EXHIBIT 10.18
STOCKHOLDER AGREEMENT
BY AND BETWEEN
HORIZON ORGANIC HOLDING CORPORATION
AND
SUIZA FOODS CORPORATION
ARTICLE I DEFINITIONS; GENERAL...................................... 1
1.1 Definitions.................................................. 1
1.2 General...................................................... 4
ARTICLE II ORGANIC WHITE FLUID MILK PROCESSING....................... 5
2.1 Sale of Organic White Fluid Milk by the Stockholder.......... 5
2.2 Exception.................................................... 5
ARTICLE III RIGHT TO PURCHASE ADDITIONAL SHARES....................... 6
3.1 Right to Purchase Additional Shares.......................... 6
3.2 Closing...................................................... 7
3.3 Exceptions................................................... 7
ARTICLE IV ADDITIONAL COVENANTS OF THE COMPANY....................... 8
4.1 Appointment of Directors..................................... 8
4.2 Certain Limitations.......................................... 9
4.3 Observer Rights.............................................. 9
4.4 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing..................................... 9
ARTICLE V ADDITIONAL COVENANTS OF THE STOCKHOLDER................... 9
5.1 Standstill................................................... 10
5.2 Voting....................................................... 10
5.3 Solicitation of Proxies...................................... 11
ARTICLE VI TRANSFERS OF STOCK........................................ 11
6.1 General...................................................... 11
6.2 Joinder Agreement; Certain Transfers......................... 11
6.3 Drag-Along Rights............................................ 11
ARTICLE VII STOCK LEGEND.............................................. 13
7.1 Form of Legend............................................... 13
7.2 Removal of Legend............................................ 13
ARTICLE VIII TERMINATION............................................... 14
8.1 Written Agreement............................................ 14
8.2 Time......................................................... 14
ARTICLE IX RIGHT OF FIRST NEGOTIATION; SALE OF STOCK
TO STOCKHOLDER COMPETITOR................................. 14
9.1 Right of First Negotiation................................... 14
9.2 Sale of Stock to Stockholder Competitor...................... 14
ARTICLE X REGISTRATION RIGHTS....................................... 15
10.1 Definitions.................................................. 15
10.2 Piggyback Registrations...................................... 15
10.3 Form S-3 Registration........................................ 17
10.4 Expenses of Registration..................................... 18
10.5 Obligations of the Company................................... 18
10.6 Termination of Registration Rights........................... 19
10.7 Delay of Registration; Furnishing Information................ 19
10.8 Indemnification.............................................. 20
10.9 Assignment of Registration Rights............................ 22
10.10 Amendment of Registration Rights............................. 22
10.11 Rule 144 Reporting........................................... 22
10.12 Market Stand-Off Agreement................................... 23
10.13 Limitation on Subsequent Registration Rights................. 23
10.14 Selection of Underwriter..................................... 23
ARTICLE XI MISCELLANEOUS............................................. 23
11.1 Notices...................................................... 23
11.2 Entire Agreement............................................. 24
11.3 Waiver; Amendment............................................ 24
11.4 Assignment; Binding Effect................................... 24
11.5 Counterparts................................................. 24
11.6 Interpretation............................................... 24
11.7 No Third Party Beneficiaries................................. 24
11.8 Governing Law................................................ 25
11.9 Form of Payments............................................. 25
11.10 Dispute Resolution........................................... 25
11.11 Cooperation and Assurances; Documents........................ 25
11.12 Specific Performance......................................... 26
11.13 Severability................................................. 26
11.14 Publicity.................................................... 26
2.
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT (this "Agreement"), dated as of June 5,
1998 (the "Effective Date"), is made by and among Horizon Organic Holding
Corporation, a Delaware corporation (the "Company"), and Suiza Foods
Corporation, a Delaware corporation (the "Stockholder").
RECITALS
WHEREAS, the Company and the Stockholder believe it is in their mutual
best interests to establish a relationship pursuant to which the Stockholder
will own an equity interest in the Company and the Company will use
Stockholder's and its Affiliates' (as defined below) processing plants to
facilitate the Company's growth where ever practical;
WHEREAS, in furtherance of these objectives the Company and
Stockholder have entered into the Stock Purchase Agreement, of even date
herewith (the "Stock Purchase Agreement"), pursuant to which the Stockholder is
purchasing up to one million one hundred thousand (1,100,000) shares of Common
Stock of the Company;
WHEREAS, the Company and certain of Stockholder's Affiliates have
entered into Processing and Distribution Agreements pursuant to which the
Company has granted such Affiliates the exclusive right to process organic white
fluid milk for the Company in certain territories and it is their mutual intent
to enter into additional agreements pursuant to which Stockholder and/or
Stockholder's Affiliates will process and/or distribute organic white fluid milk
or other organic dairy products for the Company on an exclusive basis in a
territory (the "Processing and Distribution Agreements"); and
WHEREAS, each party desires to grant certain rights in connection with
the Company Stock (as defined below) from time to time held by the Stockholder
NOW, THEREFORE, in consideration of the representations, warranties,
conditions and covenants hereinafter contained, and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
AGREEMENT
ARTICLE I
DEFINITIONS; GENERAL
1.1 Definitions. As used in this Agreement, the following terms
shall, unless the context otherwise requires, have the respective meanings
therefor set forth below:
"Additional Securities": Any Voting Securities acquired by the
Stockholder pursuant to Section 4.1.
"Affiliate": As defined in Rule 12b-2 under the Exchange Act.
1.
"Approved Transferee": As defined in Section 4.2(b).
"Beneficial Ownership" or "Beneficially Own": As defined in Rule 13d-3
under the Exchange Act.
"Board" or "Board of Directors" means either the board of directors of
the Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors (unless the context specifically requires that such
resolution be adopted by a majority of the Disinterested Directors, in which
case by a majority of such directors) and to be in full force and effect on the
date of such certification, and delivered to the Stockholder.
"Business Day": Any day other than a Saturday, Sunday, or any other
day on which banking institutions in the State of Colorado are authorized or
obligated by law or by executive order to be closed.
"Certificate of Incorporation": The Certificate of Incorporation of
the Company, as amended, in the form attached as Exhibit A hereto.
"Closing Date": As defined in the Stock Purchase Agreement.
"Commission": The United States Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act or the
Exchange Act.
"Common Stock": The Company's Common Stock, par value $.001 per share,
which has the powers, preferences, qualifications, limitations and restrictions
set forth in the Certificate of Incorporation.
"Company": As defined in the introduction to this Agreement.
"Company Notice": As defined in Section 4.1.
"Derivative Securities": Securities of the Company convertible into or
exercisable for Common Stock or any other capital stock of the Company.
"Disinterested Director" means, with respect to any proposed
transaction between the Company and an Affiliate thereof, a member of the Board
of Directors who is not an officer or employee of the Company, would not be a
party to, or have a financial interest in, such transaction and is not an
officer, director or employee of, and does not have a financial interest in,
such Affiliate. For purposes of this definition, no person would be deemed not
to be a Disinterested Director solely because such person holds shares of
capital stock of the Company.
"Employee Securities": Shares of stock, compensatory options or other
rights to acquire Common Stock issued to employees, officers, or directors of
the Company pursuant to employee stock option plans, stock purchase plans,
restricted stock plans or similar arrangements approved by the Company's Board
of Directors after the date hereof.
2.
"Exchange Act": The Securities Exchange Act of 1934, as amended, or
any successor federal statute, and the rules and regulations of the Commission
thereunder, as all of same shall be in effect at the time.
"Fully Diluted Ownership Percentage": As of the time of determination
thereof, the percentage ownership calculated by dividing (a) the number of
shares of Common Stock or other equity securities of the Company Beneficially
Owned by a person, including any Common Stock or any other equity securities
issuable upon exercise of any options, warrants or rights to acquire Common
Stock or upon conversion of securities convertible into Common Stock, howsoever
and whenever acquired, by (b) the Company's Fully Diluted Shares (including
those Fully Diluted Shares included in subsection (a) above).
"Fully Diluted Shares": The number of shares of Common Stock or other
equity securities of the Company outstanding assuming the conversion of all
securities convertible into Common Stock or any other equity security of the
Company, the exercise of all options, warrants and rights to acquire Common
Stock or any other equity security of the Company, whether or not vested, and
all restricted stock of the Company, in each case previously issued by the
Company and not terminated, canceled or held in treasury by the Company, whether
or not treated as outstanding by the Company.
"Maximum Fully Diluted Ownership Percentage": As defined in Section
3.1.
"Organic White Fluid Milk" means any fresh or ultra high pasteurized
(UHT) fluid whole milk, 2% reduced fat milk, 1% low fat milk, and fat free milk,
as well as half & half and heavy cream which has been certified as organic by
any state agency or private certification organization and which is labeled or
otherwise identified in marketing materials as "organic."
