Exhibit 10.9
INTEGRATED CIRCUIT SYSTEMS, INC.
EXECUTIVE STOCK AND OPTION AGREEMENT
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THIS EXECUTIVE STOCK AND OPTION AGREEMENT (this "Agreement") is made and
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entered into as of May 11, 1999 by and between Integrated Circuit Systems, Inc.,
a Pennsylvania corporation (the "Company"), and ▇▇▇▇ ▇. ▇▇▇ ("Executive").
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Reference is hereby made to the Agreement and Plan of Merger, as amended,
dated January 20, 1999, between the Company and ICS Merger Corp., a Pennsylvania
corporation ("ICS"), pursuant to which, as of the date hereof, and simultaneous
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with the execution of this Agreement, ICS has merged with and into the Company
(such merger, the "Merger") with the Company as the surviving corporation.
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The Company and Executive desire to enter into this Agreement (i) to
provide Executive options (collectively, the "Options") to acquire a certain
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number of shares of Class A Common and a certain number of shares of Class L
Common pursuant to the terms and subject to the conditions provided herein, and
(ii) to restrict the sale, assignment, transfer, encumbrance or other
disposition of certain shares of Common Stock held by Executive, and to provide
for certain rights and obligations in respect thereto as hereinafter provided.
The Options granted hereunder are being granted under this Agreement and are not
subject to the Company's 1999 Stock Option Plan or any other stock plan which
has been previously adopted or which is adopted in the future by the Company.
Capitalized terms used herein and not otherwise defined are defined in Section
18 hereof.
The parties hereto agree as follows:
1. Options and Option Shares.
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(a) Options Grant. The Company hereby grants to Executive options to
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purchase (x) 229,922 shares of Class A Common ("Class A Option Shares") at an
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exercise price of $0.044 per share (the "Class A Exercise Price") and (y) 25,547
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shares of Class L Common ("Class L Option Shares" and together with the Class A
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Option Shares, the "Option Shares") at an exercise price of $3.60 per share (the
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"Class L Exercise Price"). The Class A Exercise Price and the Class L Exercise
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Price are collectively referred to herein as "Option Prices" and individually
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as "Option Price". The option to purchase Class A Option Shares may be
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exercised independently of the option to purchase Class L Option Shares, and
likewise the option to purchase Class L Option Shares may be exercised
independently of the option to exercise Class A Option Shares. The Options will
be immediately exercisable and, subject to earlier expiration as provided in
subsection 1(b) below, will expire on the Expiration Date. The Options are not
intended to be "incentive stock options" within the meaning of Section 422A of
the Code.
(b) Expiration. Any Options which have not been exercised prior to the
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Termination Date will expire, and may not be exercised thereafter under any
circumstances, on the earlier of (i) 65 days after the resignation of Executive
other than for Good Reason (as defined in Executive's Employment Agreement) (180
days if the Termination Date occurs as a result of the death or
disability (as determined in the good faith discretion of the Board) of
Executive), (ii) the Expiration Date or (iii) a ▇▇▇▇ Exit. In addition, in the
event of a proposed Sale of the Company, the Board may provide, in its
discretion, by at least 20 days written notice to Executive, that any or all
Options shall terminate if not exercised as of the date of such Sale of the
Company or any other designated date following such Sale of the Company or that
any such Options shall after such Sale of the Company represent only the right
to receive such consideration as the Board shall deem equitable in the
circumstances. Executive shall be entitled to 25 days advance written notice of
a ▇▇▇▇ Exit.
(c) Procedure for Exercise. At any time after the date hereof and prior to
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the Expiration Date, Executive may exercise all or a portion of the Options
which have not expired pursuant to subsection 1(b) above by delivering written
notice of exercise to the Company, together with (i) a written acknowledgment
that Executive has read and has been afforded an opportunity to ask questions of
members of the Company's management regarding all financial and other
information provided to Executive regarding the Company and (ii) a certified
check or wire transfer of funds in an amount equal to the aggregate Option
Prices of the Option Shares being purchased or, at the option of Executive,
payment may also be made by (A) surrendering shares of Class A Common that have
been owned by the holder for at least six months and that have an aggregate fair
market value (as determined by the Board in its sole discretion) equal to the
exercise price, (B) by delivery of an irrevocable undertaking by a broker to
deliver promptly to the company sufficient funds to pay the exercise price, or
(C) any combination of the foregoing. As a condition to any exercise of the
Options, Executive will permit the Company to deliver to him all financial and
other information regarding the Company and its Subsidiaries which it believes
necessary to enable Executive to make an informed investment decision.
(d) Withholding Tax Requirements. It shall be a condition of the exercise
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of any Option that the Executive make appropriate payment or other provision
acceptable to the Company with respect to any withholding tax requirement
arising from such exercise. The amount of withholding tax required, if any,
with respect to any Option exercise (the "Withholding Amount") shall be
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determined by the Treasurer or other appropriate officer of the Company, and the
Executive shall furnish such information and make such representations as such
officer requires to make such determination.
(e) Withholding Tax Procedure. If the Company determines that withholding
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tax is required with respect to any Option exercise, the Company shall notify
the Executive of the Withholding Amount, and the Executive shall pay to the
Company in cash (including check, bankdraft, money order or wire transfer of
immediately available funds) an amount not less than the Withholding Amount or,
at the option of the Executive, such payment may also be made (i) by
surrendering shares of Class A Common that have been owned by the holder for at
least six months and that have an aggregate fair market value (as determined by
the Board in its sole discretion) equal to the amount of withholding taxes, (ii)
by delivery of an irrevocable undertaking by a broker to deliver promptly to the
Company sufficient funds to pay the withholding taxes, (iii) by requesting in
the notice of exercise that the Company not issue a number of shares of Class A
Common issuable upon exercise whose aggregate fair market value (as determined
by the Board in its sole discretion) equal the minimum amount of withholding
tax, or (iv) any combination of the foregoing. All amounts paid to the Company
pursuant to this Section 1(e) shall be deposited in accordance with
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applicable law by the Company as withholding tax for the Executive's account. If
the Treasurer or other appropriate officer of the Company determines that no
withholding tax is required with respect to the exercise of any Option (because
such option is an incentive stock option or otherwise), but subsequently it is
determined that the exercise resulted in taxable income as to which withholding
is required (as a result of a disposition of shares or otherwise), the Executive
shall promptly, upon being notified of the withholding requirement, pay to the
Company, by means acceptable to the Company, the amount required to be withheld;
and at its election the Company may condition the transfer of any shares issued
upon exercise of an incentive stock option upon receipt of such payment.
