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EX-10.5
Preferred Stock Exchange Ageement
Exhibit 10.5
PREFERRED STOCK EXCHANGE AGREEMENT
THIS PREFERRED STOCK EXCHANGE AGREEMENT ("Agreement") is entered into as of
the 15th day of June, 1995, by and among LAMBDA III, L.P., a limited partnership
("Lambda III") and LAMBDA CFD `87, L.P., a limited partnership ("Lambda CFD")
(Lambda III and Lambda CFD being sometimes hereinafter collectively referred to
as "Lambda"), and SUPERSHUTTLE INTERNATIONAL, INC., a Delaware corporation
("SSI"), with reference to the following facts:
WHEREAS, Lambda III currently owns 78,741 shares of SSI's Series A
Convertible Preferred Stock (the "Series A Preferred"), having an aggregate
liquidation value of approximately $1,000,000, and Lambda CFD currently owns
3,937 shares of Series A Preferred, having an aggregate liquidation value of
approximately $60,000; and
WHEREAS, pursuant to Section 5 of the Certificate of Designation for the
Series A Preferred, Lambda has certain rights to require the redemption of the
Series A Preferred; and
WHEREAS, SSI desires that Lambda extend its investment in SSI; and
WHEREAS, SSI has designated a new series of preferred stock, designated
"Series B Convertible Preferred Stock" (the "Series B Preferred") and ULLICO,
Inc., a Maryland corporation ("ULLICO"), proposes to purchase a total of 339,477
shares of Series B Preferred, at a purchase price of Eight and 8371/10,000
Dollars ($8.8371) per share, pursuant to that certain Stock Purchase Agreement,
dated as of June ___, 1995 (the "Stock Purchase Agreement"); and
WHEREAS, SSI has agreed to provide Lambda with certain information
requested by Lambda, as more fully set forth in that certain letter from Lambda
to SSI dated April 28, 1995 (except items 1, 6 and & of such letter); and
WHEREAS, Lambda and SSI have agreed on the terms and conditions pursuant to
which Lambda will exchange the shares of Series A Preferred currently held by
Lambda for shares of Series B Preferred;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties hereby agree as follows:
1. Exchange of Preferred Stock. Concurrently with the closing of the
purchase of Series B Preferred by ULLICO pursuant to the Stock Purchase
Agreement, Lambda will exchange all of its shares of Series A Preferred for
shares of Series B Preferred, at the rate of 1.6933 shares of Series B Preferred
for each one (1) share of Series A Preferred, with any fractional shares which
would have been issuable being paid in cash at the rate of Eight and 8371/10,000
Dollars ($8.8371) per share.
2. Rights of Lambda. The rights of Lambda as a holder of Series B Preferred
shall be as determined by the Certificate of
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Designation for the Series B Preferred; provided, however, that all rights of
Lambda under that certain Convertible Preferred Stock Purchase Agreement, dated
as of September 24, 1987 (the "Lambda Agreement") shall continue in full force
and effect, except as hereinafter expressly provided:
2.1. Registration Rights; Restrictions on Transferability. All rights
and obligations of Lambda under Section 8 of the Lambda Agreement are
hereby superseded in their entirety by the following:
(a) Restrictions on Transferability. The Convertible Preferred
and the Common Stock issuable upon conversion of the Convertible
Preferred shall not be transferable except upon the conditions
specified in this Section 2.1, which conditions are intended to insure
compliance with the provisions of the Securities Act. Lambda will
cause any proposed transferee of such securities held by Lambda to
agree to take and hold such securities subject to the provisions and
upon the conditions specified in this Section 2.1.
(b) Certain Definitions. As used in this Section 2.1, the
following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering
the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended or any similar federal statute and the rules and
regulations of the Commission thereunder, all as the same shall
be in effect at the time.
"Restricted Securities" shall mean the securities of SSI
required to bear the legend set forth in Section 2.1(c) hereof.
