EXECUTION COPY
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (this "Agreement"), dated as of December
29, 1995, is by and among U.S. Vision, Inc., a Pennsylvania corporation
(formerly, Royal International Optical, Inc., the "Company"), certain holders of
capital stock of the Company listed on Schedule I hereto (the
"Securityholders"), each of which owns that number of shares of Series C
Cumulative Convertible Preferred Stock of the Company, $0.01 par value per share
(the "Series C Preferred Stock"), Common Stock of the Company, par value $10.00
per share (the "Common Stock"), warrants to acquire shares of Common Stock (the
"Warrants"), and options to acquire shares of Common Stock (the "Options"), as
set forth opposite such Securityholder's name on Schedule I hereto. The shares
of Common Stock, shares of Series C Preferred Stock, Warrants, Options and
shares of Common Stock issuable upon the exercise of the Warrants and the
Options and conversion of the Series C Preferred Stock are hereinafter
collectively called, the "Securities".
RECITALS
WHEREAS, each of Grotech Partners III, L.P., Grotech III Companion
Fund, L.P., Grotech III Pennsylvania Fund, L.P., Grotech Partners IV, L.P.,
Keystone Venture IV, L.P., ▇▇▇▇▇▇▇▇ Partners, L.P., Penn Janney Fund, Inc.,
▇▇▇▇▇▇▇ Capital Partners, L.P., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M&M General Partnership and
Constitution Partners I, L.P. was formerly a general partner of Royal
Acquisition Associates Partnership, a Maryland general partnership ("▇▇▇▇"),
that was dissolved as of the date hereof and that has distributed the Securities
formerly held by it to said general partners;
WHEREAS, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and ▇▇▇▇ ▇. ▇▇▇▇▇▇ (each, an "Executive Officer") are
executive officers of the Company; and
WHEREAS, with respect to this Agreement, the Company and the
Securityholders desire to enter into this Agreement among themselves to assure
continuity in the ownership and management of the Company, to set forth their
rights and obligations as holders of the Company's Securities and to provide a
market and a purchase price for the Securities owned by them upon the occurrence
of certain events.
NOW, THEREFORE, in consideration of the premises and mutual agreements,
covenants and provisions herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. RECITALS. The Recitals hereto are specifically incorporated
by reference herein and made a part hereof.
SECTION 2. PURCHASE AND SALE. The Securityholders hereby agree to
purchase, sell or redeem, as applicable, the Securities in the manner and upon
the terms provided in this Agreement. Except if made in accordance with the
terms and conditions of this Agreement, the Company's Articles of Incorporation
(the "Articles") and pursuant to applicable federal and state securities laws,
no purchase, sale, gift, endorsement, assignment (including an assignment of
voting rights), transfer, pledge, encumbrance or other disposition, whether
voluntary, involuntary or by operation of law, including, without limitation,
any transfer pursuant to the death or mental incapacity of a Securityholder or a
divorce decree (hereinafter collectively referred to as, a "Transfer"), of any
Securities by any Securityholder shall be valid and binding; provided, however,
that (a) any Executive Officer shall be permitted to transfer his Securities to
immediate family members (that is, the Executive Officer's spouse, son,
daughter, grandchild and their respective spouses) or a trust for the benefit of
family members for estate planning purposes (a "Family Transfer"), and (b) any
other Securityholder may Transfer its Securities to one or more of its
affiliates; provided, further, that in either such event, the Securities so
transferred shall remain subject to the provisions of this Agreement. The
transferee of any Securities or rights therein shall, as a condition precedent
to the validity, and the recognition by the Company, of such Transfer, become a
party to this Agreement. Any transfer prohibited by this Agreement or the
attempted bad faith Transfer of any Securities for the purpose of evading the
provisions of this Agreement shall be null and void.
SECTION 3. TRANSFERS OF SECURITIES.
(a) Except as otherwise provided in this Agreement, the
Securityholders agree that each will not Transfer any of his respective
Securities, except upon the compliance by him with the provisions of this
Agreement.
(b) Offer From a Third Party.
(i) If a Securityholder (the "Transferring
Securityholder") receives a bona fide offer that the Transferring
Securityholder is willing to accept from an independent third party
that is not an affiliate of the Transferring Securityholder to purchase
all or any of the Securities then beneficially owned by the
Transferring Securityholder, the Transferring Securityholder shall
first offer in writing (the "First Offer") to sell such Securities (the
"Offered Securities") to the Company at the price and on the terms on
which the Transferring Securityholder proposes to transfer the Offered
Securities to the proposed third-party transferee. The First Offer
shall set forth (A) the number of shares of the Offered Securities, (B)
the name and address of the proposed transferee, (C) the amount of
consideration to be received by the Transferring Securityholder in the
proposed sale of the Offered Securities to the third party transferee
and (D) the method of proposed payment. A copy of the First Offer shall
also be sent to the Securityholders. The Company shall have the option
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to acquire all or any of the shares of Offered Securities at the price
and upon the terms provided in the First Offer. The Company shall have
the right to exercise its option for a period of thirty (30) days (the
"First Option Period") following its receipt of the First Offer by
notifying the Transferring Securityholder in writing of its intention
to purchase at Closing (as defined in Section 5 hereof) all or any
shares of the Offered Securities.
(ii) If the Company does not accept the First Offer
to purchase all of the shares of Offered Securities within the period
of thirty (30) days provided above in Section 3(b)(i), the Transferring
Securityholder, immediately thereafter, shall be deemed to have made an
offer (the "Second Offer") to sell any remaining shares of the Offered
Securities to the Securityholders, at the same price and on the same
terms as contained in the First Offer. The Securityholders shall have
the option to acquire all or any of the remaining shares of Offered
Securities at the price and upon the terms provided in the First Offer.
The Securityholders shall have the option, within thirty (30) days
following the expiration of the First Option Period, to accept the
Transferring Securityholder's Second Offer by notifying the
Transferring Securityholder in writing of their intention to so
purchase at Closing all or any portion of the remaining shares of
Offered Securities. If more than one Securityholder desires to purchase
the remaining shares of Offered Securities, such remaining shares shall
be purchased by them in such proportions as they may agree. In the
absence of agreement, each Securityholder desiring to purchase the
remaining shares of Offered Securities shall be entitled to purchase up
to that number of shares of such remaining Offered Securities which is
equal to the product of his fully-diluted percentage ownership interest
of Securities held by the Securityholders desiring to purchase the
shares of remaining Offered Securities and that number of shares of
remaining Offered Securities available for purchase hereunder.
