ADS TACTICAL, INC. STOCKHOLDERS AGREEMENT
Exhibit 10.4
Stockholders Agreement, dated as of this 1st day of July, 2011, by and among the stockholders
listed on Schedule I hereto (the “Hillier Stockholders”); the stockholders listed
on Schedule II hereto (the “Clarkson Stockholders”); the stockholders listed on
Schedule III hereto (the “▇▇▇▇▇▇ Stockholders”); and ADS Tactical, Inc., a Delaware
corporation (the “Company”). The Hillier Stockholders, the Clarkson Stockholders and the
▇▇▇▇▇▇ Stockholders are hereinafter collectively referred to as the “Stockholders”.
R E C I T A L S
WHEREAS, the Company and the Stockholders intend to publicly sell shares of Common Stock of
the Company, pursuant to a registration statement on Form S-1 initially filed with the Securities
and Exchange Commission on February 2, 2011 (the “Initial Public Offering”) on the terms
and conditions set forth therein;
WHEREAS, the Stockholders and the Company desire to promote their mutual interests by agreeing
to certain matters relating to the operations of the Company and the disposition and voting of the
shares of Common Stock Owned by the Stockholders as of the date hereof or acquired after the date
hereof and on or prior to the date of the closing of the Initial Public Offering (the “Shares”).
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the
parties hereto hereby agree as follows:
1. COVENANTS OF THE PARTIES
(a) Legends. From and after the date hereof, the certificates evidencing the Shares
Owned by the Stockholders will bear the following legend reflecting the restrictions on the
transfer of such securities contained in this Agreement:
“The securities evidenced hereby are subject to the terms of that certain
Stockholders Agreement, dated as of July 1, 2011, by and among the Company and
certain investors identified therein, including certain restrictions on transfer.
A copy of this Agreement has been filed with the Secretary of the Company and is
available upon request.”
(b) Hillier Representative. The parties hereto agree that ▇▇▇▇ ▇▇▇▇▇▇▇ shall act as
the representative of the Hillier Stockholders (the “Hillier Representative”) for the
purposes specified in this Agreement. The Hillier Stockholders representing a majority in interest
of the Hillier Stockholders may at any time select a new Hillier Representative; provided
that prompt written notice of such change is given to the Clarkson Representative and the LaRose
Representative.
(c) Clarkson Representative. The parties hereto agree that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall act
as the representative of the Clarkson Stockholders (the “Clarkson Representative”) for
the purposes specified in this Agreement. The Clarkson Stockholders representing a majority
in interest of the Clarkson Stockholders may at any time select a new Clarkson Representative;
provided that prompt written notice of such change is given to the Hillier Representative
and the LaRose Representative.
(d) ▇▇▇▇▇▇ Representative. The parties hereto agree that R. ▇▇▇▇▇ ▇▇▇▇▇▇ shall act as
the representative of the ▇▇▇▇▇▇ Stockholders (the “▇▇▇▇▇▇ Representative” and, together
with the Hillier Representative and the Clarkson Representative, the “Stockholder
Representatives”) for the purposes specified in this Agreement. The LaRose Stockholders
representing a majority in interest of the ▇▇▇▇▇▇ Stockholders may at any time select a new ▇▇▇▇▇▇
Representative; provided that prompt written notice of such change is given to the Hillier
Representative and the Clarkson Representative.
2. BOARD OF DIRECTORS.
(a) Election of Directors. From and after the date hereof, the Stockholders and the
Company shall take all action within their respective power, including but not limited to the
voting of all Shares and any other capital stock of the Company Owned by them, required to include
on the Board of Directors of the Company (the “Board”) at all times throughout the term of
this Agreement, for so long as the Stockholders, collectively, hold at least 50% of the voting
power of the issued and outstanding Voting Stock of the Company:
| (A) | to the extent the Clarkson Stockholders, collectively, hold at least 1% of the voting power of the issued and outstanding Voting Stock of the Company, one representative designated by the Clarkson Representative (the “Clarkson Director”); | ||
| (B) | to the extent the ▇▇▇▇▇▇ Stockholders, collectively, hold at least 1% of the voting power of the issued and outstanding Voting Stock of the Company, one representative designated by the LaRose Representative (the “▇▇▇▇▇▇ Director”); and | ||
| (C) | such other directors as may be designated by the Hillier Representative (the “Hillier Directors”). |
As of the date hereof, the Clarkson Director shall be ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and the LaRose Director
shall be R. ▇▇▇▇▇ ▇▇▇▇▇▇.
