AMENDED AND RESTATED XXXXXX XXXXX, XX. SUBSCRIPTION AGREEMENT
Teton Acquisition Corp.
c/o MidAmerican Energy Holdings Company
000 Xxxxx 00xx Xxxxxx
Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx
Ladies and Gentlemen:
The undersigned is executing this Agreement in connection with
its subscription for shares of common stock, no par value ("Common Stock") of
Teton Acquisition Corp. (the "Company"), an Iowa corporation wholly owned by
Teton Formation L.L.C. (the "Parent"), an Iowa limited liability company. The
undersigned understands that the Company is relying upon the accuracy and
completeness of the information contained herein in complying with its
obligations under federal and state securities and other applicable laws.
The Company and the Parent are contemplating entering into an
Agreement and Plan of Merger (the "Merger Agreement") with MidAmerican Energy
Holdings Company ("MidAmerican"), pursuant to which, and subject to the terms
and conditions set forth therein, the Company would merge with and into
MidAmerican, with MidAmerican being the surviving corporation (the "Merger").
The undersigned hereby irrevocably agrees with, and represents
and warrants to and for the benefit of, the Company, the Parent and the members
of the Parent, as follows:
1. Subscription.
(a) On the terms and subject to the conditions of this Agreement, the
undersigned hereby irrevocably subscribes for, and the Company hereby
irrevocably agrees to sell, 8,000,000 shares of Common Stock for a purchase
price of $35.05 per share. The shares of Common Stock to be purchased pursuant
to this Section 1(a) are herein referred to, collectively, as the "Shares."
(b) The purchase price for the Shares is payable, at the option of the
undersigned, in cash, in shares of MidAmerican common stock (which shall be
valued, for purposes of this Agreement, based on the amount per share of
MidAmerican common stock to be paid pursuant to the Merger Agreement), or any
combination thereof.
(c) The number of Shares to be purchased by the undersigned pursuant to
this Agreement shall be reduced by the number of Shares (up to 3,000,000)
purchased by certain persons, whose names or descriptions are set forth on
Schedule 1(c) hereto (the "Xxxxx Family Entities"). If any one or more of the
Xxxxx Family Entities so elect, they may subscribe for up to 3,000,000 of the
Shares on the same terms and conditions as contained
herein. As a condition to such subscription, each Xxxxx Family Entity making
such election shall execute and deliver to the Company a counterpart of this
Agreement, and shall be bound by the terms and conditions of this Agreement as
if such Xxxxx Family Entity was the original signatory hereto.
(d) The undersigned may purchase the Shares on his own behalf or for
the benefit of personal trusts under his control.
2. Other Subscription Agreements. The Company is entering into,
concurrently with the execution of this Agreement, (i) a subscription agreement
with Xxxxx X. Xxxxx (the "Xxxxx X. Xxxxx Subscription Agreement"), pursuant to
which Xxxxx X. Xxxxx has agreed to purchase, on the terms and subject to the
conditions stated therein, shares of Common Stock and/or options to purchase
Common Stock, and (ii) a subscription agreement with Berkshire Hathaway Inc.
(the "Berkshire Subscription Agreement"), pursuant to which Berkshire Hathaway
Inc. has agreed to purchase, on the terms and subject to the conditions stated
therein, shares of Common Stock and shares of preferred stock of the Company and
trust securities of a trust to be established by the Company. The Company may
also enter into subscription agreements with other members or former members of
MidAmerican management (any such agreements, together with the Xxxxx X. Xxxxx
Subscription Agreement, the "Management Subscription Agreements" and the
Management Subscription Agreements, together with this Agreement and the
Berkshire Subscription Agreement, collectively, the "Subscription Agreements"),
pursuant to which such persons will agree to purchase, on the terms and subject
to the conditions stated therein, shares of Common Stock and/or options to
purchase Common Stock. Each of the Subscription Agreements are separate and
several agreements, and the sales of Shares to the undersigned and to the other
purchasers under the Subscription Agreements are to be separate and several
sales.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the undersigned that:
(a) Organization and Qualification. The Company is duly formed, validly
existing and in good standing under the laws of the State of Iowa. The Company
was organized solely for the purposes of consummating the Merger and the other
transactions to be contemplated by the Merger Agreement and taking action with
respect thereto. Except for obligations or liabilities incurred, or to be
incurred, in connection with the transactions to be contemplated by the Merger
Agreement (including the Subscription Agreements) or in connection with their
organization, on the Closing Date the Company will not have incurred any
obligations or liabilities or engaged in any business activities of any kind.
