all holders of Registrable Shares from whom a Demand
Notice has not been received, and the Corporation shall use its reasonable best
efforts to Register under the Securities Act, for public sale in accordance with
the method of disposition specified in the Demand Notice, the number of shares
of Common Stock specified in the Demand Notice (and, as applicable, in all other
notices received by the Corporation from other holders of Registrable Shares
within twenty (20) days after the giving of such notice by the Corporation) and
any Primary Shares. Notwithstanding the foregoing, if the managing underwriter
(as selected by a majority in interest of the Demand Stockholders included in
such registration and as shall be reasonably acceptable to the Corporation)
advises the Corporation that the inclusion of all Registrable Shares and/or
Primary Shares proposed to be included in such registration would interfere with
the successful marketing (including pricing) of the Registrable Shares proposed
to be included in such registration, then the number of Registrable Shares
and/or Primary Shares proposed to be included in such Registration shall be
included in the following order:
(a) first, the Demand Shares and any other Covered
Securities by holders that have demand rights under such demand (i.e., the
Noteholder Investors in the case of a demand by the Majority Noteholder
Investors and the Preferred Investors in the case of a demand by the Majority
Preferred Investors); and
(b) second, the Primary Shares; and
(c) third, all other Registrable Shares (or, if
necessary, such Registrable Shares pro rata among the Stockholders thereof based
upon the number of Registrable Shares requested to be registered by each such
Stockholder).
4.1.1.4. Withdrawal in Demand Registration. At any time
before the Registration Statement covering Registrable Shares becomes effective,
the Majority Noteholder Investors or the Majority Preferred Investors, as the
case may be, may request the Corporation to withdraw or not to file such
Registration Statement. In that event, if such request for withdrawal shall not
have been caused by, or made in response to, the Demand Stockholders learning of
an event resulting in a material adverse effect on the business, properties,
condition, financial or otherwise, or operations of the Corporation not known at
the time of their Demand Notice, the Demand Stockholders shall lose their
applicable demand registration rights under this Section 4.1 unless the Demand
Stockholders shall pay to the Corporation the expenses incurred in connection
therewith by the Corporation through the date of such request.
4.1.1.5. Inability to Transfer Sufficient Registrable
Shares. If the Majority Noteholder Investors or the Majority Preferred
Investors, as the case may be, are unable to Transfer at least eighty percent
(80%) of their Registrable Shares, then a demand shall not be deemed to have
been made by such Investors under this Section 4.1.
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4.2. Piggyback Registration Rights.
4.2.1. Notice of Piggyback Registration and Inclusion of
Registrable Shares. Subject to the terms of this Agreement, if the Corporation
at any time proposes for any reason to Register any of its Common Stock (either
for its own account or the account of a security holder) on a form that would be
suitable for a Registration involving Registrable Shares (except with respect to
registrations on Form S-4 or Form S-8 promulgated under the Securities Act or
any successor forms thereto), the Corporation will (i) promptly give each holder
of Registrable Shares written notice thereof (which shall include a list of the
jurisdictions in which the Corporation intends to attempt to qualify such
securities under the applicable blue sky or other state securities laws) and
(ii) include in such Registration (and any related qualification under blue sky
laws or other compliance laws or regulations), and in any underwriting involved
therein, all the Registrable Shares specified in a written request delivered to
the Corporation by any such Stockholder within twenty (20) days after delivery
of such written notice from the Corporation.
4.2.2. Notice of Underwriting in Piggyback Registration. If
the Registration of which the Corporation gives notice is for a Registered
public offering involving an underwriting, the Corporation shall so advise
holders of Registrable Shares as a part of the written notice given pursuant to
Section 4.2.1 hereof. In such event, the right of any such Stockholder to
Registration shall be conditioned upon such underwriting and the inclusion of
such Stockholder's Registrable Shares in such underwriting to the extent
provided in this Section 4.2. All Stockholders proposing to distribute their
Registrable Shares through such underwriting shall (together with the
Corporation and the other holders distributing their securities through such
underwriting) enter into a customary underwriting agreement with the
underwriter's representative for such offering. The Stockholders shall have no
right to participate in the selection of the underwriters for an offering
pursuant to this Section 4.2.
4.2.3. Marketing Limitation in Piggyback Registration. In the
event the underwriter's representative advises, in writing, the Corporation and
Stockholders seeking Registration of Registrable Shares pursuant to this Section
4.2 that market factors (including, without limitation, the aggregate number of
shares of Common Stock requested to be Registered, the general condition of the
market, and the status of the persons proposing to sell securities pursuant to
the Registration) require a limitation of the number of Covered Securities to be
underwritten, the underwriter's representative (subject to the allocation
priority set forth in Section 4.1.1.3 hereof) may:
0.0.0.0.xx the case of the Corporation's initial
Registered public offering, exclude some or all Registrable Shares from such
Registration and underwriting in the manner set forth in Section 4.2.4 hereof;
and
0.0.0.0.xx the case of any Registered public offering
subsequent to the initial public offering, and not otherwise as a result of a
Demand Notice, limit the number of shares of Registrable Shares to be included
in such Registration and underwriting to not less than ten percent (10%) of all
Covered Securities included in such Registration.
