EXHIBIT 10.7
SERVICE PROVIDER STOCKHOLDERS AGREEMENT
OF
SUNSHINE ACQUISITION CORPORATION
This Service Provider Stockholders Agreement ("Agreement") is entered
into as of this ___ day of _________, 2005, by and among Sunshine Acquisition
Corporation, a Delaware corporation (the "Company"), Carlyle Partners IV, L.P.,
a Delaware limited partnership ("▇▇ ▇▇"), ▇▇ ▇▇ Coinvestment, L.P., a Delaware
limited partnership ("Coinvestment", and, together with ▇▇ ▇▇, the "Initial
Carlyle Stockholders") and the service providers that hold shares of Common
Stock (as defined below) or Vested Options (as defined below) that are or become
a party hereto from time to time by executing a supplemental signature page in
the form attached as Exhibit A hereto (each such holder and any Permitted
Transferee of such holder, individually, a "Service Provider Stockholder," and
collectively, the "Service Provider Stockholders"). Certain capitalized terms
used herein without definition have the meanings ascribed to them in Section 9
hereof.
RECITALS:
WHEREAS, on the date hereof, the Company acquired all of the
outstanding capital stock of SS&C Technologies, Inc., a Delaware corporation
("SS&C"), pursuant to that certain Agreement and Plan of Merger, dated as of
July 28, 2005, and amended as of August 25, 2005, by and among the Company,
Sunshine Merger Corporation, a Delaware corporation and wholly owned subsidiary
of the Company formed solely for purposes of the merger, and SS&C (the "Merger
Agreement").
WHEREAS, certain Service Provider Stockholders (a) hold shares of
common stock, par value $0.01 per share, of the Company ("Common Stock") and/or
(b) have been or may hereafter be issued shares of Common Stock pursuant to the
exercise by such Service Provider Stockholders of vested options to purchase
Common Stock ("Vested Options"), which such options (i) were issued in exchange
for vested options to purchase common stock of SS&C pursuant to the Merger
Agreement (the "Assumed Options") or (ii) may hereafter be issued pursuant to
any stock option plans or other employee benefit plans, in either case, now in
effect or hereafter adopted by the board of directors of the Company (the
"Board", and each director, a "Director") or pursuant to other arrangements
approved by the Board (the shares of Common Stock or other shares of capital
stock of the Company issued or that are hereafter issued to the Service Provider
Stockholders being collectively referred to as the "Restricted Shares" and,
together with the Vested Options, any other vested rights issued by the Company
to the Service Provider Stockholders to acquire Common Stock or capital stock of
the Company, the "Restricted Securities"); and
WHEREAS, the Parties hereto desire to establish herein certain terms
and conditions upon which the Restricted Securities will be held, including
provisions restricting the transfer of such, and providing for other matters.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements set forth herein, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Parties hereto,
intending to be legally bound, hereby agree as follows:
Section 1. Restrictions on Transfer.
Except for (i) Transfers effected by Service Provider Stockholders
pursuant to the exercise of Bring-Along Rights pursuant to Section 2 by the
Carlyle Stockholders or any Transfer effected in connection with a Company Sale
pursuant to Section 2; (ii) Transfers effected by Service Provider Stockholders
pursuant to the exercise of Tag-Along Rights pursuant to Section 3; (iii)
Transfers effected by Service Provider Stockholders pursuant to the Registration
Rights Agreement, dated as of the date hereof, by and among the Company, the
Initial Carlyle Stockholders, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and the Service Provider
Stockholders; and (iv) any Permitted Transfer, no Service Provider Stockholder
shall Transfer any Restricted Securities without the prior written approval of a
majority of the members of the Board, which such majority shall include at least
one Director nominated by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, for so long as he serves as the
Chief Executive Officer of the Company. Each Service Provider Stockholder
further agrees that, in connection with any Permitted Transfer, any Transfer
approved by the Board or any Transfer after the IPO, such Service Provider
Stockholder shall, if requested by the Company, deliver to the Company an
opinion of counsel, in form and substance reasonably satisfactory to the Company
and counsel for the Company, to the effect that such Transfer is not in
violation of this Agreement, the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the "Securities Act"), or the
securities laws of any state. Any purported Transfer in violation of the
provisions of this Section 1 shall be null and void and shall have no force or
effect. It shall be a condition to any Permitted Transfer, any Transfer approved
by the Board (other than any Transfer pursuant to Rule 144 promulgated under the
Securities Act approved by the Board) or any Transfer after the IPO (other than
any Transfer pursuant to Rule 144 promulgated under the Securities Act) that the
transferee shall (i) agree to become a party to this Agreement as a Service
Provider Stockholder and (ii) execute a signature page in the form attached as
Exhibit A hereto acknowledging that such transferee agrees to be bound by the
terms hereof.
Section 2. Bring-Along Rights.