(b) Authority. The Company has the requisite power and authority to
enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby have been duly and validly approved by
all necessary action, and no other proceedings on the part of the Company are
necessary to authorize the execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
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contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery of this Agreement by the undersigned, constitutes a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(c) Issuance of Shares. The Shares to be issued and sold by the Company
pursuant to this Agreement, when issued in accordance with the provisions
hereof, will be validly issued, fully paid and nonassessable stock of the
Company, and no holder of stock of the Company will have any preemptive rights
to subscribe for any such Shares. Other than shares of Common Stock, the only
securities authorized for issuance by the Company are the shares of Preferred
Stock to be issued and sold by the Company pursuant to the Berkshire
Subscription Agreement.
(d) Approvals and Consents; Non-Contravention. The creation,
authorization, issuance, offer and sale of the Shares do not require any
consent, approval or authorization of, or filing, registration or qualification
with, any governmental authority on the part of the Company (other than as will
be described in the Merger Agreement) or the vote, consent or approval in any
manner of the holders of any capital stock or other security of the Company as a
condition to the execution and delivery of this Agreement or the creation,
authorization, issuance, offer and sale of the Shares. The execution and
delivery by the Company of this Agreement and the performance by the Company of
its obligations hereunder will not violate (i) the terms and conditions of the
Articles of Incorporation or the Bylaws of the Company, or any agreement to
which the Company is a party or by which it is bound or (ii) subject to the
accuracy of the representations and warranties of the undersigned contained in
Section 4 hereof, any federal or state law.
4. Representations and Warranties of the Undersigned. The undersigned
hereby represents and warrants to the Company that:
(a) Authority. The undersigned has the requisite power and authority to
enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the undersigned and, assuming the due
authorization, execution and delivery of this Agreement by the Company,
constitutes a legal, valid and binding obligation of the undersigned enforceable
against the undersigned in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(b) Approvals and Consents; Non-Contravention. Except as required under
the HSR Act (as defined below), the execution, delivery and performance of this
Agreement by the undersigned and the consummation by the undersigned of the
transactions contemplated
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hereby do not require any consent, approval or authorization of, or filing,
registration or qualification with, any governmental authority on the part of
the undersigned, or the vote, consent or approval in any manner of the holders
of any capital stock or other security of the undersigned as a condition to the
execution and delivery of this Agreement or the consummation by the undersigned
of the transactions contemplated hereby. The execution and delivery by the
undersigned of this Agreement and the performance by the undersigned of its
obligations hereunder will not violate (i) the terms and conditions of the
certificate of incorporation, or other applicable formation document, or the
bylaws of the undersigned, or any agreement to which the undersigned is a party
or by which it is bound or (ii) any federal or state law.
(c) Residence. The principal place of business address set forth on the
signature page hereof is the undersigned's true and correct principal place of
business and is the only jurisdiction in which an offer to sell the Shares was
made to the undersigned and the undersigned has no present intention of moving
its principal place of business to any other state or jurisdiction.
(d) No Registration. The undersigned understands that the Shares have
not been registered under the Securities Act of 1933, as amended (the "Act"), or
under the laws of any other jurisdiction, and that the Company does not
contemplate and is under no obligation to so register the Shares. The
undersigned understands and agrees that the Shares must be held indefinitely
unless they are subsequently transferred (i) pursuant to an effective
registration statement under the Act and, where required, under the laws of
other jurisdictions or (ii) pursuant to an exemption from applicable
registration requirements. The undersigned recognizes that there is no
established trading market for the Shares and that it is unlikely that any
public market for the Shares will develop for at least five years. The
undersigned will not offer, sell, transfer or assign its Shares or any interest
therein in contravention of this Agreement, the Act or any state or federal law.