(f) Non-Transferability of Options. The Options are personal to Executive
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and are not transferable (whether by sale or pledge) by Executive except
pursuant to the laws of descent or distribution. Only Executive or his legal
guardian or representative may exercise the Options.
2. Representations and Warranties; Acknowledgments.
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(a) Representations and Warranties by Executive. In connection with the
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purchase and sale of Executive Stock hereunder, Executive represents and
warrants to the Company that:
(i) The shares of Executive Stock to be acquired by Executive
pursuant to this Agreement will be acquired for Executive's own account and
not with a current view to, or intention of, distribution thereof in
violation of the Securities Act or any applicable state securities laws,
and the shares of Executive Stock will not be disposed of in contravention
of the Securities Act or any applicable state securities laws.
(ii) Executive is an executive or director of the Company or its
Subsidiaries, is sophisticated in financial matters and is able to evaluate
the risks and benefits of the investment in Executive Stock.
(iii) Executive is able to bear the economic risk of his investment in
Executive Stock for an indefinite period of time because Executive Stock
has not been registered under the Securities Act and, therefore, cannot be
sold unless subsequently registered under the Securities Act or an
exemption from such registration is available.
(iv) Executive has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of Executive
Stock and has had full access to such other information concerning the
Company and its Subsidiaries as he or she has requested. Executive has
reviewed, or has had an opportunity to review, a copy of the Merger
Agreement, and Executive is familiar with the transactions contemplated
thereby. Executive also has reviewed, or has had an opportunity to review
the Offering Memorandum related to certain of the debt financing of the
Merger, the Company's Certificate of Incorporation and the Company's Bylaws
and any credit agreements, notes and related documents to which the Company
is a party.
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(v) This Agreement constitutes the legal, valid and binding
obligation of Executive, enforceable in accordance with its terms, and the
execution, delivery and performance of this Agreement by Executive does not
and will not conflict with, violate or cause a breach of any agreement,
contract or instrument to which Executive is a party or any judgment, order
or decree to which Executive is subject.
(vi) Executive has not granted and is not a party to any proxy,
voting trust or other agreement which is inconsistent with, conflicts with
or violates any provision of this Agreement. Executive shall not grant any
proxy or become party to any voting trust or other agreement which is
inconsistent with, conflicts with or violates any provision of this
Agreement.
(vii) Executive is a resident of the State of Pennsylvania.
(b) Acknowledgment by Executive. As an inducement to the Company to issue
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the Options to Executive, and as a condition thereto, Executive acknowledges and
agrees that subject to any employment agreement between Executive and the
Company or applicable law, neither the issuance of Options or any Executive
Stock to Executive nor any provision contained herein will entitle Executive to
remain in the employment of the Company or its Subsidiaries or affect the right
of the Company to terminate Executive's employment at any time for any reason.
(c) Representations and Warranties of the Company. The Company represents
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and warrants to Executive as follows:
(i) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Pennsylvania.
(ii) The Company has all requisite corporate power and corporate
authority to executive, deliver and perform this Agreement and to
consummate the transactions provided for herein.
(iii) The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions
contemplated hereby, including, but not limited to, the issuance and sale
of the Post-Recapitalization Stock to be issued by it hereunder, have been
duly authorized, and this Agreement constitutes the valid and binding
obligation of the Company, enforceable against it in accordance with the
terms hereof.
(iv) The Executive Stock issued to the Executive hereunder, when
issued in compliance with the provisions of this Agreement, will be validly
issued, fully paid and non-assessable.
(v) As of the Closing, the authorized capital stock of the Company
will consist of (A) 27,000,000 shares of Class A Common, of which
15,612,588 shares will be issued and outstanding immediately after the
Closing, (B) 7,000,000 shares of Class B Common Stock, of which 5,653,079
shares will be issued and outstanding immediately after the Closing, and
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(C) 3,000,000 shares of Class L Common Stock, of which 2,362,852 shares
will be issued and outstanding immediately after the Closing. As of the
Closing, other than options to purchase up to 5,734,333 shares of the
Company's Class A Common, options to purchase up to 137,148 shares of the
Company's Class L Common and preemptive rights to purchase shares of the
Company's capital stock granted to certain of the Company's stockholders,
there will be no rights, subscriptions, warrants, options, conversion
rights, or agreements of any kind outstanding to purchase from the Company,
or otherwise require the Company to issue, any shares of capital stock of
the Company or securities or obligations of any kind convertible or
exchangeable for any shares of capital stock of the Company; provided,
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however, that shares of Class A Common may be converted into shares of
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Class B Common and shares of Class B Common may be converted into shares of
Class A Common, all subject to the terms of the Company's Articles of
Incorporation.
3. Right to Purchase Executive Stock or Option Shares Upon Termination of
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Employment.
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(a) Repurchase Right. If the Termination Date occurs, the Executive Stock
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(including any Executive Stock acquired subsequent to the Termination Date),
whether held by Executive or one or more transferees and the Option Shares, will
be subject to repurchase by the ▇▇▇▇ Stockholders, the Bear ▇▇▇▇▇▇▇
Stockholders, and the Company pursuant to the terms and conditions set forth in
this Section 3 (the "Repurchase Option").
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(b) Repurchase Price. Executive Stock purchased pursuant to the Repurchase
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Option will be purchased at a price per share equal to the Fair Market Value of
such Executive Stock as of the Valuation Date. Option Shares purchased pursuant
to the Repurchase Option will be purchased at a price per share equal to the
difference between the Fair Market Value and the Exercise Price of such Option
Share as of the Valuation Date.