(a) If on or after the earlier of (i) the second anniversary of the
date hereof and (ii) the date that ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ceases to be Chief Executive
Officer of the Company, one or more Carlyle Stockholders, in one transaction or
a series of related transactions, propose to Transfer fifty percent (50%) or
more of the outstanding shares of Common Stock to one or more Persons other than
Affiliates, partners, members or stockholders of the Carlyle Stockholders (each
such Person, a "Third Party Purchaser"), then such Carlyle Stockholder(s) shall
have the right (a "Bring-Along Right") upon delivery of the Bring-Along Notice
(defined below), but not the obligation (subject to Section 3 hereof), to
require all, but not less than all, of the Service Provider Stockholders to
tender for purchase to the Third Party Purchaser(s), on the same terms and
conditions as apply to the Carlyle Stockholder(s) (provided, however, that (i)
in the event
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that the Carlyle Stockholder(s) are granted the right to appoint any director or
directors of any Person in connection with such Transfer, the Carlyle
Stockholder(s) shall be entitled to designate such member or members of the
board of directors of such Person and (ii) in the event that any portion of the
consideration payable to the Carlyle Stockholder(s) in connection with such
Transfer is in a form other than cash, and the Third Party Purchaser notifies
the Carlyle Stockholders that the Third Party Purchaser desires to provide to
the Service Provider Stockholders consideration solely in cash in lieu of the
non-cash consideration to be provided to the Carlyle Stockholder(s), then, at
the election of the Carlyle Stockholder(s), the consideration payable to such
Service Provider Stockholders in connection with such Transfer may consist
solely of cash, in an amount per share equal to the fair market value
(determined based on the manner in which the value of the non-cash consideration
was determined in connection with such transaction) of the per share
consideration received by the Carlyle Stockholder(s)), a number of Restricted
Securities (including any options that vest as a result of the consummation of
such Transfer to such Third Party Purchaser(s)) that, in the aggregate, equal
the number derived by multiplying (A) the total number of Restricted Securities
owned by such Service Provider Stockholder (including any options that vest as a
result of the consummation of such Transfer to such Third Party Purchaser(s));
by (B) a fraction, the numerator of which is the total number of shares of
Common Stock to be sold by the Carlyle Stockholder(s) in connection with such
transaction or series of related transactions, and the denominator of which is
the total number of the then-outstanding shares of Common Stock collectively
held by the Carlyle Stockholder(s); provided that the Bring-Along Right may be
exercised by the Carlyle Stockholder(s) prior to the earlier of (i) the second
anniversary of the date hereof and (ii) the date that ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ceases to
be Chief Executive of the Company, if ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or any of his Permitted
Transferees are transferring shares of Common Stock in such transaction or
series of related transactions or consent in writing to such exercise of the
Bring-Along Right. For purposes of this Section 2 and Section 3 hereof, the
phrase "number of Restricted Securities" held by any Person or group of Persons
shall mean the number of Restricted Shares held by such Person or group of
Persons plus the number of shares of Common Stock issuable upon exercise of
Vested Options held by such Person or group of Persons.
(b) If any Carlyle Stockholder(s) elect to exercise the Bring-Along
Right under this Section 2 with respect to the Restricted Securities held by the
Service Provider Stockholders, then the Carlyle Stockholder owning a majority of
the shares of Common Stock to be Transferred shall so notify each Service
Provider Stockholder in writing (a "Bring-Along Notice"). Each Bring-Along
Notice shall set forth: (i) the name of the Third Party Purchaser(s) and the
number of shares of Common Stock proposed to be sold by the Carlyle
Stockholder(s) to such Third Party Purchaser(s); (ii) the proposed amount and
form of consideration and material terms and conditions of payment offered by
the Third Party Purchaser(s) and a summary of any other material terms
pertaining to the Transfer ("Third Party Terms"); and (iii) the number of
Restricted Securities that such Service Provider Stockholder shall be required
to sell in such Transfer (as determined in accordance with Section 2(a) above).
The Bring-Along Notice shall be given at least fifteen (15) days before the
closing of the proposed Transfer.
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(c) Upon the giving of a Bring-Along Notice, such Service Provider
Stockholder shall be obligated to sell such number of Restricted Securities as
is set forth in the Bring-Along Notice on the Third Party Terms.
(d) At the closing of the Transfer to any Third Party Purchaser(s)
pursuant to this Section 2, the Third Party Purchaser(s) shall remit to such
Service Provider Stockholder (i) the consideration for the total sales price of
the Restricted Securities held by such Service Provider Stockholder sold
pursuant hereto, minus (ii) such Service Provider Stockholder's pro rata portion
of the consideration to be escrowed or otherwise held back, if any, in
accordance with the Third Party Terms, minus (iii) the aggregate exercise price
of any Vested Options being Transferred by such Service Provider Stockholder to
such Third Party Purchaser(s), against delivery by such Service Provider
Stockholder of (i) certificates for such Restricted Shares, duly endorsed for
Transfer or with duly executed stock powers reasonably acceptable to the
Company, and/or (ii) an instrument evidencing the Transfer or the cancellation
of the Vested Options subject to the Bring-Along Right reasonably acceptable to
the Company, and the compliance by such Service Provider Stockholder with any
other conditions to closing generally applicable to the Carlyle Stockholder(s)
and all other holders of Common Stock selling shares in such transaction, which
transaction will not subject any Service Provider Stockholder to any liability
other than (i) such Service Provider Stockholder's pro rata share of any
liability to which the holders of Common Stock selling shares in such
transaction are subject in connection with such liability and (ii) liabilities
in respect of any representation, warranty or indemnity with respect to the
title and ownership of the Restricted Securities being sold by such Service
Provider Stockholder. In the event that the proposed Transfer of the Common
Stock to such Third Party Purchaser is not consummated, the Bring Along Right
shall continue to be applicable to any proposed subsequent Transfer of the
Common Stock by any Carlyle Stockholder(s) pursuant to this Section 2.