(e) Purchase for Investment. Except for Shares as are subscribed for by
Xxxxx Family Entities (other than the undersigned), the Shares for which the
undersigned hereby subscribes are being acquired solely for the undersigned's
own account for investment and are not being purchased with a view to or for
resale, distribution or other disposition, and except as indicated above the
undersigned has no present plans to enter into any contract, undertaking,
agreement or arrangement for any such resale, distribution or other disposition.
(f) Information. The undersigned has been granted the opportunity to
ask questions of, and receive answers from, the Company and the officers of the
Company concerning the terms and conditions of the sale of the Shares, the
Merger Agreement and the transactions contemplated thereby, and to obtain any
additional information which the undersigned deems necessary to make an informed
investment decision. The undersigned has received or has had access to other
documents requested from the Company relating to the Shares and the purchase
thereof, and the Company has afforded the undersigned the opportunity to discuss
the undersigned's investment in the Company and to ask and receive answers to
any questions relating to the investment in the Shares, the Merger Agreement and
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the transactions contemplated thereby. The undersigned understands and has
evaluated the risks of a purchase of the Shares.
(g) Accredited Investor. The undersigned has read the text of Rule
501(a)(1) - (8) of Regulation D under the Act and confirms that it is an
"accredited investor" as described thereby.
(h) Ownership. At the Closing Date, the undersigned will have good and
marketable title to, and own free and clear of any liens, encumbrances,
mortgages, charges, rights or other security interests, the shares of
MidAmerican common stock, if any, to be exchanged for Shares pursuant to this
Agreement.
(i) Holding Company. The undersigned is not a "public utility company",
a "holding company", a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company", as such terms
are defined in the Public Utility Holding Company Act of 1935, as amended, or a
"public utility" as such term is defined in the Federal Power Act.
5. Closing. The closing (the "Closing") of the purchase and sale of the
Shares pursuant to this Agreement shall be held at the same place and at the
same time as the closings under the other Subscription Agreements (the "Closing
Date") and immediately prior to the effective time of the Merger.
6. Conditions to Closing. (a) The undersigned's obligation to purchase the
Shares under this Agreement at the Closing is subject to the fulfillment on or
prior to the Closing of the following conditions:
(i) Representations and Warranties. Each representation and warranty
made by the Company in this Agreement shall be true and correct in all
material respects on and as of the Closing Date as though such
representation or warranty was made on the Closing Date, and any
representation or warranty made as of a specified date earlier than the
Closing Date shall have been true and correct in all material respects on
and as of such earlier date.
(ii) Performance. The Company shall have performed and complied with,
in all material respects, each agreement, covenant and obligation required
by this Agreement to be so performed or complied with by the Company at or
before the Closing Date.
(iii) Merger Agreement. The Merger Agreement shall have been executed
and delivered by the parties thereto in form and substance reasonably
satisfactory to the undersigned. As of the Closing all conditions to the
consummation of the transactions contemplated by the Merger Agreement shall
have been satisfied or waived and the closing of the transactions
contemplated hereunder shall occur immediately prior to the effective time
of the Merger.
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(iv) Stockholders Agreement. The Stockholders Agreement (having terms
substantially the same as those set forth on Schedule I hereto) (the
"Stockholders Agreement") shall have been executed and delivered by the
Company and each of the parties to the Subscription Agreements.
(v) Subscription Agreements. The Subscription Agreements shall be in
full force and effect, no cancellation or termination (purported or
otherwise) shall have occurred in respect of any Subscription Agreement, no
material breach or default shall have occurred and be continuing under any
of the Subscription Agreements, and closings under all of the Subscription
Agreements shall be effected concurrently.