"Person": Any natural person and any domestic or foreign corporation,
general or limited partnership or other entity.
"Preemptive Rights Procedure": The process of complying with Section
4.1 of this Agreement.
"Proposed Issuance": As defined in Section 4.1.
"Requisite Stockholders": means the holders of a majority of the
Company's Voting Securities.
"Sale": means the sale of all or substantially all assets of the
Company, or the merger or consolidation or sale or exchange of outstanding
Securities as a result of which the holders of the Company's Voting Securities
immediately prior to such transaction own less than 50% of the surviving
corporation immediately following such transaction.
"Securities Act": The Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all of the same shall be in effect at the time.
3.
"Stock": All Common Stock which may from time to time be held by the
Stockholder, together with all Additional Securities.
"Stockholder": As defined in the Introduction, and any other person
that becomes a party to this Agreement.
"Stockholder Competitor": means a processor and/or distributor of
fluid milk with fluid milk sales in excess of Two Hundred Million Dollars
($200,000,000) in its most recent fiscal year. Stockholder Competitors shall not
include any stockholders or members of the Board of Directors of the Company as
of the Effective Date, or any of their Affiliates.
"Stockholder Directors": As defined in Section 5.1.
"Stockholder Notice": As defined in Section 4.1.
"Subsidiary" of any person means (i) a corporation more than fifty
percent (50%) of the outstanding voting stock of which is owned, directly or
indirectly, by such person or by one or more other Subsidiaries of such person
or by such person and one or more Subsidiaries thereof or (ii) any other person
(other than a corporation) in which such person, or one or more other
Subsidiaries of such person or such person and one or more other Subsidiaries
thereof, directly or indirectly, has at least a majority ownership and power to
direct the policies, management and affairs thereof.
"Voting Ownership Percentage": The percentage obtained by dividing the
aggregate number of votes in the election of directors to which the Voting
Securities Beneficially Owned by a person are entitled by the aggregate number
of votes in the election of directors to which all Voting Securities outstanding
are entitled as such percentage exists from time to time provided, that Voting
Securities issuable upon exercise or conversion of options, warrants or other
securities or rights shall not be included for this purpose; provided, further,
that restricted stock of the Company which is not treated by the Company as
outstanding shall not be included for this purpose; and provided, further, that,
for purposes of this definition, the Common Stock shall be deemed to be Voting
Securities and to have one vote per share in the election of directors.
"Voting Securities": any securities that are entitled to vote
generally in the election of directors of the Company.
1.2 General. For purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) The terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other
gender.
(b) The captions used in this Agreement are inserted for
convenience only and are in no way intended to describe, interpret, define or
limit the scope or content of this Agreement or any provision hereof.
4.
(c) The words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision.
(d) The term "include" or "including" shall mean without
limitation by reason of enumeration.
(e) Each reference to an "Article" of this Agreement shall
include all Sections of such Article. Similarly, each reference to a "Section"
shall include all subsections of such Section.
ARTICLE II
ORGANIC WHITE FLUID MILK PROCESSING
2.1 Sale of Organic White Fluid Milk by the Stockholder. Except as
provided in Section 2.2 below, the Stockholder hereby agrees that neither it,
nor any of its Affiliates, will introduce any Organic White Fluid Milk products
for sale under the Stockholder's brands for an initial period of five (5) years
from the Effective Date (the "Exclusivity Period") so long as Stockholder or any
of its Affiliates is processing and/or distributing Organic White Fluid Milk
products for sale under any Processing and Distribution Agreement. The
Exclusivity Period will be automatically renewed for additional one (1) year
periods, so long as Stockholder or any of its Affiliates is processing and/or
distributing Organic White Fluid Milk products for sale under any Processing and
Distribution Agreement, unless and until terminated by written notice by one
party to the other six (6) months before expiration of an Exclusivity Period.
2.2 Exception. The Company and Stockholder hereby agree that the
Stockholder or its Affiliates may acquire businesses which, as an incidental
portion of their business, produce and/or sell Organic White Fluid Milk in
territories which are covered by a Processing and Distribution Agreement. In
such event, Stockholder agrees, on behalf of itself and its Affiliates, to
either (a) transition any Organic White Fluid Milk business which it acquires to
the Company's brand within twelve (12) months of the closing of the acquisition
of such a business or (b) divest itself of the Organic White Fluid Milk business
within twelve (12) months of the closing of the acquisition. If the Stockholder
elects to divest the business as provided in subsection (b) above, then
Stockholder, or its Affiliate, as applicable, shall offer the Company the right
of first negotiation to acquire such Organic White Fluid Milk business. In such
event, Stockholder will notify the Company and the Company will have ten (10)
days from the receipt of such notice to notify the Stockholder that the Company
desires to acquire such Organic White Fluid Milk business. If the Company does
not so elect, or if the Company does not respond within such ten (10) day
period, or if the Company and Stockholder do not enter into a definitive
agreement for such acquisition within forty-five (45) days after the
Stockholder's receipt of the Company's election, then the Stockholder will be
free to negotiate with any third party for the sale of the Organic White Fluid
Milk business.
5.
ARTICLE III
RIGHT TO PURCHASE ADDITIONAL SHARES
3.1 Right to Purchase Additional Shares.
(a) So long as Stockholder's Fully Diluted Ownership Percentage
is at least five percent (5%), in the event of any proposed public or private
sale for cash of shares of Common Stock or any other capital stock of the
Company or any other security convertible into or exercisable for Common Stock
or any other capital stock of the Company (other than pursuant to the exceptions
or limitations in Section 3.4 below) ("Proposed Issuance"), the Stockholder
shall have the right to purchase from the Company in whole or in part for cash
(or, if the parties hereto shall in their discretion at such time agree, for
property or other consideration), at the same price sold in the Proposed
Issuance, a number of shares of Common Stock or any other capital stock of the
Company equal to its Maximum Fully Diluted Ownership Percentage immediately
prior to the Proposed Issuance times the number of shares issued in the Proposed
Issuance. The "Maximum Fully Diluted Ownership Percentage" shall be calculated
using the lesser of (i) the Fully Diluted Ownership Percentage calculated at the
time of the Proposed Issuance and (ii) the Fully Diluted Ownership Percentage
calculated at the closing of the sale of Common Stock to Stockholder pursuant to
the Stock Purchase Agreement.
(b) If the securities being issued are options or warrants and a
purchase price consisting of cash or other consideration is to be paid for the
issuance of such options or warrants, then upon exercise of the right under
Section 3.1(a) the Stockholder shall pay such purchase price. Any such option or
warrant shall be subject to the same terms and restrictions as the option or
warrant constituting the Proposed Issuance.
(c) The Company shall send written notice of the Proposed
Issuance (the "Company Notice") to the Stockholder not less than twenty (20)
days prior to closing of the Proposed Issuance (ten (10) days if the Proposed
Issuance consists of shares of capital stock or Derivative Securities registered
under the Securities Act for sale to the public, or to be sold to qualified
institutional buyers for cash pursuant to Rule 144A). The Company Notice shall
set forth all material terms of the Proposed Issuance, including, without
limitation, the manner of sale, the number (which may be a range) and type of
securities to be issued, a minimum and maximum number of securities that the
Stockholder is entitled to purchase hereunder, the per share sale price or the
amount and type of other consideration to be received by the Company (which may
be a range) and the Stockholder's Fully Diluted Ownership Percentage.
(d) The Stockholder may exercise its rights hereunder by sending
irrevocable written notice (the "Stockholder Notice") to the Company within
twenty (20) days after receipt of the Company Notice (ten (10) days if the
Proposed Issuance consists of shares of capital stock or Derivative Securities
registered under the Securities Act for sale to the public, or to be sold to
qualified institutional buyers for cash pursuant to Rule 144A). The Stockholder
Notice shall specify either the number of securities which the Stockholder
wishes to purchase or the Fully Diluted Ownership Percentage which the
Stockholder wishes to have immediately after the Proposed Issuance (which shall
in no event exceed the Fully Diluted Ownership Percentage existing immediately
prior to the Proposed Issuance). The Stockholder Notice may specify a
6.
maximum aggregate dollar value (in which event the Company shall, subject to the
Fully Diluted Ownership Percentage limitation, sell to the Stockholder the
maximum number of securities up to such value).
(e) The Company shall, not less than five (5) days before the
proposed closing pursuant to Section 3.2, send written notice to the Stockholder
specifying the number of securities and the aggregate purchase price of such
securities.