(iii) If the Company and the Securityholders
collectively elect to exercise options to purchase less than all of the
shares of Offered Securities pursuant to Section 3(b)(i) and (ii)
hereof, the Transferring Securityholder may (A) either proceed to
Closing with respect to those shares of Offered Securities to be
purchased by the Company and/or the Securityholders and require that
the Company purchase any remaining shares, or (B) elect not to sell any
of the shares of Offered Securities by providing notice to the Company
and/or the Securityholders, as the case may be, within fifteen (15)
days after the expiration of the thirty (30) day period provided in
Section 3(b)(ii) hereof. In all of the events set forth in Section
3(b)(i) - (iii) hereof, the Offered Securities shall continue to be
subject to the terms and conditions of this Agreement, and any new
securityholder shall execute a counterpart to this Agreement.
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(iv) Any such shares of Offered Securities which are
not so purchased pursuant to Sections 3(b)(i) - (iii) hereof by the
Company and/or the Securityholders, as the case may be, may be (after
first complying with the provisions of Section 7 hereof) sold by the
Transferring Securityholder to the third party named in the First Offer
within a period of ninety (90) days after the expiration of the thirty
(30) day period provided in Section 3(b)(ii) hereof. Such shares of
Offered Securities may be transferred to the third party named in the
First Offer provided that such shares are sold at the price and on the
terms set forth in the First Offer. Any shares of Offered Securities
not actually sold or transferred to such third party by the
Transferring Securityholder within such ninety (90) day period at the
price and on the terms set forth in the First Offer shall remain
subject to all of the provisions of this Agreement.
(c) Involuntary Transfer. If (i) any portion of a
Securityholder's Securities is attached or taken in execution, or if a
Securityholder applies for the benefit of a case under any provision of the
Federal bankruptcy law or any other law relating to insolvency or relief of
debtors, or (ii) a case or proceeding is brought against a Securityholder under
any provision of the Federal bankruptcy law or any other law relating to
insolvency or relief of debtors that is not dismissed within sixty (60) days
after the commencement thereof, or (iii) a Securityholder makes an assignment
for the benefit of creditors, or (iv) any portion of a Securityholder's
Securities is made subject to a charging order, or (v) any portion of a
Securityholder's Securities is transferred pursuant to a divorce decree, or (vi)
any portion of a Securityholder's Securities is transferred in the event of the
death (unless in accordance with the provisions of Section 3(d) hereof), mental
incapacity, or dissolution, as may be appropriate, of a Securityholder, or (vii)
the employment of an Executive Officer with the Company is terminated for Cause
(as such term is defined below) (each such event shall be hereinafter referred
to as, an "Involuntary Transfer"), such Securityholder, or his representative or
guardian, if appropriate (the "Subject Securityholder"), shall give immediate
written notice of the Involuntary Transfer to the Company and the other
Securityholders (the "Other Securityholders"), and the Company and the Other
Securityholders shall have the option, as provided in Section 3(c)(i) and (ii)
hereof, to purchase any or all of the Securities subject to the Involuntary
Transfer (the "Involuntary Transfer Stock") at the price and upon the terms
provided in Sections 4(a) and 5 hereof in accordance with the provisions of this
Section 3(c). For the purposes of this Agreement, the term "Cause" shall mean
(i) fraud, misappropriation or embezzlement, as determined in good faith by the
Board of Directors of the Company, (ii) the final, non-appealable conviction of
the Executive Officer by a court of competent jurisdiction of a felony, or (iii)
repeated and material breaches of the terms of the Executive Officer's written
or oral employment agreement with the Company, as determined in good faith by
the Company's Board of Directors, after written notice from the Company.
(i) The Company shall have the option, exercisable
upon written notice to the Subject Securityholder, for a period of
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forty-five (45) days following receipt by the Company of the written
notice of such Involuntary Transfer, to acquire all or any of the
shares of the Involuntary Transfer Stock.
(ii) Any such shares of the Involuntary Transfer
Stock with respect to which the Company shall fail to timely exercise
its option to purchase pursuant to Section 3(c)(i) hereof shall be
deemed to have been offered to the Other Securityholders, who shall
have the option, exercisable upon written notice to the Subject
Securityholder, for a period of thirty (30) days following expiration
of the forty-five (45) day period provided in Section 3(c)(i) hereof,
to purchase all or any of such remaining shares of the Involuntary
Transfer Stock. If more than one Other Securityholder desires to
purchase the Involuntary Transfer Stock, such remaining shares shall be
purchased by them in such proportions as they may agree. In the absence
of agreement, each Other Securityholder desiring to purchase the
remaining shares of the Involuntary Transfer Stock shall be entitled to
purchase up to that number of shares of such remaining Involuntary
Transfer Stock that is equal to the product of his fully-diluted
percentage ownership interest of Securities held by the Other
Securityholders desiring to purchase the remaining shares of the
Involuntary Transfer Stock and that number of shares of Involuntary
Transfer Stock available for purchase hereunder.
(iii) If the Company or any Other Securityholder has
actual knowledge of an Involuntary Transfer by a Subject
Securityholder, the Company or the Other Securityholder, as applicable,
shall give written notice to such effect to the Subject Securityholder
and to the Other Securityholders, and giving such written notice shall
constitute the Subject Securityholder's giving written notice to the
Company and to the Other Securityholders for purposes of this Section
3(c).
(iv) The Company, the Other Securityholders, or a
combination of both, as applicable, purchasing Involuntary Transfer
Stock hereunder (collectively, the "Section 3(c) Securityholders"), as
the case may be, shall settle with an assignee, trustee in bankruptcy,
attaching court or officer, legal guardian, personal representative or
successor in interest, as the case may be, holding shares of the
Involuntary Transfer Stock received in an Involuntary Transfer by
taking any or all such shares in execution and paying to them the
purchase price for each share as provided in Section 5 hereof, but not
exceeding the Subject Securityholder's indebtedness and proper items of
expense. The balance of the value of such shares of Involuntary
Transfer Stock shall be distributable to the Subject Securityholder.
(d) Death of an Executive Officer. In the event of the death
of an Executive Officer (the deceased party hereinafter being called, the
"Deceased Securityholder"), such death shall be deemed to be an Involuntary
Transfer and shall be subject to the provisions of Section 3(c) hereof;
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provided, however, that in the event that the Deceased Securityholder shall make
a Family Transfer upon his death, either by will or by the laws of intestacy in
force in the jurisdiction of his residence, then such a Family Transfer shall
not be deemed an Involuntary Transfer; provided, further, that any Securities
transferred by the Deceased Securityholder under this Section 3(d) shall remain
subject to the provisions of this Agreement. The transferee of any Securities or
rights therein under this Section 3(d) shall, as a condition precedent to the
validity, and the recognition by the Company, of such Transfer, become a party
to this Agreement.
SECTION 4. PURCHASE PRICE FOR INVOLUNTARY TRANSFER.
(a) In the event of an Involuntary Transfer (a "Sale Event"),
the purchase price for the Securities to be purchased as the result of said Sale
Event shall be the fair market value of such Securities, as provided in Section
4(b) hereof, as of the date of the Sale Event.
(b) Fair Market Value.