(c) Repurchase Procedures. The Company may elect or decline to exercise
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the Repurchase Option by delivering written notice (the "Company Repurchase
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Notice") to the holder or holders of each class of the applicable Executive
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Stock or Option Shares, the ▇▇▇▇ Stockholders and the Bear ▇▇▇▇▇▇▇ Stockholders
within the later of the one-year anniversary of this Agreement or 240 days after
the applicable Termination Date. To the extent that after giving effect to the
Company's option pursuant to the immediately preceding sentence any portion of
the Executive Stock or Option Shares is not being repurchased by the Company,
the ▇▇▇▇ Stockholders and the Bear ▇▇▇▇▇▇▇ Stockholders may elect or decline to
exercise the Repurchase Option to purchase up to their pro rata share
(determined based upon the number of shares of Class A Common and Class B Common
held by each) by delivering written notice (the "Initial Repurchase Notice") to
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the Company, the holder or holders of Executive Stock or Option Shares and the
other within the later of (i) 10 business days after receipt of the Company
Repurchase Notice or (ii) the expiration of the later of one-year anniversary of
this Agreement or the expiration of the 240 day period during which the Company
was entitled to deliver the Company Repurchase Notice. To the extent that the
▇▇▇▇ Stockholders or the Bear ▇▇▇▇▇▇▇ Stockholders do not elect to repurchase
their full allotment of the remaining Executive Stock or Option Shares, the
other party shall be entitled to purchase all or any portion of the remaining
Executive Stock or Option Shares by providing written notice (the
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"Supplemental Repurchase Notice" and together with the Initial Repurchase Notice
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and Company Repurchase Notice, a "Repurchase Notice") to each of the parties
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receiving the Initial Repurchase Notice within ten business days of the
expiration of the period during which the ▇▇▇▇ Stockholders and the Bear ▇▇▇▇▇▇▇
Stockholders were entitled to deliver the Initial Repurchase Notice. Each
Repurchase Notice will set forth the number of shares of each class of Executive
Stock and Option Shares to be acquired from such holder(s), an estimate of the
aggregate consideration to be paid for such holder's shares of each such class
of Executive Stock or Option Shares and the time and place for the closing of
the transaction. If any shares of any class of Executive Stock or Option Shares
are held by any transferees of Executive, the ▇▇▇▇ Stockholders, the Bear
▇▇▇▇▇▇▇ Stockholders and the Company, as the case may be, will purchase such
shares of such class elected to be purchased from such holder(s) of Executive
Stock or Option Shares, pro rata according to the number of shares of such class
of Executive Stock or Option Shares held by such holder(s) at the time of
delivery of such Repurchase Notice (determined as nearly as practicable to the
nearest share).
(d) Closing. Each closing of a repurchase transaction will take place on
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the date designated by the ▇▇▇▇ Stockholders, the Bear ▇▇▇▇▇▇▇ Stockholders or
the Company, as the case may be, in the latest Repurchase Notice, which date
will not be more than 60 days after the delivery of such notice, and no earlier
than any date set forth in an earlier Repurchase Notice or the final
determination of Fair Market Value per share of Executive Stock or Option Shares
as of the Valuation Date and the expiration of any time periods for which a
repurchase election may be revoked pursuant to Section 3(e) (the "Scheduled
Closing Date"). The Company will pay for any shares of Executive Stock or
Option Shares to be purchased pursuant to a Repurchase Option by delivery of
cash or cashier's check payable to the holder(s) of such shares of Executive
Stock or Option Shares in an aggregate amount equal to their share of the
aggregate repurchase price (the "Repurchase Price"); provided that any purchase
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of the Executive Stock or Option Shares that occurs after the Scheduled Closing
Date by the Company as a result of the Financing Circumstances (as defined
below) shall include simple interest calculated from the Scheduled Closing Date
to the date of such payment at the rate of 6% per annum on the Repurchase Price
attributable to such shares of Executive Stock or Option Shares. The ▇▇▇▇
Stockholders and the Bear ▇▇▇▇▇▇▇ Stockholders will pay for any shares of
Executive Stock or Option Shares to be purchased pursuant to a Repurchase Option
by delivery of cash or cashier's check payable to the holder(s) of such shares
of Executive Stock or Option Shares in an aggregate amount equal to their share
of the aggregate unpaid Repurchase Price for such shares of Executive Stock or
Option Shares. Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of shares of Executive Stock or Option Shares
pursuant to this Section 3(d) will be subject to applicable restrictions and
covenants contained in the Pennsylvania Business Corporation Law of 1988 and in
the Company's and its Subsidiaries' debt financing agreements. If (i) any such
restrictions or covenants prohibit the repurchase of Executive Stock or Option
Shares hereunder which the Company is otherwise entitled to make, (ii) the
Company does not have cash availability, including availability under its
revolver, of at least $15 million on a projected basis for the next six month
period (collectively, the "Financing Circumstances"), then the Company will not
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be required to make such repurchase (and may defer making such repurchase) until
it is permitted to do so under such restrictions and covenants and until its
projected cash availability is greater than $15 million (with it being
understood that the Company will make the maximum amount of repurchases
permitted and may defer making the remainder of such repurchases until permitted
to do so and it being further understood that any closing of any such
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repurchase shall not occur on a date which is later than the second anniversary
of the Scheduled Closing Date). The ▇▇▇▇ Stockholders, the Bear ▇▇▇▇▇▇▇
Stockholders and the Company will receive customary representations and
warranties from each seller regarding the sale of shares of Executive Stock or
Option Shares solely with respect to such seller's ownership and title to
Executive Stock or Option Shares and capacity to transfer Executive Stock or
Option Shares.