14
4.2.4. Allocation of Shares in Piggyback Registration. In the
event that the underwriter's representative limits the number of Covered
Securities to be included in a Registration pursuant to Section 4.2.3 hereof,
and such Registration is not a result of a Demand Notice, the Covered Securities
(other than Registrable Shares) held by officers of the Corporation shall be
excluded from such Registration and underwriting to the extent required by such
limitation. If a limitation of the number of Covered Securities is still
required after such exclusion, the number of Covered Securities that may be
included in such Registration (which shall not be a result of a Demand Notice)
and underwriting shall be included, subject to Section 4.2.3.2, in the following
order: (i) first, the Primary Shares; (ii) second, the Registrable Shares; and
(iii) third, all other Covered Securities held by the other Stockholders of the
Corporation (or, if necessary, such Registrable Shares pro rata among the
Stockholders thereof based upon the number of Registrable Shares requested to be
registered by each such Stockholder).
4.2.5. Withdrawal in Piggyback Registration. If any holder of
Registrable Shares disapproves of the terms of any such underwriting, such
person may elect to withdraw therefrom by written notice to the Corporation and
the underwriter's representative delivered at least seven (7) days prior to the
effective date of the Registration Statement. Any Registrable Shares or other
securities excluded or withdrawn from such underwriting shall be withdrawn from
such Registration.
4.3. Expenses of Registration. All expenses incurred by the
Corporation in complying with Sections 4.1 and 4.2 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel and independent public accountants for the Corporation,
fees and expenses (including counsel fees) incurred in connection with complying
with state securities or "blue sky" laws, fees of the National Association of
Securities Dealers, Inc., fees of transfer agents and registrars, costs of
insurance and fees and disbursements of one counsel for the sellers of
Registrable Shares and underwriter counsel fees, but excluding any Selling
Expenses, are called "Registration Expenses". All underwriting discounts and
selling commissions applicable to the sale of Registrable Shares are called
"Selling Expenses". The Company will pay all Registration Expenses in connection
with all registration statements under Section 4.1.1 and Section 4.2 hereof. All
Selling Expenses in connection with each registration statement under Sections
4.1 and 4.2 hereof shall be borne by the participating sellers in proportion to
the number of Registrable Shares sold by each or as they may otherwise agree.
4.4. Registration Procedures and Obligations. Whenever required
under this Agreement to effect the Registration of any Registrable Shares, the
Corporation shall, as expeditiously as reasonably possible:
4.4.1. Prepare and file with the Securities and Exchange
Commission a Registration Statement with respect to such Registrable Shares and
use its reasonable best efforts to cause such Registration Statement to become
effective, and, upon the request of Stockholders of a majority of the
Registrable Shares registered thereunder, keep such Registration Statement
effective for up to eighty (80) days.
4.4.2. Prepare and file with the Securities and Exchange
Commission such amendments and supplements to such Registration Statement and
the prospectus used in 4.4.1.
15
connection with such Registration Statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement.
4.4.3. Furnish to Stockholders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable Shares
owned by them.
4.4.4. Use its reasonable best efforts to register and qualify
the securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions as shall be reasonably
requested by selling Stockholders; provided, however, that the Corporation shall
not be required in connection therewith or as a condition thereto to qualify to
do business or to file a general consent to service of process in any such
states or jurisdictions; and provided, further, that in the event any
jurisdiction in which the securities shall be qualified imposes a non-waivable
requirement that expenses incurred in connection with the qualification of the
securities be borne by selling Stockholders, such expenses shall be payable pro
rata by selling Stockholders.
4.4.5. In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Stockholder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
4.4.6. Notify each Stockholder of Registrable Shares covered
by such Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
4.4.7. Provide a transfer agent and registrar for all
Registrable Shares registered pursuant to such Registration Statement and a
CUSIP number for all such Registrable Shares, in each case not later than the
effective date of such Registration.
4.4.8. Furnish, at the request of any Stockholder requesting
Registration of Registrable Shares pursuant to this Agreement, on the date that
such Registrable Shares are delivered for sale in connection with a Registration
pursuant to this Agreement, (i) an opinion, dated such date, of the counsel
representing the Corporation for the purposes of such Registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to such Stockholder and (ii) a letter dated such date, from
the independent certified public accountants of the Corporation, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters.
4.4.9. Use its best efforts to cause all such Registrable
Shares to be listed on each securities exchange on which similar securities
issued by the Corporation are then listed.
16
4.4.10. Subject to Section 12 hereof, make available for
inspection by any seller of Registrable Shares to be sold pursuant to the
Registration Statement, any underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney, accountant or other
agent retained by any such seller or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of the Corporation (collectively, the "Records"), and cause the
Corporation's officers, directors, employees and independent accountants to
supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such Registration Statement.
4.4.11. Otherwise use its best efforts to comply with all
applicable rules and regulations of the Securities and Exchange Commission, and
make available to its security holders, as soon as reasonably practicable, an
earnings statement or such other document covering the period of at least twelve
(12) months beginning with the first day of the Corporation's first full
calendar quarter after the effective date of the Registration Statement, which
earnings statement will satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder.