(f) If a Proposed Issuance consists of a public offering for
cash, and if the managing underwriters for such offering advise the Company in
writing that the fifteen (15) day notice and ten (10) day notice periods
referenced in paragraphs 2.2(c) and (d), respectively, are not consistent with
the proposed offering schedule, such periods may be reduced to the extent
necessary to be consistent with such proposed offering schedule (but not below
ten (10) days and five (5) days, respectively). The Company will use reasonable
efforts to inform Stockholder of material developments with respect to such
offering.
(g) If any terms of the Proposed Issuance are revised or amended
in any material respect after delivery of the Company Notice, such Proposed
Issuance, as so revised or amended, shall constitute a new Proposed Issuance
subject to the terms of this Section 3.1; provided, that the required notice
period in respect of such revised terms under paragraph 2.2(c) shall be twenty
(20) days and under paragraph 2.2(d) shall be ten (10) days.
3.2 Closing. The purchase and sale of any securities pursuant to
this Section 3 shall take place on the date of the closing of the Proposed
Issuance or, if it is not possible to close on such date because of the need to
secure approval for, or to file, any amendments to the Certificate of
Incorporation, comply with any waiting periods imposed on such purchase and sale
by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, or secure necessary
regulatory approvals, then as soon as reasonably practicable following the
closing of the Proposed Issuance, or at such other time as the Company and the
Stockholder may agree. The Closing shall occur at a time and place specified by
the Company in a notice provided to the Stockholder at least five (5) days prior
to the closing. In connection with such closing, the Company and the Stockholder
shall provide such customary closing certificates and opinions as the
Stockholder or the Company, as appropriate, shall reasonably request. The
Company and the Stockholder will use their best efforts to comply with all
Federal and state laws and regulations and stock exchange or Nasdaq National
Market listing requirements applicable to any purchase and sale of shares of
Voting Securities under Section 3.1. The issuance of such shares by the Company
shall be subject to compliance with applicable laws and regulations and
requirements of the Nasdaq National Market or applicable stock exchange, and
there shall not then be in effect any order enjoining or restraining such
exercise or issuance.
3.3 Exceptions. Proposed Issuances shall not include:
(a) the grant or issuance of Employee Securities, or the
issuance of Common Stock upon exercise or conversion thereof;
(b) any issuances of shares of Common Stock upon conversion of
Derivative Securities outstanding as of the date hereof;
7.
(c) any issuances of Common Stock upon exercise or conversion of
Derivative Securities which previously comprised a Proposed Issuance which was
effected in compliance with Section 3.1 hereof to Stockholder hereunder;
(d) any issuances of Voting Securities that would result
(assuming exercise or conversion of any Derivative Securities so issued) in a
less than one percent (1%) increase in the voting power of Voting Securities
outstanding in any calendar year;
(e) any issuances of Voting Securities in connection with any
merger, acquisition or strategic alliance; or
(f) any issuances of Voting Securities, Derivative Securities or
Common Stock upon conversion of Derivative Securities to banks or equipment
lessors in connection with any loan agreement up to an aggregate of a three
percent (3%) increase in the voting power of Voting Securities outstanding in
any calendar year.
ARTICLE IV
ADDITIONAL COVENANTS OF THE COMPANY
4.1 Appointment of Directors.
(a) The Company hereby agrees that the Stockholder shall be
entitled, from and after the date hereof, to designate one member of the Board
of Directors of the Company (such director being referred to herein as the
"Stockholder Director"). Notwithstanding the foregoing, if at any time the
Stockholder's Voting Ownership Percentage is less than five percent (5%), the
Stockholder thereafter shall not be entitled to designate any Stockholder
Director. The Stockholder Director shall be entitled to the same
indemnification, compensation and other benefits provided to all other non-
employee members of the Board of Directors of the Company.
(b) In accordance with the foregoing, the Company hereby agrees
that the Company's Board of Directors will take all action necessary such that
upon the fifth (5th) business day following the Closing, the Company's Board
shall be increased in size, if necessary, and the person designated by the
Stockholder shall be elected to the Company's Board as a Class I Director
effective upon such date. Following the Closing, the Company shall cause (i) the
person designated by the Stockholder as a director to be included (consistent
with applicable law and the Certificate of Incorporation) in the group of
nominees who are recommended for election as Class I Directors by the management
of the Company and included in the Company's proxy statement pursuant to the
Exchange Act at each meeting of stockholders of the Company when Class I
Directors are to be elected, and (ii) at a special meeting of the Board of
Directors held as soon as practicable after the creation of any vacancy as a
result of the death, resignation or removal of the Stockholder Director, the
appointment of such person or persons as are designated by the Stockholder to
fill any such vacancy (unless such vacancy is the result of a resignation,
removal or similar action taken in order to comply with Section 4.1(a)). The
Company shall not be in violation of this Section 4.1 to the extent that the
failure to include any required Stockholder Director on the Company's Board of
Directors is attributable to the failure of the Stockholder to designate a
Stockholder Director or to the unwillingness or inability
8.
of such designee to serve. For all purposes of this Agreement, the Company shall
be in compliance with this Section 4.1(b) if it uses reasonable efforts to cause
the Stockholder Director to be elected to the Company's Board of Directors in
accordance with this Section 4.1.
4.2 Certain Limitations. The individual designated as a Stockholder
Director in accordance with the provisions of Section 4.1 shall, prior to
commencing any activities as member of the Company's Board of Directors, enter
into a confidentiality agreement, in substantially the same form as is entered
into by the other directors. The Company may request that the Stockholder
Director excuse himself or herself from deliberations or discussions of the
Board of Directors of the Company involving relationships between the Company
and the Stockholder or its Affiliates, or where, in the good faith determination
of a majority of the Board of Directors of the Company, such deliberations or
discussions are deemed to concern confidential or sensitive business or trade
information. Unless otherwise prohibited by law, the Stockholder Director may
vote on all matters submitted to the Board of Directors. Upon a similar
determination, the Company may refrain from sending or providing to the
Stockholder Director information of the type specified in the preceding sentence
disseminated to the Board of Directors.
4.3 Observer Rights. In the event that Stockholder is entitled to
designate a Stockholder Director as provided in Section 4.1(a) above, but
Stockholder elects not to designate a Stockholder Director or the Stockholder's
designee is either unwilling or unable to serve, then the Stockholder shall be
entitled to designate a representative to attend the meetings of the Board of
Directors as an observer. The individual designated as an observer in accordance
with the provisions of this Section 4.3 shall, prior to commencing any
activities as an observer, enter into a confidentiality agreement, in
substantially the same form as is entered into by the Company's Directors. The
Company may request that the observer excuse himself or herself from
deliberations or discussions of the Board of Directors of the Company involving
relationships between the Company and the Stockholder or its Affiliates, or
where, in the good faith determination of a majority of the Board of Directors
of the Company, such deliberations or discussions are deemed to concern
confidential or sensitive business or trade information or where necessary to
preserve the Company's attorney-client privilege.
4.4 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing. The Company agrees to cooperate with
the Stockholder in connection with Stockholder's compliance with the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ Antitrust Improvements Act of 1976 in connection with Stockholder's
acquisition of additional Stock on the open public market or otherwise;
provided, however, that Stockholder shall be responsible for any application
fees in connection with such a filing.
ARTICLE V
ADDITIONAL COVENANTS OF THE STOCKHOLDER
The Stockholder covenants and agrees with the Company that until the
eighteen (18) month anniversary of the termination of the Exclusivity Period set
forth in Article II of this Agreement:
9.
5.1 Standstill.
(a) Except as specifically contemplated by this Agreement or
pursuant to its exercise of the rights set forth in Article III or Section 9.2
below, the Stockholder will not, and will cause each Affiliate of the
Stockholder not to, purchase, acquire or own, or offer or agree to purchase,
acquire or Beneficially Own, directly or indirectly, any Voting Securities (or
enter into any arrangements or understandings with any third party to do any of
the foregoing), if after such acquisition the Stockholder's Voting Ownership
Percentage would exceed twenty-five percent (25%).
(b) Section 5.1(a) shall cease to have any further force or
effect if the Board of Directors of the Company, without prior written consent
from the Stockholder, takes any action (including without limitation the
approval of a transaction pursuant to Section 203 of the General Corporation Law
of Delaware) to facilitate or approve any merger, consolidation, business
combination or other transaction (or series of transactions) in which the
holders of Voting Securities immediately prior to such transaction (or
transactions) would collectively hold less than fifty percent (50%) of the
voting power of the securities that are entitled to vote generally in the
election of directors of the surviving parent corporation giving effect to all
Voting Securities outstanding immediately after such transaction (or
transactions) (a "Change of Control Transaction"), provided that no such Change
of Control Transaction shall close until the date which is not less than thirty
(30) days after the later of (A) the date the Board of Directors of the Company
takes any action to facilitate or approve the Change of Control Transaction, or
(B) the date Stockholder is notified of such action, in each case, such that
Stockholder is released from the obligations of Section 5.1(a) for a period of
not less than thirty (30) days prior to the closing or effectiveness of a Change
of Control Transaction.
