EXHIBIT 10.2
Exhibit C
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SHAREHOLDERS AGREEMENT
by and among
FRESH AMERICA CORP.,
NORTH TEXAS OPPORTUNITY FUND LP,
and
each of
▇▇▇▇ ▇▇▇▇▇▇▇ LIFE INSURANCE COMPANY,
▇▇▇▇ ▇▇▇▇▇▇▇ VARIABLE LIFE INSURANCE COMPANY,
SIGNATURE 1A (CAYMAN), LTD.,
SIGNATURE 3 LIMITED
and
INVESTORS PARTNER LIFE INSURANCE COMPANY
August 14, 2001
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TABLE OF CONTENTS
Article I Definitions .............................................. 1
Article II Holders' Preemptive Rights ............................... 10
2.01 Preemptive Right ......................................... 10
2.02 Notice to Holders ........................................ 10
2.03 Allocation of Unsubscribed New Securities ................ 11
2.04 Permitted Acquisitions ................................... 11
Article III Right of First Offer; Co-Sale Rights .................... 11
3.01 Right of First Offer .................................... 11
3.02 Rights of Co-Sale ....................................... 13
3.03 Method of Electing Sale; Allocation of Sales ............ 13
3.04 Sales to Related Parties ................................ 14
Article IV Pull-Along Rights ....................................... 14
Article V Directors ............................................... 15
5.01 Voting Agreement ........................................ 15
5.02 Board Observation and Membership ........................ 15
5.03 Board of Directors ...................................... 16
Article VI Personal Gain on Sale Transaction; Unlocking Proposal ... 17
6.01 Personal Gain on Sale Transaction ....................... 17
6.02 Unlocking Proposal ...................................... 18
Article VII Representations and Warranties .......................... 18
7.01 Representations and Warranties of the Company ........... 18
7.02 Representations and Warranties of the Purchasers ........ 18
Article VIII Covenants ............................................... 18
Article IX Miscellaneous ........................................... 19
9.01 Indemnification ......................................... 19
9.02 Equitable Relief ........................................ 19
9.03 Integration and Amendments .............................. 19
9.04 Headings ................................................ 20
9.05 Severability ........................................... 20
9.06 Notices ................................................ 20
9.07 Successors ............................................. 22
9.08 Remedies ............................................... 22
9.09 Survival ............................................... 22
9.10 Fees ................................................... 22
9.11 Counterparts ........................................... 22
9.12 Other Business ......................................... 22
9.13 Choice of Law .......................................... 22
9.14 Nominees for Beneficial Owners ......................... 23
9.15 Fiduciary Duties ....................................... 23
9.16 Duties Among Holders ................................... 23
9.17 Confidentiality .............................. ......... 23
EXHIBIT C
SHAREHOLDERS AGREEMENT
This Shareholders Agreement (as from time to time amended, modified and
restated in accordance with the terms hereof, this "Agreement") is made as of
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August 14, 2001, to be effective for all purposes as of the Closing Date (as
hereinafter defined), by and among FRESH AMERICA CORP., a Texas corporation (the
"Company"), NORTH TEXAS OPPORTUNITY FUND LP, a Texas limited partnership
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("NTOF"), and each of ▇▇▇▇ ▇▇▇▇▇▇▇ LIFE INSURANCE COMPANY ("JH Life"), ▇▇▇▇
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▇▇▇▇▇▇▇ VARIABLE LIFE INSURANCE COMPANY ("JH Variable"), SIGNATURE 1A (CAYMAN),
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LTD. ("Cayman"), SIGNATURE 3 LIMITED ("Signature 3") and INVESTORS PARTNER LIFE
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INSURANCE COMPANY ("Investors"). JH Life, JH Variable, Cayman, Signature 3 and
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Investors are at times herein referred to individually as a "▇▇▇▇▇▇▇ Entity" and
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collectively as the "▇▇▇▇▇▇▇ Entities", and NTOF and the ▇▇▇▇▇▇▇ Entities are at
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times herein referred to individually as a "Purchaser" and collectively as the
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"Purchasers".
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W I T N E S S E T H:
WHEREAS, the Company and the Purchasers have entered into a Securities
Exchange and Purchase Agreement (as amended, modified or restated from time to
time, the "Purchase Agreement") dated of even date herewith and pursuant to
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which the Company has issued (i) to NTOF fifty thousand (50,000) shares of
Preferred Stock (as hereinafter defined) and one or more Warrants (as
hereinafter defined) to purchase, subject to adjustment as provided in the
Purchase Agreement, an aggregate of 84,100,980 shares of Common Stock (as
hereinafter defined) and (ii) to the ▇▇▇▇▇▇▇ Entities an aggregate of
twenty-seven thousand (27,000) shares of Preferred Stock and Warrants to
purchase, subject to adjustment as provided in the Purchase Agreement, an
aggregate of 45,414,529 shares of Common Stock; and
WHEREAS, the Purchasers are willing to enter into and to consummate the
transactions contemplated by the Purchase Agreement only if, among other things,
the Company and the Purchasers enter into, and agree to perform under, this
Agreement.
NOW, THEREFORE, in consideration of the foregoing, and the mutual
representations, warranties and covenants contained in this Agreement, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Purchasers, intending to be legally bound,
hereby agree as follows:
Article I
Definitions
As used in this Agreement, the following terms have the meanings
indicated:
Acceptable Pull-Along Sale Terms. With respect to any Pull-Along Sale,
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means the following terms:
(a) the transaction giving rise to such Pull-Along
Sale shall continue to meet the provisions of sales pursuant to
Article III;
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(b) the sale by the ▇▇▇▇▇▇▇ Entities shall be at the
same price, on the same terms and conditions (subject to
paragraph (e) below) and for the same type of consideration
(subject to paragraph (c) below) as is to be received in the
proposed sale by the Initiating Shareholders;
(c) at least ninety percent (90%) of the
consideration to be paid to the ▇▇▇▇▇▇▇ Entities in connection
with such sale consists solely of cash or Freely Tradeable
Securities;
(d) if any consideration consists of Freely Tradeable
Securities, then each ▇▇▇▇▇▇▇ Entity shall have received, at
such holder's option, an opinion, addressed to such ▇▇▇▇▇▇▇
Entity or stating that the ▇▇▇▇▇▇▇ Entities are entitled to
rely thereon, of a firm of nationally recognized securities
counsel reasonably acceptable to the ▇▇▇▇▇▇▇ Entities to the
effect that each ▇▇▇▇▇▇▇ Entity may immediately resell any and
all such Freely Tradeable Securities pursuant to a valid
exemption under the Securities Act; and
(e) (i) any agreement to be entered into by the
▇▇▇▇▇▇▇ Entities in connection with such sale shall contain
only those provisions that are customarily found in agreements
of the type typically entered into in transactions of such
type, (ii) such agreement shall provide that any liability
under such agreement for indemnification or similar obligation
thereunder (including indemnifications for breach of
representations or warranties, other than representations and
warranties by the ▇▇▇▇▇▇▇ Entities with respect to
authorization to sell, and title to, the Registrable
Securities being sold by the ▇▇▇▇▇▇▇ Entities) shall be on a
several basis limited to each Holder's percentage interest on
a fully diluted basis of all Registrable Securities included
in such transaction and (iii) such agreement shall provide
that each ▇▇▇▇▇▇▇ Entity's maximum liability under any such
agreement shall in no event exceed the amount equal to the
cash proceeds of such sale actually received by such ▇▇▇▇▇▇▇
Entity in connection with such sale.