4.4.12. After the filing of the Registration Statement, (i)
cause the related prospectus to be supplemented by any required prospectus
supplement, and, as so supplemented, to be filed pursuant to Rule 424 under the
Securities Act, (ii) comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Shares covered by such
Registration Statement during the applicable period in accordance with the
intended methods of disposition by the sellers of such Registrable Shares set
forth in such Registration Statement or supplement to such prospectus and (iii)
promptly notify each such seller holding Registrable Shares covered by such
Registration Statement of any stop order issued or threatened suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included in such Registration Statement for sale in any
jurisdiction and take all reasonable actions required to prevent the entry of
such stop order or promptly to remove it if entered.
4.4.13. Have its employees and personnel (i) prepare and make
presentations at any "road shows" and before analysts and rating agencies, as
the case may be, (ii) take other actions to obtain ratings for any Registrable
Shares and (iii) otherwise provide reasonable assistance to the underwriters
(taking into account the needs of the Corporation's businesses and the
requirements of the marketing process) in the offering, marketing or selling of
Registrable Shares in any underwritten offering.
4.5. Indemnification.
4.5.1. The Corporation agrees to indemnify and hold harmless,
to the extent permitted by law, each holder of Registrable Shares, its officers,
directors, employees, partners and agents and each Person who controls such
holder (within the meaning of Section 15 of the Securities Act or Section 20 of
the Securities Exchange Act) against any losses, claims, damages, liabilities,
joint or several, to which such holder or any such director, officer, employee,
partner or agent or controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon (i) any
17
untrue or alleged untrue statement of a material fact contained (A) in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or (B) in any application or other document or
communication (in this Section 9(f) collectively called an "application")
executed by or on behalf of the Corporation or based upon written information
furnished by or on behalf of the Corporation filed in any jurisdiction in order
to qualify any securities covered by such registration statement under the "blue
sky" or securities laws thereof, or (ii) any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Corporation will reimburse such holder and each
such director, officer, employee, partner or agent and controlling person for
any legal or any other expenses incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided, that the Corporation will not be liable in any such case
to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement, or omission or alleged omission,
made in such registration statement, any such prospectus or preliminary
prospectus or any amendment or supplement thereto, or in any application, in
reliance upon and in conformity with written information prepared and furnished
to the Corporation by such holder expressly for use therein or by such holder's
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Corporation has furnished such
holder with a sufficient number of copies of the same. In connection with an
underwritten offering, the Corporation will indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the holders of Registrable Shares.
4.5.2. In connection with any registration statement in which
a holder of Registrable Shares is participating, each such holder will furnish
to the Corporation in writing such information and documents as the Corporation
reasonably requests for use in connection with any such registration statement
or prospectus and, to the extent permitted by law, will severally and not
jointly indemnify and hold harmless the Corporation, its directors and officers
and each other Person who controls the Corporation (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities, joint or
several, to which the Corporation or any such director or officer or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon (i)
any untrue or alleged untrue statement of a material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or in any application or (ii) any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, and such holder will reimburse
the Corporation and each such director, officer and controlling person for any
legal or any other expenses incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding, but in each
case such holder will have obligations under this Section only to the extent
that such untrue statement or omission is made in such registration statement,
any such prospectus or preliminary prospectus or any amendment or supplement
thereto, or in any application, in reliance upon and in conformity with written
information prepared and furnished to the Corporation by such holder expressly
for use therein; provided, that the obligation to indemnify will be individual
to each holder and will be limited to the net
18
amount of proceeds received by such holder from the sale of Registrable Shares
pursuant to such registration statement.
4.5.3. Any Person entitled to indemnification hereunder will
(i)give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification; provided, that the failure of any
Person so to notify the indemnifying party will not relieve the indemnifying
party of its obligations hereunder except to the extent that the indemnifying
party is materially prejudiced by such failure to notify and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party will not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent will not be
unreasonably withheld); provided, that without the prior written consent of the
indemnified party, no indemnifying party will effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability arising out of such proceeding. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim.
4.5.4. The indemnification provided for under this Agreement
will remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party and will survive the Transfer of securities by
any holder thereof. Each indemnifying party also agrees to make such provisions,
as are reasonably requested by any indemnified party, for contribution to such
party in the event such indemnifying party's indemnification is unavailable for
any reason.
5. Board of Directors.
5.1. Size of Board. The Board shall be set at no less than two (2)
and no more than nine (9) members.
5.2. Right to Designate. (i) So long as the Preferred Stockholders a
party to this Agreement on the date hereof collectively with their Permitted
Transferees that are Affiliates thereof, continue to hold shares of Series A
Preferred Stock and Common Stock representing in the aggregate at least
twenty-five percent (25%) of the shares of Common Stock into which the shares of
Series A Preferred Stock are convertible, the Preferred Stockholders shall have
the right to designate two (2) persons for election to the Board; and (ii) the
Common Stockholders shall have the right to nominate the remainder of the
directors; provided, however, that so long as Falcon Mezzanine Partners, L.P. or
its Affiliates ("Falcon") is a Preferred Stockholder and the Preferred
Stockholders maintain their rights under this Section 5.2, Falcon shall have the
right, on behalf of the Preferred Stockholders, to designate one (1) of such two
(2) Board seats
19
provided to the Preferred Stockholders under this Section 5.2., and for so long
as Prudential Capital Partners, L.P. and/or Prudential Capital Partners
Management Fund, L.P. or their Affiliates (collectively, "Prudential") are
Preferred Stockholders and the Preferred Stockholders maintain their rights
under this Section 5.2, Prudential have the right, on behalf of the Preferred
Stockholders, to designate one (1) of such two (2) Board seats provided to the
Preferred Stockholders under this Section 5.2. Falcon's initial designee to the
Board, on behalf of the Preferred Stockholders, shall be Xxxxxxx Xxxx; and
Prudential's initial designee to the Board, on behalf of the Preferred
Stockholders, shall be Xxxxxxx X. Xxxxxxx. If at any time Falcon or Prudential
shall not have such right to designate a Director, Preferred Stockholders voting
on an as-converted basis shall have the right by majority vote to designate such
Director(s). There shall be no cumulative voting with respect to such
designation(s).