(i) Agreement of Parties. For purposes of determining
the fair market value of the Securities to be purchased pursuant to
Section 3(c) hereof, if the Section 3(c) Securityholders or the
Company, as applicable, and the Subject Securityholder, as applicable,
agree in writing as to the purchase price for the Securities to be
purchased as the result of a Sale Event, such agreed value shall be the
fair market value of said Securities and shall be the purchase price of
said Securities for purposes of this Agreement. If no agreement on the
fair market value of the Securities to be purchased pursuant to Section
3(c) hereof can be reached within fifteen (15) days after the date that
the last option period pursuant to which any Section 3(c)
Securityholder or the Company, as applicable, elected to purchase such
Securities has expired, then the fair market value of said Securities
shall be determined pursuant to Section 4(b)(ii) hereof.
(ii) Third Party Appraisal. If the parties cannot
agree on the fair market value, as set forth in Section 4(b)(i) above,
of the Securities to be purchased within the period therein stated,
then within seven (7) days thereafter, an appraiser or appraisers shall
be jointly selected by the Subject Securityholder, on the one hand, and
the Company, if it is the only Section 3(c) Securityholder, or the
Section 3(c) Securityholders (excluding the Company) owning at least a
majority in interest of the fully-diluted Securities owned by the
Section 3(c) Securityholders (hereinafter, the "Majority Interest"), if
the Section 3(c) Securityholders are comprised in whole or in part of
persons or entities other than the Company, and the determination of
such jointly selected appraiser or appraisers as to the "fair market
value" of the Securities to be sold by the Subject Securityholder and
purchased by the Section 3(c) Securityholders or the Company, as
applicable, shall be binding and conclusive upon all parties. If the
applicable parties are unable to reach an agreement as to an appraiser,
the provisions of Section 4(b)(iii) below shall apply.
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For purposes of this Section 4(b)(ii), the "fair
market value" of the Securities shall be an amount equal to the "fair
market value per share of Common Stock" multiplied by the number of
shares of Common Stock held by the Securityholder or issuable upon the
exercise of the Warrants or conversion of the shares of Series C
Preferred Stock (or issuable upon the exercise conversion of any other
securities of the Company not outstanding on the date hereof) held by
the Securityholder which are being sold and purchased hereunder.
For purposes hereof, "fair market value per share of
Common Stock" shall be an amount equal to the fair market value of all
of the shares of Common Stock on a fully-diluted basis as of the date
of the Sale Event as determined by appraisal pursuant to this Section
4(b)(ii), divided by the total number of shares of Common Stock on a
fully-diluted basis issued and outstanding as of such date.
(iii) Additional Appraiser. If the Subject
Securityholder, on the one hand, and the Company or the Majority
Interest, as the case may be, on the other hand, do not agree upon the
selection of an appraiser or appraisers, as provided in Section
4(b)(ii) hereof within the period therein stated, then, within five (5)
days after the expiration of the seven (7) day period provided for in
Section 4(b)(ii) hereof, the Subject Securityholder and the Company or
the Majority Interest, as applicable, shall deliver to the other a list
of three appraisers and each of the Subject Securityholder and the
Company or the Majority Interest, as applicable, shall select one (1)
appraiser from the list delivered by the other by written notice to the
other. If either party fails to deliver a list of appraisers or to
select an appraiser from such list within said five (5) day period, the
other party may select an appraiser from its list and such appraiser
shall serve as the sole appraiser. Each of the appraisers so selected
shall, within thirty (30) days of being selected, determine the fair
market value of the Securities. If the lower of the two (2) appraisals
is at least ninety percent (90%) of the higher appraisal, then the fair
market value of the Securities shall be equal to the average of the two
(2) appraisals. If the lower of the two (2) appraisals is less than
ninety percent (90%) of the higher appraisal, then the two (2)
appraisers shall appoint a third appraiser within seven (7) days after
the end of said thirty (30) day period, and such third appraiser shall,
within fifteen (15) days of being selected, determine the fair market
value of the Securities. In such event, the fair market value of the
Securities shall be equal to the average of (A) the third appraisal and
(B) whichever of the first two appraisals is closest in dollar amount
to the third appraisal. The determination of such appraisers shall be
determinative of the fair market value of the Securities for the
purposes of this Section 4, and shall be binding, final and conclusive
on all parties hereto.
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(iv) Costs of Appraisals. All expenses incurred in
the appraisal process shall be borne and paid equally by the Subject
Securityholder, on the one hand, and the Company, on the other hand.
SECTION 5. CLOSING. Closing (the "Closing") on the sale of any
Securities sold pursuant to this Agreement shall be, unless otherwise agreed to
in writing by the purchasers of such shares (the "Section 5 Securityholders")
and the seller of such shares (the "Seller") or his personal or legal
representative, or successor, as the case may be, held at the principal place of
business of the Company thirty (30) days after the earlier of (a) the date on
which an option is exercised to purchase all of the Securities offered for sale
pursuant to this Agreement (or, if an election is made to sell less than all of
the offered Securities, then upon the date on which an option is subsequently
exercised to purchase the remaining portion of such offered Securities) or (b)
if all of such Securities offered for sale are not purchased pursuant to this
Agreement, the date on which the last option period to purchase such offered
Securities expires (collectively, the "Closing Date"). At the Closing, (i) the
Seller shall surrender the certificates representing the Securities to be
transferred and any documentation reasonably requested by the Company or the
Section 5 Securityholders, as the case may be, to convey the Securities
transferred, properly endorsed or executed for transfer and (ii) the
Securityholder shall pay the full amount of the purchase price in cash or by any
other means as agreed upon in writing by the Seller.
SECTION 6. STOCK COVERED. Except as otherwise provided herein, the
provisions of Sections 2 through 5 and Section 7 of this Agreement shall apply
to all of the Securities, now owned or which may be hereinafter acquired in any
manner, and any other capital stock or securities exercisable or convertible
into capital stock, of the Company hereinafter acquired. The term "Securities"
shall include such other acquired securities.
SECTION 7. TAG ALONG RIGHTS; DRAG ALONG RIGHTS.
(a) Tag Along Rights. If, at any time prior to the successful
completion of a firm commitment underwritten initial public offering (the "IPO")
of the Common Stock pursuant to an effective registration statement on Form S-1
(or its equivalent) under the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder (the "Securities Act"), any
Securityholder (a "Selling Securityholder") desires to Transfer in a single
transaction or in a series of related transactions, that number of Securities
equal to ten percent (10%) or more of the total number of Securities owned by
him in the aggregate and neither the Company nor the Securityholders have
elected to purchase said Securities pursuant to the provisions of Section 3
hereof, then the Selling Securityholder shall give notice of such intent to the
Securityholders at least twenty (20) days prior to the proposed date of such
sale. Such notice shall specify the number of shares and the terms, including
price, upon which such Securities are to be sold, exchanged, conveyed, or
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otherwise transferred and the proposed date of such sale, exchange, conveyance,
or transfer.