(e) In the event that (i) any Carlyle Stockholder exercises its rights
pursuant to this Section 2, or (ii) a Company Sale is approved by the Board and
the holders of fifty percent (50%) or more of the then-outstanding shares of
Common Stock, each Service Provider Stockholder shall consent to and raise no
objections against such transaction, and if any such transaction is structured
as a sale of stock, each Service Provider Stockholder shall take all actions
that the Board and/or the Carlyle Stockholder(s) reasonably deem necessary or
desirable in connection with the consummation of such transaction. Without
limiting the generality of the foregoing, each Service Provider Stockholder
agrees that it (i) shall consent to and raise no objections against such
transaction; (ii) shall execute any Common Stock purchase agreement, merger
agreement or other agreement entered into with the purchaser with respect to
such transaction setting forth the Third Party Terms and any ancillary agreement
(related to the Transfer of the shares or the Company Sale, but not with respect
to employment) with respect thereto; (iii) shall vote the Common Stock held by
such Service Provider Stockholder in favor of such transaction (including
executing a written consent of stockholders approving such transaction); and
(iv) shall refrain from the exercise of dissenters' appraisal rights with
respect to such transaction. In addition, in connection with any such Company
Sale, each holder of Vested Options agrees that, at the election of the Board,
each outstanding Vested Option shall be terminated and converted into the right
to receive cash consideration in connection with such
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Company Sale in an amount equal to (x) the fair market value of the per share
consideration received in connection with such Company Sale by the Carlyle
Stockholder(s) (which value shall, in the case of any non-cash consideration, be
determined based on the manner in which the fair market value of such non-cash
consideration was determined in connection with such Company Sale), less (y) the
exercise price of such Vested Option and any applicable withholding taxes.
(f) If the Company or the holders of the Company's securities enter
into any negotiation or transaction for which Rule 506 (or any similar rule then
in effect) promulgated under the Securities Act may be available with respect to
such negotiation or transaction (including a merger, consolidation, or other
reorganization), each Service Provider Stockholder shall, if requested by the
Company, appoint a purchaser representative (as such term is defined in Rule 501
of the Securities Act) reasonably acceptable to the Company. If such purchaser
representative was designated by the Company, the Company shall pay the fees of
such purchaser representative, but if any Service Provider Stockholder appoints
another purchaser representative, such Service Provider Stockholder shall be
responsible for the fees of the purchaser representative so appointed.
(g) Each Service Provider Stockholder shall bear its pro rata share of
the costs of any Company Sale or other transaction (pursuant to this Agreement
or otherwise) in which it sells Restricted Securities to the extent such costs
are incurred for the benefit of all holders of Restricted Securities and are not
otherwise paid by the Company or the acquiring party.
Section 3. Tag-Along Right.