(vi) Required Equity Interest. The Shares (after giving effect to the
other Subscription Agreements) shall represent, at and as of the Closing,
not less than eighty-seven percent (87%) of the outstanding voting stock of
the Company.
(b) The Company's obligation to sell the Shares under this Agreement at
the Closing is subject to the fulfillment on or prior to the Closing of the
following conditions:
(i) Representations and Warranties. Each representation and warranty
made by the undersigned in this Agreement shall be true and correct in all
material respects on and as of the Closing Date as though such
representation or warranty was made on the Closing Date, and any
representation or warranty made as of a specified date earlier than the
Closing Date shall have been true and correct in all material respects on
and as of such earlier date.
(ii) Performance. The undersigned shall have performed and complied
with, in all material respects, each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by the
undersigned at or before the Closing Date.
(iii) Merger Agreement. The Merger Agreement shall have been executed
and delivered by the parties thereto in form and substance reasonably
satisfactory to the Company. As of the Closing all conditions to the
consummation of the transactions contemplated by the Merger Agreement shall
have been satisfied or waived and the closing of the transactions
contemplated hereunder shall occur immediately prior to the effective time
of the Merger.
(iv) Stockholders Agreement. The Stockholders Agreement shall have
been executed and delivered by the Company and each of the parties to the
Subscription Agreements.
(v) Subscription Agreements. The Subscription Agreements shall be in
full force and effect, no cancellation or termination (purported or
otherwise) shall have occurred in respect of any Subscription Agreement, no
material breach or default shall have occurred and be continuing under any
of the Subscription Agreements, and closings under all of the Subscription
Agreements shall be effected concurrently.
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7. Covenants. Each of the Company and the undersigned covenants and agrees
with the other that, at all times from and after the date hereof until the
Closing Date, it will comply with all covenants and provisions of this Section
7, except to the extent the other party may otherwise consent in writing.
(a) Regulatory and Other Approvals. Subject to the terms and conditions
of this Agreement, each of the Company and the undersigned will proceed
diligently and in good faith to, as promptly as practicable (x) obtain all
consents, approvals or actions of, make all filings with and give all notices to
governmental or regulatory authorities or any public or private third parties
required of the Company and the undersigned to consummate the transactions
contemplated hereby and by the Merger Agreement, and (y) provide such other
information and communications to such governmental or regulatory authorities or
other public or private third parties as the other party or such governmental or
regulatory authorities or other public or private third parties may reasonably
request in connection therewith. In addition to and not in limitation of the
foregoing, each of the parties will (1) take promptly all actions necessary to
make the filings required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder (the
"HSR Act") (2) comply at the earliest practicable date with any request for
additional information received from the Federal Trade Commission (the "FTC") or
the Antitrust Division of the Department of Justice (the "Antitrust Division"),
pursuant to the HSR Act, and (3) cooperate with the other party in connection
with such party's filings under the HSR Act and in connection with resolving any
investigation or other inquiry concerning the transactions contemplated by this
Agreement commenced by either the FTC or the Antitrust Division or state
attorneys general.
(b) Notice and Cure. Each of the Company and the undersigned will
promptly notify the other in writing of, and contemporaneously will provide the
other with true and complete copies of any and all information or documents
relating to, and will use all commercially reasonable efforts to cure before the
Closing Date, any event, transaction or circumstance, occurring after the date
of this Agreement that causes or will cause any covenant or agreement of either
such party under this Agreement to be breached or that renders or will render
untrue any representation or warranty of either such party contained in this
Agreement as if the same were made on or as of the date of such event,
transaction or circumstance.
(c) Fulfillment of Conditions. Each of the Company and the undersigned
will take all commercially reasonable steps necessary or desirable and proceed
diligently and in good faith to satisfy each condition to the obligations of
such party contained in this Agreement and will not take any action that could
reasonably be expected to result in the nonfulfillment of any such condition or
fail to take any commercially reasonable action that could reasonably be
expected to prevent the nonfulfillment of any such condition.