One or more of the Securityholders may elect to participate
in such sale by giving notice to the Selling Securityholder at least five (5)
days prior to the date of the proposed sale. Such notice from one or more of the
Securityholders shall specify the number of Securities which they propose to
sell. If one or more of the Securityholders elect to participate in such sale,
and give timely notice of such election in accordance with the provisions of
this Section 7(a), then the Selling Securityholder shall not effect such sale
unless either (i) the proposed purchaser of such shares offers to purchase from
each of the Securityholders electing to participate in the sale, at the same
time and on the same terms (including price) as Securities that are being
purchased from the Selling Securityholder, that number of Securities on a
fully-diluted basis owned by each of the electing Securityholders which bears
the same proportion to the total number of Securities on a fully-diluted basis
which such Securityholder beneficially owns as the number of Securities being
sold by the Selling Securityholder bears to the total number of Securities owned
by the Selling Securityholder, or (ii) to the extent the proposed purchaser is
unwilling to purchase shares of one or more of the electing Securityholders'
Securities as calculated above, then the number of shares of the electing
Securityholders' Securities as so calculated, and the number of Securities of
the Selling Securityholder as otherwise to be sold, shall each be reduced
proportionately to equal the total number of shares to be purchased by the
proposed purchaser, who will thereupon offer to purchase that number of shares
of the electing Securityholders' Securities as so calculated at the same time
and on the same terms (including price) as the number of Securities to be sold
by the Selling Securityholder, as recalculated herein.
(b) Drag Along Rights. If at any time prior to the IPO, a
bona fide offer (a "Bona Fide Offer") is made by an independent third party to
purchase all or substantially all of the Company's assets or equity securities,
then if the Bona Fide Offer is received by a Securityholder, that Securityholder
shall promptly notify the Company in writing of the terms, including price, and
conditions of the Bona Fide Offer. Upon receipt of the notice from the
Securityholder or, if the Bona Fide Offer is received by the Company directly
from the independent third party, the Company, promptly shall notify (the
"Company Notice") the Securityholders in writing of the Bona Fide Offer,
specifying the terms, including price, and conditions of the Bona Fide Offer.
The Securityholders owning at least two-thirds (2/3) of the shares of Common
Stock on a fully-diluted basis owned by all of the Securityholders on the date
of the Bona Fide Offer (the "Two-Thirds Interest") shall have the option (the
"Option"), for a period of thirty (30) days from the date of receipt of the
Company Notice, to require the Company and the Securityholders to accept the
Bona Fide Offer; provided, however, that the Company may elect instead to
acquire all of the Securityholders' Securities (the "Securityholders' Equity")
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on the same terms, including price, and subject to the same conditions as
specified in the Bona Fide Offer (except that the consideration payable to the
Securityholders shall be cash). Any election by the Company pursuant to this
Section 7(b) shall be at the direction of a two-thirds majority of the members
of the Board of Directors of the Company (the "Board")(with the Securityholders'
Board representatives abstaining from any such vote to the extent that they or
their affiliates are party to the Option election).
Should the Two-Thirds Interest desire to exercise the Option,
they shall notify the Company (the "Securityholders' Notice") in writing of
their exercise of the Option prior to the expiration of the aforementioned
thirty (30) day period. The Company shall have thirty (30) days from the date of
receipt of the Securityholders' Notice to elect whether to acquire the
Securityholders' Equity or accept the Bona Fide Offer. If the Company declines
to acquire the Securityholders' Equity, the Securityholders hereby agree to
effect the sale of their Securities (or, if the transaction is an asset sale, to
effect the asset sale) pursuant to the Bona Fide Offer.
If the Company elects to acquire the Securityholders' Equity,
it shall consummate the acquisition of the Securityholders' Equity on or before
the period expiring ninety (90) days from the date of the Company Notice. If the
Company shall fail to consummate the acquisition of the Securityholders' Equity
on or prior to the expiration of such period, then the Company and the
Securityholders shall accept the Bona Fide Offer. If, however, the Bona Fide
Offer has been withdrawn prior to such date due to the Company's inability to
timely consummate the acquisition of the Securityholders' Equity, then the
Securityholders shall have the election, in accordance with the procedures set
forth herein, to require the Company and the Securityholders to accept the next
Bona Fide Offer without the option of the Company to acquire the
Securityholders' Equity in lieu of accepting the Bona Fide Offer.
The acquisition by the Company of the Securityholders' Equity
shall be for cash consideration. If the Bona Fide Offer is accepted, the
Securityholders shall be entitled to receive the same form of consideration as
the Company's Other Securityholders.
SECTION 8. REGISTRATION RIGHTS.
(a) Certain Definitions: As used in this Section 8, the
following terms shall have the following respective meanings:
(i) "Commission" shall mean the Securities and
Exchange Commission, or any other Federal agency at the time
administering the Securities Act;
(ii) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended, or any similar Federal statute, and
the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the time;
(iii) "Securityholder Shares" shall mean,
collectively, the shares of Common Stock held by the Securityholders and
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issuable upon the exercise of the Warrants and conversion of the Series
C Preferred Stock (or issuable upon the exercise or conversion of any
warrants, options or convertible securities acquired after the date
hereof) held by the Securityholders;
(iv) "Registration Expenses" shall mean the expenses
so described in Section 8(f) hereof; and
(v) "Selling Expenses" shall mean the expenses so
described in Section 8(f) hereof.
(b) Demand Rights.
(i) At any time after the second (2nd) anniversary
of the date of this Agreement, the Two-Thirds Interest on such date, may
require that the Company register under the Securities Act all or a
portion of their Securityholder Shares for sale in the manner specified
in such notice. Notwithstanding anything to the contrary contained
herein, (A) no request may be made under this Section 8(b) within one
hundred and twenty (120) days after the effective date of (I) the IPO or
(II) a registration statement filed by the Company covering a firm
commitment underwritten public offering in which the holders of
Securityholder Shares shall have been entitled to join pursuant to
Section 8(c) or (d) hereof and in which there shall have been
effectively registered at least fifty percent (50%) of the total
Securityholder Shares as to which registration shall have been so
requested and (B) if the demand under this Section shall relate to an
IPO in which the net proceeds (the is gross proceeds to the Company as a
result of such offering less the applicable underwriting discounts and
commissions) equals or exceeds Twenty-Five Million Dollars ($25,000,000)
and the pre-offering valuation for the Company's common equity equals or
exceeds One Hundred Million Dollars ($100,000,000).
(ii) Following receipt of any notice of demand under
this Section 8(b), the Company shall immediately notify all record
holders of the Securityholder Shares from whom notice has not been
received of their rights to participate in the underwritten public
offering and, upon the written request from such holders within thirty
(30) days after the giving of such notice by the Company, shall include
all Securityholder Shares held by such holders in the underwritten
public offering.