(b) Replacement Directors. In the event that the Clarkson Director, the LaRose
Director or any of the Hillier Directors designated in the manner set forth in Section 2(a) hereof
is unable to serve, or once having commenced to serve, is removed or withdraws from the Board (a
“Withdrawing Director”), such Withdrawing Director’s replacement (the “Substitute
Director”) will be designated by the Clarkson Representative, in the event the Withdrawing
Director is the Clarkson Director, the ▇▇▇▇▇▇ Representative, in the event the Withdrawing Director
is the LaRose Director, and the Hillier Representative, in the event the Withdrawing
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Director is a
Hillier Director, subject, in each case, to the prior consent of the Hillier Representative, such
consent not to be unreasonably withheld. The Stockholders and the Company agree to take all action
within their respective power, including but not limited to, the
voting of Shares and any other capital stock of the Company Owned by them from time to time to
cause the election of such Substitute Director as promptly as practicable following his or her
nomination pursuant to this Section 2(b).
3. TRANSFER OF STOCK
(a) Rights of First Refusal.
(i) Limitations on Transfer. No Transfer of Shares will be made or permitted by the
Stockholders (other than (i) pursuant to a Permitted Transfer or (ii) pursuant to a Public Offering
or a Rule 144 Sale) unless such Stockholder desiring to make the Transfer (hereinafter referred to
as the “Transferor”) shall have first made an offer to sell such Shares to the Company and
then to the Stockholder Representatives of the other Stockholders (the “Transferee
Representatives”) in the manner contemplated by this Section 3(a), and such offers shall not
have been accepted.
(ii) Offer by Transferor. The Transferor shall make an offer, in writing, to the
Company and the Transferee Representatives, which offer shall be irrevocable by its terms for 30
days following the delivery of such offer, to sell to the Company or, failing its election to
purchase all of the Subject Shares (defined below), then to the Transferee Representatives, all of
the Subject Shares, at the same price and for the same amount and form of consideration and on the
same terms and conditions, as would govern the proposed transfer by the Transferor of Shares (the
“Subject Shares”) to a bona fide third party (the “Third Party Offer”). The
Transferor will attach a statement of intention to Transfer the Subject Shares to such third party,
together with the name and address of the prospective third party transferee, the number of Subject
Shares involved in the proposed Transfer, and the terms and conditions (including price and form of
consideration) of the Third Party Offer (the “Statement”).
(iii) Acceptance of Offer.
(A) Within ten business days after the receipt of the offer described in
Section 3(a)(ii), the Company may, at its option, elect to purchase some or all of
the Subject Shares. The Company shall give notice of its intention to exercise, or
that it does not intend to exercise, its option hereunder to the Transferor and to
the Transferee Representatives within such ten business day period. Failure by the
Company to give such notice within such ten business day period shall be deemed a
failure to exercise its option hereunder. In the event that the Company delivers an
election notice for less than all of the Subject Shares, such election notice shall
not be effective unless and until a Transferee Representative delivers an election
notice to purchase the remaining Subject Shares pursuant to this Section 3(a).
(B) In the event that the Company does not exercise its option to purchase any
or all of the Subject Shares within such ten business day period, each of the
Transferee Representatives may elect to purchase all, but not less than
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all, of the
Subject Shares not being purchased by the Company. Each Transferee Representative
shall give notice of its intention to exercise, or that it does not intend to
exercise, its option hereunder to the Transferor and to the Company
within ten business days after receipt of notice from the Company to the effect
that the Company will not exercise any or all of its option to purchase, or, if the
Company does not give such notice, within ten business days after expiration of the
response period specified in Section 3(a)(iii)(A). Failure by any Transferee
Representative to give notice of its intent to exercise or not exercise within such
ten business day period shall be deemed a failure to exercise such Transferee
Representative’s option hereunder.
(C) In either event, any notice of exercise (the party or parties giving such
notice of exercise, the “Purchaser(s)”) pursuant to paragraphs (A) or (B)
above shall specify a date for the closing of the purchase, which shall not be more
than thirty days after the date of the giving of such notice.
(D) In the event the Company does not exercise its option to purchase all of
the Subject Shares and more than one Transferee Representative elects to purchase
all of the Subject Shares not being purchased by the Company, such Subject Shares
shall be divided equally between such Transferee Representatives or otherwise in a
manner to be agreed by such Transferee Representatives on or prior to the closing of
the purchase.
(iv) Purchase Price. Subject to Section 3(a)(v), the purchase price per share paid by
the Company or any Transferee Representative for the Subject Shares shall be the price per share
offered to be paid by the prospective transferee described in the offer, which price shall be paid
in cash or, if so provided in the offer of the prospective transferee, cash plus deferred payments
of cash in the same proportions, and with the same terms of deferred payment as therein set forth.