(a) In the event that any Carlyle Stockholder(s) propose to Transfer
capital stock of the Company to a Third Party Purchaser, then each Service
Provider Stockholder shall have the right (the "Tag-Along Right") to request
that the proposed Third Party Purchaser purchase from such Service Provider
Stockholder up to the number of whole Restricted Securities equal to the number
derived by multiplying (x) the total number of shares of Common Stock that the
proposed Third Party Purchaser has agreed or committed to purchase plus the
total number of shares of Common Stock that are issuable upon conversion,
exercise or exchange of Vested Options or Convertible Securities that the
proposed Third Party Purchaser has agreed or committed to purchase, by (y) a
fraction, the numerator of which is the total number of Restricted Securities
(including any options that vest as a result of the consummation of such
Transfer to such Third Party Purchaser but excluding (i) shares issuable upon
the exercise of unvested options and (ii) any Vested Options that have an
exercise price per share of Common Stock greater than the price per share of
Common Stock to be paid by the Third Party Purchaser) owned by such Service
Provider Stockholder, and the denominator of which is the aggregate number of
shares of Common Stock collectively owned by the Carlyle Stockholders, such
Service Provider Stockholder and all other holders of Common Stock plus the
aggregate number of shares of Common Stock issuable upon conversion, exercise or
exchange of Vested Options and Convertible Securities (excluding (i) shares
issuable upon the exercise of unvested options and (ii) any Vested Options or
other Convertible Securities that have an exercise or conversion price per share
of Common Stock greater than the price per shares of Common Stock to be paid
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by the Third Party Purchaser) owned by all Carlyle Stockholder(s), such Service
Provider Stockholder and all other holders of Common Stock, Vested Options, or
other Convertible Securities. Any Restricted Securities purchased from the
Service Provider Stockholders pursuant to this Section 3(a) shall be purchased
at the same price per share of Common Stock (less, in the case of a Vested
Option, the exercise price thereof) and upon the same terms and conditions as
such proposed Transfer by the Carlyle Stockholder(s) (provided, however, that
(i) in the event that the Carlyle Stockholder(s) are granted the right to
appoint any director or directors of any Person in connection with such
Transfer, the Carlyle Stockholder(s) shall be entitled to designate such member
or members of the board of directors of such Person and (ii) in the event that
any portion of the consideration payable to the Carlyle Stockholder(s) in
connection with such Transfer is in a form other than cash, and the Third Party
Purchaser notifies the Carlyle Stockholder(s) that the Third Party Purchaser
desires to provide to the Service Provider Stockholders exercising their rights
under this Section 2 consideration solely in cash in lieu of the non-cash
consideration to be provided to the Carlyle Stockholder(s), then, at the
election of the Carlyle Stockholder(s), the consideration payable to such
Service Provider Stockholders in connection with such Transfer may consist
solely of cash, in an amount per share equal to the fair market value
(determined based on the manner in which the value of the non-cash consideration
was determined in connection with such transaction) of the per share
consideration received by the Carlyle Stockholder(s)).
(b) The Carlyle Stockholder(s) shall notify each Service Provider
Stockholder in writing in the event such Carlyle Stockholder(s) propose to make
a Transfer or series of Transfers giving rise to the Tag-Along Right at least
fifteen (15) business days prior to the date on which such Carlyle
Stockholder(s) expect to consummate such Transfer (the "Sale Notice") which
notice shall specify the number of shares of Common Stock which the Third Party
Purchaser intends to purchase in such Transfer. The Tag-Along Right may be
exercised by any Service Provider Stockholder by delivery of a written notice to
the Carlyle Stockholder(s) proposing to sell securities of the Company (the
"Tag-Along Notice") within ten (10) business days following receipt of the Sale
Notice from such Carlyle Stockholder(s). The Tag-Along Notice shall state the
number of Restricted Securities that the Service Provider Stockholder proposes
to include in such Transfer to the proposed Third Party Purchaser (not to exceed
the number as determined above). In the event that the proposed Third Party
Purchaser does not purchase the specified number of Restricted Securities from
the Service Provider Stockholders at the same price per share of Common Stock
(less, in the case of a Vested Option, the exercise price thereof) and on the
same terms and conditions as such proposed Transfer by the Carlyle
Stockholder(s) (provided, however, that in the event that the Carlyle
Stockholder(s) are granted the right to appoint any director or directors of any
Person in connection with such Transfer, the Carlyle Stockholder(s) shall be
entitled to designate such member or members of the board of directors of such
Person), then the Carlyle Stockholders shall not be permitted to sell any shares
of Common Stock to the proposed Third Party Purchaser unless such Carlyle
Stockholder(s) purchase from the Service Provider Stockholder such specified
number of Restricted Securities on the same terms and conditions as specified in
such Sale Notice.
(c) At the closing of the Transfer to any Third Party Purchaser
pursuant to this Section 3, the Third Party Purchaser shall remit to each
Service Provider Stockholder exercising
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his rights under this Section 3 (x) the consideration for the total sales price
of the Restricted Securities (calculated in the manner set forth above) held by
such Service Provider Stockholder sold pursuant hereto, minus (y) the aggregate
exercise price of any Vested Options being Transferred by such Service Provider
Stockholder to such Third Party Purchaser(s), minus (z) such Service Provider
Stockholder's pro rata portion of any such consideration to be escrowed or
otherwise held back, if any, in accordance with the Third Party Terms, against
delivery by such Service Provider Stockholder of certificates for such
Restricted Shares subject to the Tag Along Right, duly endorsed for Transfer or
with duly executed stock powers reasonably acceptable to the Company, and/or an
instrument evidencing the Transfer or the cancellation of the Vested Options
being sold reasonably acceptable to the Company, and the compliance by such
Service Provider Stockholder with any other conditions to closing generally
applicable to the Carlyle Stockholder(s) and all other holders of Common Stock,
Vested Options or Convertible Securities selling securities in such transaction.
Section 4. Dividend Equivalents.