(iii) The holders of a majority of the
Securityholder Shares to be sold in the underwritten public offering may
designate the managing underwriter of such offering.
(iv) The Company shall be obligated to register
Securityholder Shares pursuant to this Section 8(b) on not more than two
(2) separate occasions, provided, however, that such obligation shall be
deemed satisfied only when a registration statement covering at least
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seventy-five percent (75%) of the total Securityholder Shares specified
in notices received as aforesaid, for sale in accordance with the method
of disposition specified by the requesting holders, shall have become
effective and, if such method of disposition is a firm commitment
underwritten public offering, all such shares shall have been sold
pursuant thereto. Notwithstanding anything in this Section 8(b) to the
contrary, the Company shall be entitled, upon the written advice of the
managing underwriters, to reduce the number of Securities to be offered
in any such public offering, pro rata in accordance with the ownership
interest of each holder of Securityholder Shares to be included in the
offering.
(v) The Company shall be entitled to include in any
registration statement referred to in this Section 8(b) Securities to be
sold by the Company for its own account, except as and to the extent
that, in the opinion of the managing underwriter (if such method of
disposition shall be an underwritten public offering), such inclusion
would adversely affect the marketing of the Securityholder Shares to be
sold. The Company will not file with the Commission any other
registration statement with respect to its Securities, whether for its
own account or for that of other Securityholders, from the date of
receipt of a notice from requesting holders pursuant to this Section
8(b) until the completion of the period of distribution of the
registration contemplated thereby.
(c) Incidental Registration. If the Company at any time
(other than pursuant to Section 8(b) or (d) hereof) proposes to register any of
its securities under the Securities Act for sale to the public, whether for its
own account or for the account of other security holders or both (except with
respect to registration statements on Forms ▇-▇, ▇-▇ or another form not
available for registering the Securityholder Shares for sale to the public),
each such time it will give written notice to all holders of Securityholder
Shares of its intention so to do. Upon the written request of any holder of
Securityholder Shares, received by the Company within thirty (30) days after the
giving of any such notice by the Company, to register any of its Securityholder
Shares (whether or not such Securityholder Shares are issued or outstanding at
the time), in whole or in part (which request shall state the intended method of
disposition thereof), the Company will use its best efforts to cause the
Securityholder Shares as to which registration shall have been so requested to
be included in the securities to be covered by the registration statement
proposed to be filed by the Company, all to the extent requisite to permit the
sale or other disposition by the holder (in accordance with its written request)
of such Securityholder Shares so registered. In the event that any registration
pursuant to this Section 8(c) shall be, in whole or in part, an underwritten
public offering of Securities, the number of Securityholder Shares to be
included in such an underwriting may be reduced, in whole or in part, (pro rata
among the requesting holders of Securityholder Shares based upon the number of
Securityholder Shares owned by such holders) if and to the extent that the
managing underwriter shall be of the opinion that such inclusion would adversely
affect the marketing of the securities to be sold by the Company therein,
provided, however, that such number of Securityholder Shares shall not be
reduced below thirty percent (30%) of the aggregate number of shares offered by
the Company and the requesting holders of Securityholder Shares. Notwithstanding
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the foregoing provisions, the Company may withdraw any registration statement
referred to in this Section 8(c) without thereby incurring any liability to the
holders of Securityholder Shares.
(d) Registration on Form S-3. If at any time (i) a holder or
holders of Securityholder Shares requests that the Company file a registration
statement on Form S-3 (or any successor thereto) for a public offering of all or
any portion of the Securityholder Shares held by such requesting holder or
holder and (ii) the Company is a registrant entitled to use Form S-3 (or any
successor thereto) to register such shares, then the Company shall use its best
efforts to register under the Securities Act on Form S-3 (or any successor
thereto), for public sale in accordance with the method of disposition specified
in such notice, the number of Securityholder Shares specified in such notice.
Whenever the Company is required by this Section 8(d) to use its best efforts to
effect the registration of Securityholder Shares, each of the procedures and
requirements of Section 8(b) hereof (including but not limited to the
requirement that the Company notify all holders of Securityholder Shares from
whom notice has not been received and provide them with the opportunity to
participate in the offering) shall apply to such registration; provided,
however, that there shall be no limitation on the number of registrations on
Form S-3 (or any successor thereto) which may be requested and obtained under
this Section 12(d), except that not more than two (2) such registrations shall
occur within any twelve-month period; and provided further that the requirements
contained in the first sentence of Section 8(b) hereof shall not apply to any
registration on Form S-3 (or any successor thereto) which may be requested and
obtained under this Section 8(d).
(e) Registration Procedures. If and whenever the Company is
required by the provisions of Section 8(b), (c) or (d) hereof to use its best
efforts to effect the registration of any Securityholder Shares under the
Securities Act, the Company will, as expeditiously as possible:
(i) prepare and file with the Commission a
registration statement (which, in the case of an underwritten public
offering pursuant to Section 8(b) hereof, shall be on Form S-1 or such
other form of general applicability satisfactory to the managing
underwriter selected as therein provided) with respect to such
securities and use its best efforts to cause such registration statement
to become and remain effective for the period of the distribution
contemplated thereby (determined as hereinafter provided);
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective for the period specified in
subparagraph (i) above and comply with the provisions of the Securities
Act with respect to the disposition of all Securityholder Shares covered
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by such registration statement in accordance with the sellers' intended
method of disposition set forth in such registration statement for such
period;
(iii) furnish to each seller of Securityholder
Shares and to each underwriter such number of copies of the registration
statement and the prospectus included in the registration statement
(including each preliminary prospectus) as such persons reasonably may
request in order to facilitate the public sale or other disposition of
the Securityholder Shares covered by such registration statement;
(iv) use all reasonable efforts to register or
qualify the Securityholder Shares covered by such registration statement
under the securities or "blue sky" laws of such jurisdictions as the
sellers of Securityholder Shares or, in the case of an underwritten
public offering, the managing underwriter reasonably shall request,
provided, however, that the Company shall not for any such purpose be
required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction;
(v) use its best efforts to list the Securityholder
Shares covered by such registration statement with any securities
exchange on which the Securities is then listed;
(vi) immediately notify each seller of
Securityholder Shares and each underwriter under such registration
statement, at any time when a prospectus relating thereto is required to
be delivered under the Securities Act, of the happening of any event of
which the Company has knowledge as a result of which the prospectus
contained in such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing;
(vii) if the offering is underwritten and at the
request of any seller of Securityholder Shares, use its best efforts to
furnish on the date that Securityholder Shares are delivered to the
underwriters for sale pursuant to such registration: (A) an opinion
dated such date of counsel representing the Company for the purposes of
such registration, addressed to the underwriters and to such seller,
stating that such registration statement has become effective under the
Securities Act and that (1) to the best knowledge of such counsel, no
stop order suspending the effectiveness thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act, (2) the registration statement,
the related prospectus and each amendment or supplement thereof comply
as to form in all material respects with the requirements of the
Securities Act (except that such counsel need not express any opinion as
to financial statements contained therein) and (3) to such other effects
as reasonably may be requested by counsel for the underwriters or by
such seller or its counsel and (B) a letter dated such date from the
independent public accountants retained by the Company, addressed to the
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underwriters and to such seller, stating that they are independent
public accountants within the meaning of the Securities Act and that, in
the opinion of such accountants, the financial statements of the Company
included in the registration statement or the prospectus, or any
amendment or supplement thereof, comply as to form in all material
respects with the applicable accounting requirements of the Securities
Act, and such letter shall additionally cover such other financial
matters (including information as to the period ending not more than
five (5) business days prior to the date of such letter) with respect to
such registration as such underwriters reasonably may request; and
(viii) make available for inspection by each seller
of Securityholder Shares, upon such seller signing an appropriate
confidentiality agreement, any underwriter participating in any
distribution pursuant to such registration statement, and any attorney,
accountant or other agent retained by such seller or underwriter, all
financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors
and employees to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with
such registration statement.