(v) Consideration Other Than Cash. If the offer to purchase Subject Shares pursuant
to the Third Party Offer is for consideration other than cash or cash plus deferred payments of
cash, the Purchaser(s) shall pay the cash equivalent of such other consideration. If the
Transferor and the Purchaser(s) cannot agree on the amount of such cash equivalent within ten
business days after the last notice of exercise is given pursuant to Section 3(a)(iii)(A) or (B),
any of such parties may, by five business days’ written notice to the other, initiate appraisal
proceedings under Section 3(a)(vi) for determination of the cash equivalent.
(vi) Appraisal Procedure. If any party shall initiate an appraisal procedure to
determine the amount of the cash equivalent of any consideration for Subject Shares under Section
3(a)(v), then the Transferor and the Purchaser(s) shall, by mutual agreement, promptly appoint as
an appraiser an individual who shall be a nationally-recognized investment banking firm. The
appraiser shall, within ten business days of appointment, investigate the value of the
consideration for the Subject Shares as of the proposed transfer date and shall submit a notice of
an appraisal of that value to each party. The Transferor and the Purchaser(s) agree to
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be bound by
such appraisal. The cost of the appraisal shall be shared one-half by the Transferor and one-half
by the Purchaser(s).
(vii) Closing of Purchase. The closing of the purchase shall take place at the office
of the Company or such other location as shall be mutually agreeable to the
Purchaser(s) and the Transferor, on a date chosen by the Purchaser(s), and the purchase price,
to the extent comprised of cash, shall be paid at the closing by wire transfer of immediately
available funds, and cash equivalents and documents evidencing any deferred payments of cash
permitted pursuant to Section 3(a)(iv) above shall be delivered at the closing. At the closing,
the Transferor shall deliver to the Purchaser(s) the certificates evidencing the Subject Shares to
be conveyed, duly endorsed and in negotiable form with any requisite documentary stamps affixed
thereto or with an instrument evidencing the Transfer reasonably acceptable to the Company.
(viii) Release from Restriction; Termination of Rights. If the offer to sell all of
the Subject Shares is not accepted pursuant to this Section 3(a), the Transferor may accept the
Third Party Offer and Transfer the Subject Shares to the prospective transferee named in the
Statement attached to the offer in accordance with the agreed upon terms of such Transfer set forth
in the Statement, provided that (A) such Transfer shall be made only in strict accordance
with the terms therein stated and (B) the transferee agrees, in writing, to be bound by such
Stockholder’s obligations under this Agreement pursuant to an instrument of assumption reasonably
satisfactory in form and substance to the Board. If the Transferor shall fail to accept the Third
Party Offer and consummate the proposed Transfer within ninety (90) days following the expiration
of the time hereinabove provided for the election by the Transferee Representatives, the Subject
Shares shall again become subject to all the restrictions of this Section 3.
(ix) Limitations. The provisions of this Section 3(a) shall not apply to Permitted
Transfers.
(b) Injunctive Relief. The Company and the Stockholders hereby declare that it is
impossible to measure in money the damages which will accrue to the parties hereto by reason of the
failure of any Investor to perform any of its obligations set forth in this Section 3. Therefore,
the Company and the Stockholders shall have the right to specific performance of such obligations,
and if any party hereto shall institute any action or proceeding to enforce the provisions hereof,
each of the Company and the Stockholders hereby waives the claim or defense that the party
instituting such action or proceeding has an adequate remedy at law.
4. REGISTRATION RIGHTS.
(a) Requested Registration.
(i) Request for Registration. If the Company shall receive from a Stockholder (a
“Requesting Holder”), at any time after six (6) months after the consummation of the
Initial Public Offering, a written request that the Company effect any registration with respect to
all or a part of the Registrable Securities held by such Requesting Holder, the Company will as
soon as practicable, use its diligent best efforts to effect such registration (including, without
limitation, filing post-effective amendments, appropriate qualification under
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applicable blue sky
or other state securities laws and appropriate compliance with applicable regulations issued under
the Securities Act) 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; provided that the Company shall not be obligated to effect, or take any action to
effect, any such registration pursuant to this Section 4(a):
(1) in any particular jurisdiction in which the Company would be required to
execute a general consent to service of process in effecting such
registration, qualification or compliance, unless the Company is already
subject to service in such jurisdiction and except as may be required by the
Securities Act or applicable rules or regulations thereunder;
(2) with respect to the Requesting Holder only, after the Company has
effected two (2) such registrations requested by such Requesting Holder
pursuant to this Section 4(a) and such registrations have been declared or
ordered effective and the sales of such Registrable Securities shall have
closed;
(3) during the period following any underwritten public offering by the
Company as contemplated by Section 4(i) below, as such period may be
extended by the underwriter representative; or
(4) if the Company shall furnish to the Requesting Holder a certificate
signed by the President of the Company stating that in the good faith
judgment of the Board of Directors it would be materially detrimental to the
Company for a registration statement to be filed in the near future, in
which case the Company’s obligation to use its diligent best efforts to
comply with this Section 4 shall be deferred for one or more periods not to
exceed one hundred eighty (180) days in the aggregate in any twelve-month
period.
