STOCK PURCHASE AND REDEMPTION AGREEMENT by and among GLENCOE CAPITAL, LLC, FMFC HOLDINGS, LLC, FIRST MERCURY HOLDINGS, INC., and FIRST MERCURY FINANCIAL CORPORATION dated as of October 17, 2006
Exhibit 10.18
by and among
GLENCOE CAPITAL, LLC,
FMFC HOLDINGS, LLC,
FIRST MERCURY HOLDINGS, INC.,
and
FIRST MERCURY FINANCIAL CORPORATION
dated as of
October 17, 2006
This Stock Purchase and Redemption Agreement (this “Agreement”) is entered into as of
October 17, 2006, by and among Glencoe Capital, LLC, a Delaware limited liability company
(“Glencoe”), FMFC Holdings, LLC, a Delaware limited liability company (“Holdings”),
First Mercury Holdings, Inc., a Delaware corporation (the “Company”) and First Mercury
Financial Corporation, a Delaware corporation (“FMFC”). Glencoe, Holdings, the Company and
FMFC are referred to collectively herein as the “Parties.”
WHEREAS, Holdings owns an aggregate of 400 shares of Series A Convertible Preferred Stock, par
value $0.01 per share, of the Company (the “Company Preferred Stock”);
WHEREAS, prior to the initial public offering of common stock of FMFC (the “IPO”), the
Company will be merged with and into FMFC, with FMFC continuing as the corporation surviving the
merger (the “Merger”);
WHEREAS, in the Merger, Holdings will be issued shares of Series A Convertible Preferred Stock
of FMFC (the “FMFC Preferred Stock”) which have substantially identical terms as the shares
of Company Preferred Stock held by Holdings;
WHEREAS, in connection with the IPO, pursuant to, and in accordance with, the terms of the
FMFC Preferred Stock, the FMFC Preferred Stock will be converted into (i) a preferential cash
payment (the “Series A Preference Amount”), and (ii) a certain number of shares of Common
Stock of the Company;
WHEREAS, Exhibit A to this Agreement sets forth the methodology by which the Series A
Preference Amount and the number of shares of Common Stock issuable to Holdings are calculated; and
WHEREAS, this Agreement further contemplates a transaction under which, simultaneously with
the completion of the IPO, FMFC will purchase from Holdings, and Holdings will sell to FMFC,
certain of the shares of Common Stock issued upon conversion of the FMFC Preferred Stock.
NOW, THEREFORE, in consideration of the premises and the actual promises herein made, and in
consideration of the representations, warranties, and covenants herein contained, the receipt and
sufficiency of which is hereby acknowledged, the Parties agree as follows.
Section 1. Definitions.
“Agreed Cash Payment” shall mean $80,000,000 plus the Series A Dividends
accrued through the closing date of the IPO, determined in accordance with the methodology set
forth on Exhibit A.
“Common Stock” means the common stock, par value $0.01 per share, of FMFC.
“Material Adverse Effect” means a material adverse effect upon the business, financial
condition, operations, results of operations or future prospects of the Company and its
subsidiaries, taken as a whole.
“Person” means an individual, a partnership, a corporation, an association, a joint
stock company, a limited liability company or partnership, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
“Security Interest” means any lien, encumbrance, mortgage, pledge, or other security
interest.
The following terms are defined in the Sections hereof listed below:
| Defined Term | Section | |
“Agreement”
|
Preface | |
“Cash Shortfall”
|
Section 2(a) | |
“Closing”
|
Section 2(c) | |
“Closing Date”
|
Section 2(c). | |
“Company”
|
Preface | |
“Company Preferred Stock”
|
Recitals | |
“FMFC Preferred Stock”
|
Recitals | |
“IPO”
|
Recitals | |
“IPO Price”
|
Section 2(a) | |
“Party”
|
Preface | |
“Series A Preference Amount”
|
Recitals | |
“Shares”
|
Section 2(b) |
Section 2. Basic Transaction.
(a) Conversion. In connection with the IPO, at the Closing, the Parties agree that
the FMFC Preferred Stock held by Holdings will be cancelled in exchange for the amount of cash and
shares of Common Stock determined in accordance with the methodology set forth on Exhibit A
hereto. The number of shares of Common Stock to be issued to Holdings shall be determined by using
the IPO Price (defined below).