5.2 Voting. So long as Stockholder's Fully Diluted Ownership
Percentage is at least five percent (5%), the Stockholder will take such action
as may be required so that all shares of Voting Securities owned by the
Stockholder are voted (i) for management's nominees to the Board of Directors of
the Company, if such nominees are consistent with the provisions of Section 5.1
hereof; (ii) to approve any amendments to the Company's equity incentive plans
for employees and directors approved by the Board, including any amendments
which increase the number of shares reserved for issuance under such plans;
provided that Stockholder shall not be required to vote in favor of any increase
in the number of shares under any such plan if, after giving effect to such
Amendment, the aggregate number of shares reserved for future issuance under the
Company's equity incentive plans for employees and directors exceeds fifteen
percent (15%) of the Company's Fully Diluted Shares as of the date of the
meeting approving the plan; and (iii) to approve any amendments to the Company's
Certificate of Incorporation to increase the Company's authorized capital stock.
So long as the Stockholder holds more than five percent (5%) of the outstanding
shares of Voting Securities, the Stockholder shall be present, in person or by
proxy, at all duly held meetings of stockholders of the Company so that all
shares of Voting Securities held by the Stockholder may be counted for the
purposes of determining the presence of a quorum at such meetings. The
Stockholder shall not subject any Stock to any arrangement or agreement with
respect to the voting of such shares which is inconsistent with the foregoing
obligations. The obligations under this Section 5.2 will not apply and during
the continuance of any of the events described in paragraphs (A) or (B) of
Section 5.3(b)(iii).
10.
5.3 Solicitation of Proxies. Without the prior written consent of
the Company, the Stockholder shall not (a) solicit proxies with respect to any
Voting Securities, or (b) become a "participant" in any "election contest" as
such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act, in
either case in connection with the election of directors of the Company;
provided, however, that (i) Stockholder shall not be deemed to be a
"participant" by reason of the membership of its Stockholder Directors or its
designees on the Board of Directors of the Company, (ii) the announcement by
Stockholder of the manner in which it intends to vote its Company Shares shall
not, alone, be deemed to be a "solicitation" of proxies and (iii) the
restrictions in this Section 5.3 shall not apply in connection with and during
the continuance of any of the following:
(A) an attempt by another person to acquire control of the
Company of the Company's business through a tender offer, merger,
recapitalization, proxy contest, consent solicitation, asset
acquisition or other transaction, whether or not such transaction is
proposed, endorsed or approved by the Company's Board of Directors, it
being understood that for purposes of this subsection, an acquisition
of, or the commencement of a fully-financed tender offer or exchange
offer to acquire, at least fifty percent (50%) of either the then
outstanding Voting Securities or the Fully-Diluted Shares shall be
deemed to be an attempt to acquire control of the Company; or
(B) an actual solicitation of proxies or consents by or on
behalf of a person other than Stockholder or the Company.
ARTICLE VI
TRANSFERS OF STOCK
6.1 General. The provisions regarding transfers of Stock contained
in this Article V shall apply to all shares of Stock now owned or hereafter
acquired by Stockholder, including shares of Stock acquired by reason of
original issuance, dividend, distribution, exchange, conversion and acquisition
of outstanding shares of Stock from another Person, and such provisions shall
apply to any shares of Stock obtained by a Stockholder upon the exercise,
exchange or conversion of any option, warrant or other Derivative Security.
6.2 Joinder Agreement; Certain Transfers. Stockholder shall not
transfer any Stock to a Person not already a party to this Agreement unless and
until such Person executes and delivers to the Corporation a joinder agreement
in form and substance reasonably acceptable to the Corporation, pursuant to
which such Person will thereupon become a party to, and be bound by and
obligated to comply with the terms and provisions of, this Agreement, as a
Stockholder hereunder. This restriction on transfer shall not apply to any Stock
transfers by the Stockholder in any registered transaction or any transaction
which is exempt from registration such as a sale pursuant to Rule 144 of the
Securities Act of 1933, as amended.
6.3 Drag-Along Rights.
(a) If at any time the Board shall approve a Sale of the Company
in accordance with the applicable provisions of this Agreement (an "Approved
Sale"), then, subject
11.
to Section 6.3(b) below: (i) Stockholder shall consent to and raise no
objections against the Approved Sale; (ii) Stockholder shall cause its designees
on the Board to take all necessary corporate action to approve such Approved
Sale; (iii) if the Approved Sale is structured in whole or part as a merger or
consolidation, or a sale of all or substantially all assets, each Stockholder
shall waive any dissenters rights, appraisal rights or similar rights in
connection with such merger, consolidation or asset sale; (iv) if the Approved
Sale is structured in whole or part as a sale of securities, the Stockholder
agree to sell their Stock on the terms and conditions approved by Requisite
Stockholders; and (v) Stockholder shall take all necessary actions, including
the execution of such agreements and such instruments and other actions
reasonably necessary to provide the representations, warranties, indemnities,
covenants, conditions, non-compete agreement, escrow agreements and other
provisions and agreements relating to such Approved Sale, and effectuate the
allocation and distribution of the aggregate consideration upon the Approved
Sale as set forth in Section 6.3(b) below. The obligations set forth in
subsection 6.3(a)(ii) shall not apply if Stockholder's representative on the
Board believes in good faith, based upon advice of legal counsel, that
compliance with such obligation would violate his or her fiduciary obligations
under applicable law In such event, Stockholder's representative on the Board
will be given reasonable time to consult legal counsel.
(b) The obligations of the Stockholder pursuant to this Section
6.3 are subject to the satisfaction of the following conditions:
(i) upon the consummation of the Approved Sale, the
Stockholder shall receive the same proportion of the aggregate consideration
from such Approved Sale that the Stockholder would have received if such
aggregate consideration had been distributed by the Company in complete
liquidation pursuant to the rights and preferences set forth in the Charter as
in effect immediately prior to such Approved Sale (giving effect to applicable
preferences and orders of priority set forth therein);
(ii) all holders of then-currently exercisable,
exchangeable or convertible Derivative Securities will be given an opportunity
to either (A) exercise their rights to acquire the stock underlying such
Derivative Securities prior to the consummation of the Approved Sale (but only
to the extent such Derivative Securities are then vested or exercisable or would
be vested or exercisable pursuant to their respective terms, including as a
result of the Approved Sale), or (B) upon the consummation of the Approved Sale,
receive in exchange for such Derivative Securities consideration equal to the
amount determined by multiplying (1) the amount of consideration per share of
Stock (of the same class as that for which the Derivative Security is then
exercisable) received by the holders of such class of Stock in connection with
the Approved Sale (after taking into account any dilutive effect that would have
resulted had such holder participated in such sale as Stockholder) less the
exercise price per Derivative Security by (2) the number of Derivative
Securities (but only to the extent such Stock Equivalents are then vested or
exercisable, exchangeable or convertible);
(iii) Stockholder shall not be obligated to make any out-
of-pocket expenditure prior to the consummation of the Approved Sale (excluding
modest expenditures for its own postage, copies, etc., and the fees and expenses
of its own counsel retained by it), and Stockholder shall not be obligated to
pay more than its or his pro rata share (based upon the number of shares of
Stock and vested Derivative Securities held by such holder) of reasonable
12.
expenses incurred in connection with such Approved Sale to the extent such
costs are incurred for the benefit of all Stockholders and are not otherwise
paid by the Company or the acquiring party (costs incurred by or on behalf of a
Stockholder for its or his sole benefit will not be considered costs of the
transaction hereunder), provided that a Stockholder's liability for its pro rata
share of such allocated expenses shall not in any event exceed the total
purchase price received by such Stockholder for its Stock and Derivative
Securities (including the exercise price thereof); and
(iv) (A) in the event that the Stockholder is required to
provide any representations or warranties in connection with the Approved Sale,
the Stockholder shall be required to represent and warrant only as to its title
to its Stock and Derivative Securities, the absence of encumbrances on such
Stock and Derivative Securities and the Stockholder's authority, power and right
to enter into and consummate such purchase or merger agreement without violating
any other agreement or legal requirement), and (B) in the event that Stockholder
is required to provide any indemnities in connection with the Approved Sale,
then Stockholder shall not be liable for more than its pro rata share (based
upon the number of shares of Stock and vested Derivative Securities held by such
holder) of any liability for indemnity and such liability shall not in any event
exceed the total purchase price received by such Stockholder for its Stock plus
Derivative Securities (including the exercise price thereof).