In the event the Company is not obligated to effect any requested registration by virtue of
the foregoing clauses (1) through (4), such request shall not be deemed to be a demand for
registration for purposes of this Section 4(a). The registration statement filed pursuant to the
request of the Requesting Holder, subject to the provisions of Section 4(a)(ii) below, may include
other securities of the Company which are held by Persons (including any other Stockholder) who, by
virtue of agreements with the Company, are entitled to include their securities in any such
registration (“Other Stockholders”) and securities being sold by the Company for its own
account.
(ii) Underwriting.
(A) If the Requesting Holder intends to distribute the Registrable Securities
covered by its request by means of an underwriting, they shall so advise the Company
as a part of their request made pursuant to Section 4(a)(i).
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(B) If Other Stockholders request such inclusion, the Requesting Holder shall
offer to include the securities of such Other Stockholders in the underwriting and
may condition such offer on their acceptance of the further applicable provisions of
this Section 4. The Stockholders whose shares are to be included in such
registration shall (together with all Other Stockholders proposing to distribute
their securities through such underwriting) agree to sell such
Stockholder’s shares on the basis provided in any underwriting arrangement
approved by the Requesting Holder and the Company and complete and execute all
questionnaires, powers of attorney, indemnities and other documents required for
such underwriting arrangements and the Company and such Requesting Holder and such
Other Stockholders shall enter into an underwriting agreement in customary form with
the representative of the underwriter or underwriters selected for such
underwriting. Notwithstanding any other provision of this Section 4(a), if the
underwriter representative advises the Company in writing that marketing factors
require a limitation on the number of shares to be underwritten, the number of
shares included in the registration by the Requesting Holder and each Other
Stockholder shall be reduced on a pro rata basis (based on the number of shares of
Common Stock held by such holder), by such minimum number of shares as is necessary
to comply with such request. No Registrable Securities or any other securities
excluded from the underwriting by reason of the underwriter’s marketing limitation
shall be included in such registration. If any Other Stockholder who has requested
inclusion in such registration as provided above disapproves of the terms of the
underwriting, such Person may elect to withdraw therefrom by written notice to the
Company, the underwriter and the Requesting Holder. 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, the
officers and directors of the Company (who are not already included in the
registration as Other Stockholders) may include their securities for their own
account in such registration if the underwriting representative 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.
For the avoidance of doubt, none of the securities being registered for the
Company’s own account shall be excluded from such registration; provided
that if the inclusion of such securities by the Company in the registration causes
any of the Registrable Securities included in the Requesting Holder’s written
request pursuant to 4(a)(i) to be excluded from the underwriting by reason of the
underwriter’s marketing limitation, such request shall not be deemed to be a demand
for registration for purposes of this Section 4(a).
(b) Company Registration.
(i) If the Company shall determine to register any of its equity securities either for its own
account or for the account of any holders of equity securities of the Company other than a
registration (x) relating solely to employee stock or benefit plans, (y) relating solely to a
Commission Rule 145 transaction, or (z) on any registration form which does
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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, the Company will:
(A) promptly give to each Stockholder Representative a written notice thereof;
(B) if any capital stock of the Company held by any Stockholder will be
included in the registration, promptly give to each other Stockholder a written
notice of the registration; and
(C) 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 by the
Stockholders, within fifteen (15) days after receipt of the last written notice from
the Company described in clause (A) or (B) above, as the case may be, except as set
forth in Section 4(b)(ii) below. Such written request may specify all or a part of
such Stockholder’s Registrable Securities.