8. Indemnification. The undersigned agrees to indemnify and hold harmless
the Company, the Parent, or any member, officer, director or control person
(within the meaning of Section 15 of the Act) of any such entity from and
against any and all loss, damage or liability due to or arising out of a breach
of any representation or warranty of the undersigned
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contained in any document furnished by the undersigned in connection with the
offering and sale of the Shares, including, without limitation, this Agreement,
or failure by the undersigned to comply with any covenant or agreement made by
the undersigned herein or in any other document furnished by the undersigned to
any of the foregoing in connection with this transaction.
9. Survival; Binding Effect. All covenants, agreements, representations and
warranties made herein shall survive the execution and delivery of this
Agreement and delivery of the Shares and payment therefor and, notwithstanding
any investigation heretofore or hereafter made by the undersigned or on the
undersigned's behalf, shall continue in full force and effect. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party and all covenants,
promises and agreements in this Agreement by or on behalf of the Company, or by
or on behalf of the undersigned, shall bind and inure to the benefit of the
successors and assigns of such parties hereto.
10. Termination.
(a) This Agreement may be terminated, and the transactions contemplated
hereby may be abandoned (i) at any time before the Closing, by mutual written
agreement of the Company and the undersigned or (ii) at any time before the
Closing, by the Company or the undersigned, in the event that any order or law
becomes effective restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement or the Company, upon notification of the non-terminating party by the
terminating party.
(b) This Agreement shall terminate, with no further action being
required on the part of either party hereto, (i) automatically, if the Merger
Agreement is not executed and delivered by the parties hereto on or before 11:59
p.m., October 24, 1999, or (ii) automatically, once the Merger Agreement has
been executed and delivered, upon any termination of the Merger Agreement in
accordance with its terms by MidAmerican or (with the requisite Member vote
under the Parent's Operating Agreement or the requisite two-thirds vote of the
Company's Board of Directors) by the Parent or the Company, as applicable.
(c) If this Agreement is validly terminated pursuant to this Section
10, this Agreement will forthwith become null and void, and there will be no
liability or obligation on the part of the undersigned or the Parent or the
Company (or any of their respective members, officers, directors, employees,
agents or other representatives or affiliates). Notwithstanding the foregoing,
no such termination shall affect the obligations of the undersigned pursuant to
Section 8, which shall survive any such termination.
11. Notices. All notices, statements, instructions or other documents
required to be given hereunder shall be in writing and shall be given either
personally, by overnight courier or by facsimile, addressed to the Company at
its principal offices and to the other party at its address or facsimile number
reflected on the signature page hereto. The undersigned, by written notice given
to the Company in accordance with this Section 11 may change the
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address to which notices, statements, instructions or other documents are to be
sent to the undersigned. All notices, statements, instructions and other
documents hereunder that are mailed shall be deemed to have been given on the
date of delivery.
12. Complete Agreement; Counterparts. This Agreement constitutes the entire
agreement and supersedes all other agreements and understandings, both written
and oral, between the parties hereto, with respect to the subject matter hereof.
This Agreement may be executed by any one or more of the parties hereto in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same instrument.
13. Assignment. Except as provided herein, without the prior written
consent of each of the parties hereto, neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto and any
attempt to do so will be void. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and shall be enforceable by the
parties hereto and their respective successors and assigns.
14. Amendment and Waiver. This Agreement may be amended or modified only by
an instrument signed by the parties hereto. A waiver of any provision of this
Agreement must be in writing, designated as such, and signed by the party
against whom enforcement of that waiver is sought. The waiver by a party of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent or other breach thereof.
15. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York.
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IN WITNESS WHEREOF, the undersigned has executed this Amended and
Restated Subscription Agreement on this 24th day of October 1999.
--------------------------------------
Mailing Address
/s/ Xxxxxx Xxxxx, Xx.