5.3. Replacement of Director. In the event any director nominated
pursuant to Section 5.2 hereof shall resign, die, become incapacitated or
otherwise cease to act as a director or is removed from the Board, the
Stockholder(s) who nominated such director shall be entitled to designate a
successor to such director by notifying the Board, in writing, of a replacement
nominee, and the Stockholders shall vote their Covered Securities, at any
regular or special meeting called for the purpose of filling positions on the
Board, or in any written consent executed in lieu of such a meeting of
Stockholders, and shall take all actions necessary, to ensure the election to
the Board of such replacement nominee to fill the unexpired term of the director
who is being replaced. To the extent the Stockholder who nominated a director to
the Board desires to remove such director, all of the Stockholders hereby agree
to vote their Covered Securities or execute written consents in respect of such
Covered Securities to remove such director in accordance with the wishes of the
party who originally nominated such director.
5.4. Certain Expenses. All reasonable out-of-pocket expenses of all
members of the Board in connection with attendance at Board meetings shall be
reimbursed by the Corporation.
5.5. Election of Designees. The Corporation shall use its best
efforts to cause any designees selected in accordance with this Agreement to be
elected to the Board. Each Stockholder shall vote such Stockholder's shares of
Common Stock at any regular or special meeting of stockholders of the
Corporation or in any written consent executed in lieu of such a meeting of
stockholders and shall take all other actions necessary (whether in such
Stockholder's capacity as Stockholder or otherwise, including, without
limitation, causing any directors to take all such necessary action, whether at
a meeting or by an action by written consent in lieu of a meeting): (i) to give
effect to the agreements contained in Section 5.2 and (ii) to ensure that the
certificate of incorporation and by-laws of the Corporation do not, at any time
hereafter, conflict in any respect with the provisions of this Agreement.
5.6. Board Meetings; Expenses; Indemnification; Insurance. Meetings
of the Board and any committee thereof shall be held at the principal offices of
the Corporation or at such other place as may be determined by the Board or such
committee. Regular meetings of the Board shall be held on such dates and at such
times as shall be determined by the Board: provided that there shall be at least
one meeting held during each fiscal quarter. Special meetings of the Board or
any committee thereof may be called by any director (or, in the case of a
special meeting of any committee of the Board, by any member thereof) in at
least three days'
20
prior notice to the other directors, which notice shall state the purpose or
purposes for which such meeting is being called. The Corporation shall pay all
reasonable out-of-pocket expenses incurred by any director in connection with
the participation by directors in attending meetings of the Board (and
committees thereof) and the boards of directors (and committees thereof) of any
subsidiaries of the Corporation. The directors of the Corporation shall be
indemnified by the Corporation to the extent set forth in the Corporation's
by-laws. The Corporation shall maintain directors' and officers' insurance in an
amount reasonably acceptable to the Stockholders.
5.7. Quorum; Act of the Board. Except as otherwise required by law
or the certificate of incorporation of the Corporation, at all meetings of the
Board, a majority of the entire Board shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board. If a
quorum shall not be present at any meeting of the Board, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting of the time and place of the adjourned meeting,
until a quorum shall be present. Unless otherwise provided in the certificate of
incorporation or by-laws of the Corporation, any action required or permitted to
be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting, if all the members of the Board or committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board. Notwithstanding anything to the contrary
set forth in this Section 5.7, if any Series A Preferred Stock remain
outstanding on September 30, 2009, no matters set forth before the Board shall
be deemed to be approved by the Board unless there is obtained the unanimous
affirmative vote or written consent of each of the Directors then a member of
the Board. For the avoidance of doubt, from and after September 30, 2009, if any
Series A Preferred Stock shall remain outstanding, without the affirmative or
written consent of each of the Directors of the Board, the Corporation shall not
and shall not permit any of its Subsidiaries to:
5.7.1. incur or repay any indebtedness, including without
limitation any indebtedness under any committed facility, or contract for the
incurrence of any indebtedness;
5.7.2. issue or redeem any capital stock, or contract to issue
or redeem any capital stock, or make any dividend or distribution in respect of
any capital stock;
5.7.3. enter into any agreement or arrangement with any
Affiliate, stockholder, officer or director or amend the terms of any such
existing arrangement;
5.7.4. make any acquisitions or investments including, without
limitation, investments in the Corporation, any Subsidiary or any other person;
5.7.5. approve or modify the Corporation's or any Subsidiary's
budget;
5.7.6. approve any sale of any property or assets, including,
without limitation, the capital stock of any Subsidiary;
5.7.7. appoint or remove any officer of the Corporation or any
Subsidiary;
21
5.7.8. amend the charter or bylaws of the Corporation or any
Subsidiary;
or
5.7.9. grant any Common Stock Equivalents.