(ii) Underwriting. If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so advise each of the
Stockholder Representatives as a part of the written notice given pursuant to Section 4(b)(i)(A)
and, if applicable, (B). In such event, the right of each of the Stockholders to registration
pursuant to this Section 4(b) shall be conditioned upon such Stockholder’s participation in such
underwriting and the inclusion of such Stockholder’s Registrable Securities in the underwriting to
the extent provided herein. Each Stockholder whose shares are to be included in such registration
shall (together with the Company and the Other Stockholders distributing their securities through
such underwriting) agree to sell such Stockholder’s shares on the basis provided in any
underwriting arrangements approved by the Company and complete and execute all questionnaires,
power of attorney, indemnities and other documents required for such underwriting arrangements and
enter into an underwriting agreement in customary form with the representative of the underwriter
or underwriters selected for underwriting by the Company. Notwithstanding any other provision of
this Section 4(b), if the underwriter representative determines that marketing factors require a
limitation on the number of shares to be underwritten, the representative may (subject to the
allocation priority set forth below) exclude from such registration and underwriting some or all of
the Registrable Securities which would otherwise be underwritten pursuant hereto. The Company
shall so advise all holders of securities requesting registration, and the number of shares of
securities that may be included in the registration and underwriting by each of the Stockholders
and Other Stockholders shall be reduced, on a pro rata basis (based on the number of shares of the
class to be registered held by such holders), by such minimum number of shares as is necessary to
comply with such limitation. For the avoidance of doubt, none of the securities being registered
by the Company for its own account shall be excluded. If any of the Stockholders or any officer,
director or Other Stockholder disapproves of the terms of any such underwriting, he or she may
elect to withdraw therefrom by written notice to the Company and the underwriter. Any Registrable
Securities or
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other securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration.
(c) Form S-3. If the Company has qualified for the use of Form S-3, the Stockholders
shall have the right to request registration on Form S-3 (such request shall be in writing and
shall state the number of shares of Registrable Securities to be disposed of). The Company shall
give written notice to all of the Stockholder Representatives of the receipt of a request for
registration pursuant to this Section 4(c) and shall provide a reasonable opportunity for other
Stockholders to participate in the registration; provided that if the registration is for
an
underwritten offering, the terms of Section 4(a)(ii) shall apply to all participants in such
offering. Subject to the foregoing, the Company will use its best efforts to effect promptly the
registration of all shares of Registrable Securities on Form S-3 to the extent requested by the
Stockholders thereof for purposes of disposition.
(d) Company Control. The Company may decline to file a registration statement
referenced in Section 4(b) above, or withdraw such registration statement after filing, but prior
to the effectiveness of the registration statement; provided that the Company shall
promptly notify each Stockholder Representative in writing of any such action. The Company shall
have the sole discretion to select any and all underwriters that may participate in any
underwritten offering.
(e) Expenses of Registration. All Registration Expenses incurred in connection with
any registration, qualification or compliance pursuant to this Section 4 shall be borne by the
Company, and all Selling Expenses shall be borne by the holders of the securities so registered pro
rata on the basis of the number of their shares so registered.
(f) Registration Procedures. In the case of each registration effected by the Company
pursuant to this Section 4, the Company will keep the Stockholders, as applicable, advised in
writing as to the initiation of each registration and as to the completion thereof. At its
expense, the Company will, subject to the terms of this Section 4:
(i) keep such registration effective for a period of one hundred twenty (120) days or until
the Stockholders have completed the distribution described in the registration statement relating
thereto, whichever first occurs; provided, however, that (A) such 120-day period
shall be extended for a period of time equal to the period during which the Stockholders refrain
from selling any securities included in such registration in accordance with the provisions in
Section 4(i) hereof; and (B) in the case of any registration of Registrable Securities on Form S-3
which are intended to be offered on a continuous or delayed basis, such 120-day period shall be
extended until all such Registrable Securities are sold; provided that applicable rules
under the Securities Act governing the obligation to file a post-effective amendment permit, in
lieu of filing a post-effective amendment which (y) includes any prospectus required by Section
10(a) of the Securities Act or (z) reflects facts or events representing a material or fundamental
change in the information set forth in the registration statement, the incorporation by reference
of information required to be included in (y) and (z) above to be contained in periodic reports
filed pursuant to Section 12 or 15(d) of the Exchange Act in the registration statement; and
provided further that the Stockholders shall not be permitted to sell any
securities at any time that the
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Board of Directors determines in good faith that it would be
materially detrimental to the Company for sales of securities to be made;
(ii) furnish such number of prospectuses and other documents incident thereto as each of the
Stockholders, as applicable, from time to time may reasonably request;
(iii) notify each Stockholder covered by such registration 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; and
(iv) furnish, on the date that such Registrable Securities are delivered to the underwriters
for sale, if such securities are being sold through underwriters, (1) an opinion, dated as of such
date, of the counsel representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public offering and addressed
to the underwriters and (2) a letter, dated as of such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering and addressed to the
underwriters.