"Registrable Securities" means (i) shares of the Convertible
Preferred, whether issued to Lambda or to ULLICO pursuant to the
Stock Purchase Agreement, (ii) shares of Common Stock issuable
upon conversion of the Series B Preferred, and (iii) shares of
Common Stock issued pursuant to the exercise of the Warrants
issued to ULLICO pursuant to the Stock Purchase Agreement.
The terms "registered," "registered" and "registration"
refer to a registration effected by preparing and filing a
registration statement with the Commission in compliance with the
Securities Act, and the declaration or ordering of the
effectiveness of such registration statement by the Commission.
"Registration Expenses" shall mean all expenses incurred by
SSI in complying Sections 2.1(e) and 2.1(f) hereof, including,
without limitation, all registration, qualification and filing
fees, printing expenses, escrow fees, fees and disbursements of
counsel for SSI, blue sky fees and expenses, and the expense of
any special audits incident to or required by any such
registration (but excluding the
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compensation of regular employees of SSI which shall be paid in
any event by SSI).
"Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale and all fees and
disbursements of counsel for any Holder.
"Holder" shall mean any holder of Registrable Securities
subject to this Agreement, or issued pursuant to the Stock
Purchase Agreement.
"Initiating Holders" shall mean any Holders requesting
registration of any Registrable Securities pursuant to Sections
2.1 (e) and 2.1(f) hereof, or pursuant to the provisions of the
Stock Purchase Agreement.
(c) Restrictive Legend. Each certificate representing (i) the
Series B Preferred, and (ii) shares of SSI's Common Stock issued upon
conversion of the Series B Preferred, shall (unless otherwise
permitted by the provisions of Section 2.1(d) below) be stamped or
otherwise imprinted with a legend substantially in the following form
(in addition to any legend required under applicable state securities
laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID
ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE
SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST
BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE CORPORATION.
(d) Notice of Proposed Transfers. The Holder of each certificate
representing Restricted Securities by acceptance thereof agrees to
comply in all respects with the provisions of this Section 2.1(d).
Prior to any proposed transfer of any Restricted Securities, unless
(i) there is in effect a registration statement under the Securities
Act covering the proposed transfer, or (ii) the Board of Directors of
SSI excuses compliance with this Section 2.1(d) in writing, the Holder
thereof shall give written notice to SSI of such Holder's intention to
effect such transfer. Each such notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail, and shall
be accompanied (except in pro rata distributions by the Holder to its
partners or shareholders or transactions in compliance with Rule 144)
by either (1) an unqualified written opinion of legal counsel who
shall be reasonably satisfactory to 551 addressed to SSI and
reasonably satisfactory in form and substance to SSI's counsel, to the
effect that the proposed transfer of the Restricted Securities may be
effected without registration under the Securities Act or any
applicable state securities laws, or
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(2) a "no action" letter from the Commission to the effect that the
distribution of such securities without registration will not result
in a recommendation by the staff of the Commission that action be
taken with respect thereto (and an equivalent letter or interpretive
opinion from the agency or agencies administering any applicable state
securities laws), whereupon the Holder of such Restricted Securities
shall be entitled to transfer such Restricted Securities in accordance
with the terms of the notice delivered by the holder to SSI. Each
certificate evidencing the Restricted Securities transferred as above
provided shall bear the appropriate restrictive legend set forth in
Section 8.3 above, except that such certificate shall not bear such
restrictive legend if in the opinion of counsel for SSI such legend is
not required in order to establish compliance with any provisions of
the Securities Act.
(e) Demand Registration.