(e) Revocation of Repurchase Election. Notwithstanding anything contained
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in this Agreement to the contrary, if Executive objects to Board's determination
of Fair Market Value as described in the definition of Fair Market Value, or if
the Fair Market Value of a share of Executive Stock or Option Shares is
otherwise determined to be an amount more than 10% greater than the per share
repurchase price for such share of Executive Stock or Option Shares in the
Initial Repurchase Notice or Supplemental Repurchase Notice, each of the
Company, the ▇▇▇▇ Stockholders and the Bear ▇▇▇▇▇▇▇ Stockholders shall have the
right to revoke its exercise of the Repurchase Option for all or any portion of
the Executive Stock or Option Shares elected to be repurchased by it by
delivering notice of such revocation in writing to the holders of the Executive
Stock and Option Shares, the Company, the ▇▇▇▇ Stockholders and the Bear ▇▇▇▇▇▇▇
Stockholders during (i) the 30 day period beginning on the date that the
Company, the ▇▇▇▇ Stockholders and the Bear ▇▇▇▇▇▇▇ Stockholders received
Executive's written notice of objection, and (ii) the 30 day period beginning on
the date that the Company, the ▇▇▇▇ Stockholders and/or the Bear ▇▇▇▇▇▇▇
Stockholders are given written notice that the Fair Market Value of a share of
Executive Stock or Option Shares was finally determined to be an amount more
than 10% greater than the per share repurchase price for Executive Stock or
Option Shares set forth in the Initial Repurchase Notice or in the Supplemental
Repurchase Notice.
In the event that the ▇▇▇▇ Stockholders deliver a notice of revocation, the
Bear ▇▇▇▇▇▇▇ Stockholders shall be entitled to purchase all or any portion of
the Executive Stock or Option Shares that would otherwise have been purchased by
the ▇▇▇▇ Stockholders by providing an additional Supplemental Repurchase Notice
to the holders of the Executive Stock and Option Shares and the Company within
10 business days after receipt of the ▇▇▇▇ Stockholders' notice of revocation.
The Company may exercise the Repurchase Option for the remaining Executive Stock
and Option Shares by delivering an additional Company Repurchase Notice to the
holder or holders of the applicable Executive Stock and Option Shares within 10
business days of the expiration of the 10 business day period described in the
preceding sentence.
In the event that the Bear ▇▇▇▇▇▇▇ Stockholders deliver a notice of
revocation, the ▇▇▇▇ Stockholders shall be entitled to purchase all or any
portion of the Executive Stock or Option Shares that would otherwise have been
purchased by the Bear ▇▇▇▇▇▇▇ Stockholders by providing an additional
Supplemental Repurchase Notice to the holders of the Executive Stock and Option
Shares and the Company within 10 business days after receipt of the Bear ▇▇▇▇▇▇▇
Stockholders' notice of revocation. The Company may exercise the Repurchase
Option for the remaining Executive Stock and Option Shares by delivering an
additional Company Repurchase Notice to the holder or holders of the applicable
Executive Stock and Option Shares within 10 business days of the expiration of
the 10 business day period described in the preceding sentence.
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In the event that the Company delivers a notice of revocation, the ▇▇▇▇
Stockholders and the Bear ▇▇▇▇▇▇▇ Stockholders shall be entitled to purchase
their pro rata share (determined based on the number of shares of Class A Common
and Class B Common held by each) of all or any portion of the Executive Stock or
Option Shares that would otherwise have been purchased by the Company by
providing an additional Supplemental Repurchase Notice to the holders of the
Executive Stock and Option Shares and the other party within 10 business days
after receipt of the Company's notice of revocation. To the extent that the
▇▇▇▇ Stockholders or the Bear ▇▇▇▇▇▇▇ Stockholders do not elect to repurchase
their full allotment of Executive Stock or Option Shares, the other party shall
be entitled to purchase the remaining Executive Stock or Option Shares by
delivering an additional Supplemental Repurchase Notice to the holder or holders
of the applicable Executive Stock or Option Shares within 10 business days of
the expiration of the 10 business day period described in the preceding
sentence.
(f) Termination of Repurchase Right. The Repurchase Option granted to the
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▇▇▇▇ Stockholders, Bear ▇▇▇▇▇▇▇ Stockholders and the Company shall terminate (to
the extent not previously exercised) with respect to Executive Stock and Option
Shares at the earliest of (i) a ▇▇▇▇ Exit, (ii) a Qualified Initial Public
Offering, or (iii) the tenth anniversary of the Closing Date.
4. Right to Put Executive Stock.
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(a) Put Right. If Executive ceases to be employed by the Company or any
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of its Subsidiaries due to a termination by the Company of Executive's
employment with the Company or any Subsidiary other than for Cause, then
holder(s) of Executive Stock have the right (the "Put Right") to require the
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Company, or should they so elect subject to the terms and conditions set forth
herein, the ▇▇▇▇ Stockholders and the Bear ▇▇▇▇▇▇▇ Stockholders, to purchase all
or any portion of the Executive Stock then held by all (and not less than all)
of such holder(s) (other than any Executive Stock for which the Company has
exercised its Repurchase Option) pursuant to the terms and conditions set forth
in this Section 4. If any shares of any class of Executive Stock are held by
any transferees of Executive, the ▇▇▇▇ Stockholders, the Bear ▇▇▇▇▇▇▇
Stockholders and the Company, as the case may be, will purchase such shares of
such class to be purchased from such holder(s) of Executive Stock, pro rata
according to the number of shares of such class of Executive Stock held by such
holder(s) at the time of delivery of such Put Notice (determined as nearly as
practicable to the nearest share).
(b) Put Price. Executive Stock purchased pursuant to the Put Right will be
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purchased at a price per share equal to the Fair Market Value of such Executive
Stock as of the Valuation Date.
(c) Put Procedures.
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(i) The Put Right is exercisable by the holder(s) of the Executive
Stock delivering written notice (the "Put Notice") to the Company, the ▇▇▇▇
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Stockholders and the Bear ▇▇▇▇▇▇▇ Stockholders during the period beginning
on the date that Executive is terminated by the Company (the "Termination Date")
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and ending on the date 65 days after the Termination Date. The Put Notice will
set forth the number of shares of each class of Executive Stock held by all of
the holder(s) of Executive Stock.