Affiliate. With respect to any Person, (a) a Person that, directly or
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indirectly or through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person; (b) any
Person of which such Person or such Person's spouse is an officer,
director, security holder, partner, or, in the case of a trust, the
beneficiary or trustee, and (c) any Person that is an officer,
director, security holder, partner, or, in the case of a trust, the
beneficiary or trustee of such Person. The term "control" as used with
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respect to any Person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting
securities, by contract, or otherwise.
Agreement. This term is defined in the preamble to this Agreement.
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Amended and Restated Articles. This term is defined in Article I of the
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Purchase Agreement.
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Appraised Value. The value determined in accordance with the following
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procedures. For a period of thirty (30) days after the date of a
Valuation Event (the "Negotiation Period"), each party to this
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Agreement agrees to negotiate in good faith to reach agreement upon the
Appraised Value of the securities or other property at issue, as of the
date of the Valuation Event, which Appraised Value will be the fair
market value of such securities or property, without premium for
control or discount for minority interests, illiquidity or restrictions
on transfer. If the parties are unable to agree upon the Appraised
Value of such securities or other property by the end of the
Negotiation Period, then the Appraised Value of such securities or
property will be determined for purposes of this Agreement by a
recognized appraisal or investment banking firm mutually agreeable to a
majority of the Holders taking part in the transaction the subject of
such valuation and the Company (the "Appraiser"). If such Holders and
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the Company cannot agree on an Appraiser within fifteen (15) days after
the end of the Negotiation Period, then the Company, on the one hand,
and such Holders, on the other hand, shall each select an Appraiser
within twenty-one (21) days after the end of the Negotiation Period
and, within twenty-five (25) days after the end of the Negotiation
Period, those two Appraisers shall select an independent Appraiser to
determine the fair market value of such securities or property, without
premium for control or discount for minority interests, illiquidity or
restrictions on transfer. Such independent Appraiser shall be directed
to determine the fair market value of such securities or property as
soon as practicable, but in no event later than thirty (30) days from
the date of its selection. The determination by an Appraiser of the
fair market value will be conclusive and binding on all parties to this
Agreement. The Appraised Value of each share of Common Stock at a time
when (a) the Company is not a reporting company under the Exchange Act
and (b) the Common Stock is not traded in or on an organized securities
market or exchange, will, in all cases, be calculated by determining
the Appraised Value of the Company taken as a whole and by dividing
that value by the sum of (x) the number of shares of Common Stock then
outstanding plus (y) the number of shares of Common Stock Equivalents,
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without premium for control or discount for minority interests,
illiquidity or restrictions on transfer. The costs of the Appraiser
will be borne by the Company. In no event will the Appraised Value of
the Common Stock or Other Securities be less than the per share
consideration received or receivable with respect to the Common Stock
or securities or property of the same class as the Other Securities, as
the case may be, in connection with a pending transaction involving a
sale, merger, recapitalization, reorganization or consolidation of, or
share exchange involving, the Company, a dissolution of the Company, a
sale or transfer of all or a majority of its assets or revenue or
income generating capacity, or any similar transaction. The prevailing
market prices for any security or property will not be dispositive of
the Appraised Value thereof.
Appraiser. This term is defined in the definition of Appraised Value.
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Average Market Value. The average Closing Price for the security in
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question for the thirty (30) trading days immediately preceding the
date of determination.
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Board of Directors. The board of directors of the Company. Unless this
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Agreement expressly states otherwise, the term "Board of Directors"
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includes any and all committees of such Board of Directors.
Business Day. Each day of the week except Saturdays, Sundays and days
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on which banking institutions are authorized by law to close in the
State of Texas.
Buyer. This term is defined in Section 3.03(a)(ii).
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Capital Stock. As to any Person, its common stock and any other capital
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stock of such Person authorized from time to time, and any other
shares, options, interests, participations or other equivalents
(however designated) of or in such Person, whether voting or nonvoting,
including, without limitation, common stock, options, warrants,
preferred stock, phantom stock, stock appreciation rights, preferred
stock, convertible notes or debentures, stock purchase rights and all
agreements, instruments, documents, and securities convertible,
exercisable or exchangeable, in whole or in part, into any one or more
of the foregoing.
Cayman. This term is defined in the preamble to this Agreement.
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Certificate of Designation. This term is defined in Article I of the
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Purchase Agreement.
Change in Control. The occurrence of either of the following: (a) the
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Holders shall cease to have the ability to elect, directly, a majority
of the members of the Board of Directors; or (b) the Holders shall
cease to own and to control, directly or indirectly, at least
seventy-five percent (75%) of the issued and outstanding shares of
Capital Stock of the Company (in either case, other than (i) as a
result of a transaction approved by the Holders or (ii) solely as a
result of the voluntary sale by a Holder of all or any part of its
Capital Stock; provided, however, that upon the consummation of any
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such sale, the percentage of Capital Stock of the Company set forth in
clause (b) above shall be automatically reduced by the aggregate
percentage of Capital Stock of the Company so transferred).
Closing Date. This term is defined in Article I of the Purchase
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Agreement.
Closing Price.
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(a) If the primary market for the security in question is a
national securities exchange registered under the Exchange Act or other
market or quotation system in which last sale transactions are reported
on a contemporaneous basis, then the last reported sales price, regular
way, of such security for such day, or, if there has not been a sale on
such trading day, then the highest closing or last bid quotation
therefor on such trading day (excluding, in any case, any price that is
not the result of bona fide arm's length transaction); or
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(b) If the primary market for such security is not an exchange
or quotation system in which last sale transactions are
contemporaneously reported, then the highest closing or last bona fide
bid quotation by disinterested Persons in the over-the-counter market
on such trading day as reported by the National Association of
Securities Dealers or such other generally accepted source of publicly
reported bid quotations as the Holders designate.
Common Stock. The common stock, par value $.01 per share, of the
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Company.
Common Stock Equivalent. Any option, warrant, right or other security
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exercisable into, exchangeable for, or convertible into Common Stock.
Company. Fresh America Corp., a Texas corporation, and its successors
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or assigns. Unless the context requires otherwise, the term "Company"
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includes any Subsidiary of the Company.
Co-Sell Shares. This term is defined in Section 3.03(c).
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Co-Sellers. This term is defined in Section 3.03(c).
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Election Notice. This term is defined in Section 3.03(b).
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Excess Compensation. Any cash, securities or other remuneration payable
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during any period subsequent to the closing of a Sale Transaction,
including cash, securities or other remuneration related to future
performance or payable subsequent to the closing of a Sale Transaction,
to (a) any officers, directors or employees of the Company or any
Affiliate thereof (other than reasonable compensation paid in the
ordinary course of business to such officer, director or employee in
his/her capacity as an officer, director or employee of the Company or
any Affiliate thereof) or (b) any Person (other than the Purchasers)
who owns, directly or indirectly, five percent (5%) or more of the
Capital Stock of the Company at the time of the closing of the Sale
Transaction. To the extent such cash, securities or other remuneration
is payable subsequent to the closing of a Sale Transaction, the amount
of Excess Compensation will be an amount equal to the present value of
such excess cash, securities or other remuneration, discounted to the
time of the closing of the Sale Transaction at the then prevailing
prime rate of interest as set forth in the "Money Rates" or similar
listing in The Wall Street Journal. To the extent such cash, securities
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or other remuneration payable subsequent to the closing of the Sale
Transaction is unliquidated or contingent, the amount of such cash,
securities or other remuneration, for purposes of computing Excess
Compensation, will be equal to the maximum amount that may be payable
at such future time. Excess Compensation shall not include that portion
of any equity based compensation resulting from an increase in the
value of the equity underlying such compensation that occurs after the
closing of a Sale Transaction.