(a) Each Service Provider Stockholder who holds Assumed Options as of
the record date of a cash dividend that is declared by the Company on shares of
Common Stock, will receive, with respect to each Assumed Option held by the
Service Provider Stockholder on such record date, a cash payment (the "Dividend
Equivalent"), less any applicable withholding taxes, on the date of the payment
of such cash dividend (or, if later, payment shall be made at the earliest time
permitted under the terms of the agreements governing any indebtedness to which
the Company or any of its subsidiaries may be a party) equal to the product of:
(i) the difference between (1) the number of shares of Common
Stock subject to such Assumed Options, minus (2) a number of shares of
Common Stock equal to (x) the aggregate exercise price of such Assumed
Options, divided by (y) the fair market value of a share of Common Stock
immediately prior to the record date of such dividend (rounded down to the
nearest whole share of Common Stock); and
(ii) the dollar amount of such dividend per share of Common
Stock.
(b) The fair market value of a share of Common Stock for purposes of
this Section 4 shall be reasonably determined by the Board, taking into account
the most recent Third Party Valuation (defined below) obtained by the Company.
(c) In no event shall a Service Provider Stockholder be eligible for a
Dividend Equivalent (i) in connection with an extraordinary cash dividend where
the Assumed Options are adjusted to reflect such extraordinary cash dividend, or
(ii) on or after the Service Provider Stockholder's Termination of Service.
(d) Each Service Provider Stockholder understands and agrees that each
Assumed Option that is an "incentive stock option," as such term is defined in
Section 422 of the Code, shall, as a result of this Section 4 and Section 6, no
longer be an "incentive stock option" and instead will be treated for tax
purposes as a non-qualified stock option.
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Section 5. Rights to Repurchase Restricted Securities.
(a) During the period beginning on the date of the Service Provider
Stockholder's Termination of Service and ending on the date nine (9) months
following the later of (i) the date of such Termination of Service and (ii) the
date of the exercise of any Vested Options held by the Service Provider
Stockholder as of the date of such Termination of Service, the Company shall
have the option to repurchase the Restricted Securities (including any Vested
Options) held by the terminated Service Provider Stockholder and/or his or her
Permitted Transferees (collectively, the "Call Right"); provided, however, that
such Call Right shall not apply to any Assumed Options (or underlying shares of
Common Stock) held by any Service Provider Stockholder that is terminated by the
Company or one of its subsidiaries without Cause or that resigns from the
Company or one of its subsidiaries with Good Reason. The Call Right may be
exercised once with respect to any terminated Service Provider Stockholder. The
purchase price payable by the Company upon exercise of the Call Right (the
"Purchase Price") shall be the fair market value of the Restricted Securities
(which shall mean the fair market value of the Restricted Shares if the Call
Right is with respect to Vested Options, less any applicable exercise price and
withholding taxes), subject to the Call Right on the date of the Call Notice.
The Company shall engage an investment bank to determine the fair market value
of the Common Stock (i.e. the value of the Company in its entirety) (a "Third
Party Valuation") at least once every twelve (12) months; provided that the
Company shall not be required to obtain a Third Party Valuation prior to March
31, 2007. The fair market value of the Restricted Securities subject to a Call
Right shall be reasonably determined by the Board, taking into account the most
recent Third Party Valuation obtained by the Company; provided that when
determining fair market value for purposes of this Section 5, the Board shall
not further discount the fair market value of the Restricted Securities solely
because (i) it is determining the fair market value of Restricted Securities
that constitute less than a majority of all of the outstanding shares of Common
Stock of the Company or (ii) there is no liquid public market for the Restricted
Securities; provided further that the foregoing shall not limit the ability of
an investment bank or the Board to take into account the fact that there is no
liquid public market when determining the value of the Common Stock. The Call
Right shall be exercised by written notice (the "Call Notice") to such Service
Provider Stockholder given in accordance with Section 10(f) of this Agreement on
or prior to the last day on which the Call Right may be exercised by the
Company. Notwithstanding the foregoing, to the extent Restricted Securities are
purchased pursuant to a plan or arrangement that is intended to comply with
Section 260.140.41 of Title 10 of the California Code of Regulations, the Call
Right with respect to such Restricted Securities held by employees who are not
managers, directors, consultants or officers of the Company or any of its
subsidiaries shall comply with Section 260.140.41 of Title 10 of the California
Code of Regulations, as determined by the Board.
(b) The repurchase of Restricted Securities pursuant to the exercise
of the Call Right shall take place on a date specified by the Company, but in no
event later than sixty (60) days following the date of the exercise of such Call
Right or, if later, within ten (10) days following the receipt by the Company of
all necessary governmental approvals. On such date, such Service Provider
Stockholder shall transfer the Restricted Securities subject to the Call Notice
to the Company, free and clear of all liens and encumbrances, by delivering to
the
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Company the certificates or other documents representing the Restricted
Securities to be purchased, duly endorsed for transfer to the Company or
accompanied by a stock power duly executed in blank, and the Company shall pay
to such Service Provider Stockholder the Purchase Price in cash or by bank or
cashier's check.
Section 6. Assumed Option Tax Withholding and Net Exercise.