(i) Request for Registration. In case SSI shall receive from
Initiating Holders a written request that SSI effect any registration
with respect to all or a part of the Registrable Securities, SSI will,
on one (1) occasion only (except with respect to registrations on Form
S-3, if registration on such Form is available, which registrations
may, subject to the restrictions set forth below in this Section
2.l(e)(i), be requested at any time and from time to time):
(1) promptly give written notice of the proposed
registration to all other Holders; and
(2) as soon as practicable, use its diligent best efforts to
effect such registration, qualification or compliance (including,
without limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under
the Securities Act and any other governmental requirements or
regulations) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of
such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities
of any Holder joining in such request as are specified in a
written request received by SSI within 15 business days after
receipt of such written notice from SSI; provided that SSI shall
not be obligated to take any action to effect any such
registration, qualification or compliance pursuant to this
Section 2.1(e):
(a) In any particular jurisdiction in which SSI would
be required to execute a general consent to service of
process in effecting such registration, qualification or
compliance unless SSI is already subject to service in such
jurisdiction and except as may be required by the Securities
Act;
(b) Within six (6) months immediately following the
effective date of any registration statement pertaining
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to securities of SSI (other than a registration with respect
to an employee benefit plan);
(c) If the Holders propose to sell a number of shares
of Registrable Securities having an aggregate proposed
offering price to the public of less than $5,000,000.
Subject to the foregoing clauses (a) through (c), SSI shall file a
registration statement covering the Registrable Securities so requested to
be registered as soon as practicable, after receipt of the request or
requests of the Initiating Holders; provided, however, that if SSI shall
furnish to such Holders a certificate signed by the President of SSI
stating that in the good faith judgment of the Board of Directors of SSI,
it would be seriously detrimental to SSI and its shareholders for such
registration statement to be filed on or before the date filing would be
required and it is therefore essential to defer the filing of such
registration statement, SSI shall have the right to defer such filing for a
period of not more than 120 days after receipt of the request of the
Initiating Holders; provided, however, that SSI may only exercise such
right once within any 12 month period.
The registration statement filed pursuant to the request of the
Initiating Holders may, subject to the provisions of Section 2.1(e) (ii)
below, include other securities of SSI which are held by persons who, by
virtue of agreements entered into with SSI in connection with the issuance
of securities subsequent to the date of this Agreement, are entitled to
include their securities in such registration; provided, however, that such
agreements shall not be inconsistent with the registration priorities
provided in this Agreement.
(ii) Underwriting. If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an
underwriting, they shall so advise SSI as a part of their request made
pursuant to Section 2.1(e) and SSI shall include such information in the
written notice referred to in Section 2.1(e) (i) (1). The right of any
Holder to registration pursuant to Section 2.1(e) shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent requested
(unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein.
If, by virtue of agreements entered into subsequent to the date of
this Agreement, the holders of other securities of SSI (the "Other
Holders") request and are entitled to inclusion in such registration, the
Initiating Holders shall, on behalf of all Holders, offer to the Other
Holders that such other securities be included in the underwriting and may
condition such offer on the acceptance by such Other Holders of the further
provisions of this paragraph 2.1(e). SSI shall (together with all Holders
and Other Holders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with
the representative of
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the underwriter or underwriters selected for such underwriting by a
majority in interest of the Initiating Holders.
Notwithstanding any other provision of this Section 2.l(e), if the
representative of the underwriter or underwriters advises the Initiating
Holders in writing that marketing factors require a limitation of the
number of shares to be underwritten, then the Initiating Holders shall so
advise all Holders and Other Holders of securities which would otherwise be
underwritten pursuant hereto, and the number of shares of Registrable
Securities and such other securities that may be included in the
registration and underwriting shall be allocated first among the Initiating
Holders and Holders thereof in proportion, as nearly as practicable, as the
respective amounts of Registrable Securities held by the Initiating Holders
and Holders bear to the total amount of Registrable Securities. Thereafter
any remaining number of shares which are not excluded by the representative
shall be allocated among the Other Holders in such proportion as the
respective number of shares each such Other Holder requests to be included
in such registration bears to the total number of shares all Other Holders
request be included. All Registrable Securities or any other securities
excluded from the underwriting by reason of the underwriter's marketing
limitation shall not be included in such registration.