----------------------------------- --------------------------------------
Xxxxxx Xxxxx, Xx. City State Zip Code
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Tax Identification Number
SUBSCRIPTION ACCEPTED AS OF THE ABOVE DATE
TETON ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Chairman, Chief Executive
Officer and President
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Schedule I
PROJECT TETON
SUMMARY OF TERMS FOR SHAREHOLDERS' AGREEMENT
AND MANAGEMENT EQUITY PARTICIPATION
BACKGROUND
o In order to encourage equity participation in NewCo by Management, DLS
will be required to roll over (tax free) 100% of his total current
equity in Monarch (both shares directly owned and those subject to
options), and up to three additional Management participants may be
offered the opportunity to rollover (tax free) up to 100%, but not less
than 65%, of such person's total current equity in Monarch (both shares
directly owned and those subject to options), into NewCo's voting
common stock or options, as applicable. Management's contribution will
be valued on the basis of the price paid to the public stockholders of
Monarch in the Merger (the "Merger Price") less any applicable option
exercise price.
o Walter and/or his children and their respective personal trusts will
invest a total of $280.4 million in voting common stock of NewCo, with
such investment achieved through a roll-over of certain of their
present Monarch holdings and through cash investments at the closing.
At least 5 million shares (or approximately $175 million in value) of
such common shares will be directly owned by Xxxxxx or his personal
trusts.
o Teton will acquire NewCo voting common stock, convertible preferred
stock and trust preferred stock in separately agreed amounts through
cash investments or through contributions of Monarch common stock
valued at the Merger Price at the closing.
OPTION TERMS
o The number of existing shares subject to options and the exercise price
per share will remain unchanged.
o As per the terms of the existing option plan, all existing options will
be fully vested as of the closing date.
o Subject to review of accounting implications, in order to encourage
retention of existing options and avoid the need to finance early
option exercises, all outstanding options will have their exercise
terms extended until
eight years after the closing date. Options with current exercise terms
of greater than eight years from the closing date will not be affected.
ADDITIONAL OPTIONS
o As an additional incentive for Management to rollover a higher
proportion of their equity into NewCo, if DLS or any other Management
participant rolls over 100% of his common stock and stock options, then
for each ten shares rolled over (whether directly owned or subject to
options), DLS and each such other Management participant will receive
an option to purchase three additional shares of NewCo at an exercise
price equal to the per share Merger Price. These additional options
will vest in increments of 1/3 per year over the three years following
the closing date. All options will contain various other customary
terms, including anti-dilution provisions.
MANAGEMENT EQUITY -- TRANSFERABILITY; PUT AND CALL RIGHTS, ETC.
o All Management shares and options will be nontransferable for a period
of three years following the closing date (subject to exceptions for
transfers to immediate family members and personal trusts for their
benefit or management's benefit). After three years, transfer
restrictions will be lifted (subject to customary plan limitations as
to options); however, such shares and options will be subject to both
put and call rights (described below).
o At any time after the third anniversary of the closing, management will
be allowed one opportunity per year to put their shares and options to
NewCo for cash in increments of not less than 25% of their total equity
holdings as of the closing date, at a price to be agreed upon. If the
parties cannot agree on a price for the shares or options, the option
to put will be based on an "appraised value" to be determined by an
independent appraiser mutually acceptable to Management and NewCo. The
option to put at appraised value may be made by any management
stockholder at any time within 30 days after the appraised value has
been finally determined. The purchase price for the options will be
equal to the agreed or appraised value, as applicable, of the
underlying common shares less an amount equal to the applicable option
exercise price.
o NewCo will be required to have an appraisal of the common shares made
on the third anniversary of the closing date. Thereafter, NewCo will be
required to have an appraisal
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made at the request of a selling Management shareholder, but not more
frequently than once per calendar year.
o In determining appraised value, the third party appraiser will value
Management shares based on their percentage of the total equity value
of NewCo as a going concern, and will value the shares as though NewCo
were a publicly traded company, with reasonable liquidity and without a
controlling block of shares and with no sell-out premium (as might
exist in a change of control or sale of the company transaction).