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(ii) The ▇▇▇▇ Stockholders and the Bear ▇▇▇▇▇▇▇ Stockholders may
each elect to purchase their pro rata share (determined based upon the number of
shares of Class A Common and Class B Common held by each) of any or all of the
shares of Executive Stock which the Company is otherwise required to purchase
pursuant to the Put Option by delivering written notice (the "Initial Put
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Purchase Notice") to the holder or holders of each class of Executive Stock, the
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Company and the other party, within 30 days after receiving the Put Notice. To
the extent that the ▇▇▇▇ Stockholders or the Bear ▇▇▇▇▇▇▇ Stockholders do not
elect to purchase their full allotment of Executive Stock, the other party shall
be entitled to purchase all or any portion of the remaining Executive Stock by
providing notice (the "Supplemental Put Purchase Notice") to each of the parties
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receiving the Initial Put Purchase Notice within the later of (i) 10 business
days after receipt of the Initial Put Purchase Notice or (ii) the expiration of
the 30 day period during which the ▇▇▇▇ Stockholders and the Bear ▇▇▇▇▇▇▇
Stockholders were entitled to deliver Initial Put Purchase Notices. To the
extent that, after giving effect to the reoffer pursuant to the immediately
preceding sentence, any portion of the Executive Stock is not being purchased by
the ▇▇▇▇ Stockholders or the Bear ▇▇▇▇▇▇▇ Stockholders, the Company must
repurchase the remaining Executive Stock as set forth in Section 4(d) below.
Each Initial Put Purchase Notice and Supplemental Purchase Notice shall set
forth the number of shares of each class of Executive Stock to be acquired from
such holder(s) and an estimate of the aggregate consideration to be paid for
such holder's shares of each such class of Executive Stock.
(d) Closing. The closing of the transactions contemplated by this Section
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4 will take place at a time and place mutually agreed upon by the parties
acquiring Executive Stock which date will not be more than 120 days after the
delivery of the Put Notice, and no earlier than the final determination of Fair
Market Value per share of Executive Stock as of the Valuation Date and the
expiration of any time periods for which a purchase election may be revoked
pursuant to Section 4(e) (the "Anticipated Closing Date"). The ▇▇▇▇
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Stockholders, the Bear ▇▇▇▇▇▇▇ Stockholders and the Company, as the case may be,
shall pay for any shares of Executive Stock to be purchased pursuant to the Put
Option by delivery of cash or a cashier's check payable to the holder(s) of such
shares of Executive Stock in an aggregate amount equal to their pro rata share
of the aggregate repurchase price ("Put Price") for such shares of Executive
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Stock; provided that any purchase of Executive Stock that occurs after the
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Anticipated Closing Date by the Company as a result of the Financing
Circumstances shall include simple interest calculated from the Anticipated
Closing Date until the date of such purchase at the rate of 6% per annum on the
Put Price attributable to such shares of Executive Stock. Notwithstanding
anything to the contrary contained in this Agreement, all repurchases of shares
of Executive Stock by the Company will be subject to applicable restrictions and
covenants contained in the Pennsylvania Business Corporation Law of 1988 and in
the Company's and its Subsidiaries' debt and equity financing agreements. If
either of the Financing Circumstances exist, the Company will not be required to
make such repurchases until it is permitted to do so under such restrictions and
until its projected cash availability is greater than $15 million (with it being
understood that the Company will make the maximum amount of repurchases
permitted under such financing agreements and may defer making the remainder of
such repurchases until permitted to do so and it being further understood that
any closing of any such repurchase shall not occur on a date which is later than
the second anniversary of the Anticipated Closing Date). The ▇▇▇▇ Stockholders,
the Bear ▇▇▇▇▇▇▇ Stockholders and the Company will receive customary
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representations and warranties from each seller regarding the sale of shares of
Executive Stock, solely with respect to such seller's ownership and title to
Executive Stock and capacity to transfer Executive Stock.
(e) Revocation of Purchase Election. Notwithstanding anything contained in
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this Agreement to the contrary, if Executive objects to the Board's
determination of Fair Market Value as described in the definition of Fair Market
Value, or if the Fair Market Value of a share of Executive Stock is otherwise
determined to be an amount more than 10% greater than the per share repurchase
price for such share of Executive Stock in the Initial Put Purchase Notice or
Supplemental Put Purchase Notice, each of the ▇▇▇▇ Stockholders and the Bear
▇▇▇▇▇▇▇ Stockholders shall have the right to revoke its exercise of the option
to purchase shares of Executive Stock pursuant to Section 4(d) by delivering
notice of such revocation in writing to the holders of the Executive Stock, the
Company, and the other party during (i) the 30 day period beginning on the date
that the Company, the ▇▇▇▇ Stockholders and the Bear ▇▇▇▇▇▇▇ Stockholders
received Executive's written notice of objection, and (ii) the 30 day period
beginning on the date that the Company, the ▇▇▇▇ Stockholders and/or the Bear
▇▇▇▇▇▇▇ Stockholders are given written notice that the Fair Market Value of a
share of Executive Stock was finally determined to be an amount more than 10%
greater than the per share repurchase price for Executive Stock set forth in the
Initial Put Purchase Notice or in the Supplemental Put Purchase Notice.
Furthermore, if Executive objects to the Board's determination of Fair
Market Value as described in the definition of Fair Market Value, or if the Fair
Market Value of a share of Executive Stock is otherwise determined to be more
than 10% less than the per share repurchase price for such share of Executive
Stock in the Initial Put Purchase Notice or Supplemental Put Purchase Notice,
Executive shall have the right to revoke his exercise of the Put Right pursuant
to Section 4 by delivering notice of such revocation in writing to the Company,
the ▇▇▇▇ Stockholders and the Bear ▇▇▇▇▇▇▇ Stockholders during (i) the 30 day
period beginning on the date that the Company, the ▇▇▇▇ Stockholders and the
Bear ▇▇▇▇▇▇▇ Stockholders received Executive's written notice of objection, or
(ii) the 30 day period beginning on the date that Executive, the Company, the
▇▇▇▇ Stockholders and/or the Bear ▇▇▇▇▇▇▇ Stockholders are given written notice
that the Fair Market Value of a share of Executive Stock was finally determined
to be more than 10% less than the per share repurchase price for Executive Stock
set forth in the Initial Put Purchase Notice or in the Supplemental Put Purchase
Notice.