If any Holder of Registrable Securities, or Other Holder of other
securities entitled (upon request) to be included in such registration,
disapproves of the terms of the underwriting, such person may elect to
withdraw therefrom by written notice to SSI, the underwriter and the
Initiating Holders. The securities so withdrawn shall also be withdrawn
from registration. If the underwriter has not limited the number of
Registrable Securities or other securities to be underwritten, SSI may
include its securities for its own account in such registration if the
underwriter so agrees and if the number of Registrable Securities and other
securities which would otherwise have been included in such registration
and underwriting will not thereby be limited.
(f) SSI Registration.
(i) If at any time or from time to time, SSI shall determine to
register any of its securities, either for its own account or the account
of a security holder or holders exercising their respective demand
registration rights, other than a registration relating solely to employee
benefit plans, or a registration on any registration form which does not
permit secondary sales or does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities, SSI will:
(1) promptly give to each Holder written notice thereof (which
shall include a list of the jurisdictions in which SSI intends to
attempt to qualify such securities under the applicable blue sky or
other state securities laws); and
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(2) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a
written request or requests, made within 20 days after receipt of such
written notice from SSI, by any Holder or Holders, except as set forth
in 2.1(f) (ii) below.
(ii) Underwriting. If the registration of which SSI gives notice is or
a registered public offering involving an underwriting, SSI shall so advise
the Holders as a part of the written notice given pursuant to Section
2.1(e) (i). In such event the right of any Holder to registration pursuant
to Section 2.1(f) shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with
SSI and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by SSI.
Notwithstanding any other provision of this Section 2.1(f), if the
underwriter determines that marketing factors require a limitation of the
number of shares to be registered, the underwriter may limit the number of
Registrable Securities to be included in the registration and underwriting.
SSI shall so advise all Holders and any other holders of "piggyback"
registration rights (the "Other Shareholders"), and the number of shares of
Registrable Securities and shares held by Other Shareholders that may be
included in the registration and underwriting shall be allocated among all
Holders and Other Shareholders thereof in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities and shares
held by Other Shareholders entitled to inclusion in such registration held
by all such Holders and Other Shareholders at the time of filing the
registration statement. If any Holder or other Shareholder disapproves of
the terms of any such underwriting, he may elect to withdraw therefrom by
written notice to SSI and the underwriter. Any Registrable Securities or
shares held by other Shareholders excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
(g) Expenses of Registration. All Registration Expenses incurred in
connection with the registration, qualification or compliance pursuant to
Section 2.1(e) shall be borne by SSI. Notwithstanding the above, SSI shall
not be required to pay for any expenses of any registration proceeding
begun pursuant to Section 2.1(e) if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (which Holders shall bear such
expenses); provided, however, that if at the time of such withdrawal, the
Holders have learned of a material adverse change in the condition,
business, or prospects of SSI from that known to the Holders at the time of
their registration request, then the Holders shall not be required to pay
any of such expenses. All Registration Expenses incurred in
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connection with any piggyback requests pursuant to Section 2.1(f) shall be
borne by SSI. All Selling Expenses shall be borne by the Holders of such
securities pro rata on the basis of the respective number of shares so
registered.
(h) Registration Procedures. In the case of each registration,
qualification or compliance effected by SSI pursuant to this Section 2.1,
SSI will keep each Holder advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion
thereof. At its expense SSI will:
(i) Keep such registration, qualification or compliance effective
for a period of 120 days or until the Holder or Holders have completed
the distribution described in the registration statement relating
thereto, whichever first occurs; and
(ii) Furnish such number of prospectuses and other documents
incident thereto as a Holder from time to time may reasonably request.
(i) Termination of Registration Rights. The registration rights
granted pursuant to this Section 2.1 shall terminate as to each Purchaser
at such time as all shares acquired by such Purchaser pursuant to this
Agreement (including share of Series B Preferred and shares of Common Stock
issued upon conversion of the Series B Preferred) shall constitute less
than Three Percent (3%) of the outstanding shares of SSI.
(j) Indemnification.