(a) Each Service Provider Stockholder who holds an Assumed Option,
upon exercise thereof within ninety (90) days of the scheduled expiration of
such Assumed Option, shall have the right to require the Company to retain
shares of Common Stock underlying such Assumed Option having a fair market value
on the date of the exercise of the Assumed Option equal to the amount of the
Service Provider Stockholder's tax withholding obligation that arises in
connection with the exercise of such Assumed Option; provided that the foregoing
is at such time permitted under the terms of the agreements governing any
indebtedness to which the Company or any of its subsidiaries may be a party; and
provided, further that no fractional shares of Common Stock will be retained to
satisfy any portion of the withholding tax and the Service Provider Stockholder
hereby agrees to satisfy any additional amount of withholding taxes that are not
satisfied through the retention of shares of Common Stock by the Company. Any
shares of Common Stock retained by the Company pursuant to this Section 6 shall
be deducted from the underlying shares to be received by such Service Provider
Stockholder upon exercise of the Assumed Option.
(b) With the consent of the Board and to the extent permitted by law,
each Service Provider Stockholder may pay the exercise price of an Assumed
Option for the shares of Common Stock with respect to which such Assumed Option
is exercised through the surrender of shares of Common Stock then issuable upon
exercise of the Assumed Option having a fair market value on the date of the
exercise of the Assumed Option equal to the aggregate exercise price of the
exercised portion of the Assumed Option (in which case the Service Provider
Stockholder will be deemed the legal owner of such surrendered shares of Common
Stock at the time of the exercise of the Assumed Option); provided that the
foregoing is at such time permitted under the terms of the agreements governing
any indebtedness to which the Company or any of its subsidiaries may be a party;
and provided, further that no fractional shares of Common Stock may be
surrendered to satisfy any portion of the exercise price and the Service
Provider Stockholder hereby agrees to satisfy any additional amount of exercise
price that is not satisfied through the surrender of shares of Common Stock by
the Company.
(c) The fair market value of a share of Common Stock for purposes of
this Section 4 shall be reasonably determined by the Board, taking into account
the most recent Third Party Valuation obtained by the Company.
Section 7. Permitted Transfers.
Anything herein to the contrary notwithstanding, the provisions of the
first sentence of Section 1 shall not apply to: (a) any Transfer of Restricted
Shares by a Service Provider Stockholder by gift to, or for the benefit of, any
member or members of his or her immediate family (which shall include any
spouse, lineal ancestor or descendant or sibling) or to
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a trust, partnership or limited liability company for the benefit of such
members; provided that such Service Provider Stockholder shall retain sole and
exclusive control over the voting and disposition of said Restricted Shares
until the termination of this Agreement; or (b) any Transfer of Restricted
Shares by a Service Provider Stockholder to the heirs, executors or legatees of
such Service Provider Stockholder by operation of law upon the death or
incapacity of such Service Provider Stockholder (each of the Transfers
referenced in clauses (a) and (b) above being referred to herein as a "Permitted
Transfer"); provided that, in each case, such Transfer is effected in compliance
with all of the provisions of Section 1 hereof other than the restrictions
contained in the first sentence of Section 1 hereof. The recipient of any
Restricted Shares pursuant to the foregoing shall be referred to herein as a
"Permitted Transferee" and shall be deemed a Service Provider Stockholder for
all purposes of this Agreement.
Section 8. Termination.
This Agreement, and the respective rights and obligations of the
Parties, shall terminate (i) upon the consummation of a Company Sale or (ii)
with respect to any Service Provider Stockholder, upon execution of a written
agreement of such Service Provider Stockholder, the Initial Carlyle Stockholders
and the Company to terminate this Agreement; provided that (i) first sentence of
Section 1 and the provisions of Sections 3, 4, 5 and 6 shall terminate upon the
consummation of an IPO.
Section 9. Certain Definitions.
(a) As used in this Agreement, the following terms shall have the
meanings set forth below.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with such Person.
"Carlyle Stockholders" means (i) the Initial Carlyle Stockholders,
(ii) any Affiliate of any Initial Carlyle Stockholder that is issued any shares
of Common Stock after the date hereof, and (iii) any subsequent transferee of
the shares of Common Stock held by the Persons listed in clause (i) or clause
(ii) above.
"Cause" means (a) the Board's determination that the Service Provider
Stockholder failed to substantially perform his or her duties (other than any
such failure resulting from the Service Provider Stockholder's disability) which
is not remedied within ten days after receipt of written notice from the Company
specifying such failure; (b) the Board's determination that the Service Provider
Stockholder failed to carry out, or comply with any lawful and reasonable
directive of the Board or the Service Provider Stockholder's immediate
supervisor, which is not remedied within ten days after receipt of written
notice from the Company specifying such failure; (c) the Service Provider
Stockholder's conviction, plea of no contest, plea of nolo contendere, or
imposition of unadjudicated probation for any felony, indictable offense or
crime involving moral turpitude; (d) the Service Provider Stockholder's unlawful
use (including being under the influence) or possession of illegal drugs on the
Company's premises or while performing the Service Provider Stockholder's duties
and
10
responsibilities; (e) the Service Provider Stockholder's commission of a
material act of fraud, embezzlement, misappropriation, willful misconduct, or
breach of fiduciary duty against the Company; or (f) any other reason which
would permit by law the Company to terminate the service of the Service Provider
Stockholder without notice or without pay in lieu of notice thereof.