5.8. Composition of Subsidiary Boards; Observer Rights. The
composition of the Governing Body of each wholly-owned Subsidiary of the
Corporation that is incorporated or organized under the laws of the United
States of America or any state thereof or the District of Columbia, as well as
that of Brightstar US, Inc., a Florida corporation, shall be identical to the
composition of the Board. With respect to each other Subsidiary of the
Corporation, the Preferred Stockholders shall be provided with the right to send
one non-voting observer to all meetings of the Governing Body of such
Subsidiary. Each Subsidiary shall use its reasonable best efforts to provide the
observer with notice of all meetings of its Governing Body consistent with that
provided to the official members of the Governing Body; provided, however, that
failure to give such notice shall not invalidate any action taken by the
Governing Body at the meeting. Each Subsidiary shall reimburse the observer for
his or her out-of-pocket expenses incurred in attending the meetings of the
Subsidiary's Governing Body, consistent with that provided to the official
members of the Governing Body.
5.9. Fiduciary Duties. Nothing in this Agreement, express or
implied, shall relieve any officer or director of the Corporation or any of its
Subsidiaries, or any Stockholder, of any fiduciary or other duties or
obligations they may have to the Corporation's stockholders.
6. Rights and Preferences of the Series A Preferred Stock. The Series A
Preferred Stock shall have the rights and preferences, including, without
limitation the dividend rate, liquidation preference, ranking, put right,
protective provision and voting rights set forth in the Certificate of
Designations as filed with the Division of Corporations of the State of
Delaware. Nothing in this Agreement shall be construed to restrict in any manner
the rights and preferences of the Series A Preferred Stock in the Certificate of
Designation, but any rights shall be in addition to and without limiting such
rights.
7. Covenant of the Management Controlling Stockholders. The Management
Controlling Stockholders shall not transfer any of their shares in a manner
which would result in the occurrence of a Liquidity Event or Change of Control
under the Certificate of Designation governing the terms of the Series A
Preferred Stock unless, the holders of Preferred Stock shall have consented to
such transfer under paragraph g(ii)(4) of the Certificate of Designation to the
extent their consent is required in accordance with the terms thereof (whether
or not the Corporation is a party to such Liquidity Event of Change of Control).
8. Termination. This Agreement shall terminate in its entirety (a) upon
the vote of the holders of a majority of the Common Stock held by each of (i)
the Investors, voting as one class (on an as-converted basis), and (ii) the
Stockholders, other than the Investors, voting as a separate class, and (b) in
the case of Sections 2, 3 and 5 (i) on the closing of a Qualified Public
Offering pursuant to an effective registration statement under the Securities
Act, covering the offer and sale of Stock for the account of the Corporation to
the public and (ii) upon the consummation of a Sale of Control pursuant to
Section 3 hereof; provided, however, that the
22
Board voting agreement provided in Section 5.2 hereof shall terminate on the
earlier of (i) an event in described in (a) or (b) above; or (ii) on the tenth
(10th) anniversary of the date hereof.
9. Restrictive Legend. So long as any Covered Securities are subject to
the provisions hereof, all certificates representing Covered Securities owned or
hereafter acquired by any Stockholder or any transferee thereof bound by this
Agreement shall bear legends stating in substance:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH THE
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS."
"THE SHARES EVIDENCED HEREBY ARE SUBJECT TO THE STOCKHOLDERS' AGREEMENT OF
THE CORPORATION DATED DECEMBER______________, 2003, AS MAY BE AMENDED FROM
TIME TO TIME (A COPY OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST FROM
THE CORPORATION), WHICH CONTAINS RESTRICTIONS ON THE TRANSFERABILITY OF
THE SHARES EVIDENCED HEREBY, AND BY ACCEPTING ANY INTEREST IN SUCH SHARES
THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL
BECOME BOUND BY ALL THE PROVISIONS OF SAID STOCKHOLDERS' AGREEMENT."
10. Information Rights; Confidentiality. The Corporation shall deliver to
the Investors (i) audited financial statements within ninety (90) days of the
close of each fiscal year of the Corporation; (ii) unaudited quarterly financial
statements within forty five (45) days of the end of each fiscal quarter of the
Corporation; (iii) unaudited monthly financial statements within thirty (30)
days of the end of each fiscal month; (iv) annual budgets for each fiscal year
within thirty (30) days following the commencement of such fiscal year; and (v)
any other information reasonably requested by the Investors from time to time.