o At any time after the third anniversary of the closing, NewCo will be
allowed one opportunity per year to call Management shares and options
for cash in increments of not less than 25% of their total equity
holdings at a price to be agreed upon, or, failing agreement, at the
appraised value, determined in the same manner.
o Since all currently-owned management shares and options will be fully
vested on the closing date, those shares and options will not be
affected by any termination of employment. For example, if a Management
shareholder's employment is terminated prior to the end of the
three-year period, the put and call rights described above will mature
beginning at the end of the three-year period and will be exercisable
by both parties in the same manner as if the Management shareholder had
still been employed.
o With respect to additional option grants subject to vesting, in the
event a Management shareholder's employment is terminated without
"cause," or by the Management shareholder for "good reason," or by
reason of his or her death or disability, such additional options will
become fully vested and (after three years) subject to the put and call
provisions. If a Management shareholder's employment is terminated
within the three-year period by the NewCo for cause or by him without
good reason, any unvested additional option shares will be forfeited.
XXXXXX AND XXXXXX FAMILY SHARES -- TRANSFERABILITY,
PUTS AND CALLS, ETC.
o 5 million of the voting common shares owned by Xxxxxx and/or his
personal trusts will not be transferable except in "Permitted
Transfers". "Permitted Transfers" will include (a) transfers by and
among Xxxxxx, his personal trusts and any foundation or foundation
created by Xxxxxx where the voting of such common shares is directed by
Xxxxxx, (b) provided Teton is an "Eligible Purchaser" as defined below,
transfers to third parties
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made after compliance with the right of first refusal provisions in
favor of Teton described below, (c) transfers made at any time after
the earlier of Walter's death or the third anniversary of the closing
date pursuant to a put by Xxxxxx or his personal trusts or his estate
of some or all of such shares to Teton for cash or Teton common stock
(at the election of Xxxxxx or his personal trusts or estate), with such
put exercisable only if Teton is an Eligible Purchaser, i.e., purchase
by Teton would not cause Teton to become - - subject to regulation as a
registered holding company under the Public Utility Holding Company Act
of 1935 ("PUHCA")due to the repeal or amendment of PUHCA or otherwise
and (d) such other transfer arrangements as may be agreed by and among
Xxxxxx and Teton promptly following the signing of a definitive merger
agreement which would not cause Teton or Xxxxxx to become subject to
regulation as a registered holding company under PUHCA. Any put
pursuant to clause (c) above shall be at agreed or appraised value
determined in the same manner as applies to management's puts.
o Such 5 million shares shall also be subject to a right of first refusal
in favor of Teton if a transfer of any such shares is proposed to be
made to a third party at any time.
o The balance of the voting common shares (i.e. the excess over 5 million
shares) owned by Xxxxxx or his children or any of their respective
personal trusts shall not be subject to any contractual transfer
restrictions and shall not be subject to any puts, calls or rights of
first refusal.
TETON'S HOLDINGS
o Pursuant to the terms thereof, the Trust Preferred shall be
non-transferable.
o Teton's Convertible Preferred and voting common stock shall be freely
transferable (subject to PUHCA and other applicable legal constraints).
To the extent that Teton transfers (other than transfers to any of its
consolidated subsidiaries) 5% or more of its common stock or
Convertible Preferred, all transfer restrictions, rights of first
refusal and puts in respect of common stock owned by Xxxxxx or his
personal trusts shall immediately lapse. In addition, if any such
transfer by Teton represents more than 50% of the voting power or 50%
of the combined equity value of NewCo (exclusive of Trust Preferred),
then Xxxxxx, Xxxxxx'x children and their respective personal trusts
shall have the right on a
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proportional basis to tag-along in connection with such sale on the
same terms and conditions as apply to Teton's sale.
o No puts, calls or rights of first refusal shall apply to any of Teton's
holdings.
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