(g) Indemnification.
(i) To the extent permitted by law, the Company will indemnify each of the Stockholders, as
applicable, with respect to each registration which has been effected pursuant to this Section 4,
and each underwriter for such Stockholder, if any, and each person who controls any underwriter,
against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any of the following (each, a “Violation”): (x) any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like) incident to any such
registration, qualification or compliance, (y) 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, or (z) any violation by the Company of the Securities Act or the Exchange Act or any
rule or regulation thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification or compliance; and will
reimburse each of the Stockholders, each such underwriter and each Person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action; provided
that the Company will not be liable in any such case to any Stockholder, underwriter or
controlling person to the extent that any such claim, loss, damage, liability or expense arises out
of or is based upon a Violation which occurs in reliance upon information furnished to the Company
by the Stockholders, underwriter or controlling person seeking to be indemnified, where such
information is specifically provided for use in such prospectus, offering circular or other
document.
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(ii) Each of the Stockholders will, if Registrable Securities held by it are included in the
securities as to which such registration, qualification or compliance is being effected, indemnify
the Company, each of its directors and officers and each underwriter, if any, of the Company’s
securities covered by such a registration statement, each person who controls the Company or such
underwriter, each Other Stockholder and each of their officers, directors, and partners, and each
person controlling such Other Stockholder 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 made by such Stockholder, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the statements by such
Stockholder therein not misleading, and will reimburse
the Company and such Other Stockholders, 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
the Company by such Stockholder and stated to be specifically for use therein; provided,
however, that the obligations of each of the Stockholders hereunder shall be limited to an
amount equal to the net proceeds to such Stockholder of securities sold as contemplated herein.
(iii) Each party entitled to indemnification under this Section 4(f) (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 any litigation resulting therefrom, 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 (unless the Indemnified Party shall have
reasonably concluded that there may be a conflict of interest between the Indemnifying Party and
the Indemnified Party in such action, in which case the fees and expenses of counsel shall be at
the expense of the Indemnifying Party); 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 4 unless the Indemnifying Party is materially prejudiced thereby.
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.
Each Indemnified Party shall furnish such information regarding itself or the claim in question as
an Indemnifying Party may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
(iv) If the indemnification provided for in this Section 4(f) is held by a court of competent
jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim,
damage or expense referred to herein, then the Indemnifying Party, in lieu
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of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage or expense 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 loss, liability, claim, damage or expense, 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 (or alleged 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 any
underwritten public offering contemplated by this Agreement are in conflict with the foregoing
provisions, the provisions in such underwriting agreement shall be controlling.
(h) Information by the Stockholders. Each of the Stockholders holding securities
included in any registration shall furnish to the Company such information regarding such
Stockholder and the distribution proposed by such Holder as the Company may reasonably request in
writing and as shall be reasonably required in connection with any registration, qualification or
compliance referred to in this Section 4.
(i) “Market Stand-off” Agreement. Each of the Stockholders agrees, if requested by
the Company and an underwriter of equity securities of the Company, not to sell or otherwise
transfer or dispose of any Registrable Securities held by such Stockholder during the 90-day period
following the effective date (including, with respect to any registration statement on Form S-3,
the effective date as defined under Rule 430B(f) of the Securities Act)of any registration
statement of the Company filed under the Securities Act. If requested by the underwriters, the
Stockholders shall execute a separate agreement to the foregoing effect. The Company may impose
stop-transfer instructions with respect to the shares (or securities) subject to the foregoing
restriction until the end of said 90-day period. The provisions of this Section 4(i) shall be
binding upon any transferee who acquires Registrable Securities.
(j) Additional Rights. In the event the Company shall grant to any Stockholder
registration rights that are more favorable in any respect to such Stockholder than the
registration rights granted to any other Stockholder herein, such other Stockholders, as the case
may be, shall be entitled to such more favorable provisions.
(k) Transfer of Registration Rights. The registration rights set forth in this
Section 4 may be assigned, in whole or in part, to any Permitted Transferee (who shall be bound by
all obligations of this Agreement); provided that such Transfer is in accordance with the
terms of this Agreement.
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(l) Termination. The registration rights set forth in this Section 4 shall no longer
be available to any Stockholder if all of the Registrable Securities held by such Stockholder have
been sold in a registration pursuant to the Securities Act or pursuant to Rule 144.
5. TERMINATION.
This Agreement shall terminate on the date on which each of the Stockholder Representatives
shall have agreed in writing to terminate this Agreement.
6. INTERPRETATION OF THIS AGREEMENT.
(a) Terms Defined. As used in this Agreement, the following terms have the respective
meaning set forth below:
Commission: shall mean the Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act.