Notwithstanding the foregoing, if the Service Provider Stockholder is a party to
a written employment or consulting agreement with the Company (or its
Subsidiary), then "Cause" shall be as such term is defined in the applicable
written employment or consulting agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Sale" means the consummation of any transaction or series of
transactions pursuant to which one or more Persons or group of Persons (other
than any Initial Carlyle Stockholder or its Affiliates) acquires (i) capital
stock of the Company possessing the voting power sufficient to elect a majority
of the members of the Board or the board of directors of the successor to the
Company (whether such transaction is effected by merger, consolidation,
recapitalization, sale or transfer of the Company's capital stock or otherwise)
or (ii) all or substantially all of the assets of the Company and its
subsidiaries.
"Convertible Securities" means any option, warrant or right, other
than the Vested Options, convertible, exercisable or exchangeable for shares of
Common Stock and any other securities that are convertible, exchangeable or
exercisable into shares of Common Stock.
"Good Reason" means the Service Provider's resignation from employment
with the Company or any of its subsidiaries within ninety (90) days following
one of the following events (which event is not cured within thirty (30) days
following Service Provider's providing the Company with written notice of
Service Provider's intent to resign for Good Reason):
(i) a material reduction in the scope of the Service Provider's
duties as in effect for at least six (6) months prior to such reduction,
where Service Provider's new duties are materially inconsistent with the
Service Provider's position with the Company or any subsidiary; or
(ii) a material reduction by the Company in the Service
Provider's base salary.
"IPO" means a public offering of Common Stock pursuant to a
registration statement filed in accordance with the Securities Act.
"Party" means any of the parties to this Agreement, as set forth in
the preamble.
"Person" means any individual, corporation, partnership, limited
partnership, limited liability company, syndicate, trust, association or other
entity.
"Termination of Service" shall mean the time when the
employee-employer and service provider-service recipient relationship between a
Service Provider Stockholder and the Company or one of its subsidiaries is
terminated for any reason, with or without cause, including,
11
but not by way of limitation, a termination by resignation, discharge, death or
retirement, but excluding a termination where there is a simultaneous
reemployment or reengagement by the Company or one of its subsidiaries.
"Transfer" means any sale, transfer, assignment, conveyance, pledge or
other disposition.
(b) The following terms have the meaning set forth in the Sections set
forth below:
DEFINED TERM LOCATION OF DEFINITION
------------ ----------------------
Affiliate Section 9
Agreement Preamble
Assumed Options Recitals
Board Recitals
Bring-Along Notice Section 2
Bring-Along Right Section 2
Call Notice Section 5
Call Right Section 5
Carlyle Stockholders Section 9
Coinvestment Preamble
Common Stock Recitals
Company Preamble
Company Sale Section 9
Convertible Securities Section 9
▇▇ ▇▇ Preamble
Director Recitals
Dividend Equivalent Section 4
Initial Carlyle Stockholders Preamble
IPO Section 9
Party Section 9
Merger Agreement Recitals
Permitted Transfer Section 6
Permitted Transferee Section 6
Person Section 9
Purchase Price Section 5
Restricted Securities Section 9
Restricted Shares Section 9
Sale Notice Section 3
Securities Act Section 1
SS&C Recitals
Tag-Along Notice Section 3
Tag-Along Right Section 3
Termination of Service Section 9
12
Third Party Purchaser Section 2
Third Party Terms Section 2
Third Party Valuation Section 5
Transfer Section 9
Vested Options Recitals
Section 10. Miscellaneous.
(a) Legends. Each certificate representing the securities issued by
the Company and held by a Service Provider Stockholder shall bear the following
legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
SAID LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF."
In addition to the foregoing, each certificate representing securities issued by
the Company and held by a Service Provider Stockholder shall bear the following
legend:
"THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
SERVICE PROVIDER STOCKHOLDERS AGREEMENT BETWEEN THE ISSUER AND THE
INITIAL HOLDER HEREOF DATED AS OF ____________, 2005. A COPY OF SUCH
AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE ISSUER TO THE
HOLDER HEREOF UPON WRITTEN REQUEST."
(b) Successors, Assigns and Transferees. This Agreement shall be
binding upon and inure to the benefit of the Parties and their respective legal
representatives, heirs, legatees, successors, and assigns and any other
transferee and shall also apply to any securities acquired by a Service Provider
Stockholder after the date hereof.
(c) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware (without giving effect to
the choice of law principles therein).
(d) Specific Performance; Submission to Jurisdiction. The parties
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent
13
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in Court of Chancery or other courts of the State of Delaware,
this being in addition to any other remedy to which such party is entitled at
law or in equity. In addition, each of the parties hereto (i) consents to submit
itself to the personal jurisdiction of the Court of Chancery or other courts of
the State of Delaware in the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement, (ii) agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from such court, (iii) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than the Court of Chancery or other courts of
the State of Delaware and (iv) to the fullest extent permitted by Law, consents
to service being made through the notice procedures set forth in Section 10(f).