ARTICLE VII
STOCK LEGEND
7.1 Form of Legend.
(a) Each certificate or instrument representing Voting Securities now
or hereafter owned by the Stockholder, or issued to any in connection with a
transfer permitted hereunder, shall be endorsed with the following legend:
The securities represented by this certificate or instrument are subject to
the provisions of a Stockholder Agreement, dated June 5, 1998 (the
"Agreement"), among the Company and parties thereto, and any subsequent
amendments of or supplements to said Agreement. The sale, transfer, pledge
or other disposition and the voting of the securities represented by this
certificate or instrument are subject to certain provisions of said
Agreement. A copy of said Agreement is on file and may be obtained at the
Company's principal executive office.
7.2 Removal of Legend. The legend relating to this Agreement endorsed on
any certificate or instrument pursuant to this Article VI shall be removed, and
the Company will issue a certificate or instrument without such legend to the
holders of the Stock represented by such certificate or instrument, upon the
termination of this Agreement, or upon a transfer made in compliance with this
Agreement (unless the terms of the Agreement applicable to such transfer
expressly provide that the transferee of Stock shall hold the transferred Stock
subject to the provisions of this Agreement).
13.
ARTICLE VIII
TERMINATION
8.1 Written Agreement. This Agreement may be terminated by the written
agreement of the Company and the Stockholder.
8.2 Time. Except as otherwise specifically provided herein, the
provisions of Articles II, III and IX shall terminate at any time the
Stockholder's Voting Ownership Percentage is less than five percent (5%).
ARTICLE IX
RIGHT OF FIRST NEGOTIATION; SALE OF STOCK TO STOCKHOLDER COMPETITOR
9.1 Right of First Negotiation. The Company hereby grants Stockholder a
right of first negotiation to acquire the Company in the event that the Board of
Directors determines that it is in the best interests of the Company and its
stockholders to engage in a Sale of the Company. In such event, the Company
will notify Stockholder and Stockholder will have ten (10) days from the receipt
of such notice to notify the Company that Stockholder desires to acquire the
Company in a Sale. If Stockholder does not so elect, or if Stockholder does not
respond within such ten (10) day period, or if the Company and Stockholder do
not enter into a definitive agreement for such acquisition within forty-five
(45) days after the Company's receipt of Stockholder's election, then the
Company shall be free to negotiate with any third party for the Sale of the
Company. If, at any time, the Company receives an unsolicited offer from a
third party for the Sale of the Company, the Company will notify Stockholder of
the material terms of such offer within ten (10) days of the receipt of such
offer.
9.2 Sale of Stock to Stockholder Competitor. In the event that a
Stockholder Competitor offers to buy Stock from the Company, the Company will
notify Stockholder of the material terms of such offer within ten (10) days of
the receipt of such offer (the "Notice"). Stockholder shall have ten (10) days
from the receipt of such notice to notify the Company that Stockholder desires
to buy such Stock on such terms. If Stockholder does not so elect, or if
Stockholder does not respond within such ten (10) day period, or if the Company
and Stockholder do not enter into a definitive agreement for such acquisition
within ten (10) days after the Company's receipt of Stockholder's election, then
the Company shall be free to negotiate with such Stockholder Competitor for the
sale of the Stock on terms no less favorable to the Company than those set forth
in the Notice. This Section 9.2 shall not apply to any offer by a Stockholder
Competitor to purchase Stock from the Company in connection with a Sale of the
Company.
14.
ARTICLE X
REGISTRATION RIGHTS
10.1 Definitions. As used in this Section, the following terms shall have
the following respective meanings:
"Form S-3" means such form under the Securities Act as in effect on
the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"Holder" means any person owning of record Registrable Securities or
any assignee of record of such Registrable Securities in accordance with Section
10.9 hereof.
"Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
"Registrable Securities" means (a) the Stock; and (b) any Common Stock
of the Company issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
above-described securities. Notwithstanding the foregoing, any such securities
shall cease to be Registrable Securities following (i) a transfer of such
securities registered under the Securities Act; (ii) a transfer of such
securities in an open-market transaction under Rule 144; or (iii) a transfer of
less than 500,000 shares of such securities to any person or entity other than
the following persons and entities: a subsidiary, parent corporation, general
partner or limited partner of the transferring Holder (any of the foregoing
persons may be referred to herein as a "Related Transferee").
"Registrable Securities then outstanding" shall be the number of
shares determined by calculating the total number of shares of the Voting
Securities that are Registrable Securities and either (a) are then issued and
outstanding or (b) are issuable pursuant to then exercisable or convertible
securities.
"Registration Expenses" shall mean all expenses incurred by the
Company in complying with Sections 10.2, and 10.3 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, 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).
"SEC" or "Commission" means the Securities and Exchange Commission.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale, and any fees or expenses of counsel for the
Holder.
10.2 Piggyback Registrations. Beginning upon the expiration of the Lock-Up
Agreement between the Stockholder and the Representatives of the Company's
underwriters
15.
dated as of even date herewith, the Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to the filing
of any registration statement under the Securities Act for purposes of its
Initial Offering, and at least fifteen (15) days prior to the filing of any
registration statement under the Securities Act for any other public offering of
securities of the Company (including, but not limited to, registration
statements relating to secondary offerings of securities of the Company, but
excluding registration statements relating to employee benefit plans or with
respect to corporate reorganizations or other transactions under Rule 145 of the
Securities Act) and will afford each such Holder an opportunity to include in
such registration statement all or part of such Registrable Securities held by
such Holder. Each Holder desiring to include in any such registration statement
all or any part of the Registrable Securities held by it shall, within fifteen
(15) days after the above-described notice from the Company (in the case of the
Initial Offering) or ten (10) days after the above described notice (in the case
of any other offering), so notify the Company in writing. Such notice shall
state the intended method of disposition of the Registrable Securities by such
Holder. If a Holder decides not to include all of its Registrable Securities in
any registration statement thereafter filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms
and conditions set forth herein.
(a) Underwriting. If the registration statement under which the
Company gives notice under this Section 10.3 is for an underwritten offering,
the Company shall so advise the Holders of Registrable Securities. In such
event, the right of any such Holder to be included in a registration pursuant to
this Section 10.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of the Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated, first, to the Company; second, to the Holders on a pro rata
basis based on the total number of Registrable Securities held by the Holders;
and third, to any stockholder of the Company (other than a Holder) on a pro rata
basis. No such reduction shall (i) reduce the securities being offered by the
Company for its own account to be included in the registration and underwriting,
or (ii) reduce the amount of securities of the selling Holders included in the
registration below twenty-five percent (25%) of the total amount of securities
included in such registration, unless such offering is the Initial Offering and
such registration does not include shares of any other selling stockholders, in
which event any or all of the Registrable Securities of the Holders may be
excluded in accordance with the immediately preceding sentence. In no event will
shares of any other selling stockholder be included in such registration which
would reduce the number of shares which may be included by Holders without the
written consent of Holders of not less than fifty percent (50%) of the
Registrable Securities proposed to be sold in the offering.
(b) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 10.2 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in
16.
such registration. The Registration Expenses of such withdrawn registration
shall be borne by the Company in accordance with Section 10.5 hereof.
10.3 Form S-3 Registration. Beginning upon the expiration of the Lock-Up
Agreement between the Stockholder and the Representatives of the Company's
underwriters dated as of even date herewith, in case the Company shall receive
from any Holder or Holders of Registrable Securities a written request or
requests that the Company effect a registration on Form S-3 (or any successor to
Form S-3) or any similar short-form registration statement and any related
qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders of Registrable
Securities; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 10.3:
(i) if Form S-3 (or any successor or similar form) is not
available for such offering by the Holders, or
(ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public of less than $500,000, or
(iii) if the Company shall furnish to the Holders a
certificate signed by the Chairman of the Board stating that in the good faith
judgment of the Board of the Company, it would be seriously detrimental to the
Company and its stockholders for such Form S-3 Registration to be effected at
such time, in which event the Company shall have the right to defer the filing
of the Form S-3 registration statement for a period of not more than ninety (90)
days after receipt of the request of the Holder or Holders under this Section
10.3; provided, that such right to delay a request shall be exercised by the
Company not more than once in any twelve (12) month period, or
(iv) if the Company has, within the six (6) month period
preceding the date of such request, already effected two (2) registrations on
Form S-3 for the Holders pursuant to this Section 10.3, or
(v) if the Holders are requesting that the Company file
such a registration in any particular jurisdiction in which the Company would be
required to qualify to do business or to execute a general consent to service of
process in effecting such registration, qualification or compliance.
17.
(c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All such Registration Expenses incurred in
connection with registrations requested pursuant to this Section 10.3 after the
first two (2) registrations shall be paid by the selling Holders pro rata in
proportion to the number of shares sold by each.