The Corporation shall further provide to the Investor's legal and business
advisors and consultants reasonable access upon reasonable notice to the books,
records and properties of the Corporation and its officers, so long as such
access does not violate any Federal or applicable state law. The Investors shall
hold all non-public information obtained pursuant to the requirements of this
Agreement that has been identified in writing as confidential by the Corporation
in accordance with such Investor's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
practices of Institutional Investors (as defined in the Purchase Agreement), it
being understood and agreed by the Corporation that in any event an Investor may
make disclosures (a) to its Affiliates and its Affiliates' directors, officers,
employees, agents and partners and members, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the
23
confidential nature of such information and instructed to keep such information
confidential), (b)to the extent requested by any Government Authority (as
defined in the Purchase Agreement), (c) to the extent required by applicable
laws or regulations or by any subpoena or similar legal process, (d) to any
other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section 10, to (i) any
transferee of, or any prospective transferee of, any of its Covered Securities
or (ii) any direct or indirect contractual counterparty or prospective
counterparty (or such contractual counterparty's or prospective counterparty's
professional advisor) to any credit derivative transaction relating to
obligations of the Corporation, (g) with the consent of the Corporation, (h) to
the extent such information (1) becomes publicly available other than as a
result of a breach of this Section 10, or (2) becomes available to an Investor
on a nonconfidential basis from a source other than the Corporation, or (3) to
the National Association of Insurance Commissioners or any other similar
organization or any nationally recognized rating agency that requires access to
information about an Investor's or its Affiliates' investment portfolio in
connection with ratings issued with respect to such Investors or its Affiliates
and that no written or oral communications from counsel to an Investor and no
information that is or is designated as privileged or as attorney work product
may be disclosed to any Person unless such Person is an Investor and (i) and
with respect to each Investor that is an investment fund, to actual or
prospective investors in such fund or any future fund that may be established by
such Investor or its Affiliates; provided that, unless specifically prohibited
by applicable law or order of Government Authority (as defined in the Purchase
Agreement), each Investor shall notify the Corporation of any request by any
Government Authority (as defined in the Purchase Agreement) or representative
thereof (other than any such request in connection with any examination of the
financial condition of such Investor by such Government Authority (as defined in
the Purchase Agreement)) for disclosure of any such non-public information prior
to disclosure of such information; and provided, further, that in no event shall
any Investor be obligated or required to return any materials furnished by the
Corporation or any of the Corporation's Subsidiaries.
Notwithstanding anything to contrary herein, the Corporation and each
Investor (and each of its employees, representatives and agents) is permitted to
disclose to any and all Persons, without limitation of any kind, the tax
treatment and tax structure of the transactions contemplated by the Purchase
Agreement and related documents, and all materials of any kind (including
opinions and other tax analyses) that are provided to the Corporation or such
Investor related to such tax treatment or tax structure. In this regard, the
Corporation and each Investor acknowledge and agree that the Corporation's or
such Investor's disclosure of the tax treatment or tax structure of such
transactions is not limited in any way by an express or implied understanding or
agreement, oral or written (whether or not such agreement or understanding is
legally binding). Furthermore, the Corporation and each Investor acknowledge and
agree that they do not know or have reason to know that their use or disclosure
of information relating to the structure or tax aspects of the transactions
contemplated by the Purchase Agreement and related documents is limited in any
other manner for the benefit of any other Person.
24
11. Miscellaneous Provisions.
11.1. Transferee Restrictions. Any person or entity who acquires
Covered Securities as a Permitted Transferee shall comply with this Agreement
and shall become a "Stockholder" for purposes of this Agreement. Such person or
entity shall be bound by all the provisions of this Agreement applicable to such
Stockholder from whom such person or entity acquired such Covered Securities. A
Permitted Transferee shall also be bound by all of the provisions of this
Agreement applicable to the Stockholder from whom such Permitted Transferee
acquired Covered Securities whether or not such Stockholder continues to be a
Stockholder of the Corporation.
11.2. Notice. Any and all notices, designations, consents, offers,
acceptances, or any other communication provided for herein shall be given in
writing by registered or certified mail which shall be addressed:
12.2.1. if to the Corporation to:
Brightstar Corp.
0000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Telecopier: (000)000-0000
Attention: R. Xxxxxxx Xxxxxx, President
(or to such other address as may be
designated by the Corporation in writing)
12.2.2 with a copy (which shall not constitute notice) to:
Xxxxxxxxxxx & Xxxxxxxx LLP
Miami Center, 20th Floor
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Telecopier: (000)000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
12.2.3. if to the Preferred Stockholders, to:
the addresses specified in Exhibit A attached hereto
(or to such other address as may be designated
by such Stockholder in writing).
12.2.4. if to the Convertible Noteholders, to:
the addresses specified in Exhibit B attached hereto
(or to such other address as may be designated
by such Convertible Noteholder in writing).
12.2.5. if to the Common Stockholders, to the addresses
specified on Exhibit C attached hereto (or to such other
address as may be designated by such Stockholder in
writing).
25
Except as otherwise provided in this Agreement, each such notice
shall be deemed given at the time it shall be mailed in any post office or
branch post office regularly maintained by the United States Government.
11.3. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof,
and supersedes all prior agreements and understandings, oral and written,
between the parties hereto with respect to the subject matter hereof.
11.4. Successors and Assigns. This Agreement shall be binding upon,
and shall inure to the benefit of, the parties hereto and the respective
successors and permitted assigns of each of them, so long as they hold Covered
Securities.
11.5. Amendments; Waiver. This Agreement may be amended, and any
provision contained herein may be waived for all Stockholders, upon the vote of
the holders of a majority of the Common Stock held by each of (i) the Investors,
voting as one class (on an as-converted basis), and (ii) the Stockholders,
other than the Investors, voting as a separate class; provided that no amendment
or waiver of any provision of Section 4 shall be made without the unanimous vote
of all Stockholders; provided further, that if any amendment or wavier would
have a materially adverse and disproportionate effect on the rights of any
Stockholder of the same class hereunder relative to any other Stockholder
hereunder, such amendment or waiver shall also require the prior written
approval of the Stockholder so adversely affected. In addition, the rights
granted pursuant to Section 2.4 may be waived only upon the vote of the holders
of a majority of the Common Stock held by the Investors (voting on an
as-converted basis), each voting as a separate class.