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(b) Purchase and Sale of Shares. On and subject to the terms and conditions of this
Agreement, at the Closing, in addition to the transaction contemplated by Section 2(a) above, FMFC
agrees to purchase from Holdings, and Holdings agrees to sell, transfer, convey, and deliver to
FMFC that number of shares of Common Stock (the “Shares”) determined by dividing the Cash
Shortfall by the IPO Price. “Cash Shortfall” shall mean the difference between (i) the
Agreed Cash Payment and (ii) the Series A Preference Amount (determined in accordance with the
methodology set forth on Exhibit A). The “IPO Price” shall mean the per share
purchase price received by FMFC in the IPO (i.e. the Public Offering Price set forth on the cover
page of the prospectus relating to the IPO).
(c) The Closing. The closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place on the closing date of the IPO, at the offices of XxXxxxxxx
Will & Xxxxx LLP, 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, commencing at 9:00
a.m. local time or such other date as the Parties may mutually determine (the “Closing
Date”).
(d) Deliveries at the Closing. At the Closing, (i) FMFC shall deliver to Holdings,
the Agreed Cash Payment and the shares of Common Stock set forth in Section 2(a) above, and
(ii) Holdings will deliver to FMFC, the FMFC Preferred Stock and, upon receipt, the stock
certificates representing the Shares, endorsed in blank or accompanied by duly executed assignment
documents.
Section 3. Representations and Warranties of the Company and FMFC. Each of the
Company and FMFC represents and warrants, jointly and severally, to Glencoe and Holdings that the
statements contained in this Section 3 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement throughout this Section
3).
(a) Organization, Qualification, and Corporate Power. Each of the Company and FMFC is
a corporation duly organized, validly existing, and in good standing under the laws of the State of
Delaware. Each of the Company and FMFC has the requisite corporate power and authority and all
licenses, permits, and authorizations necessary to carry on the businesses in which it is presently
engaged and to own and use the properties presently owned and used by it, other than those
licenses, permits and authorizations the lack of which, individually or in the aggregate, would not
have a Material Adverse Effect.
(b) Authorization. Each of the Company and FMFC has the requisite corporate power and
authority to execute and deliver this Agreement and to perform its obligations hereunder. Upon
approval by their respective Boards of Directors, the execution, delivery and performance of this
Agreement by each of the Company and FMFC will have been duly authorized and no other corporate
proceedings on the part of the Company or FMFC will be necessary to authorize this Agreement and
the transactions contemplated hereby. Upon approval by their Boards of Directors, this Agreement
will constitute the valid and legally binding
obligation of each of the Company and FMFC, enforceable in accordance with its terms and
conditions.
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(c) Noncontravention. Except with respect to the Credit Agreement, dated as of May 8,
2006, by and between FMFC, the Guarantors and JPMorgan Chase Bank, N.A., as amended, (the
“Credit Agreement”) for which a consent to the transactions contemplated hereby has been
obtained, and the filing of exemption requests from the Form A requirements for the change in
control of a domestic insurer with the Illinois Division of Insurance and Minnesota Department of
Commerce, which exemption requests have been granted, neither the execution and the delivery of
this Agreement by the Company or FMFC, nor the consummation of the transactions contemplated hereby
by the Company or FMFC, will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, or other restriction of any government, governmental agency, or
court to which any of the Company or its Subsidiaries is subject, or any provision of the charter
or bylaws of any of the Company or its Subsidiaries, (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which any of the Company or its Subsidiaries is
a party or by which it is bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets), or (iii) require the Company or any of
its Subsidiaries to give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement, other than any such violations, conflicts, breaches,
defaults, accelerations, terminations, modifications, cancellations or notices that, individually
or in the aggregate, would not have a Material Adverse Effect or would not impair the ability of
the Company or FMFC to consummate the transactions contemplated by this Agreement.
Section 4. Representations and Warranties of Glencoe and Holdings. Each of Glencoe
and Holdings, jointly and severally, represents and warrants to the Company and FMFC that the
statements contained in this Section 4 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement throughout this Section
4).
(a) Organization of Glencoe and Holdings. Each of Glencoe and Holdings is duly
organized, validly existing, and in good standing under the laws of the jurisdiction of its
formation.
(b) Authorization of Transaction. Each of Glencoe and Holdings has requisite limited
liability company power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance of this Agreement by each of
Glencoe and Holdings have been duly authorized by all requisite limited liability company action.