For purposes of Section 8(e)(i) and (ii) and of Section
8(b)(iii) and (vi) hereof, the period of distribution of Securityholder Shares
in a firm commitment underwritten public offering shall be deemed to extend
until each underwriter has completed the distribution of all securities
purchased by it (but not later than one hundred and eighty (180) days), and the
period of distribution of Securityholder Shares in any other registration shall
be deemed to extend until the earlier of the sale of all Securityholder Shares
covered thereby and one hundred and twenty (120) days after the effective date
thereof.
In connection with each registration hereunder, the sellers
of Securityholder Shares will furnish to the Company in writing such information
with respect to themselves and the proposed distribution by them as reasonably
shall be necessary in order to assure compliance with Federal and applicable
state securities laws.
In connection with each registration pursuant to Section
8(b), (c) or (d) hereof covering an underwritten public offering, the Company
and each seller agree to enter into a written agreement with the managing
underwriter selected in the manner herein provided in such form and containing
such provisions as are customary in the securities business for such an
arrangement between such underwriter and companies of the Company's size and
investment stature.
(f) Expenses. All expenses incurred by the Company in
complying with Section 8(b), (c) and (d) hereof, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
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(including counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars, costs of
insurance and reasonable fees and disbursements of one law firm for the sellers
of Securityholder Shares, but excluding any Selling Expenses, are called
"Registration Expenses". All underwriting discounts and selling commissions
applicable to the sale of the Securityholder Shares are called "Selling
Expenses".
The Company will pay all Registration Expenses in connection
with each registration statement under Section 8(b), (c) or (d) hereof, except
to the extent that any such Registration Expenses must be borne by the
participating sellers in order to permit the sale of shares in any state under
the state securities or "blue sky" laws thereof and except that the sellers
shall pay such expenses in connection with the third (3rd) and all following
registration requests under Section 8(d) hereof (if at least two (2) of the
prior registrations under Section 8(d) have successfully been consummated or, if
not consummated, were terminated due to the request of the person(s) originally
requesting registration). All Selling Expenses in connection with each
registration statement under Section 8(b), (c) or (d) hereof, and any
Registration Expenses borne by the sellers pursuant to the preceding sentence
shall be borne by the participating sellers in proportion to the number of
shares sold by each, or by such participating sellers (including the Company if
it shall be a participating seller) as they may agree.
(g) Indemnification and Contribution.
(i) In the event of a registration of any of the
Securityholder Shares under the Securities Act pursuant to Section 8(b),
(c) or (d) hereof, the Company will indemnify and hold harmless each
seller of such Securityholder Shares thereunder, each underwriter of
such Securityholder Shares thereunder and each other person, if any, who
controls such seller or underwriter within the meaning of the Securities
Act, against any losses, claims, damages, liabilities or expenses, joint
or several (or actions in respect thereof), to which such seller,
underwriter or controlling person may become subject under the
Securities Act, Exchange Act, or other Federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of
any litigation, if such settlement is effected with the written consent
of the Company), insofar as such losses, claims, damages liabilities or
expenses (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in any registration statement (the "Registration Statement")
under which such Securityholder Shares were registered or qualified
under the Securities Act or applicable state securities laws pursuant to
Section 8(b), (c) or (d) hereof, any preliminary prospectus (the
"Preliminary Prospectus") or final prospectus ("Prospectus") contained
therein, or any amendment or supplement thereof, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, or arise out of or are based in whole or in part
-16-
on any inaccuracy in the representations and warranties of the Company
contained in an underwriting agreement with the underwriters or any
failure of the Company to perform its obligations under such
underwriting agreement or under law; and will reimburse each such
seller, each such underwriter and each such controlling person for any
legal and other expenses as such expenses are reasonably incurred by
them in connection with investigating, defending, settling, compromising
or paying any such loss, claim, damage, liability, expense or action;
provided, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission in the Registration Statement,
any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with the
information furnished in writing by any such seller, any such
underwriter or any such controlling person.
(ii) In the event of a registration of any of the
Securityholder Shares under the Securities Act pursuant to Section 8(b),
(c) or (d) hereof, each seller of such Securityholder Shares thereunder,
severally and not jointly, will indemnify and hold harmless the Company,
each person, if any, who controls the Company within the meaning of the
Securities Act, each officer of the Company who signs the registration
statement, each director of the Company, each underwriter, each person
who controls any underwriter within the meaning of the Securities Act
and each other seller of Securityholder Shares thereunder, against any
losses, claims, damages liabilities or expenses, joint or several, to
which the Company or such officer, director, underwriter, controlling
person or other seller may become subject under the Securities Act,
Exchange Act, or other Federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation if
such settlement is effected with the written consent of the seller of
the Securityholder Shares), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or arise out of or are based
in whole or in part on any inaccuracy in the representations and
warranties of the seller of such Securityholder Shares contained in an
underwriting agreement with the underwriters or any failure of such
seller to perform its obligations under such agreement or under law;
provided, however, that such seller will be liable hereunder in any such
case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon
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and in strict conformity with information pertaining to such seller, as
such, furnished in writing to the Company by such seller stated to be
specifically for use in such registration statement and prospectus;
provided further that the liability of each seller hereunder shall be
limited to the proportion of any such loss, claim, damage, liability or
expense which is equal to the proportion that the public offering price
of the shares sold by such seller under such registration statement
bears to the total public offering price of all securities sold
thereunder, but not in any event to exceed the proceeds received by such
seller from the sale of Securityholder Shares covered by such
registration statement.