Exchange Act. The Securities Exchange Act of 1934, as amended, and the
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rules and regulations promulgated thereunder.
5
Fair Market Value.
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(a) As to securities regularly traded in the organized
securities markets, the Average Market Value; and
(b) as to all securities not regularly traded in the
securities markets and other property, the fair market value of such
securities or property as determined in good faith by the Board of
Directors at the time it authorizes the transaction (a "Valuation
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Event") requiring a determination of Fair Market Value under this
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Agreement; provided, however, that, at the election of the Holders, the
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Fair Market Value of such securities and other property will be the
Appraised Value.
Freely Tradeable Securities, Securities:
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(a) which are of a class:
(i) of Securities issued or fully guaranteed by
the United States of America or any agency thereof and
entitled to the full faith and credit of the United States
of America, for which price quotations are routinely
quoted and for which, in the opinion of the ▇▇▇▇▇▇▇
Entities, there is a ready liquid market; or
(ii) both registered pursuant to either section
12(b) or section 12(g) of the Exchange Act and either
listed on a national securities exchange or on the NASDAQ
National Market; and
(b) which may be resold immediately in the public markets
by each and every holder of Registrable Securities without
requirement of further registration under the Securities Act.
GAAP. Generally accepted accounting principles, applied on a consistent
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basis, as set forth in the Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants and/or in
statements of the Financial Accounting Standards Board and/or their
respective successors and that are applicable in the circumstances as
of the date in question. Accounting principles are applied on a
"consistent basis" when the accounting principles observed in a current
period are comparable in all material respects to those accounting
principles applied in a preceding period.
▇▇▇▇▇▇▇ Director. This term is defined in Section 5.02.
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▇▇▇▇▇▇▇ Entities. This term is defined in the preamble to this
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Agreement and includes any successors or assigns of each such ▇▇▇▇▇▇▇
Entity.
Holders. The Purchasers and all other Persons holding Registrable
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Securities (other than the Company or any Affiliate of the Company).
Unless otherwise provided in this Agreement, in each instance that the
Holders are required to request or consent in concert
6
to an action, the Holders will be deemed to have requested or consented
to such action if the Holders of a majority-in-interest of the
Registrable Securities so request or consent.
Holder Observer. This term is defined in Section 5.02.
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Holder Representative. This term is defined in Section 5.02.
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Independent Director. This term is defined in Section 5.02.
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Indemnified Party. This term is defined in Section 9.01.
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Initiating Shareholder. This term is defined in Article IV.
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Investors. This term is defined in the preamble to this Agreement.
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JH Life. This term is defined in the preamble to this Agreement.
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JH Variable. This term is defined in the preamble to this Agreement.
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Negotiation Period. This term is defined in the definition of Appraised
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Value.
New Securities. Any Capital Stock of the Company other than (a) the
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Shares and Other Securities, (b) Capital Stock issued in a Qualified
Public Offering and (c) Permitted Stock.
Non-Selling Shareholders. Any Holders that are not Initiating
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Shareholders for the purposes of Article IV.
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Notice of Acceptance. This term is defined in Section 3.01(c).
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Notice of Intent. This term is defined in Section 3.01(a).
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Notice of Sale. This term is defined in Section 3.03(a).
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NTOF. This term is defined in the preamble to this Agreement and shall
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include any successor or assign of NTOF.
NTOF Directors. This term is defined in Section 5.02.
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Offer Notice. This term is defined in Section 3.01(b).
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Offer Price. This term is defined in Section 3.01(b).
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Offered Securities. This term is defined in Section 3.01(a).
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Other Parties. This term is defined in Section 3.01(a).
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Other Securities. Any stock, other securities, property or rights that
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any Holder becomes entitled to receive as a result of owning any of the
Shares.
Permitted Acquisition. This term is defined in Section 2.04.
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Permitted Stock. This term is defined in Article I of the Purchase
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Agreement.
Person. This term will be interpreted broadly to include any
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individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, company,
institution, entity, party or government (whether national, federal,
state, county, city, municipal or otherwise), including, without
limitation, any instrumentality, division, agency, body or department
of any of the foregoing.
Preemptive Rights Notice. This term is defined in Section 2.02.
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Preferred Stock. The Series D Cumulative Redeemable Preferred Stock,
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$1.00 par value per share, issued to the Purchasers pursuant to the
terms of the Purchase Agreement.
Pull-Along Sale. This term is defined in Article IV.
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Pull-Along Sale Date. This term is defined in Article IV.
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Pull-Along Sale Notice. This term is defined in Article IV.
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Purchase Agreement. This term is defined in the recitals to this
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Agreement.
Purchaser and Purchasers. These terms are defined in the preamble to
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this Agreement.
Qualified Public Offering. A firm underwritten public offering of the
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Company's Common Stock under the Securities Act completed by the
Company and resulting in gross cash proceeds (before underwriting
discounts and commissions) of at least twenty million dollars
($20,000,000).
"Register," "registered" and "registration" refer to a registration
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effected by preparing and filing a registration statement in compliance
with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
Registrable Securities. This term is defined in Article I of the
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Purchase Agreement.
Related Party. With respect to any Holder, any partnership, corporation
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or limited liability company all of the interests or equity of which
are at all times held by such Holder and that agrees in writing to be
bound by the terms of this Agreement.
Sale Transaction. Any transaction pursuant to which (a) the Company
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would sell or dispose (in one or a series of related sales or
dispositions) all or substantially all of its
8
assets (other than inventory in the ordinary course of business),
including any sale or disposition of the equity interests or assets of
any Subsidiaries of the Company, or (b) the Company, or the holders of
the Capital Stock of the Company, would sell, transfer, issue, assign,
pledge or otherwise dispose of or convey shares of Capital Stock of the
Company, or the Company would engage in any merger, consolidation,
combination or similar transaction, in one or a series of related
transactions, such that the beneficial owners of the shares of Capital
Stock of the Company immediately prior to the transaction or
transactions will, immediately after such transaction or transactions,
beneficially own less than a majority of the shares of Capital Stock of
the Company, if the Company is the surviving or resulting Person in
such transaction or transactions, or less than a majority of the
outstanding Capital Stock of the surviving or resulting Person, if the
Company is not the surviving or resulting Person in such transaction or
transactions, or (c) any transaction or series of related transactions
that results in any Change in Control.
Securities Act. The Securities Act of 1933, as amended, and the rules
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and regulations promulgated thereunder.
Selling Shareholder. This term is defined in Section 3.03.
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Shares. (a) The Preferred Stock, (b) any shares of Common Stock or
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Other Securities issued or issuable to the Holders upon exercise of the
Warrants, (c) all securities issued upon the subdivision, combination
or reclassification, or in respect of, or in substitution for, such
Preferred Stock or such shares of Common Stock or Other Securities and
(d) any other shares of Capital Stock owned from time to time by a
Holder that have not been previously sold to the public.
Signature 3. This term is defined in the preamble to this Agreement.
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Subsidiary. Each Person of which or in which the Company or its
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Subsidiaries own directly or indirectly fifty-one percent (51%) or more
of (a) the combined voting power of all classes of stock having general
voting power under ordinary circumstances to elect a majority of the
board of directors or equivalent body of such Person, if it is a
corporation or similar person, (b) the capital interest or profits
interest of such Person, if it is a partnership, joint venture or
similar entity, or (c) the beneficial interest of such Person, if it is
a trust, association or other unincorporated organization.