Common Stock: the common stock, par value $0.001 per share, of the Company.
Exchange Act: shall mean the Securities Exchange Act of 1934, as amended.
Owns, Own or Owned: shall mean beneficial ownership, assuming the
conversion of all outstanding securities convertible into Common Stock and the exercise of all
outstanding options and warrants to acquire Common Stock.
Permitted Transfer: shall mean any Transfer of Shares (i) for estate planning
purposes or (ii) to a charitable contribution; provided that in each instance the
transferee agrees to be bound by the provisions of this Agreement as if such transferee were an
original signatory hereto and standing in the shoes of the transferor in such Transfer. Any any
Permitted Transferee of a Hillier Stockholder shall be treated as a Hillier Stockholder for all
purposes hereof; any Permitted Transferee of a Clarkson Stockholder shall be treated as a Clarkson
Stockholder for all purposes hereof; and any Permitted Transferee of a ▇▇▇▇▇▇ Stockholder shall be
treated as a ▇▇▇▇▇▇ Stockholder for all purposes hereof.
Permitted Transferee: shall mean any Person that acquires Shares in a Permitted
Transfer.
Person: shall mean an individual, partnership, joint-stock company, corporation,
limited liability company, trust or unincorporated organization, and a government or agency or
political subdivision thereof.
Public Offering: shall mean any offering of Shares to the public pursuant to an
effective registration statement under the Securities Act.
Register, Registered and Registration: shall mean to a registration
effected by preparing and filing a registration statement in compliance with the Securities Act
(and any post-effective
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amendments filed or required to be filed) and the declaration or ordering
of effectiveness of such registration statement.
Registrable Securities: shall mean all Shares held by the Stockholders.
Registration Expenses: shall mean all expenses incurred by the Company in compliance
with Section 4(a), (b) and (c) hereof, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel for the Company, fees and expenses of
counsel for the Stockholders, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the compensation of regular
employees of the Company, which shall be paid in any event by the Company).
Rule 144 Sale: shall mean a sale of Shares to the public through a broker, dealer or
market-maker pursuant to Rule 144 under the Securities Act (or any successor rule or regulation).
Selling Expenses: shall mean all underwriting discounts and selling commissions
applicable to the sale of Registrable Securities.
Securities Act: shall mean the Securities Act of 1933, as amended.
Stockholder Representatives: shall mean the Hillier Representative, the Clarkson
Representative and the ▇▇▇▇▇▇ Representative.
Transfer: shall mean any sale, transfer, conveyance, assignment, pledge,
hypothecation or other disposition.
Voting Stock: means all classes of capital stock of the Company then outstanding and
normally entitled to vote in the election of directors of the Company.
(b) Directly or Indirectly. Where any provision in this Agreement refers to action to
be taken by any Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
(c) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be performed entirely
within such State.
(d) Section Headings. The headings of the sections and subsections of this Agreement
are inserted for convenience only and shall not be deemed to constitute a part thereof.
-14-
7. MISCELLANEOUS
(a) Notices.
(i) All communications under this Agreement shall be in writing and shall be delivered by hand
or facsimile or mailed by overnight courier or by registered or certified mail, postage prepaid:
| (A) | if to any of the Hillier Stockholders, to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Telephone: ▇▇▇-▇▇▇-▇▇▇▇ Telecopier: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇ |
or at such other address and to the attention of such other person as the Hillier Representative
may designate by written notice to the Company and the other Stockholders.
| (B) | if to any of the Clarkson Stockholders, to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Telephone: ▇▇▇-▇▇▇-▇▇▇▇ Telecopier: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇ |
or at such other address and to the attention of such other person as the Clarkson
Representative may designate by written notice to the Company and the other
Stockholders.
| (C) | if to any of the ▇▇▇▇▇▇ Stockholders, to: R. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Telephone: ▇▇▇-▇▇▇-▇▇▇▇ Telecopier: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇ |
or at such other address and to the attention of such other person as the ▇▇▇▇▇▇
Representative may designate by written notice to the Company and the other
Stockholders.
| (D) | and if to the Company, at: |
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| ADS Tactical, Inc. ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy: |
| with a copy to: |
| ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇ Telephone: ▇▇▇-▇▇▇-▇▇▇▇ Telecopy: ▇▇▇-▇▇▇-▇▇▇▇ |
or at such other address and to the attention of such other person as the Company may designate by
written notice to the Stockholders.