(iii) Promptly after receipt by an indemnified party
hereunder of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party in writing
of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve it from any liability which it may
have to such indemnified party for contribution or otherwise other than
as specifically set forth under the terms of this Section 8(g) and shall
only relieve it from any liability which it may have to such indemnified
party under this Section 8(g) if and to the extent the indemnifying
party is materially prejudiced by such omission. In case any such action
shall be brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in and, to the extent
it may desire, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be a conflict between the positions of the
indemnifying party and the indemnified party in conducting the defense
of any such action or that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional
to those available to the indemnifying party, the indemnified party or
parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable
to such indemnified party for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof unless (A) the indemnified party shall have employed such
counsel in connection with the assumption of legal defenses in
accordance with the provisions of the preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for
the expenses of more than one separate counsel) or (B) the indemnifying
party shall not have employed counsel reasonably satisfactory to the
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indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action, in each of which cases
the fees and expenses of counsel shall be at the expense of the
indemnifying party.
(iv) In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in
which either (A) any holder of Securityholder Shares exercising rights
under this Agreement, or any controlling person of any such holder,
makes a claim for indemnification pursuant to this Section 8(g) but it
is judicially determined (by the entry of a final judgment or decree by
a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that this Section
8(g) provides for indemnification in such case or (B) contribution under
the Securities Act may be required on the part of any such selling
holder or any such controlling person in circumstances for which
indemnification is provided under this Section 8(g); then, and in each
such case, the Company and such holder will contribute to the aggregate
losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that such holder
is responsible for the portion represented by the percentage that the
public offering consideration of its Securityholder Shares offered by
the registration statement bears to the public offering consideration of
all securities offered by such registration statement, and the Company
is responsible for the remaining portion; provided, however, that, in
any such case, (1) no such holder will be required to contribute any
amount in excess of the public offering price of all such Securityholder
Shares offered by it pursuant to such registration statement and (2) no
person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 12(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
(h) Changes in Securities. If, and as often as, there is any
change in the Securities by way of a Recapitalization Event, or through a
merger, consolidation, reorganization, recapitalization or by any other means,
appropriate adjustment shall be made in the provisions hereof so that the rights
and privileges granted hereby shall continue with respect to the Securities as
so changed.
(i) Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Securityholder Shares to the public without
registration, at all times after ninety (90) days after any registration
statement covering a public offering of securities of the Company under the
Securities Act shall have become effective, the Company agrees to:
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(i) make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities
Act ("Rule 144");
(ii) use its best efforts to file with the
Commission in a timely manner all reports and other documents required
of the Company under the Securities Act and the Exchange Act; and
(iii) furnish to each holder of Securityholder
Shares forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so
filed by the Company as such holder may reasonably request in availing
itself of any rule or regulation of the Commission allowing such holder
to sell any Securityholder Shares without registration.
(j) Transfer of Registration Rights. Any Securityholder (or
any valid transferee thereof) may transfer to any transferee its registration
rights pursuant to this Section 8, provided that the number of Securityholder
Shares as to which registration rights are transferred shall equal at least
twenty percent (20%) of the Securityholder Shares originally owned by the
Securityholder and provided, further, that no transfer of such rights may be
made to a direct competitor of the Company.
(k) Termination of Registration Rights. The obligations of
the Company under this Section 8 shall terminate on the fifth (5th) anniversary
of the IPO.
SECTION 9. ELECTION/REMOVAL OF DIRECTORS. Each Securityholder agrees to
vote his Securities in accordance with the applicable provisions of the
Articles.
SECTION 10. SPECIFIC PERFORMANCE. Inasmuch as the Securities cannot be
readily purchased or sold in the open market, irreparable damage would result in
the event that the provisions of this Agreement are not specifically enforced.
Therefore, the rights to, or obligations of, the parties hereto shall be
enforceable in a court of equity by a decree of specific performance and
appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies, and all other remedies provided for in this Agreement,
shall, however, be cumulative and not exclusive and shall be in addition to any
other remedies which any party may have under this Agreement or otherwise.
SECTION 11. ENDORSEMENT OF CERTIFICATE. Upon the execution of this
Agreement, each certificate for Securities now registered or to be issued in the
name of the Securityholders shall be endorsed by the Secretary of the Company as
follows:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THEY HAVE BEEN SO REGISTERED UNDER THOSE
ACTS OR IF EXEMPTIONS FROM REGISTRATION ARE AVAILABLE.
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THIS CERTIFICATE IS TRANSFERABLE ONLY UPON COMPLIANCE WITH
THE PROVISIONS OF THAT CERTAIN STOCKHOLDERS' AGREEMENT DATED
AS OF DECEMBER 29, 1995 BY AND AMONG U.S. VISION, INC. AND
CERTAIN OF ITS SECURITYHOLDERS, A COPY OF WHICH IS ON FILE IN
THE OFFICE OF THE SECRETARY OF THE COMPANY AND IS AVAILABLE
UPON REQUEST OF ANY SECURITYHOLDER WITHOUT CHARGE.
All certificates for any equity securities of the Company
hereinafter issued to the Securityholders shall bear the same endorsement, and
this Agreement shall cover all such stock.
SECTION 12. TERM. Notwithstanding anything contained herein to the
contrary, this Agreement shall terminate, and all rights and obligations
hereunder shall cease, upon the earlier to occur of the termination of this
Agreement as provided by applicable Maryland law or the occurrence of any of the
following events:
(a) The written agreement of each of the then parties
hereto; or
(b) The cessation of the Company's business.
The provisions of this Agreement set forth in Sections 2 through 5 and Section 7
hereof, shall terminate and be of no further force and effect upon the
completion of an IPO.
SECTION 13. NOTICES. All notices, offers, acceptances, requests and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if delivered or mailed by certified or registered mail to the
Securityholders at their addresses in the stock records of the Company, and if
to the Company at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇. Any
party hereto may change his or its address for notice by giving notice thereof
in the manner herein above provided.
SECTION 14. MISCELLANEOUS.
(a) Entire Agreement, Etc. This Agreement, and the documents
referred to herein, embody the entire agreement and understanding among the
parties hereto with respect to the subject matter hereof and may be amended,
modified or canceled only by written agreement of the parties hereto. This
Agreement shall be binding upon, and inure to the benefit of, and shall be
enforceable by, the heirs, successors, assigns, and personal representatives, as
the case may be, of the parties hereto. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware,
without giving effect to its conflicts of laws provisions. In case any term of
-21-
this Agreement shall be held invalid, illegal or unenforceable in whole or in
part, neither the validity of the remaining part of such term nor the validity
of the remaining terms of this Agreement shall in any way be affected thereby.
Each of the parties agrees that he will consent to and approve any amendments of
the Restated Articles or Bylaws of the Company which may be necessary or
advisable in order to conform any of the provisions of this Agreement or any
amendments hereto to applicable law. Each Securityholder further agrees to
execute and deliver such documents as may be necessary in order to implement the
provisions of the preceding sentence. Any amendments hereto shall be in writing
and executed by each of the parties hereto.
(b) COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be considered an original and all of
which, when taken together, shall constitute one and the same instrument.