This Agreement constitutes the valid and legally binding obligation of each of Glencoe and
Holdings, enforceable in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this Agreement, nor
the consummation of the transactions contemplated hereby by Glencoe or Holdings, will (i) violate
any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, or
- 4 -
other
restriction of any government, governmental agency, or court to which Glencoe or Holdings is
subject or, any provision of its formation documents or arrangements, (ii) conflict with, result in
a breach of, constitute a default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which either Glencoe or Holdings is a
party or by which it is bound or to which any of its assets is subject (or result in the imposition
of any Security Interest upon any of its assets), or (iii) require either Glencoe or Holdings to
give any notice to, make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement, other than any such violations, conflicts, breaches, defaults,
accelerations, terminations, modifications, cancellations or notices that, individually or in the
aggregate, would not have a Material Adverse Effect or would not impair the ability of Glencoe or
Holdings to consummate the transactions contemplated by this Agreement.
(d) Shares. At the Closing, Holdings shall hold of record and own beneficially the
Shares, free and clear of any restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Security Interests, options, warrants, purchase rights,
commitments, and claims.
Section 5. Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its reasonable best efforts to take all
action and to do all things necessary, proper, or advisable in order to consummate and make
effective the transactions contemplated by this Agreement (including satisfaction, but not waiver,
of the closing conditions set forth in Section 6 below).
(b) Registration Rights Agreement. At or prior to the Closing, Holdings, FMFC and the
other parties thereto shall enter into an amended and restated registration rights agreement in
substantially the form attached hereto as Exhibit B (the “Registration Rights
Agreement”).
(c) Termination of Stockholders Agreement. At or prior to the Closing, the Parties
shall enter into a termination agreement in substantially the form attached hereto as Exhibit
C (the “Stockholders Agreement Termination”), related to that certain Stockholders
Agreement, dated as of August 17, 2005 by and among the Company and the Parties signatory thereto.
(d) Termination of Management Agreement. At or prior to the Closing, the Parties
shall enter into a termination agreement in substantially the form attached hereto as Exhibit
D (the “Management Agreement Termination”), related to that certain Glencoe Management
Services Agreement, dated as of June 7, 2004 by and between Glencoe and FMFC, pursuant to which
FMFC will pay a $300,000 termination fee and all of the accrued management fees under such
agreement through the Closing Date.
(e) Termination of the Management Rights Agreement. At or prior to the Closing, the
Parties shall enter into a termination agreement in substantially the form attached hereto as
Exhibit E (the “Oversight Agreement Termination”), related to that certain
Management Rights
- 5 -
Agreement, dated as of June 7, 2004 by and between Glencoe Capital Partners III,
L.P., a Delaware limited partnership (an affiliate of Glencoe) and FMFC.
Section 6. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Company and FMFC. The obligation of the Company
and FMFC to consummate the transactions to be performed by them in connection with the Closing is
subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 4 above qualified
as to materiality shall be true and correct in all respects and those not so qualified shall
be true and correct in all material respects at and as of the Closing Date, except for
representations and warranties that speak as of a specific date or time (which need only be
true and correct as of such date or time);
(ii) each of Glencoe and Holdings shall have performed and complied with all of their
covenants hereunder through the Closing;
(iii) the closing of the IPO shall have occurred;
(iv) no action, suit, or proceeding shall be pending before any court or quasi-judicial
or administrative agency of any federal, state, local, or foreign jurisdiction wherein an
unfavorable injunction, judgment, order, decree, or ruling would (A) prevent consummation of
any of the transactions contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or (C) affect
materially and adversely the right of FMFC to purchase the Shares; and
(v) each of Glencoe and Holdings shall have delivered a certificate of an appropriate
officer (of each) certifying as to the xxxxxx set forth in clauses (i) and (ii) of this
Section 6(b).
(b) Conditions to Obligation of the Glencoe and Holdings. The obligation of Glencoe
and Holdings to consummate the transactions to be performed by them in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3 above qualified
as to materiality shall be true and correct in all respects and those not so qualified shall
be true and correct in all material respects at and as of the Closing Date, except for
representations and warranties that speak as of a specific date or time (which need only be
true and correct as of such date or time);
(ii) each of the Company and FMFC shall have performed and complied with all of their
covenants hereunder through the Closing;
- 6 -
(iii) no action, suit, or proceeding shall be pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction wherein an unfavorable injunction, judgment, order, decree, or ruling, would
(A) prevent consummation of any of the transactions contemplated by this Agreement or (B)
cause any of the transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, or ruling shall be in
effect);
(iv) FMFC shall have delivered a certificate of an appropriate officer certifying as to
the matters set forth in clauses (i) and (ii) of this Section 6(b); and
(v) the equity value of FMFC in the IPO shall be at least $300 million after giving
effect to the offering.