(d) The Company will use its best efforts to qualify for the use of
the Form S-3 registration statement or any successor form as promptly as
reasonably practicable following the closing of the IPO.
10.4 Expenses of Registration. Except as specifically provided herein, all
Registration Expenses incurred in connection with any registration under Section
10.2 or Section 10.3 herein shall be borne by the Company. All Selling Expenses
incurred in connection with any registrations hereunder, shall be borne by the
holders of the securities so registered pro rata on the basis of the number of
shares so registered. The Company shall not, however, be required to pay for
expenses of any registration proceeding begun pursuant to Section 10.3, the
request of which has been subsequently withdrawn by the Initiating Holders
unless (a) the withdrawal is based upon material adverse information concerning
the Company of which the Initiating Holders were not aware at the time of such
request or (b) the Holders of a majority of Registrable Securities agree to
forfeit their right to one requested registration pursuant to Section 10.2 or
Section 10.3, as applicable, in which event such right shall be forfeited by all
Holders). If the Holders are required to pay the Registration Expenses, such
expenses shall be borne by the holders of securities (including Registrable
Securities) requesting such registration in proportion to the number of shares
for which registration was requested.
10.5 Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to ninety (90) days or one hundred
eighty (180) days in the case of a registration pursuant to Section 10.3 or, if
earlier, until the Holder or Holders have completed the distribution related
thereto.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use all reasonable efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as
18.
shall be reasonably requested by the Holders, provided that the Company shall
not be required in connection therewith or as a condition thereto to qualify to
do business or to file a general consent to service of process in any such
states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable Securities
are delivered to the underwriters for sale, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) 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 reasonably satisfactory to a majority in interest of the Holders
requesting registration, addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities and (ii) 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
reasonably satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and if permitted by
applicable accounting standards, to the Holders requesting registration of
Registrable Securities.
10.6 Termination of Registration Rights. All registration rights granted
under this Section 10 shall expire with respect to a particular Holder if (a)
such Holder (together with its affiliates, partners and former partners) holds
less than 1% of the Company's outstanding Common Stock or (b) all Registrable
Securities held by and issuable to such Holder (and its affiliates, partners and
former partners) may be sold under Rule 144 during any ninety (90) day period.
10.7 Delay of Registration; Furnishing Information.
(a) No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 10.
(b) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 10.2 or 10.3 that the selling
Holders shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended
19.
method of disposition of such securities as shall be required to effect the
registration of their Registrable Securities.
(c) The Company shall have no obligation with respect to any
registration requested pursuant to Section 10.3 if the number of shares or the
anticipated aggregate offering price of the Registrable Securities to be
included in the registration does not equal or exceed the number of shares or
the anticipated aggregate offering price required to originally trigger the
Company's obligation to initiate such registration as specified in Section 10.3.
(d) The Company shall have no obligation with respect to any
registration rights granted herein until the expiration of the Lock-Up Agreement
between the Stockholder and the Representatives of the Company's underwriters
dated as of even date herewith.
10.8 Indemnification. In the event any Registrable Securities are included
in a registration statement under Sections 10.2 or 10.3:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, officers, directors and legal counsel
of each Holder, any underwriter (as defined in the Securities Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation") by the Company: (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
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
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration statement; and the
Company will reimburse each such Holder, partner, officer, director, legal
counsel, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided however, that the
indemnity agreement contained in this Section 10.8(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld, nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, director, legal
counsel, underwriter or controlling person of such Holder.
(b) To the extent permitted by law, each Holder will, if Registrable
Securities held by such Holder are included in the securities as to which such
registration qualifications or compliance is being effected, indemnify and hold
harmless the Company, each of its directors, its officers, and legal counsel and
each person, if any, who controls the Company within the
20.
meaning of the Securities Act, any underwriter and any other Holder selling
securities under such registration statement or any of such other Holder's
partners, directors or officers or any person who controls such Holder, against
any losses, claims, damages or liabilities (joint or several) to which the
Company or any such director, officer, controlling person, underwriter or other
such Holder, or partner, director, officer or controlling person of such other
Holder may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder under an instrument duly executed by such Holder and stated to be
specifically for use in connection with such registration; and each such Holder
will reimburse any legal or other expenses reasonably incurred by the Company or
any such director, officer, legal counsel, controlling person, underwriter or
other Holder, or partner, officer, director, legal counsel or controlling person
of such other Holder in connection with investigating or defending any such
loss, claim, damage, liability or action if it is judicially determined that
there was such a Violation; provided, however, that the indemnity agreement
contained in this Section 10.9(b) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder, which consent shall not be
unreasonably withheld; provided further, that in no event shall any indemnity
under this Section 10.9 exceed the proceeds from the offering received by such
Holder.
(c) Promptly after receipt by an indemnified party under this Section
10.8 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 10.8, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 10.8, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section
10.8.
(d) If the indemnification provided for in this Section 10.8 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any losses, claims, damages or liabilities referred to herein,
the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability 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 Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
21.
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, that in no event shall any contribution by a
Holder hereunder exceed the proceeds from the offering received by such Holder.
(e) The obligations of the Company and Holders under this Section
10.8 shall survive completion of any offering of Registrable Securities in a
registration statement and the termination of this agreement. 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.
10.9 Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Section 10 may be assigned by a
Holder to a transferee or assignee of Registrable Securities which (a) is a
Related Transferee, or (b) acquires at least five hundred thousand (500,000)
shares of Registrable Securities (as adjusted for stock splits, stock dividends
and combinations); provided, however, that (i) the transferor shall, within ten
(10) days after such transfer, furnish to the Company written notice of the name
and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned and (ii) such transferee shall
agree to be subject to all restrictions set forth in this Agreement.
10.10 Amendment of Registration Rights. Any provision of this Section 10
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of at least a majority of the
Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this Section 10.10 shall be binding upon each Holder and the
Company. By acceptance of any benefits under this Section 10, Holders of
Registrable Securities hereby agree to be bound by the provisions hereunder.
10.11 Rule 144 Reporting. With a view to making available to the Holders
the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of
the first registration filed by the Company for an offering of its securities to
the general public;
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act;
(c) So long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon request: a written statement by the Company as to its
compliance with
22.
the reporting requirements of said Rule 144 of the Securities Act, and of the
Exchange Act (at any time after it has become subject to such reporting
requirements); a copy of the most recent annual or quarterly report of the
Company; and such other reports and documents as a Holder may reasonably request
in availing itself of any rule or regulation of the SEC allowing it to sell any
such securities without registration.
10.12 Market Stand-Off Agreement. In connection with a public offering of
the Company's Common Stock, each Holder hereby agrees that such Holder shall not
sell or otherwise transfer or dispose of any Common Stock (or other securities)
of the Company held by such Holder (other than those included in the
registration) for a period of up to ninety (90) days as may be specified by the
representatives of the underwriters of Common Stock (or other securities) of the
Company and the Company, provided that all executive officers and directors of
the Company, and all stockholders of the Company whose Fully Diluted Ownership
Percentage is at least one percent (1%).
Each Holder agrees to execute and deliver such other agreements as may be
reasonably requested by the Company or the underwriter which are consistent with
the foregoing or which are necessary to give further effect thereto. The
obligations described in this Section 10.12 shall not apply to a registration
relating solely to employee benefit plans on Form S-1 or Form S-8 or similar
forms that may be promulgated in the future, or a registration relating solely
to a Commission Rule 145 transaction on Form S-4 or similar forms that may be
promulgated in the future. The Company may impose stop-transfer instructions
with respect to the shares of Common Stock (or other securities) subject to the
foregoing restriction until the end of said period of time.
10.13 Limitation on Subsequent Registration Rights. After the date of this
Agreement, the Company shall not, without the prior written consent of the
Holders of fifty percent (50%) of the Registrable Securities then outstanding,
enter into any agreement with any holder or prospective holder of any securities
of the Company that would grant such holder registration rights senior to those
granted to the Holders hereunder.
10.14 Selection of Underwriter. The holders of a majority of the shares of
Registrable Securities to be included in a registration pursuant to Section 10.3
will have the right to select one or more underwriters to manage the offering of
such Registrable Securities, subject to the Company's approval, which will not
be unreasonably withheld or delayed.
ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices, requests, demands and other communications
which are required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been duly given if delivered by hand, by
facsimile transmission (receipt confirmed by telephone) or by overnight
registered or certified mail, return receipt requested, postage prepaid
addressed to the Company at the address of its principal office and to the
Stockholder at its last known address as shown by the books and records of the
Company, or to such other address as the Stockholder shall have specified in
writing to the other parties. Any notice given by personal
23.
delivery, facsimile transmission or overnight mail shall be deemed to have been
delivered on the date of the receipt of such delivery or transmission at the
address set forth above (or such other address designated pursuant hereto); and
any notice given by registered or certified mail shall be deemed to have been
delivered on the fourth (4th) Business Day following the date on which it was
deposited in the United States postal system. Notice in writing may be given by
a method other than as described above and such notice shall be deemed delivered
on the date actually received.