(c) GENDER. The use of the singular shall include the plural
and the use of the masculine gender shall include the feminine and neutral
genders and vice versa.
(d) NO RIGHT OF EMPLOYMENT. Neither this Agreement nor any
purchase or sale of Securities hereunder shall create, or be construed or deemed
to create, any right of employment by the Company in favor of any person.
IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
ATTEST: U.S. VISION INC., INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. SEAL)
----------------------------- ------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Secretary ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.,
President and CEO
WITNESS: GROTECH PARTNERS III, L.P.
GROTECH III COMPANION FUND, L.P.
GROTECH III PENNSYLVANIA FUND, L.P.
By: GROTECH CAPITAL GROUP, INC.,
GENERAL PARTNER
/s/ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ (SEAL)
----------------------------- ------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇,
Managing Director
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EXECUTION COPY
WITNESS: GROTECH PARTNERS IV, L.P.
By: GROTECH CAPITAL GROUP IV, INC.,
GENERAL PARTNER
/s/ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ (SEAL)
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇,
Managing Director
WITNESS: ▇▇▇▇▇▇▇ CAPITAL PARTNERS, L.P.
By: ▇▇▇▇▇▇▇ CAPITAL MANAGEMENT, L.P.,
GENERAL PARTNER
/s/ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ (SEAL)
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, General Partner
WITNESS: THE PENN JANNEY FUND, INC.
/s/ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇ (SEAL)
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▇▇▇▇▇▇▇ ▇. ▇▇▇, Executive Vice
President
WITNESS: ▇▇▇▇▇▇▇▇ PARTNERS, L.P.
By: SGMS, L.P., GENERAL PARTNER
By: ▇▇▇▇▇▇▇▇ PARTNERS, INC.,
GENERAL PARTNER
/s/ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ (SEAL)
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▇▇▇▇▇▇ ▇▇▇▇▇, Vice President
-23-
WITNESS: M & M GENERAL PARTNERSHIP
/s/ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (SEAL)
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, General Partner
WITNESS: CONSTITUTION PARTNERS I, L.P.
By: RKM INVESTMENT COMPANY,
GENERAL PARTNER
/s/ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (SEAL)
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
WITNESS:
/s/ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (SEAL)
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
WITNESS:
/s/ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇. (SEAL)
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
WITNESS:
s/ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (SEAL)
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
WITNESS:
/s/ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (SEAL)
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-24-
WITNESS:
/s/ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (SEAL)
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
WITNESS:
/s/ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ (SEAL)
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▇▇▇▇ ▇. ▇▇▇▇▇▇
-25-
SHARES OF SHARES OF
SHARES OF SERIES C NUMBER OF SERIES A NUMBER OF
COMMON PREFERRED WARRANT PREFERRED OPTION TOTAL PERCENT
NAME OF SECURITYHOLDER STOCK STOCK* SHARES STOCK ** SHARES CSEs CSEs
GROTECH PARTNERS IV, L.P. 3,100.0000 31,666.70 7,832.0000 41.1667 10,932.00 .22
GROTECH PARTNERS III, L.P. 610.0000 6,238.50 1,543.0000 8.1101 2,153.00 .04
GROTECH III COMPANION FUND, L.P. 66.0000 679.60 168.0000 0.8835 234.00 .00
GROTECH III PENNSYLVANIA FUND, L.P. 38.0000 389.50 96.0000 0.5064 134.00 .00
▇▇▇▇▇▇▇▇ PARTNERS, L.P. 2,980.0000 30,448.70 7,531.0000 39.5833 10,511.00 .21
PENN JANNEY FUND, L.P. 238.0000 2,435.90 602.0000 3.1667 840.00 .02
▇▇▇▇▇▇▇ CAPITAL PARTNERS, L.P. 119.0000 1,218.00 301.0000 1.5834 420.00 .01
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 357.0000 3,651.30 903.0000 4.7467 1,260.00 .03
M&M GENERAL PARTNERSHIP 132.0000 1,348.70 333.0000 1.7533 465.00 .01
CONSTITUTION PARTNERS I, L.P. 953.0000 9,743.60 2,409.0000 12.6667 3,362.00 .07
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. 926.0000 3,519.6500 4,445.65 .09
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 16.0000 1,170.7390 1,186.74 .02
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. 1,170.7380 1,170.74 .02
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 16.0000 1,170.7390 1,186.74 .02
▇▇▇▇ ▇. ▇▇▇▇▇▇ 1,170.7390 1,170.74 .02
PIPER & MARBURY L.L.P. AS TRUSTEE **** 5.0000 3.55
SUBTOTAL SECURITYHOLDERS 9,556.0000 87,820.50 21,721.5520 114.1667 8,202.6050 39,471.61 .80
KEYSTONE VENTURE IV, L.P. *** 1,192.0000 12,179.50 3,012.0000 15.8334 4,204.00 .08
TOTAL ISSUED & OUTSTANDING 13,786.0000 100,000.00 24,733.5520 130.0000 11,013.0000 49,532.55 1.00
* The Series C Preferred Stock is convertible pursuant to the provisions of
Section 11 of its Certificate of Designation. Assuming that no Accrued
Dividends are owed by the Company and the Offering Price Per Share (pre-split)
equals $20.00, then the number of shares of shares of Common Stock issuable
upon the conversion of each share of Series C Preferred Stock would equal
317.500 (post-split), calculated as follows: [($63.50 / $20.00) x 100,000] /
1,000 = 317.50 shares. Because the conversion ratio for the Series C Preferred
Stock is uncertain and the Series C Preferred Stock is subject to redemption
at the option of the Company, the shares of Series C Stock have not been included
in the calculation of the number and percentage of Common Stock Equivalents.
** Non-convertible and therefore not included in the calculation of the number and
percentage of Common Stock Equivalents.
*** Not a party to the Stockholders' Agreement.
**** FRACTIONAL SHARES HELD IN TRUST BY PIPER & MARBURY L.L.P.
SHARES OF NUMBER OF
COMMON WARRANT
NAME OF SECURITYHOLDER STOCK SHARES
GROTECH PARTNERS IV, L.P. 0.1699 0.2997
GROTECH PARTNERS III, L.P. 0.7492 0.0026
GROTECH III COMPANION FUND, L.P. 0.5328 0.0892
GROTECH III PENNSYLVANIA FUND, L.P. 0.1321 0.3372
▇▇▇▇▇▇▇▇ PARTNERS, L.P. 0.9277 0.0450
PENN JANNEY FUND, L.P. 0.4746 0.4846
▇▇▇▇▇▇▇ CAPITAL PARTNERS, L.P. 0.2422 0.2547
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 0.4623 0.0962
M&M GENERAL PARTNERSHIP 0.0377 0.5814
CONSTITUTION PARTNERS I, L.P. 0.8984 0.9384
KEYSTONE VENTURE IV, L.P. 0.3731 0.4230
SUBTOTAL SECURITYHOLDERS 5.0000 3.5520