TBCA. The Texas Business Corporation Law, as the same may be amended
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from time to time.
Third Party. A Person not a Holder or an Affiliate of a Holder.
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Transfer. This term is defined in Section 3.01(a).
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Transfer Closing. This term is defined in Section 3.01(c).
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Transferor. This term is defined in Section 3.01(a).
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Unlocking Proposal. Any bona fide proposal made to the Company by a
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Third Party pursuant to which a Sale Transaction would occur.
Unlocking Put. This term is defined in Section 6.02.
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Valuation Event. This term is defined in the definition of Fair Market
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Value.
Warrants. This term is defined in Article I of the Purchase Agreement.
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Article II
Holders' Preemptive Rights
2.01 Preemptive Right. The Company will not issue or sell any New
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Securities without first complying with this Article II; provided, however, that
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all rights granted to Holders pursuant to the provisions of this Article II
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shall expire upon the consummation of a Qualified Public Offering. The Company
hereby grants to each Holder the preemptive right to purchase, pro rata, all or
any part of the New Securities that the Company may, from time to time, propose
to sell or to issue. If New Securities are offered or sold as part of a unit
with other New Securities, then the preemptive right granted by this Article II
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will apply to such units and not to the individual New Securities composing such
units. Each Holder's pro rata share for purposes of Article II is the ratio that
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the total number of Shares of the Company held by such Holder immediately prior
to the issuance of the New Securities, bears to the sum of (a) the total number
of shares of Common Stock of the Company then outstanding, plus (b) the total
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number of shares of Preferred Stock of the Company then outstanding, plus (c)
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the total number of shares of Common Stock of the Company issuable upon exercise
or conversion of all Common Stock Equivalents then outstanding.
2.02 Notice to Holders. If the Company proposes to issue or to sell New
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Securities, then it will give each Holder written notice of its intention (each,
a "Preemptive Rights Notice"), which Preemptive Rights Notice shall describe the
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type of New Securities and the price and terms upon which the Company proposes
to issue or to sell the New Securities. Each Holder will have twenty (20) days
from the date of receipt of any such Preemptive Rights Notice (or, if
applicable, twenty (20) days from the date of receipt of such other information
as such Holder may reasonably request to facilitate its investment decision) to
agree to purchase up to its respective pro rata share of the New Securities for
the price (valued at Fair Market Value for any noncash consideration) and upon
the terms specified in the applicable Preemptive Rights Notice by giving written
notice to the Company stating the quantity of New Securities agreed to be
purchased.
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2.03 Allocation of Unsubscribed New Securities. If any Holder fails to
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exercise such preemptive right within such twenty (20) day period, then the
other Holders, if any, will have an additional five (5) day period to purchase
such Holder's portion not so agreed to be purchased in the same proportion in
which such other Holders were entitled to purchase the New Securities (excluding
for such purposes such non-purchasing Holder). Thereafter, the Company will have
ninety (90) days to sell the New Securities not elected to be purchased by the
Holders at the same price and upon the same terms specified in the applicable
Preemptive Rights Notice. If the Company has not sold the New Securities within
such ninety (90) day period, then the Company will not issue or sell any New
Securities without first offering such securities in the manner provided in this
Article II.
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2.04 Permitted Acquisitions. Notwithstanding any other provision of this
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Agreement to the contrary, the provisions of this Article II shall not apply to
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any issuance or sale of New Securities by the Company if such New Securities are
paid as non-cash consideration for (a) the merger of any Person with and into
the Company, (b) the acquisition by the Company of all of the Capital Stock of
any Person or (c) the sale of all or substantially all of the assets of any
Person to the Company, in each case provided such transaction is approved by the
Board of Directors and by all Holders (each such issuance or sale, a "Permitted
---------
Acquisition").
-----------
Article III
Right of First Offer; Co-Sale Rights
3.01 Right of First Offer.
--------------------
(a) If any Purchaser desires to sell, convey or transfer (a "Transfer"; and
--------
any such Purchaser desiring to so sell, convey or transfer being a "Transferor")
----------
any Capital Stock of the Company or any portion thereof to any Person other than
an Affiliate of the Transferor, the Transferor shall give written notice (a
"Notice of Intent") to the other Purchasers (such entities being the "Other
---------------- -----
Parties") (i) stating that the Transferor desires to make such Transfer, and
-------
(ii) setting forth the amount of the Capital Stock of the Company proposed to be
transferred (any such Capital Stock proposed to be so transferred being the
"Offered Securities").
------------------
(b) Each of the Other Parties may, within fifteen (15) days of receipt of
the Notice of Intent, deliver or cause to be delivered a written notice (the
"Offer Notice") to the Transferor stating (i) that it offers to purchase the
------------
Offered Securities and the cash price that it proposes to pay for such Offered
Securities (the "Offer Price"), and (ii) that such offer is irrevocable.
-----------
(c) The irrevocable offer to purchase the Offered Securities contained in
any Offer Notice will remain open for a period of fifteen (15) days from
delivery to the Transferor of such Offer Notice. Within such fifteen (15) day
period, the Transferor may elect to accept such offer (in whole or in part) by
delivering to such Other Party written notice of its irrevocable election to
accept such offer (the "Notice of Acceptance"). If Transferor accepts such
--------------------
offer, (i) such Other Party shall deliver to Transferor, within thirty (30) days
of receipt of the Notice of Acceptance, a written notice identifying the source
of financing for such purchase by such Other Party, and (ii) the closing of the
purchase and sale contemplated by the Notice of Acceptance shall occur on or
before the forty-fifth (45th) Business Day following delivery of the Notice of
Acceptance or on
11
such date and at such time and place as mutually agreed by such Other Party and
Transferor (the "Transfer Closing"). At the Transfer Closing, such Other Party
----------------
will deliver to Transferor the cash purchase price of such Offered Securities,
against delivery by Transferor of the Offered Securities being so purchased
together with reasonably appropriate transfer documentation and representations
related thereto.
(d) If Transferor does not deliver a Notice of Acceptance to the Company
within the fifteen (15) day period specified in Section 3.01(c) above, such
---------------
Other Party's offer to Transferor will be deemed to have been rejected and
Transferor will, subject to Sections 3.02 and 3.03 below, be free to Transfer
------------- ----
(or enter into a written agreement to Transfer) such Offered Securities to the
Company or one or more third parties within one-hundred twenty (120) days of the
expiration of such fifteen (15) day period on terms acceptable to Transferor.
(e) If such Other Party fails to deliver an Offer Notice within the fifteen
(15) day period specified in Section 3.01(b) above, then Transferor may (subject
---------------
to Sections 3.02 and 3.03 below), within a period of one hundred twenty (120)
------------- ----
days following the expiration of such fifteen (15) day period, Transfer (or
enter into a written agreement to Transfer) all Offered Securities to one or
more third parties, on terms acceptable to Transferor.
(f) If Transferor shall not have Transferred or entered into a written
agreement to Transfer the Offered Securities to one or more third parties prior
to the expiration of the one hundred twenty (120) day period specified in
Section 3.01(d) or (e) above, as applicable, the right of first offer under this
--------------- ---
Section 3.01 shall again apply in connection with any subsequent Transfer by
------------
such Purchaser.