(i) SSI will indemnify each Holder, each of its officers and directors
and partners, and each person controlling such Holder, with respect to
which registration, qualification or compliance has been effected pursuant
to this Section 2.1, and each underwriter, if any, and each person who
controls any underwriter, against all expenses, claims, losses, damages and
liabilities (or actions in respect thereof), arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained
in any registration statement, prospectus, offering circular or other
document (including any related registration statement, notification or the
like) incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading, or any violation by SSI of any rule or regulation promulgated
under the Securities Act applicable to SSI and relating to action or
inaction required of SSI in connection with any such registration,
qualification or compliance, and will reimburse each such Holder, each of
its officers, directors or partners, as the case may be, and each person
controlling such Holder, each such underwriter and each person who controls
any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that SSI and the Selling
Shareholder
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will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission based upon written information furnished to SSI by an
instrument duly executed by such Holder or underwriter and stated to be
specifically for use therein.
(ii) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification
or compliance is being effected, indemnify SSI and its directors and
officers, each legal counsel and independent accountant of SSI, each
underwriter, if any, of SSI's securities covered by such a registration
statement, each person who controls SSI or such underwriter within the
meaning of the Securities Act, and each other such Holder, each of its
officers, directors and partners and each person controlling such Holder,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement
prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse SSI, such Holders, such directors, officers, partners,
persons, underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to SSI
by an instrument duly executed by such Holder and stated to be specifically
for use therein.
(iii) Each party entitled to indemnification under this Section 2.1(j)
(the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall conduct the defense of
such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld), and the Indemnified Party may
participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this
Section 2.1, unless such failure to give prompt notice is prejudicial to
the Indemnifying Party's ability to defend such action. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with
the consent of each Indemnified Party, consent to entry of any judgment or
enter into any settlement-which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation. The
indemnity agreements contained in this Section 2.1(j) shall not apply to
amounts
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paid in settlement of any claim, loss, damage, liability or action if such
settlement is effected without the consent of the Indemnifying Party, which
consent shall not be unreasonably withheld.
(iv) If the indemnification provided for in this Section 2.1(j) is
held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any expenses, claims, losses, damages,
liabilities and actions referred to in Section 2.1(j) (i), then the
Indemnifying Party, in lieu of indemnifying such Indemnified Party
thereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such expenses, claims, losses, damages,
liabilities and actions in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and of the
Indemnified Party on the other in connection with the statements or
omissions which resulted in such expenses, claims, losses, damages,
liabilities and actions as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(v) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with the underwritten public offering are in
conflict with the foregoing provisions, the provisions in the underwriting
agreement shall be controlling.
(k) Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to SSI such
information regarding such Holder or Holders and the distribution proposed
by such Holder or Holders as SSI may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section 2.1.
(1) Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time
permit the sale of the Restricted Securities to the public without
registration, after such time as a public market exists for the Common
Stock of SSI, SSI agrees to:
(i) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act at all
times after 90 days after the effective date of the first registration
under the Securities Act filed by SSI for an offering of its
securities to the general public;
(ii) Use its best efforts to then file with the Commission in a
timely manner all reports and other documents required of SSI under
the Securities Act and the Securities Exchange Act of 1934,
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as amended (at any time after it has become subject to such reporting
requirements);
(iii) So long as Purchaser owns any Restricted Securities to
furnish to the Purchaser forthwith upon request a written statement by
SSI as to its compliance with the reporting requirements of said Rule
144 (at any time after 90 days after the effective date of the first
registration statement filed by SSI for an offering of its securities
to the general public), and of the Securities Act and the Securities
Exchange Act (at any time after it has become subject to such
reporting requirements), a copy of the most recent annual or quarterly
report of SSI, and such other reports and documents of SSI as
Purchaser may reasonably request in availing itself of any rule or
regulation of the Commission allowing Purchaser to sell any such
securities without registration.
(m) Transfer of Registration Rights. The rights to cause SSI to
register securities granted Purchasers under Sections 2.1(e) and 2.1(f) may
be not be assigned or transferred by the Purchaser without the prior
written consent of SSI.