In the event that the ▇▇▇▇ Stockholders deliver a notice of revocation, the
Bear ▇▇▇▇▇▇▇ Stockholders shall be entitled to purchase all or any portion of
the Executive Stock that would otherwise have been purchased by the ▇▇▇▇
Stockholders by providing an additional Supplemental Put Purchase Notice to the
holders of the Executive Stock and the Company within 10 business days after
receipt of the ▇▇▇▇ Stockholders' notice of revocation. The Company must
purchase the remaining shares of Executive Stock by delivering an additional
Company Put Purchase Notice to the holder or holders of the applicable Executive
Stock within 10 business days of the expiration of the 10 business day period
described in the preceding sentence.
In the event that the Bear ▇▇▇▇▇▇▇ Stockholders deliver a notice of
revocation, the ▇▇▇▇ Stockholders shall be entitled to purchase all or any
portion of the Executive Stock that would
10
otherwise have been purchased by the Bear ▇▇▇▇▇▇▇ Stockholders by providing an
additional Supplemental Put Purchase Notice to the holders of the Executive
Stock and the Company within 10 business days after receipt of the Bear ▇▇▇▇▇▇▇
Stockholders' notice of revocation. The Company must purchase the remaining
shares of Executive Stock by delivering an additional Company Put Purchase
Notice to the holder or holders of the applicable Executive Stock within 10
business days of the expiration of the 10 business day period described in the
preceding sentence.
(f) Termination of Put Right. The Put Right granted to the holder(s) of
------------------------
Executive Stock shall terminate (to the extent not previously exercised) with
respect to Executive Stock as of the first anniversary of the date of this
Agreement.
5. Restrictions on Transfer of Executive Stock.
-------------------------------------------
(a) Transfer of Executive Stock. Executive will not sell, pledge, transfer
---------------------------
or otherwise dispose of (a "Transfer") any interest in any shares of Executive
--------
Stock, except (i) pursuant to the provisions of Sections 3, 4, 5(b), 8, 9, 11
(in connection with a Transfer by the ▇▇▇▇ Stockholders only) or 13 hereof, (ii)
pursuant to the terms of the Registration Agreement, dated as of the date
hereof, by and between the Company and certain of its stockholders, (iii)
pursuant to applicable laws of descent and distribution, or (iv) among
Executive's Family Group; provided, that the restrictions contained in this
--------
Section 5 will continue to be applicable to the shares of Executive Stock after
any Transfer of the type referred to clauses (iii) or (iv) above and, as a
condition to any such Transfer, the transferees of such shares of Executive
Stock must agree in writing to be bound by the provisions of this Agreement.
In the case of a transfer by Executive to a member of his Family Group, after
such transfer Executive must continue to own at least 50% of his shares of
Executive Stock originally owned by him on a fully diluted basis. Any
transferee of Executive Stock pursuant to a Transfer in accordance with clause
(iii) or (iv) above is herein referred to as a "Permitted Transferee." Upon the
--------------------
proposed Transfer of Executive Stock pursuant to clause (iii) or (iv) above,
Executive or a Permitted Transferee Transferring such Executive Stock will
deliver a written notice (a "Transfer Notice") to the Company, which discloses
---------------
in reasonable detail the identity of the Permitted Transferee(s).
Notwithstanding the foregoing, no party hereto shall avoid the provisions of
this Agreement by making one or more transfers to one or more Permitted
Transferees and then disposing of all or any portion of such party's interest in
such Permitted Transferee.
(b) Termination of Transfer Restrictions. The restrictions set forth in
------------------------------------
Section 6(a) will terminate upon a Qualified Initial Public Offering.
6. Additional Restrictions on Transfer.
-----------------------------------
(a) The certificates representing shares of Executive Stock will bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM
11
REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER
AGREEMENTS SET FORTH IN AN EXECUTIVE STOCK AND OPTION
AGREEMENT BETWEEN THE ISSUER (THE "COMPANY") AND AN EMPLOYEE
OF THE COMPANY DATED AS OF MAY 11, 1999, A COPY OF WHICH MAY
BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL
PLACE OF BUSINESS WITHOUT CHARGE."
The legend set forth above regarding the Plan shall be removed from the
certificates evidencing any securities which cease to be Executive Stock.
(b) No holder of Executive Stock may Transfer any Executive Stock (except
pursuant to an effective registration statement under the Securities Act)
without first delivering to the Company an opinion of counsel reasonably
acceptable in form and substance to the Company (which counsel will be
reasonably acceptable to the Company) that registration under the Securities Act
is not required in connection with such Transfer. If such opinion of counsel
reasonably acceptable in form and substance to the Company further states that
no subsequent Transfer of such Executive Stock will require registration under
the Securities Act, the Company will promptly upon such Transfer deliver new
certificates which do not bear the Securities Act legend set forth in Section
6(a).
7. Definition of Executive Stock. For all purposes of this Agreement,
-----------------------------
Executive Stock will continue to be Executive Stock in the hands of any holder
other than Executive (except for the Company, purchasers pursuant to an offering
registered under the Securities Act or purchasers pursuant to a Rule 144
transaction (other than a Rule 144(k) transaction occurring prior to the time
the Company is a Public Company) and subsequent transferees), and each such
other holder of Executive Stock will succeed to all rights and obligations
attributable to Executive as a holder of Executive Stock hereunder. Executive
Stock will also include shares of the Company's capital stock issued with
respect to shares of Executive Stock by way of a stock split, stock dividend or
other recapitalization.