(g) If Transferor delivers a timely Notice of Acceptance in compliance
Section 3.01(c) above and the applicable Other Party fails to purchase the
---------------
Offered Securities by the close of business on the date set for the Transfer
Closing, the right of first offer under this Section 3.01 shall not apply to any
------------
subsequent Transfer by such Purchaser of Capital Stock of the Company (or any
portion thereof that is the subject of such Notice of Acceptance).
(h) Each Other Party shall keep confidential the terms of any proposed
Transfer contained in any Notice of Intent or Offer Notice, except as otherwise
required by law or as necessary to finance the purchase of the Offered
Securities subject to such proposed Transfer.
(i) All rights of any Other Party pursuant to this Section 3.01 shall
------------
survive the exercise of any Warrant.
(j) None of the provisions of this Section 3.01 will apply to any sale by a
------------
Holder of shares of Capital Stock of the Company in a Qualified Public Offering,
so long as all Holders have had an opportunity to participate in such offering
in accordance with the registration rights granted by the Purchase Agreement.
3.02 Rights of Co-Sale. If any Holder intends to sell or to transfer,
-----------------
directly or indirectly, any shares of any class of Capital Stock of the Company
held by it to any Person, then each other Holder will have the right to
participate in such sale or transfer on the terms set forth
12
in Section 3.03; provided, however, that the provisions of Section 3.03 will not
------------ -------- ------- ------------
apply (i) to any sale by any Holder of shares of Capital Stock of the Company in
a Qualified Public Offering, so long as all Holders have had an opportunity to
participate in such offering in accordance with the registration rights granted
by the Purchase Agreement, or (ii) to any sale or other transfer by any of the
▇▇▇▇▇▇▇ Entities (as Selling Shareholders) occurring after the date that is
three (3) years from the date hereof.
3.03 Method of Electing Sale; Allocation of Sales. No sale or transfer by
--------------------------------------------
any Holder of any shares of Capital Stock of the Company will be valid unless
the transferee of such Capital Stock first agrees in writing to be bound by the
same terms and conditions that apply to such Holder under this Agreement. In
addition, before any shares of Capital Stock of the Company held, directly or
indirectly, by any Holder may be sold or transferred to any Person, such Holder
(as such, the "Selling Shareholder") will comply with the following provisions:
-------------------
(a) The Selling Shareholder will deliver or cause to be delivered a
written notice (the "Notice of Sale") to each other Holder at least ten
--------------
(10) Business Days prior to making any such sale or transfer. The Company
agrees to provide the Selling Shareholder with a list of the names and
addresses of each such Holder for such purpose. The Notice of Sale will
include (i) a statement of the Selling Shareholder's bona fide intention to
sell or to transfer, (ii) the name and address of the prospective
transferee (the "Buyer"), (iii) the number of shares of Capital Stock of
-----
the Company to be sold or transferred, (iv) the terms and conditions of the
contemplated sale or transfer, (v) the purchase price in cash that the
Buyer will pay for such shares of Capital Stock, (vi) the expected closing
date of the transaction and (vii) such other information as any Holder may
reasonably request to facilitate their decision as to whether or not to
exercise the rights granted by this Section 3.03.
------------
(b) Any Holder receiving the Notice of Sale may elect to participate
in the contemplated sale or transfer by exercising its right to co-sell its
Capital Stock of the Company pursuant to Section 3.03(c). Such rights may
---------------
be exercised in the sole discretion of such Holder by delivering a written
notice (each, an "Election Notice") to the Company and the Selling
---------------
Shareholder within ten (10) Business Days after receipt of the applicable
Notice of Sale stating the election of such Holder to exercise its right of
co-sale pursuant to Section 3.03(c).
---------------
(c) Each Holder (excluding the Selling Shareholder) may elect to sell
or to transfer in the contemplated transaction up to the total of the
number of shares of Capital Stock of the Company then held by it. Promptly
after the receipt of an Election Notice exercising such right, the Selling
Shareholder will use its commercially reasonable best efforts to cause the
Buyer to amend its offer so as to provide for the Buyer's purchase, upon
the same terms and conditions as those contained in the Notice of Sale, of
all of the shares of Capital Stock of the Company elected to be sold in
such Election Notices (the "Co-Sell Shares"). If the Buyer is unwilling to
--------------
amend its offer to purchase all of the Co-Sell Shares in addition to the
shares of Capital Stock described in the related Notice of Sale and if the
Selling Shareholder desires to proceed with the sale, then the total number
of shares that such Buyer is willing to purchase will be allocated to the
Selling
13
Shareholder and each Holder having given an Election Notice exercising its
right pursuant to this Section 3.03(c) (collectively, the "Co-Sellers") in
--------------- ----------
proportion to the aggregate number of shares of Capital Stock of the
Company held by each such Person; provided, however, that no such Person
-------- -------
will be so allocated a number of shares greater than the number of shares
that it has sought to sell or to transfer to such Buyer in the related
Notice of Sale or Election Notice. All Capital Stock sold or transferred by
the Selling Shareholder and the Co-Sellers with respect to a single Notice
of Sale will be sold or transferred to the Buyer in a single closing on the
terms described in such Notice of Sale, and each such share will receive
the same per share consideration. If, for whatever reason, the Buyer
declines to purchase any shares from any Holder delivering an Election
Notice, then the Selling Shareholder will not be permitted to sell or to
transfer any shares of Capital Stock to such Buyer.
(d) No Prejudice to Put Option. Nothing contained in Section 3.02 or
-------------------------- ------------
3.03 above shall limit, impair or restrain in any way the rights of any
----
Holder to exercise the Put Option under any of the circumstances described
in Article V of the Purchase Agreement, except with respect to Co-Sell
Shares elected to be sold by a Holder pursuant to Section 3.03(c).
---------------
3.04 Sales to Related Parties. No sale or transfer of shares of Capital
------------------------
Stock of the Company by any Holder to a Related Party of any Holder will be
subject to the provisions of Section 3.02 or 3.03, provided that such Related
------------ ----
Party first agrees to assume the obligations of such Holder (without relieving
such Holder of any obligations under this Agreement) under this Agreement with
respect to the shares of Capital Stock of the Company thereby acquired by it and
to be bound by the same terms and conditions that apply to such Holder under
this Agreement, the Amended and Restated Articles and the Purchase Agreement, in
each case pursuant to a written instrument in a form and substance satisfactory
to the other Holders.
Article IV
Pull-Along Rights
Subject to the provisions of Article III, if, prior to a Qualified Public
-----------
Offering, the holders of fifty percent (50%) or more of the total Capital Stock
of the Company elect to sell all of their shares of Capital Stock of the Company
in a bona fide sale to a third party that is not an Affiliate, Subsidiary or
Related Party of the Company or such holders (such selling shareholders being
hereinafter referred to as the "Initiating Shareholders") on Acceptable
-----------------------
Pull-Along Sale Terms, then all Non-Selling Shareholders shall be obligated to
sell all of the Capital Stock of the Company then held by Non-Selling
Shareholders in such sale (each, a "Pull-Along Sale"); provided, however, that
--------------- -------- -------
not less than thirty (30) days prior to the date such Pull-Along Sale is to take
place (the "Pull-Along Sale Date"), the Initiating Shareholders shall deliver a
--------------------
written notice (each, a "Pull-Along Sale Notice") to the Company and each
----------------------
Non-Selling Shareholder, which Pull-Along Sale Notice shall state that a
Pull-Along Sale is to take place and shall set forth the identity of the Buyer
and the terms of the proposed Pull-Along Sale (including the date of the
proposed sale and the purchase price per share of Capital Stock of the Company).