11.6. Applicable Law. This Agreement and the legal relations among
the parties hereto shall be governed by, and construed in accordance with, the
internal laws of the State of New York applicable to contracts made and to be
wholly performed therein.
11.7. Binding Effect; Benefits. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their respective
successors and permitted assigns.
11.8. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
11.9. Severability. If any provision or part thereof contained in
this Agreement is declared invalid by any court of competent jurisdiction or a
government agency having jurisdiction, such declaration shall not affect the
remainder of the provision or the other provisions and each shall remain in full
force and effect.
11.10. Headings. The headings in this Agreement are for reference
purposes only and shall not in any way affect or limit the meaning or
interpretation of this Agreement.
[SIGNATURE PAGE TO FOLLOW]
26
27
IN WITNESS WHEREOF, the undersigned have executed this Stockholders
Agreement on the date first above written. *
BRIGHTSTAR CORP
By: /s/ R. Xxxxxxx Xxxxxx
-----------------------
Name: R. Xxxxxxx Xxxxxx
Title: President
28
EXHIBIT A
PREFERRED STOCKHOLDERS
The undersigned parties hereby consent to become Stockholders of the
Corporation and agree to be bound by the terms and conditions of the foregoing
Stockholders' Agreement at the time they become owners of any Covered Securities
of the Corporation:
Shares of Series
Name: A Preferred Stock: Signature:
Falcon Mezzanine Partners, LP 1,214,574.899(1) Falcon Mezzanine Partners, LP
00 Xxxxxxxx Xxxxxx By: Falcon Mezzanine
Xxxxxxx, XX 00000 Investments, LLC,
Attn: Xxxxxxx Xxxx Its: General Partner
With a copy to: By: /s/ Xxxxxx Xxxxx
---------------------
Xxxxxx Xxxxxx & Xxxxxxx LLP Name: Xxxxxx Xxxxx
00 Xxxx Xxxxxx Title: Vice President
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxxxxxx, Esq.
--------------
(1) After the issuance by the Corporation of the Additional Purchased Preferred
Stock (as defined in the Purchase Agreement), if it occurs, Falcon Mezzanine
Partners LP will own, in the aggregate, 1,351,214.575 shares of Series A
Preferred Stock.
A-1
SHARES OF SERIES
NAME: A PREFERRED STOCK: SIGNATURE:
Prudential Capital Partners, L.P. l,175,649.321(2) Prudential Capital Partners, L.P.
c/o Prudential Capital Group By: Prudential Capital Group, L.P.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000 Xxx: General Partner
Xxxxxxx, XX 00000
With a copy to: By: /s/ Xxx Xxxxx:
----------------
Xxxxxx Xxxxxx & Xxxxxxx LLP Name: Xxx Xxxxx
00 Xxxx Xxxxxx Its: Vice President
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxxxxxx, Esq.
Prudential Capital Partners Management 38,925.578(3) Prudential Capital Partners Management Fund, L.P.
Fund, L.P. c/o Prudential Capital Group By: Prudential Investment Management, Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000 Xxx: General Partner
Xxxxxxx, XX 00000
With a copy to: By: /s/ Xxx Xxxxx
---------------
Xxxxxx Xxxxxx & Xxxxxxx LLP Name: Xxx Xxxxx
00 Xxxx Xxxxxx Its: Vice President
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxxxxxx, Esq.
----------------
(2) After the issuance by the Corporation of the Additional Purchased Preferred
Stock (as defined in the Purchase Agreement), if it occurs, Prudential Capital
Partners, L.P. will own, in the aggregate, 1,307,909.867 shares of Series A
Preferred Stock.
(3) After the issuance by the Corporation of the Additional Purchased Preferred
Stock (as defined in the Purchase Agreement), if it occurs, Prudential Capital
Partners Management Fund, L.P. will own, in the aggregate, 43,304.705 shares of
Series A Preferred Stock.
A-2
SHARES OF SERIES
NAME: A PREFERRED STOCK: SIGNATURE:
[***] 600,000.000 [***]
c/o Grandview Capital Management LLC
000 Xxxxxxxxx Xxxxxx #000 By: /s/ Xxxx X. Xxxxxx
Xxxxxxxxx Xxxxx, XX 00000 ----------------------------
Attn: Xxxxxx Xxxxx Name: Xxxx X. Xxxxxx
Title: Senior Vice President
Arrow Investment Partners 7,287.449 Arrow Investment Partners
c/o Grandview Capital Management LLC
000 Xxxxxxxxx Xxxxxx #000 By: /s/ Xxxx X. Xxxxxx
Xxxxxxxxx Xxxxx, XX 00000 ---------------------------
Attn: Xxxxxx Xxxxx Name: Xxxx X. Xxxxxx
Title: Senior Vice President
A-3
SHARES OF SERIES
NAME: A PREFERRED STOCK: SIGNATURE:
RCG Carpathia Master Fund, Ltd. 440,283.401 RCG Carpathia Master Fund, Ltd.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000 By: /s/ Xxxxxx X. Xxxxxx
Attn: Xxxxxxx Xxxxxxx ----------------------------
Name: Xxxxxx X. Xxxxxx
With a copy to: Title: Managing Director
RCG Carpathia Master Fund, Ltd.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
A-4
EXHIBIT B
CONVERTIBLE NOTEHOLDERS
Amount of
Convertible
Senior
subordinated
Name: notes: Signature:
Falcon Mezzanine Partners, LP $10,283,400.81(4) Falcon Mezzanine Partners, LP
00 Xxxxxxxx Xxxxxx By: Falcon Mezzanine Investments, LLC,
Xxxxxxx, XX 00000 Its: General Partner
Attn: Xxxxxxx Xxxx
With a copy to: By: /s/ Xxxxxx Xxxxx
---------------------------
Xxxxxx Xxxxxx & Xxxxxxx LLP Name: Xxxxxx Xxxxx
00 Xxxx Xxxxxx Title: Vice President
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxxxxxx, Esq.