8. Unaffiliated Sale of the Company
--------------------------------
(a) If the Board approves an Unaffiliated Sale of the Company (an "Approved
--------
Sale"), then each holder of each class of Executive Stock will vote for, consent
----
to and raise no objections against such Approved Sale. Each holder of each
class of Executive Stock will, to the maximum extent permitted by applicable
law, waive any dissenters' rights, appraisal rights or similar rights in
connection with such Approved Sale, and if such Approved Sale is a sale of
stock, each holder of such class of Executive Stock will agree to sell
(including, without limitation, by executing and delivering definitive
agreements with respect thereto) up to all of his or her shares of Executive
Stock on the terms and conditions approved by the Board; provided that the terms
--------
and conditions of such transaction applicable to each holder of a class of
Executive Stock are the same as those applicable to the ▇▇▇▇ Stockholders
holding such class of capital stock (including, subject to Section
12
10 below, the price per share and the type of consideration, but excluding
reasonable investment banking and advisory fees customarily charged by the ▇▇▇▇
Stockholders and the Bear ▇▇▇▇▇▇▇ Stockholders for transactions of such type).
Each holder of Executive Stock will take all necessary or desirable actions in
connection with the consummation of the Approved Sale as requested by the Board
or the Company.
(b) 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 by the Securities and Exchange Commission may be available
with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), the holders of Executive Stock will, at
the request of the Company, appoint a purchaser representative (as such term is
defined in Rule 501) reasonably acceptable to the Company. If any holder of
Executive Stock appoints a purchaser representative designated by the Company,
the Company will pay the fees of such purchaser representative, but if any
holder of Executive Stock declines to appoint the purchaser representative
designated by the Company, such holder will appoint another purchaser
representative, and such holder will be responsible for the fees of the
purchaser representative so appointed.
(c) Each of the holders of Executive Stock (if any) will bear their pro-
rata share (based upon the number of shares of Class A Common sold) of the costs
of any sale of Executive Stock pursuant to an Approved Sale to the extent such
costs are incurred for the benefit of all or substantially all holders of Common
Stock and are not otherwise paid by the Company or the acquiring party. Costs
incurred by each holder of Executive Stock on its own behalf will not be
considered costs of the transaction hereunder.
(d) The provisions of this Section 8 shall terminate upon a Qualified
Initial Public Offering.
9. ▇▇▇▇ Sale of the Company
------------------------
(a) If a majority of the members of the Board (which, for purposes of this
Section 9, shall include any director appointed by the Bear ▇▇▇▇▇▇▇ Stockholders
pursuant to the Voting Agreement, dated as of the date hereof, by and among the
Company and certain stockholders of the Company party thereto from time to time
(the "Voting Agreement")) who are not Affiliates or designees of the ▇▇▇▇
Stockholders (the "Non-▇▇▇▇ Directors") approve a ▇▇▇▇ Sale of the Company (an
------------------
"Approved ▇▇▇▇ Sale"), then each holder of Executive Stock who is not an
------------------
Affiliate of the ▇▇▇▇ Stockholders will vote for, consent to and raise no
objections against such Approved ▇▇▇▇ Sale. Each such holder of Executive Stock
will, to the maximum extent permitted by applicable law, waive any dissenters'
rights, appraisal rights or similar rights in connection with such Approved ▇▇▇▇
Sale, and in the event that such Approved ▇▇▇▇ Sale is a sale of stock, each
such holder of Executive Stock will agree to sell (including, without
limitation, by executing and delivering definitive agreements with respect
thereto) up to all of his or her Executive Stock on the terms and conditions
approved by the Non-▇▇▇▇ Directors; provided that the terms and conditions of
--------
such transaction applicable to each holder of a class of Executive Stock that is
not a ▇▇▇▇ Stockholder or an Affiliate thereof are the same as those applicable
to the stockholder holding the largest number of shares of such class of capital
stock that is not a ▇▇▇▇ Stockholder or an Affiliate thereof (including, subject
to Section 9 below, the price
13
per share and the type of consideration, but excluding reasonable investment
banking and advisory fees customarily charged by the Bear ▇▇▇▇▇▇▇ Stockholders
for transactions of such type). Each holder of Executive Stock will take all
necessary or desirable actions in connection with the consummation of the
Approved ▇▇▇▇ Sale as requested by the Non-▇▇▇▇ Directors, the ▇▇▇▇ Stockholders
or the Company.
(b) If, in relation to an Approved ▇▇▇▇ Sale, 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 by the Securities and
Exchange Commission may be available with respect to such negotiation or
transaction (including a merger, consolidation or other reorganization), the
holders of Executive Stock will, at the request of the Company or the ▇▇▇▇
Stockholders appoint a purchaser representative (as such term is defined in Rule
501) reasonably acceptable to the Company and the ▇▇▇▇ Stockholders. If any
holder of Executive Stock appoints a purchaser representative designated by the
Company or the ▇▇▇▇ Stockholders, the Company will pay the fees of such
purchaser representative, but if any holder of Executive Stock declines to
appoint the purchaser representative designated by the Company or the ▇▇▇▇
Stockholders, such holder will appoint another purchaser representative, and
such holder will be responsible for the fees of the purchaser representative so
appointed.
(c) Each of the holders of Executive Stock (if any) will bear their pro-
rata share (based upon the number of shares of Class A Common sold by
stockholders) of the costs of any sale of Executive Stock pursuant to an
Approved ▇▇▇▇ Sale, to the extent such costs are incurred for the benefit of all
or substantially all holders of Common Stock not affiliated with the ▇▇▇▇
Stockholders and are not otherwise paid by the Company or the acquiring party.
Costs incurred by each holder of Executive Stock on its or her own behalf will
not be considered costs of the transaction hereunder.
(d) The provisions of this Section 9 shall terminate upon a Qualified
Initial Public Offering.
10. Distributions upon Sale of the Company, etc.. In the event of a sale
--------------------------------------------
or exchange by the holders of Executive Stock (whether by sale, merger,
recapitalization, reorganization, consolidation, combination or otherwise) in
connection with an Approved Sale or Approved ▇▇▇▇ Sale each holder of Executive
Stock shall receive in exchange for the Executive Stock held by such holder
participating in such sale, the same portion of the aggregate consideration from
such sale or exchange that such holder would have received if such aggregate
consideration had been distributed by the Company to the holders of capital
stock of the Company participating in such sale, in complete liquidation
pursuant to the rights and preferences set forth in the Company's Amended and
Restated Articles of Incorporation as in effect immediately prior to such sale
or exchange (and assuming that the only shares of capital stock of the Company
outstanding were the shares of capital stock of the Company participating in
such sale). Each holder of Executive Stock shall take all necessary or
desirable actions in connection with the distribution of the aggregate
consideration from such sale or exchange as requested by the Company.