Section 7. Termination of Agreement. The Parties may terminate this Agreement as
provided below:
(i) the Parties may terminate this Agreement by mutual written consent at any time
prior to the Closing;
(ii) either Glencoe or Holdings on the one hand, or the Company or FMFC on the other
hand may terminate this Agreement if the IPO has not occurred or is not capable of occurring
prior to December 31, 2006.
Section 8. Miscellaneous.
(a) No Third-Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any Person other than the Parties and their respective successors and permitted
assigns.
(b) Entire Agreement. This Agreement constitutes the entire agreement between the
Parties with respect to the subject matter hereof and supersedes any prior understandings,
agreements, or representations by or between the Parties, written or oral, to the extent they
relate in any way to the subject matter hereof.
(c) Survival of Representations and Warranties. All of the representations,
warranties, covenants, and agreements contained in this Agreement shall survive indefinitely.
(d) Succession and Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties named herein and their respective successors and assigns. No Party
may assign either this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other Party.
(e) Counterparts This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together will constitute one and the same
instrument.
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(f) Headings The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder
shall be deemed duly given upon receipt if it is sent by facsimile (with confirmed receipt), or
reputable express courier, and addressed or otherwise sent to the intended recipient as set forth
below:
If to the Company or FMFC:
First Mercury Financial Corporation
00000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
Attn: Xxxxxxx Xxxxx, Chief Executive Officer
00000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
Attn: Xxxxxxx Xxxxx, Chief Executive Officer
Copy to:
Xxxxx & Lardner LLP
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile: 000-000-0000
Attn: Xxxxx X. Xxxxxxxxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile: 000-000-0000
Attn: Xxxxx X. Xxxxxxxxxx
If to the Glencoe or Holdings:
First Mercury Holdings, LLC
c/o Glencoe Capital, LLC
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Portfolio Management
Facsimile: (000) 000-0000
c/o Glencoe Capital, LLC
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Portfolio Management
Facsimile: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other communication hereunder to the
intended recipient at the address or facsimile number set forth above using any other means
(including personal delivery, messenger service, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any party may change the
address or facsimile number to which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in the manner herein set forth.
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(h) Governing Law; Interpretation. This Agreement shall be construed in accordance
with and governed for all purposes by the internal substantive laws of the State of Illinois
applicable to contracts executed and to be wholly-performed within such State.
(i) JURISDICTION.
(i) ANY SUIT, ACTION OR PROCEEDING AGAINST THE BUYER, THE CORPORATION OR THE
EQUITYHOLDERS ARISING OUT OF, OR WITH RESPECT TO, THIS AGREEMENT OR ANY JUDGMENT ENTERED BY
ANY COURT IN RESPECT THEREOF SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF ILLINOIS OR IN
THE U.S. DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, SUCH JURISDICTION TO BE
DETERMINED BY THE FIRST FILING OF SUCH ACTION, SUIT OR PROCEEDING IN SUCH JURISDICTION, AND
THE PARTIES HERETO ACCEPT THE EXCLUSIVE JURISDICTION OF THOSE COURTS FOR THE PURPOSE OF ANY
SUIT, ACTION OR PROCEEDING.
(ii) IN ADDITION, EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY JUDGMENT
ENTERED BY ANY COURT IN RESPECT THEREOF BROUGHT IN ILLINOIS OR THE U.S. DISTRICT COURT FOR
THE NORTHERN DISTRICT OF ILLINOIS AND HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY
SUIT, ACTION OR PROCEEDINGS BROUGHT IN ILLINOIS OR IN SUCH DISTRICT COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
(j) Amendments and Waiver. No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by each of the Parties hereto. No waiver by
any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.