(n) "Market Stand-off" Agreement. Any Holder holding any outstanding
Common Stock acquired pursuant to this Agreement at such time, if requested
by SSI or an underwriter of Common Stock (or other securities) of SSI,
shall agree not to sell or otherwise transfer or dispose of any Common
Stock (or other securities) of SSI acquired pursuant to this Agreement
held by such Purchaser during the 120 day period following the effective
date of a registration statement of SSI filed under the Securities Act of
1933, as amended, provided that all Holders holding any of the outstanding
Common Stock and all officers and directors of SSI enter into similar
agreements. Such agreement shall be in writing in the form satisfactory to
SSI and such underwriter. SSI may impose stop-transfer instructions with
respect to the shares (or securities) subject to the foregoing restriction
until the end of said 120 day period.
2.2. Other Rights of Lambda. The other rights of Lambda as provided in the
Lambda Agreement shall continue in full force and effect, except as follows:
(a) Reporting. In lieu of the information and reports to which Lambda
is entitled pursuant to Sections 7.1 through 7.5, inclusive, of the Lambda
Agreement, Lambda shall be entitled to receive the reports given to ULLICO
pursuant to Section 6.1 of the Stock Purchase Agreement.
(b) Covenants Waived. Lambda hereby waives the provisions of Sections
7.5, 7.6, 7.7 of the Lambda Agreement, and further agrees that the
provisions of Section 7.9 shall apply only to Xxxxx Xxxxx.
(c) Termination of Covenants. Notwithstanding any other term or
provision hereof, or of the Lambda Agreement, all rights of Lambda and
covenants of SSI, excepting only those provided in Section 2.1 of this
Agreement, and expressly including those provided in
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Section 9 and 10 of the Lambda Agreement, shall terminate upon the
occurrence of a "Triggering Event." As used herein, "Triggering Event"
shall mean and include the first to occur of any of the following events:
(i) the successful completion of a public offering by SSI of
securities of SSI pursuant to a Registration Statement filed with the
Securities and Exchange Commission (other than a registration on Form
S-8 of a similar form contemplating the registration of securities for
an employee equity or benefit plan), at an offering price (after
giving effect to any adjustments to the common stock of SSI after the
date hereof) of not less than Twelve Dollars ($12) per share of common
stock (prior to underwriting commissions and offering expenses) and an
aggregate initial offering price to the public of not less than Seven
Million Five Hundred Thousand Dollars ($7,500,000); or
(ii) the completion of a merger of SSI with or into any other
corporation or entity (other than a merger with a wholly-owned
subsidiary of SSI, or a merger solely for the purpose of changing the
domicile and state of incorporation of SSI); or
(iii) the completion of a sale of all or substantially all of the
assets of SSI in a single transaction or a series of related
transactions; or
(iv) the completion of a sale of all or substantially all of the
outstanding securities of SSI by the holders thereof in a single
transaction or a series of related transactions; or
(v) any transaction or event, expressly including but not
limited to one or more sales or transfers by Lambda, as a result of
which Lambda is no longer the holder of Common Stock (or Series B
Preferred Stock convertible into Common Stock) equal to at least Three
Percent (3%) of the total number of shares of Common Stock of SSI
outstanding, on a fully-diluted basis.
2.3. Election of Directors. As soon as is practicable after the exchange
provided for herein, and at each meeting of the shareholders of SSI thereafter
at which directors are elected, Lambda shall have the right to nominate and
elect to the Board of Directors one (1) individual to be selected by Lambda;
provided, however, that at any meeting of shareholders for the purpose of
electing persons to the Board of Directors, the holders of Series B Preferred
Stock shall have the right to nominate and elect only a total of three (3)
individuals selected by all holders of Series B Preferred, including any such
persons who are already directors. Lambda agrees and acknowledges that, SSI may
require any such prospective nominee to complete and return a questionnaire, in
form and substance suitable to SSI. Lambda further agrees and acknowledges that
the Certificate of Designation of the Series B Preferred provides that the
holders of the Series B Preferred will have the right to elect a total of three
(3) persons to the Board of Directors of SSI. Lambda further acknowledges and
agrees that Lambda will have the right to designate and elect one (1) of these
three directors, and ULLICO will have the right to designate and
13
elect two (2) of these three directors. No consultation or agreement between or
among ULLICO and Lambda shall be necessary prior to the nomination or election
by either party of such directors, and the right of ULLICO to nominate and elect
two (2) directors and the right of Lambda to nominate and elect one (1) director
shall be independent.