On the Pull-Along Sale Date and so long as the Pull-Along Sale remains on
Acceptable Pull-Along Sale Terms, at the time and place designated in the
Pull-Along Sale Notice, the Initiating
14
Shareholders and each Non-Selling Shareholder shall deliver to the Buyer
certificates representing the number of shares of Capital Stock of the Company
desired or required to be sold by them pursuant to this Article IV, each such
----------
certificate to be properly endorsed for transfer, against payment therefor by
certified check or wire transfer of immediately available funds to such accounts
as the Initiating Shareholders and each Non-Selling Shareholder shall specify in
writing. All Capital Stock of the Company sold or transferred by the
shareholders of the Company with respect to a Pull-Along Sale will be sold or
transferred in a single closing on the terms described in such Pull-Along Sale
Notice, and all Capital Stock of the Company sold by the Non-Selling
Shareholders in any Pull-Along Sale will receive the same per share
consideration as the Capital Stock of the Company sold by the Initiating
Shareholder.
Article V
Directors
5.01 Voting Agreement. To ensure compliance with this Article V, each
---------------- ---------
Holder hereby irrevocably covenants and agrees to vote, or to give or to
withhold consent with respect to, all shares of Capital Stock of the Company now
owned or later acquired by such Holder, all in accordance with the terms of this
Article V. The agreement to vote contained in this Article V will expire on the
--------- ---------
earlier to occur of (a) the day prior to the maximum period permitted under
applicable law or (b) the last date on which any Holder ceases to hold any
Capital Stock of the Company. A counterpart of this Agreement will be deposited
with the Company at its principal place of business or registered office and
will be subject to the same right of examination by a shareholder of the
Company, in person or by agent or attorney, as are the books and records of the
Company.
5.02 Board Observation and Membership. The Company will deliver to each
--------------------------------
Purchaser, each Holder Observer and to each Holder Representative (a) a
certified copy of all materials distributed at or prior to all meetings of the
Board of Directors, certified as true and accurate by the Secretary of the
Company, promptly following each such meeting and (b) a certified copy of the
minutes of each of the meetings of the Board of Directors, certified as true and
accurate by the Secretary of the Company, as soon as available but in any event
promptly following the end of the next subsequent regular meeting of the Board
of Directors. The Company will permit each Holder, at all times during which
such Holder owns any Capital Stock of the Company, to designate, by written
notice, one (1) Person to attend and to observe all meetings of the Board of
Directors (each, a "Holder Observer"). The Board of Directors shall consist of
---------------
five (5) members. For so long as NTOF owns any Capital Stock of the Company,
NTOF shall have, subject to the immediately succeeding sentence, the right to
designate three (3) such members to serve on such Board of Directors (the "NTOF
----
Directors"). For so long as any ▇▇▇▇▇▇▇ Entity owns any Capital Stock of the
---------
Company, such ▇▇▇▇▇▇▇ Entities shall have the right, upon written notice to
NTOF, to designate one (1) member to serve on the Board of Directors (the
"▇▇▇▇▇▇▇ Director" and together with the NTOF Directors, collectively, the
----------------
"Holder Representatives" and individually, a "Holder Representative"); provided,
---------------------- --------------------- --------
however, that at all times prior to the ▇▇▇▇▇▇▇ Entities giving such written
-------
notice to NTOF, NTOF shall have the right to designate an additional member to
the Board of Directors. In addition, the holders of Common Stock other than
Purchasers shall be entitled to elect one (1) director of the Company (the
"Independent Director"). The Company will (x) provide each Holder Observer and
--------------------
each
15
Holder Representative notice of all meetings of the Board of Directors not less
than five (5) Business Days in advance, except that (i) if longer advance notice
is given to any member of the Board of Directors, then the same advance notice
will be given to each Holder Observer and each Holder Representative and (ii) if
exceptional circumstances arise that make it prudent for a special meeting of
the Board of Directors to be called on less than five (5) Business Days' notice,
then such meeting may be called with such notice as may be reasonable at the
time, and the earliest advance notice given to any member of the Board of
Directors will be given to each Holder Observer and each Holder Representative
and (y) provide to each Holder Observer and each Holder Representative a copy of
all materials distributed at such meetings. Such meetings shall be held in
person at least every two months (unless otherwise agreed to by the Holders),
and shall be called by the Chief Executive Officer of the Company at any time
upon the request of a Holder Representative on up to four (4) additional
occasions per calendar year on seven (7) calendar days' actual notice to the
Company. Any Holder may change its Holder Observers and/or Holder
Representatives, as the case may be, by written notice to the Company and each
other Holder. The Company shall reimburse each Holder Observer and each Holder
Representative for all reasonable expenses incurred in connection with traveling
to and from such meetings and attending such meetings.
5.03 Board of Directors.
------------------
(a) So long as the provisions of this Article V remain in effect and in
---------
accordance with provisions of Section 5.02 of this Agreement and Section 2.4 of
------------
the Certificate of Designation, each Holder will vote, or give or withhold
consent with respect to, all shares of Capital Stock of the Company now owned or
later acquired by such party so that at all times the Persons designated to
serve as members of the Board of Directors by the Holders pursuant to the
provisions of this Article V will be elected and remain members of the Board of
---------
Directors; provided, however, that the Holders will not have any obligation to
-------- -------
designate, or to cause any individual to serve as, a Holder Representative. No
director designated by any Holder or Holders pursuant to the provisions of this
Article V may be removed from the Board of Directors by any party to this
---------
Agreement without the prior written consent of such Holder or Holders, as
applicable. Any Holder may, at any time, terminate its rights under this Article
-------
V by providing written notice of such termination to the Company and each other
-
Holder.
(b) If any director elected to the Board of Directors after being
designated as a candidate for membership by the Persons entitled to designate
candidates pursuant to this Article V dies, resigns, is removed or otherwise
---------
ceases to serve as a member of the Board of Directors, then the Company shall
give notice thereof to the Person entitled to designate such candidate, and such
Person shall promptly designate a successor and notify the Board of Directors of
its selection, and the Board of Directors shall act promptly to fill the vacancy
with such designee in accordance with the Company's bylaws and applicable law;
provided, however, that no director designated as a candidate for membership by
-------- -------
any Holder or Holders pursuant to the provisions of this Article V may be
---------
removed by any party to this Agreement without the prior written consent of such
Holder or Holders, as applicable.
(c) Within five (5) days after a record date is set for any annual meeting
for the election of directors or for the mailing of any consent solicited for
such purpose, the Secretary of
16
the Company shall notify each Person entitled to designate candidates pursuant
to the terms hereof of the upcoming election and anticipated date thereof and
shall request that each Person entitled to designate candidates take all
necessary action to designate its candidate(s). Each Person entitled to
designate candidates pursuant to the terms hereof shall notify the Secretary of
the Company at least ten (10) days before such election of such Person's
respective candidate(s). A failure by a Person entitled to designate candidates
pursuant to the terms hereof to provide such notification shall be deemed to be
a designation by such Person of the same candidates, if any, as were last
designated by such Person. Any designation pursuant to this Section 5.03(c)
---------------
shall be made in writing.
(d) The parties hereto hereby agree to cast their votes for, or to give
their written consent to, the removal of a member of the Board of Directors at
any time upon receipt of instructions in writing to such effect signed by the
Person entitled to designate that member pursuant to the terms hereof.
(e) The Board of Directors shall have no right to fill any vacancy on the
Board of Directors for which any Person has the right to designate a candidate
pursuant to the terms hereof unless such vacancy is filled by the designee of
the Person having the right to so designate such director.