(ii) Any notice so addressed shall be deemed to be given: if delivered by hand or facsimile,
on the date of such delivery; if mailed by overnight courier, on the first
business day following the date of such mailing; and if mailed by registered or certified
mail, on the third business day after the date of such mailing.
(b) Reproduction of Documents. This Agreement and all documents relating thereto,
including, without limitation, (i) consents, waivers and modifications which may hereafter be
executed, (ii) documents received by each Stockholder pursuant hereto and (iii) financial
statements, certificates and other information previously or hereafter furnished to each
Stockholder, may be reproduced by each Stockholder by a photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and each Stockholder may destroy any
original document so reproduced. All parties hereto agree and stipulate that any such reproduction
shall be admissible in evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such reproduction was made by each
Stockholder in the regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
(c) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties.
(d) Entire Agreement; Amendment and Waiver. This Agreement constitute the entire
understanding of the parties hereto relating to the subject matter hereof and supersede all prior
understandings among such parties. This Agreement may be amended, and the observance of any term
of this Agreement may be waived, with (and only with) the written consent of each of the
Stockholder Representatives.
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(e) Severability. In the event that any part or parts of this Agreement shall be held
illegal or unenforceable by any court or administrative body of competent jurisdiction, such
determination shall not affect the remaining provisions of this Agreement which shall remain in
full force and effect.
(f) Counterparts. This Agreement may be executed in two or more counterparts
(including by facsimile), each of which shall be deemed an original and all of which together shall
be considered one and the same agreement.
(g) Recapitalization, Exchange, Etc. Affecting the Company’s Stock. Nothing in this
Agreement shall prevent the Company from effecting any recapitalization, corporate reorganization,
“corporate inversion” involving the creation of one or more holding companies and/or holding
company subsidiaries, or similar transaction. The provisions of this Agreement shall apply, to the
full extent set forth herein, with respect to any and all shares of Common Stock and all of the
other shares of capital stock of the Company or any successor or assignee of the Company (whether
by merger, consolidation, sale of assets, business combination or otherwise) that may be issued in
respect of, in exchange for, or in substitution of such shares of capital stock and shall be
appropriately adjusted for any stock dividends, splits, reverse splits, combinations,
recapitalizations, and the like occurring after the date hereof.
(h) Submission to Jurisdiction; Waiver of Jury Trial. EACH PARTY HERETO HEREBY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK
AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY
CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS STOCKHOLDERS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
-17-
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders Agreement as of the
date first above written.
| COMPANY: ADS Tactical, INC. |
||||
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||
| Title: | CEO | |||
| HILLIER STOCKHOLDERS: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ |
||||
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
|
||||
| ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2010 GRANTOR RETAINED ANNUITY TRUST |
||||
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||
| Title: | TRUSTEE | |||
| HILLIER REPRESENTATIVE: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ |
||||
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
|
||||
| CLARKSON STOCKHOLDERS: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ |
||||
|
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
|
||||
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| ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 2010 GRANTOR RETAINED ANNUITY TRUST |
||||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |||
| Title: | TRUSTEE | |||
| CLARKSON REPRESENTATIVE: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ |
||||
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
|
||||
| ▇▇▇▇▇▇ STOCKHOLDERS: R. ▇▇▇▇▇ ▇▇▇▇▇▇ |
||||
/s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇
|
||||
| R. ▇▇▇▇▇ ▇▇▇▇▇▇ 2010 GRANTOR RETAINED ANNUITY TRUST |
||||
| By: | /s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇ | |||
| Name: | R. ▇▇▇▇▇ ▇▇▇▇▇▇ | |||
| Title: | TRUSTEE | |||
| ▇▇▇▇▇▇ REPRESENTATIVE: R. ▇▇▇▇▇ ▇▇▇▇▇▇ |
||||
/s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇
|
||||
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SCHEDULE
I
Hillier Stockholders
Hillier Stockholders
| Investor | Shares Owned | |||
1. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ |
84,809.2 | |||
2. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2010 Grantor Retained Annuity Trust |
1,730.8 | |||
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SCHEDULE
II
Clarkson Stockholders
Clarkson Stockholders
| Investor | Shares Owned | |||
1. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ |
24,147.2 | |||
2. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 2010 Grantor Retained Annuity Trust |
492.8 | |||
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SCHEDULE
III
▇▇▇▇▇▇ Stockholders
▇▇▇▇▇▇ Stockholders
| Investor | Shares Owned | |||
1. R. ▇▇▇▇▇ ▇▇▇▇▇▇ |
36,405.6 | |||
2. R. ▇▇▇▇▇ ▇▇▇▇▇▇ 2010 Grantor Retained Annuity Trust |
554.4 | |||
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