(l) Expenses. Except as set forth herein, each of the Parties will bear its own costs
and expenses (including legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
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(m) Construction. Any reference to any federal, state, local, or foreign statute or
law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. The word “including” shall mean including without limitation.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above
written.
| FIRST MERCURY FINANCIAL CORPORATION | ||||
By: |
/s/ Xxxxxxx X. Xxxxx | |||
Name: |
Xxxxxxx X. Xxxxx | |||
Title: |
President & CEO | |||
| FIRST MERCURY HOLDINGS, INC. | ||||
By: |
/s/ Xxxxxxx X. Xxxxx | |||
Name: |
Xxxxxxx X. Xxxxx | |||
Title: |
President & CEO | |||
| GLENCOE CAPITAL, LLC | ||||
By: |
/s/ Xxxxx X. Xxxxxxx | |||
Name: |
Xxxxx X. Xxxxxxx | |||
Title: |
Principal | |||
| FMFC HOLDINGS, LLC | ||||
By: |
/s/ Xxxxx X. Xxxxxxx | |||
Name: |
Xxxxx X. Xxxxxxx | |||
Title: |
Vice President | |||
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Exhibit A
Offering Size |
$ | 165,000,000 | ||||||
Overallotment N |
0 | |||||||
Total IPO Proceeds |
165,000,000 | |||||||
Cash Paid to Glencoe in Transaction |
88,258,132 | |||||||
Primary Proceeds |
$ | 76,741,868 | ||||||
Pre-IPO Shares Outstanding (after split) |
11,802,725 | |||||||
IPO Price |
$ | 17.00 | ||||||
Assumed Pre-Money Equity Value(1) |
$ | 200,646,319 | ||||||
Primary Proceeds |
76,741,868 | |||||||
Post Money Equity Value |
$ | 277,388,187 | ||||||
Glencoe Diluted Ownership (post-IPO) |
39.4 | % | ||||||
Preferred Shares |
400 | |||||||
Preferred Per Share Value |
$ | 100,000 | ||||||
Total Value of Preferred |
$ | 40,000,000 | ||||||
Series A Dividend Rate |
8.0 | % | ||||||
Make Whole Rate |
16.0 | % | ||||||
Original Issuance Date |
June 7, 2004 | |||||||
Last Full Quarter End |
September 5, 2006 | |||||||
Pricing Date (for proration) |
October 18, 2006 | |||||||
Number of Quarters Outstanding |
9.48 | |||||||
Assumed Days in Year |
360 | |||||||
Conversion Price per share |
$ | 5,749.68 | ||||||
Conversion Value per share |
$ | 100,000 | ||||||
Section 2(a) — Conversion |
||||||||
(i) Series A Preference Amount (payable in cash) |
||||||||
(A) Series A Original Purchase Price |
$ | 40,000,000 | ||||||
plus |
||||||||
(B) Series A Dividends |
||||||||
(8.0% cumulative dividends compounded
quarterly) |
$ | 8,258,132 | ||||||
plus |
||||||||
(C) Make Whole Amount |
||||||||
Excess of: |
||||||||
(x) [Series A Original Purchase Price x
Make Whole Rate (compounded quarterly)] |
$ | 58,009,376.29 | ||||||
over |
||||||||
(y) (A) plus (B) (from above) |
$ | 48,258,132.13 | ||||||
| $ | 9,751,244 | |||||||
Total Series A
Preference Amount |
$ | 58,009,376 | ||||||
plus |
||||||||
(ii) shares of common stock having a value equal to: |
||||||||
the Excess of: |
||||||||
(x) the conversion value upon a Liquidation Event
[Preferred Shares x (Conversion Value/Conversion
Price)] x IPO price per share (split-adjusted) |
||||||||
([Percentage ownership of Company] x
[Total Equity Value]) + Series A
Dividends |
$ | 117,655,525 | ||||||
over |
||||||||
(y) the Series A Preference Amount (as set forth
in (i) above) |
$ | 58,009,376 | ||||||
Value of total shares of common issued |
$ | 59,646,148 | ||||||
Section 2(b) — Purchase and Sale of Shares |
||||||||
Agreed Cash Payment |
$ | 88,258,132 | ||||||
Less: Series A Preference Amount paid in cash |
58,009,376 | |||||||
Amount of cash to be paid in transaction for repurchase of common stock |
$ | 30,248,756 | ||||||
Value of total shares of common issued upon conversion |
$ | 59,646,148 | ||||||
Repurchase of common stock with remainder of agreed cash payment |
30,248,756 | |||||||
Value of total shares of common stock remaining after repurchase |
$ | 29,397,392 | ||||||
Glencoe Ownership of the Company post-IPO(2) |
10.6 | % | ||||||
| (1) | Assumed Equity Value is the midpoint of the IPO range | |
| (2) | Assumes $101,491,868 of IPO proceeds. |