11.2 Entire Agreement. This Agreement, the Stock Purchase Agreement, and
the documents, instruments and agreements to be executed and delivered pursuant
to this Agreement and the Stock Purchase Agreement constitute the entire
agreement among the parties with respect to the subject of the transactions
contemplated hereby and supersedes all prior letters or agreements with respect
thereto.
11.3 Waiver; Amendment.
(a) Any provision hereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only by the
written consent of (i) as to the Company, only by the Company, (ii) as to the
Stockholder, only by the Stockholder.
(b) This Agreement may not be amended or modified orally but only in
an instrument in writing duly executed by (i) the Company and (ii) the
Stockholder.
11.4 Assignment; Binding Effect. This Agreement shall not be assignable by
the Stockholder, and no purported assignment by the Stockholder shall be valid,
unless the assignment occurs in connection with a transfer of Stock made in
accordance with this Agreement and unless the transferee executes a counterpart
of this Agreement and then only with respect to the Stock so transferred;
provided, however, that, notwithstanding the foregoing, the Stockholder's rights
and obligations under Article II, III and IV, except as expressly set forth
therein, shall not be assignable by the Stockholder. Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit of the Company,
the Stockholder and their respective heirs, devisees, legal representatives,
successors, assigns and other transferees.
11.5 Counterparts. This Agreement may be executed in counterparts, each of
which, when so executed and delivered, shall be deemed to be an original and all
of which, taken together, shall constitute one and the same agreement.
11.6 Interpretation. This Agreement shall be construed and interpreted
fairly as to the parties and not in favor or against any party, regardless of
which party prepared this Agreement.
11.7 No Third Party Beneficiaries. This Agreement does not create, and
shall not be deemed to create, a relationship among the parties hereby or any of
them and any third party in the nature of a third party beneficiary or fiduciary
relationship.
24.
11.8 Governing Law. This Agreement shall be governed by the internal law
of the State of Delaware (without giving effect to the choice of law principles
thereunder), as applicable.
11.9 Form of Payments. Except as otherwise provided herein, all payments
to be made under this Agreement shall be effected in immediately available funds
by wire transfer to the bank account as a party shall by notice designate.
11.10 Dispute Resolution. Except as provided below, any and all disputes
arising under or related to this Agreement which cannot be resolved through
negotiations between the parties shall, at the election of either party, be
submitted to binding arbitration. If the parties fail to reach a settlement of
their dispute within fifteen (15) days after the earliest date upon which one of
the parties notified the other(s) of its desire to attempt to resolve the
dispute, the dispute shall, at the election of either party, be promptly
submitted to arbitration. A single arbitrator shall be selected by mutual
agreement of the parties. If the parties are unable to agree on the selection of
a single arbitrator, then each party shall select an arbitrator and the two
selected arbitrators shall together select a third mutually agreeable
arbitrator. The decision of the arbitrator(s) shall be final, nonappealable and
binding upon the parties, and it may be entered in any court of competent
jurisdiction. The arbitration shall take place in Denver or Boulder, Colorado,
as the arbitrator shall determine. The arbitrator(s) shall be bound by the laws
of the State of Delaware applicable to the issues involved in the arbitration
and all rules relating to the admissibility of evidence, including, without
limitation, all relevant privileges and the attorney work product doctrine. All
discovery shall be completed in accordance with the time limitations prescribed
in the Colorado Rules of Civil Procedure, unless otherwise agreed by the parties
or ordered by the arbitrators on the basis of strict necessity adequately
demonstrated by the party requesting an extension of time. The arbitrator(s)
shall have the power to grant equitable relief where applicable under Delaware
law, and shall be entitled to make an award of punitive damages when applicable
under Delaware law. The arbitrator(s) shall issue a written opinion setting
forth their decision and the reasons therefor within thirty (30) days after the
arbitration proceeding is concluded. The obligation of the parties to submit any
dispute arising under or related to this Agreement to arbitration as provided in
this Section shall survive the expiration or earlier termination of this
Agreement. Notwithstanding the foregoing, either party may seek and obtain an
injunction or other appropriate relief from a court to preserve or protect
trademarks, tradenames, copyrights, patents, trade secrets or other intellectual
property or proprietary information or to preserve the status quo with respect
to any matter pending conclusion of the arbitration proceeding, but no such
application to a court shall in any way be permitted to stay or otherwise impede
the progress of the arbitration proceeding. In the event of any arbitration or
litigation being filed or instituted between the parties concerning this
Agreement, the prevailing party will be entitled to receive from the other party
or parties its reasonable attorneys' fees, witness fees, costs and expenses,
court costs and other reasonable expenses (including administration and the
arbitrator's fees), whether or not such controversy, claim or action is
prosecuted to judgment or other form of relief.
11.11 Cooperation and Assurances; Documents. Each party hereto shall
cooperate, and shall take such further action and shall execute and deliver such
further documents and instruments as may be reasonably requested by any other
party for purposes of carrying out the provisions of this Agreement. All
documents and instruments delivered by or on behalf of a
25.
Stockholder to the Company shall be in form and content reasonably satisfactory
to the Company and its counsel, and all certificates, documents and instruments
delivered by or on behalf of the Company to a Stockholder shall be in form and
content reasonably satisfactory to such Stockholder and its counsel.
11.12 Specific Performance. The parties hereto acknowledge and agree that
irreparable damage would result if this Agreement is not specifically enforced
and that, therefore, the rights and obligations of the parties under this
Agreement may be enforced by a decree of specific performance issued by a court
of competent jurisdiction, and appropriate injunctive relief may be applied for
and granted in connection therewith. Such remedies shall, however, be cumulative
and not exclusive and shall be in addition to any other remedies which any party
may have under this Agreement or otherwise.
11.13 Severability. To the extent that any provisions of this Agreement be
invalid or unenforceable, it shall be considered deleted therefrom and the
remainder of such provision and of this Agreement shall be unaffected and shall
continue in full force and effect.
11.14 Publicity. No party shall refer to or identify the other party, such
other party's Affiliates, or the respective products or services of any of them,
in advertising, promotional activity, publicity release or other public filing
without the prior consent of the other party.
IN WITNESS WHEREOF, each of the undersigned parties has caused this Agreement
to be duly executed under seal and delivered by such party or one of its duly
authorized officers, all as of the Effective Date.
HORIZON ORGANIC HOLDING CORPORATION
By: /s/ Barnet ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: Barnet ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Title: President and Chief Executive
Officer
---------------------------------
SUIZA FOODS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Title: Executive Vice President
---------------------------------
26.
Exhibit A
CERTIFICATE OF INCORPORATION
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
HORIZON ORGANIC HOLDING CORPORATION
A DELAWARE CORPORATION
I.
The undersigned, Barnet ▇. ▇▇▇▇▇▇▇▇, hereby certifies that:
ONE: He is the duly elected and acting President of Horizon Organic Holding
Corporation.
TWO: The corporation's original Certificate of Incorporation was filed with
the Secretary of State of the State of Delaware on March 20, 1997 under the name
Horizon Organic Holding Corporation.
THREE: This Amended and Restated Certificate of Incorporation restates,
integrates and amends the corporation's Certificate of Incorporation filed on
March 20, 1997, and has been duly adopted in accordance with Sections 242 and
245 of the General Corporation Law of the State of Delaware.
FOUR: The text of the Amended and Restated Certificate of Incorporation of
this corporation is hereby amended and restated to read in its entirety as
follows:
II.
The name of this corporation is HORIZON ORGANIC HOLDING CORPORATION.
III.
The address of the registered office of the corporation in the State of
Delaware is the Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The name of its registered agent at such address
is the Corporation Trust Company.
IV.
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware.
A. CLASSES OF STOCK. This corporation is authorized to issue two classes
of stock to be designated, respectively, "Common Stock" and "Preferred Stock."
The total number of shares which the corporation is authorized to issue is
thirty-five million (35,000,000), of which thirty million (30,000,000) shares
shall be Common Stock and five million (5,000,000) shares shall be Preferred
Stock. The Common Stock shall have a par value of $.001 per share and the
Preferred Stock shall have a par value of $.001 per share.