-----------
(4) After the issuance by the corporation of the Additional Notes (as defined in
the Purchase Agreement), if it occurs, Falcon Mezzanine Partners, LP will own
Convertible Senior Subordinated Notes in the aggregate principal amount of
$11,440,283.40.
B-1
Amount of
Convertible
Senior
subordinated
Name: notes: Signature:
Prudential Capital Partners, L.P. $9,953,830.91(5) Prudential Capital Partners, L.P.
c/o Prudential Capital Group By: Prudential Capital Group, L.P.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000 Xxx: General Partner
Xxxxxxx, XX 00000
With a copy to: By: /s/ Xxx Xxxxx
-------------------------
Xxxxxx Xxxxxx & Xxxxxxx LLP Name: Xxx Xxxxx
00 Xxxx Xxxxxx Its: Vice President
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxxxxxx, Esq.
Prudential Capital Partners Management $329,569.90(6) Prudential Capital Partners Management Fund, L.P.
Fund, L.P. c/o Prudential Capital Group By: Prudential Investment Management, Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000 Xxx: General Partner
Xxxxxxx, XX 00000
With a copy to: By: /s/ Xxx Xxxxx
----------------------------
Xxxxxx Xxxxxx & Xxxxxxx LLP Name: Xxx Xxxxx
00 Xxxx Xxxxxx Its: Vice President
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxxxxxx,Esq.
--------------
(5) After the issuance by the Corporation of the Additional Notes (as defined in
the Purchase Agreement), if it occurs, Prudential Capital Partners, L.P. will
own Convertible Senior Subordinated Notes in the aggregate principal amount of
$11,073,636.90
(6) After the issuance by the Corporation of the Additional Notes (as defined in
the Purchase Agreement), if it occurs, Prudential Capital Partners Management
Fund, L.P. will own Convertible Senior Subordinated Notes in the aggregate
principal amount of $366,646.52.
B-2
AMOUNT OF
CONVERTIBLE
SENIOR
SUBORDINATED
NAME: NOTES: SIGNATURE:
[***] [***]
c/o Grandview Capital Management LLC
000 Xxxxxxxxx Xxxxxx #000
Xxxxxxxxx Xxxxx, XX 00000 By: /s/ Xxxx X. Xxxxxx
Attn: Xxxxxx Xxxxx ----------------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President
Arrow Investment Partners $ 61,700.41 Arrow Investment Partners
c/o Grandview Capital Management LLC
Xxxxxxxxx Xxxxx, XX 00000 By: /s/ Xxxx X. Xxxxxx
000 Xxxxxxxxx Xxxxxx #000 ---------------------------
Attn: Xxxxxx Xxxxx Name: Xxxx X. Xxxxxx
Title: Senior Vice President
B-3
Amount of
Convertible
Senior
subordinated
Name: notes: Signature:
RCG Carpathia Master Fund, Ltd. $3,727,732.79 RCG Carpathia Master Fund, Ltd.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000 By:/s/ XXXXXX X. XXXXXX
----------------------------
With a Copy to: Name: XXXXXX X. XXXXXX
RCG Carpathia Master Fund, Ltd. Title: MANAGING DIRECTOR
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
B-4
EXHIBIT C
COMMON STOCKHOLDERS
NUMBER OF SHARES OF SIGNATURE:
NAME COMMON STOCK
------------------------ ------------------- ----------------------------
Xxxx Xxxxxxx Xxxxxx 19,825,752
0000 X.X. 00xx Xxxxxx By: /s/ XXXX XXXXXXX XXXXXX
------------------------
Xxxxx, Xxxxxxx 00000 Xxxx Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxx 1,043,461
________________________ By:________________________
________________________ Xxxxx Xxxxxxxx
C-1
EXHIBIT C
COMMON STOCKHOLDERS
NUMBER OF SHARES OF SIGNATURE:
NAME COMMON STOCK
------------------------ ------------------- ----------------------------
Xxxx Xxxxxxx Xxxxxx 19,825,752
0000 X.X. 00xx Xxxxxx By: /s/ XXXX XXXXXXX XXXXXX
Xxxxx, Xxxxxxx 00000 ------------------------
Xxxx Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxx 1,043,461
0000 Xxxxxxxx Xxxxxx By: /s/ Xxxxx Xxxxxxxx
Xxxxxxx Xxxx XX 00000 ------------------------
Xxxxx Xxxxxxxx
C-1