(f) All rights granted to all Holders pursuant to the provisions of this
Article V shall expire upon the consummation of a Qualified Public Offering.
---------
Article VI
Personal Gain on Sale Transaction; Unlocking Proposal
6.01 Personal Gain on Sale Transaction. The Company shall not enter into
---------------------------------
any Sale Transaction if any Person will receive any Excess Compensation in
connection with such Sale Transaction unless, in connection with and as a
condition to such Sale Transaction, proper provision is made such that the Buyer
in such Sale Transaction agrees to pay to each Holder an amount equal to the
amount of such Excess Compensation times such Holder's proportionate ownership
interest in the Company (on a fully-diluted basis).
6.02 Unlocking Proposal. If the Company receives an Unlocking Proposal,
------------------
then the Company shall promptly give notice of such proposal to each Holder,
including in such notice the terms and conditions of such proposal and any other
information material to an evaluation of such proposal. On or after the first
date on which a Holder may exercise the Put Option pursuant to the provisions of
Article V of the Purchase Agreement, if the Company receives any Unlocking
Proposal and if, within thirty (30) days after receipt of notice of such
proposal, any Holder notifies the Company that such Holder desires to accept the
Unlocking Proposal, then either (i) the Company shall accept the Unlocking
Proposal within thirty (30) days of receipt of such Holder's notice and shall
use good faith and commercially reasonable efforts to consummate the
transactions described in the Unlocking Proposal or (ii) if the Company fails to
accept the Unlocking Proposal within such 30-day period, then such Holder shall
have the right, exercisable by written notice to the Company within thirty (30)
days after expiration of the first 30-day period, to require the Company to
purchase all of the Capital Stock of the Company
17
owned by such Holder for cash (the "Unlocking Put"), and the Company hereby
-------------
agrees to make such purchase and payment. The purchase price in the Unlocking
Put shall be the value of the applicable Capital Stock of the Company based upon
the amount that would have been paid to such Holder if the Unlocking Proposal
had been accepted. Such Holder shall select a settlement date and shall set
forth such date in its notice to the Company, which date shall be not earlier
than ten (10) days nor later than sixty (60) days after the date of such notice.
On such settlement date, upon surrender any certificates evidencing the
applicable shares of Capital Stock of the Company, the Company shall pay the
purchase price to such Holder in immediately available funds by the method
specified in such Holder's notice.
Article VII
Representations and Warranties
7.01 Representations and Warranties of the Company. The Company, to the
---------------------------------------------
same extent set forth in the Purchase Agreement, hereby represents and warrants
to the Purchasers that each of the representations and warranties of the Company
set forth in Section 7.01 of the Purchase Agreement, all of which are hereby
------------
incorporated herein by reference, is true and correct on and as of the date
hereof as if made herein.
7.02 Representations and Warranties of the Purchasers. Each Purchaser
------------------------------------------------
hereby represents and warrants to the Company that each of the representations
and warranties of such Purchaser set forth in Section 7.02 of the Purchase
------------
Agreement, all of which are hereby incorporated herein by reference, is true and
correct on and as of the date hereof as if made herein.
Article VIII
Covenants
The Company hereby covenants and agrees that, for the applicable time
periods set forth in the Purchase Agreement, the Company shall comply with any
and all covenants and agreements set forth in Article VIII of the Purchase
Agreement, all of which covenants and agreements are hereby incorporated herein
by reference.
Article IX
Miscellaneous
9.01 Indemnification. In addition to any other rights or remedies to which
---------------
the Purchasers and all other Holders may be entitled, the Company agrees to and
will indemnify and hold harmless each Purchaser, each other Holder and each of
their respective Affiliates (other than the Company or any Subsidiary),
successors, assigns, officers, directors, employees, attorneys and agents
(individually and collectively, an "Indemnified Party") from and against any and
-----------------
all losses, claims, obligations, liabilities, deficiencies, diminutions in
value, penalties, causes of action, damages, costs and expenses (including,
without limitation, costs of investigation and defense and attorneys' fees and
expenses), including, without limitation, those arising out of the sole or
contributory negligence of any Indemnified Party (but excluding the gross
negligence or willful misconduct of such Indemnified Party), that any
Indemnified Party may suffer, incur or be
18
responsible for, arising or resulting from (a) any misrepresentation, breach of
warranty or nonfulfillment of any covenant or agreement on the part of the
Company under this Agreement, the Purchase Agreement, the Amended and Restated
Articles or any other agreement to which the Company is a party in connection
with the transactions contemplated hereby or thereby or (b) any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished by the Company to the Purchasers or any other
Holder under this Agreement, the Purchase Agreement or the Amended and Restated
Articles.
9.02 Equitable Relief. It is agreed that a violation by any party of the
----------------
terms of this Agreement cannot be adequately measured or compensated in money
damages and that any breach or threatened breach of this Agreement by a party to
this Agreement would do irreparable injury to the nonbreaching party. It is,
therefore, agreed that, in the event of any breach or threatened breach by a
party to this Agreement of the terms and conditions set forth in this Agreement,
the nondefaulting party will be entitled, in addition to any and all other
rights and remedies that it may have in law or in equity, to apply for and to
obtain injunctive relief requiring the defaulting party to be restrained from
any such breach, or threatened breach, or to refrain from a continuation of any
actual breach.
9.03 Integration and Amendments. This Agreement, the Purchase Agreement and
--------------------------
the Amended and Restated Articles constitute the entire agreement among the
parties with respect to the subject matter hereof and thereof and supersede all
previous written, and all previous or contemporaneous oral, negotiations,
understandings, arrangements, and agreements. This Agreement may not be amended
or supplemented except by a writing signed by the Company and all Holders.
9.04 Headings. The headings in this Agreement are for convenience and
--------
reference only and are not part of the substance of this Agreement. References
in this Agreement to Sections and Articles are references to the Sections and
Articles of this Agreement unless otherwise specified.
9.05 Severability. The parties to this Agreement expressly agree that it is
------------
not their intention to violate any public policy, statutory or common law rules,
regulations or decisions of any governmental or regulatory body. If any
provision of this Agreement is judicially or administratively interpreted or
construed as being in violation of any such policy, rule, regulation
or decision, then the provision, section, sentence, word, clause or combination
thereof causing such violation will be inoperative (and in lieu thereof there
will be inserted such provision, sentence, word, clause or combination thereof
as may be valid and consistent with the intent of the parties under this
Agreement), and the remainder of this Agreement, as amended, will remain binding
upon the parties to this Agreement, unless the inoperative provision would cause
enforcement of the remainder of this Agreement to be inequitable under the
circumstances.
9.06 Notices. Whenever it is provided herein that any notice, demand,
-------
request, consent, approval, declaration or other communication be given to or
served upon any of the parties by another, such notice, demand, request,
consent, approval, declaration or other communication will be in writing and
will be deemed to have been validly served, given or delivered (and "the date of
such notice" or words of similar effect will mean the date) five (5)
19
days after deposit in the United States mails, certified mail, return receipt
requested, with proper postage prepaid, or upon receipt thereof (whether by
non-certified mail, telecopy, telegram, express delivery or otherwise),
whichever is earlier, and addressed to the party to be notified as follows:
If to NTOF, at: North Texas Opportunity Fund LP
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with courtesy copies to: ▇▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: R. ▇▇▇▇▇▇▇ ▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the ▇▇▇▇▇▇▇ Entities, at ▇▇▇▇ ▇▇▇▇▇▇▇ Life Insurance Company
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇ ▇▇▇▇▇▇▇ Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (T30)
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇ ▇▇▇▇▇▇▇ Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇ (T57)
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with courtesy copies to: ▇▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
20
If to the Company, at Fresh America Corp.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with courtesy copies to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by like notice.