Each party hereto hereby agrees that, to the fullest extent permitted by Law,
service of any process, summons, notice or document by U.S. registered mail to
the respective addresses set forth in Section 10(f) shall be effective service
of process for any suit or proceeding in connection with this Agreement or the
transactions contemplated hereby.
(e) Interpretation. The headings of the Sections contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the Parties and shall not affect the meaning or interpretation of this
Agreement.
(f) Notices. All notices and other communications provided for or
permitted hereunder shall be in writing and shall be deemed to have been duly
given and received when delivered by overnight courier or hand delivery, when
sent by telecopy, or five days after mailing if sent by registered or certified
mail (return receipt requested) postage prepaid, to the Parties at the following
addresses (or at such other address for any Party as shall be specified by like
notices.
(i) If to any Carlyle Stockholder, addressed to such Carlyle
Stockholder, c/o The Carlyle Group, at:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇;
(ii) If to any Service Provider Stockholder, to the address set forth
on such Service Provider Stockholder's signature page hereto;
14
(iii) If to the Company at:
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(g) Recapitalization, Exchange, Etc. Affecting the Company's Capital
Stock. The provisions of this Agreement shall apply, to the full extent set
forth herein, with respect to any and all shares of Common Stock and all of the
shares of capital stock of the Company or any successor or assign of the Company
(whether by merger, consolidation, sale of assets, or otherwise) that may be
issued in respect of, in exchange for, or in substitution of such Common Stock
and shall be appropriately adjusted for any stock dividends, splits, reverse
splits, combinations, recapitalizations, and the like occurring after the date
hereof.
(h) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to constitute one and the same agreement.
(i) Attorney's Fees. In any action or proceeding brought to enforce
any provision of this Agreement, the successful Party shall be entitled to
recover reasonable attorney's fees in addition to any other available remedy.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal, or unenforceable in any respect for any reason, the validity,
legality, and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby.
(k) Amendment. This Agreement may be amended by resolution of the
board of directors of the Company which is approved in writing by the Carlyle
Stockholders. At any time hereafter, additional Service Provider Stockholders
may be made parties hereto by executing a signature page in the form attached as
Exhibit A hereto, which signature page shall be countersigned by the Company and
shall be attached to this Agreement and become a part hereof without any further
action of any other Party hereto.
15
(l) Tax Withholding. The Company shall be entitled to require payment
in cash or deduction from other compensation payable to any Service Provider
Stockholder of any sums required by federal, state, or local tax law to be
withheld with respect to the issuance, vesting, exercise, repurchase, or
cancellation of any Restricted Share or any option to purchase Restricted
Securities.
(m) Entire Agreement. This Agreement constitutes the entire agreement
of the Parties with respect to the subject matter hereof.
[Remainder of Page Intentionally Left Blank.]
16
IN WITNESS WHEREOF, the Parties have executed this Agreement on the
date first written above.
SUNSHINE ACQUISITION CORPORATION,
By:
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇
Title: Managing Director
CARLYLE PARTNERS IV, L.P.,
a Delaware limited partnership
By:TC Group IV, L.P.,
its General Partner
By:TC Group IV, L.L.C.,
its General Partner
By:TC Group, L.L.C.,
its Managing Member
By:TCG Holdings, L.L.C.,
its Managing Member
By:
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇
Title: Managing Director
▇▇ ▇▇ COINVESTMENT, L.P.,
a Delaware limited partnership
By:TC Group IV, L.P.,
its General Partner
By:TC Group III, L.L.C.,
its General Partner
By:TC Group, L.L.C.,
its Managing Member
By:TCG Holdings, L.L.C.,
its Managing Member
By:
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇
Title: Managing Director
18
SERVICE PROVIDER STOCKHOLDER
By:
------------------------------------
Name:
----------------------------------
Notice Address:
----------------------------------------
----------------------------------------
Service Provider Stockholder Signature Page
EXHIBIT A
SIGNATURE PAGE
TO
SERVICE PROVIDER STOCKHOLDERS AGREEMENT OF
SUNSHINE ACQUISITION CORPORATION
By execution of this signature page, _____________hereby agrees to become a
party to, and to be bound by the obligations of, and receive the benefits of,
that certain Service Provider Stockholders Agreement of Sunshine Acquisition
Corporation, dated as of [______________], 2005, by and among Sunshine
Acquisition Corporation, a Delaware corporation, Carlyle Partners IV, L.P., a
Delaware limited partnership, ▇▇ ▇▇ Coinvestment, L.P., and certain other
parties thereto, as amended from time to time thereafter.
----------------------------------------
[Name]
Notice Address:
----------------------------------------
----------------------------------------
Accepted:
Sunshine Acquisition Corporation
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------