A-1
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate (a
"Preferred Stock Designation") pursuant to the Delaware General Corporation Law,
to fix or alter from time to time the designation, powers, preferences and
rights of the shares of each such series and the qualifications, limitations or
restrictions of any wholly unissued series of Preferred Stock, and to establish
from time to time the number of shares constituting any such series or any of
them; and to increase or decrease the number of shares of any series subsequent
to the issuance of shares of that series, but not below the number of shares of
such series then outstanding. In case the number of shares of any series shall
be decreased in accordance with the foregoing sentence, the shares constituting
such decrease shall resume the status that they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
V.
For the management of the business and for the conduct of the affairs of
the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A. 1. The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be fixed
exclusively by one or more resolutions adopted by the Board of Directors.
2. Subject to the rights of the holders of any series of Preferred
Stock to elect additional directors under specified circumstances, following the
closing of the initial public offering pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "1933 Act"),
covering the offer and sale of Common Stock to the public (the "Initial Public
Offering"), the directors shall be divided into three classes designated as
Class I, Class II and Class III, respectively. Directors shall be assigned to
each class in accordance with a resolution or resolutions adopted by the Board
of Directors. At the first annual meeting of stockholders following the closing
of the Initial Public Offering, the term of office of the Class I directors
shall expire and Class I directors shall be elected for a full term of three
years. At the second annual meeting of stockholders following the Closing of the
Initial Public Offering, the term of office of the Class II directors shall
expire and Class II directors shall be elected for a full term of three years.
At the third annual meeting of stockholders following the Closing of the Initial
Public Offering, the term of office of the Class III directors shall expire and
Class III directors shall be elected for a full term of three years. At each
succeeding annual meeting of stockholders, directors shall be elected for a full
term of three years to succeed the directors of the class whose terms expire at
such annual meeting.
Notwithstanding the foregoing provisions of this Article, each director
shall serve until such director's successor is duly elected and qualified or
until his death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
A-2
3. Subject to the rights of the holders of any series of Preferred
Stock, no director shall be removed without cause. Subject to any limitations
imposed by law, the Board of Directors or any individual director may be removed
from office at any time with cause by the affirmative vote of the holders of a
majority of the voting power of all the then-outstanding shares of voting stock
of the corporation, entitled to vote at an election of directors (the "Voting
Stock").
4. Subject to the rights of the holders of any series of Preferred
Stock and the Stockholders Agreement, any vacancies on the Board of Directors
resulting from death, resignation, disqualification, removal or other causes and
any newly created directorships resulting from any increase in the number of
directors, shall, unless the Board of Directors determines by resolution that
any such vacancies or newly created directorships shall be filled by the
stockholders, except as otherwise provided by law, be filled only by the
affirmative vote of a majority of the directors then in office, even though less
than a quorum of the Board of Directors and not by the stockholders. Any
director elected in accordance with the preceding sentence shall hold office for
the remainder of the full term of the director for which the vacancy was created
or occurred and until such director's successor shall have been elected and
qualified.
B. 1. Subject to paragraph (i) of Section 43 of the Bylaws, the Bylaws
may be altered or amended or new Bylaws adopted by the affirmative vote of at
least sixty-six and two thirds percent (66-2/3%) of the voting power of all of
the then-outstanding shares of the Voting Stock. The Board of Directors shall
also have the power to adopt, amend, or repeal Bylaws.
2. The directors of the corporation need not be elected by written
ballot unless the Bylaws so provide.
3. No action shall be taken by the stockholders of the corporation
except at an annual or special meeting of stockholders called in accordance with
the Bylaws and following the closing of the Initial Public Offering no action
shall be taken by the stockholders by written consent.
C. 1. Special meetings of the stockholders of the corporation may be
called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the Chief Executive Officer, (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption) or (iv) by the holders of the shares entitled to cast
not less that ten percent (10%) of the votes at the meeting, and shall be held
at such place, on such date, and at such time as they or he shall fix; provided,
however, that the following registration of any classes of equity securities of
the corporation pursuant to the provisions of the Securities Exchange Act of
1934, as amended, special meetings of the stockholders may only be called by the
Board of Directors pursuant to a resolution adopted by a majority of the total
number of authorized Directors.
2. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting of
the stockholders of the corporation shall be given in the manner provided in the
Bylaws of the corporation.
A-3
VI.
A. To the fullest extent permitted by applicable law, this corporation is
authorized to provide indemnification of (and advancement of expenses to)
directors, officers, employees and agents (and any other persons to which
Delaware law permits this corporation to provide indemnification) through Bylaw
provisions, agreements with such agents or other persons, vote of stockholders
or disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the Delaware General
Corporation Law, subject only to limits created by applicable Delaware law
(statutory or non-statutory), with respect to actions for breach of duty to the
corporation, its stockholders, and others.
B. No director of the corporation shall be personally liable to the
corporation or any stockholder for monetary damages for breach of fiduciary duty
as a director, except for any matter in respect of which such director shall be
liable under Section 174 of the General Corporation Law of the State of Delaware
or any amendment thereto or shall be liable by reason that, in addition to any
and all other requirements for such liability, such director (1) shall have
breached the director's duty of loyalty to the corporation or its stockholders,
(2) shall not have acted in good faith, or, in failing to act, shall not have
acted in good faith, (3) shall have acted in manner involving intentional
misconduct or a knowing violation of law or, in failing to act, shall have acted
in a manner involving intentional misconduct or a knowing violation of law, or
(4) shall have derived an improper personal benefit. If the Delaware General
Corporation Law is hereafter amended to authorize the further elimination or
limitation of the liability of a director, the liability of a director of the
corporation shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended.
C. Each person who was or is made a party or is threatened to be made a
party to or is in any way involved in any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), including any appeal therefrom, by
reason of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer of the corporation or of a
direct or indirect subsidiary of the corporation, or is or was serving at the
request of the corporation as a director of officer of another entity or
enterprise, or was a director or officer of a foreign or domestic corporation
which was predecessor corporation of the corporation or of another entity or
enterprise at the request of such predecessor corporation, shall be indemnified
and held harmless by the corporation, and the corporation shall advance all
expenses incurred by any such person in defense of any such proceeding prior to
its final determination, to the fullest extent authorized by the General
Corporation Law of the State of Delaware. In any proceeding against the
corporation to enforce these rights, such person shall be presumed to be
entitled to indemnification and the corporation shall have the burden of proving
that such person has not met the standards of conduct for permissible
indemnification set forth in the General Corporation Law of the State of
Delaware. The rights to indemnification and advancement of expenses conferred by
this Article VI shall be presumed to have been relied upon by the directors and
officers of the corporation in serving or continuing to serve the corporation
and shall be enforceable as contact rights. Said rights shall not be exclusive
of any other rights to which those seeking indemnification may otherwise be
entitled. The corporation may, upon written demand presented by a director or
officer of the corporation or of a direct or indirect subsidiary of the
corporation, or by a person serving at the request of the corporation as a
director or officer
A-4
of another entity or enterprise, enter into contracts to provide such persons
with specified rights to indemnification, which contracts may confer rights and
protections to the maximum extent permitted by the General Corporation Law of
the State of Delaware, as amended and in effect from time to time.
1. If a claim under this Article VI is not paid in full by the
corporation within sixty (60) days after a written claim has been received by
the corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expenses of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce the right to be advanced expenses incurred in
defending any proceeding prior to its final disposition where the required
undertaking, if any, has been tendered to the corporation) that the claimant has
not met the standards of conduct which make it permissible under the General
Corporation Law of the State of Delaware for the corporation to indemnify the
claimant for the amount claimed, but the claimant shall be presumed to be
entitled to indemnification and the corporation shall have the burden of proving
that the claimant has not met the standards of conduct for permissible
indemnification set forth in the General Corporation Law of the Sate of
Delaware.
2. If the General Corporation Law of the State of Delaware is
hereafter amended to permit the corporation to provide broader indemnification
rights than said Law permitted the corporation to provide prior to such
amendment, the indemnification rights conferred by this Article VI shall be
broadened to the fullest extent permitted by the General Corporation Law of the
State of Delaware, as so amended.
D. Any repeal or modification of any of the foregoing provisions of this
Article VII, including without limitation, any contractual rights arising under
or authorized by it, shall not adversely affect any right or protection of a
director, officer, agent or other person existing at the time of, or increase
the liability of any director of the corporation with respect to any acts or
omissions of such director, officer or agent occurring prior to such repeal or
modification.
VII.
A. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, except as provided in paragraph B. of this
Article VII, and all rights conferred upon the stockholders herein are granted
subject to this reservation.
B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the Voting Stock, voting together
as a single class, shall be required to alter, amend or repeal Articles V, VI,
and VII.
A-5
IN WITNESS WHEREOF, the undersigned has executed this certificate on
__________ __, 1998.
_______________________________
Barnet ▇. ▇▇▇▇▇▇▇▇
President
A-6