Notice to any Holder other than the Purchasers will be delivered as set forth
above to the address shown on the stock register of the Company unless such
Holder has advised the Company in writing of a different address to which
notices are to be sent under this Agreement.
Failure or delay in delivering the courtesy copies of any notice, demand,
request, consent, approval, declaration or other communication to the persons
designated above to receive copies of the actual notice will in no way adversely
affect the effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.
No notice, demand, request, consent, approval, declaration or other
communication will be deemed to have been given or received unless and until it
sets forth all items of information required to be set forth therein pursuant to
the terms of this Agreement.
9.07 Successors. Subject to the other provisions of this Agreement, this
----------
Agreement will be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns.
9.08 Remedies. The failure of any party to enforce any right or remedy
--------
under this agreement, or to enforce any such right or remedy promptly, will not
constitute a waiver thereof, nor give rise to any estoppel against such party,
nor excuse any other party from its obligations under this Agreement. Any waiver
of any such right or remedy by any party must be in writing and signed by the
party against which such waiver is sought to be enforced.
9.09 Survival. All representations, warranties and covenants made by any
--------
party in this Agreement or in any certificate or other instrument delivered by
such party or on its behalf under this Agreement will be considered to have been
relied upon by the party to which it is delivered, regardless of any
investigation made by such party or on its behalf. All statements in any such
certificate or other instrument will constitute representations warranties under
this Agreement.
9.10 Fees. The Company shall pay to each Holder promptly upon demand the
----
full amount of all payments, advances, charges, costs and expenses, including
reasonable attorneys' fees (to include reasonable outside counsel fees),
expended or incurred by such Holder in connection with (a) the negotiation and
preparation of this Agreement, the Holders' continued administration hereof, and
the preparation of any amendments and waivers hereto, (b) the
21
enforcement of each Holder's rights and/or the collection of any amounts
which become due to any Holder under this Agreement, and (c) the prosecution or
defense of any action in any way related to this Agreement, including without
limitation, any action for declaratory relief, whether incurred at the trial or
appellate level, in an arbitration proceeding or otherwise, and including any of
the foregoing incurred in connection with any bankruptcy proceeding (including
without limitation, any adversary proceeding, contested matter or motion brought
by any Holder or any other person) relating to the Company or any other person
or entity.
9.11 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which will be deemed an original and all of which, taken
together, will constitute one and the same instrument.
9.12 Other Business. It is understood and accepted that the Purchasers
--------------
and their respective Affiliates have interests in other business ventures that
may be in conflict with the activities of the Company and that nothing in this
Agreement will limit the current or future business activities of such parties
whether or not such activities are competitive with those of the Company. The
Company hereby agrees that all business opportunities in any field substantially
related to the business of the Company will be pursued exclusively through the
Company.
9.13 Choice of Law. THIS AGREEMENT HAS BEEN EXECUTED, DELIVERED, AND
-------------
ACCEPTED BY THE PARTIES, AND WILL BE DEEMED TO HAVE BEEN MADE, IN THE STATE OF
TEXAS AND WILL BE INTERPRETED AND THE RIGHTS OF THE PARTIES DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE UNITED STATES APPLICABLE THERETO AND THE
INTERNAL LAWS OF THE STATE OF TEXAS APPLICABLE TO AN AGREEMENT EXECUTED,
DELIVERED AND PERFORMED THEREIN, WITHOUT GIVING EFFECT TO THE CHOICE-OF-LAW
RULES THEREOF OR ANY OTHER PRINCIPLE THAT COULD REQUIRE THE APPLICATION OF THE
SUBSTANTIVE LAW OF ANY OTHER JURISDICTION.
9.14 Nominees for Beneficial Owners. If any Registrable Securities are
------------------------------
held by a nominee for the beneficial owner of such Registrable Securities, then
the beneficial owner of Registrable Securities may, at its election, be treated
as the Holder of such Registrable Securities for purposes of any request or
other action by any Holder or Holders of Registrable Securities pursuant to this
Agreement or any determination of any number or percentage of shares of
Registrable Securities held by any Holder or Holders of Registrable Securities
contemplated by this Agreement. If the beneficial owner of any Registrable
Securities so elects, then the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
9.15 Fiduciary Duties. The Company acknowledges and agrees that, for so
----------------
long as a Purchaser own any Warrants or Shares, (a) the officers and directors
of the Company will owe the same duties (fiduciary and otherwise) to such
Purchaser as are owed to a shareholder of the Company and (b) such Purchaser
will be entitled to all rights and remedies with respect to such duties or that
are otherwise available to a shareholder of the Company under the TBCA.
22
9.16 Duties Among Holders. Each Holder agrees (i) that no other Holder
--------------------
will by virtue of this Agreement be under any fiduciary or other duty to give or
to withhold any consent or approval under this Agreement or to take any other
action or omit to take any action under this Agreement and (ii) that each other
Holder may act or refrain from acting under this Agreement as such other Holder
may, in its discretion, elect.
9.17 Confidentiality. Each Holder agrees to keep confidential any
---------------
information delivered by the Company to such Holder pursuant to this Agreement;
provided, however, that nothing in this Section 9.17 will prevent such Holder
-------- ------- ------------
from disclosing such information (a) to any Affiliate of such Holder or any
actual or potential purchaser, participant, assignee or transferee of such
Holder's rights or obligations hereunder that agrees to be bound by the terms of
this Section 9.17, (b) upon order of any court or administrative agency, (c)
------------
upon the request or demand of any regulatory agency or authority having
jurisdiction over such Holder, (d) that is in the public domain, (e) that has
been obtained from any Person that is not a party to this Agreement or an
Affiliate of any such party without breach by such Person of a confidentiality
obligation known to such Holder, (f) in connection with the exercise of any
remedy under this Agreement or (g) to the certified public accountants or
attorneys for such Holder. The Company agrees that such Holder will be presumed
to have met its obligations under this Section 9.17 to the extent that it
------------
exercises the same degree of care with respect to information provided by the
Company as it exercises with respect to its own information of similar
character. Upon the request by the Company in connection with the delivery to
any Holder Observer of information required to be delivered to such Holder
Observer under Section 5.02 of this Agreement, such Holder Observer will enter
------------
into an agreement with the Company embodying the provisions of this Section 9.17
------------
and otherwise reasonably satisfactory to the Company and such Holder Observer.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
23
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written, to be effective for all purposes
as of the Closing Date.
THE COMPANY:
FRESH AMERICA CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
NTOF:
NORTH TEXAS OPPORTUNITY FUND LP
By: North Texas Opportunity Fund Capital
Partners LP, its general partner
By: NTOF LLC, its general
partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇
Manager
▇▇▇▇▇▇▇ ENTITIES:
▇▇▇▇ ▇▇▇▇▇▇▇ LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Title: Director
------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ VARIABLE LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Title: Authorized Signatory
------------------------------------
SIGNATURE 1A (CAYMAN), LTD.
By: ▇▇▇▇ ▇▇▇▇▇▇▇ Life Insurance Company,
Portfolio Advisor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Title: Director
------------------------------------
SIGNATURE 3 LIMITED
By: ▇▇▇▇ ▇▇▇▇▇▇▇ Life Insurance Company,
Portfolio Advisor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Title: Managing Director
-------------------------------------
INVESTORS PARTNER LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Title: Authorized Signatory
------------------------------------