SSI agrees to reimburse all directors for the reasonable expenses incurred
by such director in attending meetings of the Board of Directors, including
travel and lodging. To the extent that the Board of Directors elects to
compensate directors for attendance at meetings of the Board of Directors, the
designees of Lambda shall receive compensation on the same basis as any other
director. SSI shall investigate and, to the extent feasible, obtain a policy or
policies of directors' and officers' liability insurance, in such policy amounts
as the Board of Directors of SSI shall deem appropriate. In addition, SSI shall
enter into indemnification agreements with each director, providing for
indemnification of such director to the maximum extent permitted by applicable
law.
SECTION 3.
MISCELLANEOUS
3.1. Governing Law. This Agreement shall be interpreted and construed in
accordance with the laws of the State of California.
3.2. Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Purchaser and the
closing of the transactions contemplated hereby.
3.3. Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
3.4. Entire Agreement; Amendment. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
Neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.
3.5. Notices, etc. All notices and other communications required or
permitted hereunder shall be deemed given when received by the addressee, shall
be in writing and shall be mailed by registered or certified mail, postage
prepaid, or otherwise' delivered by hand or by messenger, addressed as follows:
14
(a) If to Lambda:
Lambda Fund Management, Inc.
000 Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxx
(b) If to SSI:
SuperShuttle International, Inc.
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
or at such other address as the Purchaser or SSI shall have furnished to the
other in writing.
3.6. Delays or Omissions. No delay or omission to exercise any right, power
or remedy accruing to any party hereunder, upon any breach or default under this
Agreement, shall impair any such right, power or remedy of such holder nor shall
it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part
of any party of any provisions or conditions of this agreement, must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement, or by law or otherwise
afforded to any party, shall, be cumulative and not alternative.
3.7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the Purchasers,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
3.8. Severability. In the event that any provision of this agreement
becomes or is declared by a court of competent jurisdiction
15
to be illegal, unenforceable or void, this agreement shall continue in full
force and effect without said provision; provided that no such severability
shall be effective if it materially changes the economic benefit of this
agreement to any party.
The foregoing agreement is hereby executed as of the date first above
written.
LAMBDA III, L.P.,
a limited partnership
By: Lambda III Capital Partners, L.P.,
General Partner
By: Lambda Management, L.P.,
General Partner
By:
-----------------------------------
General Partner
LAMBDA CFD '87, L.P.,
a limited partnership
By: Lambda Managment, L.P.,
General Partner
By:
-----------------------------------
General Partner
SUPERSHUTTLE INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ [ILLEGIBLE]
-----------------------------------
Its: Chairman & CEO
-----------------------------------
16
to be illegal, unenforceable or void, this agreement shall continue in full
force and effect without said provision; provided that no such severability
shall be effective if it materially changes the economic benefit of this
agreement to any party.
The foregoing agreement is hereby executed as of the date first above
written.
LAMBDA III, L.P.,
a limited partnership
By: Lambda III Capital Partners, L.P.,
General Partner
By: Lambda Management, L.P.,
General Partner
By: /s/ [ILLEGIBLE]
-----------------------------------
General Partner
LAMBDA CFD '87, L.P.,
a limited partnership
By: Lambda Managment, L.P.,
General Partner
By: /s/ [ILLEGIBLE]
-----------------------------------
General Partner
SUPERSHUTTLE INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ [ILLEGIBLE]
-----------------------------------
Its: Chairman & CEO
-----------------------------------