14
11. Participation Rights.
--------------------
(a) If the ▇▇▇▇ Stockholders or the Bear ▇▇▇▇▇▇▇ Stockholders propose to
enter into any sale to an unaffiliated third party (including Bear ▇▇▇▇▇▇▇ or
its Affiliates in the case of ▇▇▇▇, or ▇▇▇▇ or its Affiliates, in the case of
Bear ▇▇▇▇▇▇▇) pursuant to which such party or parties acquire more than 5% of
any class of capital stock held by the ▇▇▇▇ Stockholders or Bear ▇▇▇▇▇▇▇
Stockholder in any transaction or series of transactions (excluding Public Sales
and transfers and/or distributions to partners of the ▇▇▇▇ Stockholders or the
Bear ▇▇▇▇▇▇▇ Stockholders), then the Executive will be afforded an opportunity
to participate in such transaction on, subject to Section 10 above, the same
terms and conditions as applicable to the other holders of such class of capital
stock participating in such transaction. If any stockholder other than the ▇▇▇▇
Stockholders or the Bear ▇▇▇▇▇▇▇ Stockholders, as the case may be (each a
"Transferring Stockholder") has elected to participate in such sale, the
------------------------
Transferring Stockholder shall be entitled to sell in the contemplated sale a
number of shares of any class of capital stock equal to the product of (i) the
quotient determined by dividing the percentage of such class of capital stock
owned by the Transferring Stockholder by the aggregate percentage of Common
Stock owned by the stockholders participating in such sale (which in the case of
a sale by ▇▇▇▇ Stockholders may include the Bear ▇▇▇▇▇▇▇ Stockholders and which
in the case of a sale by Bear ▇▇▇▇▇▇▇ Stockholders may include the ▇▇▇▇
Stockholders) and (ii) the number of shares of such class of capital stock to
be sold in the contemplated sale. Each holder of Executive Stock participating
in any such transaction will take all necessary or desirable actions in
connection with the consummation of any such transaction as requested by the
▇▇▇▇ Stockholders including without limitation executing the applicable purchase
agreement.
(b) Notwithstanding the foregoing, in the event that the ▇▇▇▇ Stockholders
intend to transfer shares of more than one class of capital stock, each
Transferring Stockholder will not be entitled to participation rights pursuant
to this Section 11 unless such Transferring Stockholder sells in the
contemplated sale a pro rata portion of shares of all such classes of capital
stock, which portion shall be determined in the manner set forth in Section
11(a).
(c) The ▇▇▇▇ Stockholders will use reasonable efforts to obtain the
agreement of the prospective transferee(s) to the participation of any
Transferring Stockholders in any contemplated sale, and the ▇▇▇▇ Stockholders
will not transfer any class of capital stock to the prospective transferee(s)
unless (i) the prospective transferee(s) agree to allow the participation of the
Transferring Stockholders or (ii) the ▇▇▇▇ Stockholders agree to purchase on the
same terms and conditions the number of such class of capital stock from any
Transferring Stockholders which such Transferring Stockholders would have been
entitled to sell pursuant to this Section 11.
12. Preemptive Rights.
-----------------
(a) Except as set forth in subsection (b) below, the Company will not
issue, sell or otherwise transfer to the ▇▇▇▇ Stockholders or the Bear ▇▇▇▇▇▇▇
Stockholders (an "Issuance") at any time prior to a Public Offering, any capital
--------
stock or debt securities (or securities convertible into or exercisable or
exchangeable for capital stock or debt securities) unless, at least 15 days
prior to such Issuance, the Company notifies each holder of Executive Stock in
writing of the Issuance (including the price, the purchasers thereof and the
other terms thereof) and grants to each holder of Executive
15
Stock, the right (the "Right") to subscribe for and purchase a portion of such
-----
additional shares or other securities so issued at the same price and on the
same terms as issued in the Issuance equal to the quotient determined by
dividing (1) the number of fully diluted shares of Class A Common and Class B
Common held by such holder by (2) the total number of shares of Class A Common
and Class B Common outstanding on a fully diluted basis. Notwithstanding the
foregoing, if all Persons entitled to purchase or receive such stock or
securities are required to also purchase other securities of the Company, the
holders of capital stock exercising their Right pursuant to this Section shall
also be required to purchase the same strip of securities (on the same terms and
conditions) that such other Persons are required to purchase. The Right may be
exercised by such holder at any time by written notice to the Company received
by the Company within 10 days after receipt by such holder of the notice from
the Company referred to above. The closing of the purchase and sale pursuant to
the exercise of the Right shall occur not less than 10 days after the Company
receives notice of the exercise of the Right and concurrently with the closing
of the Issuance.
(b) Notwithstanding the foregoing, the Right shall not apply to (i)
issuances of capital stock or debt securities (or securities convertible into or
exchangeable for, or options to purchase, capital stock or debt securities), pro
rata to all holders of any class of Stock, as a dividend on, subdivision of or
other distribution in respect of, such class of capital stock, (ii) conversions
or exchanges of one class or form of capital stock into another class or form of
capital stock, (iii) issuances of capital stock upon exercise of any debt
security issued by the Company, or (iv) the issuance of capital stock (or
securities convertible into or exchangeable for, or options to purchase, capital
stock) on customary, arm's length terms in connection with the provision by the
▇▇▇▇ Stockholders or the Bear ▇▇▇▇▇▇▇ Stockholders of debt financing to the
Company or its Subsidiaries.
(c) The provisions of this Section 12 will terminate upon the consummation
of a Public Offering or upon a ▇▇▇▇ Exit.
13. Initial Public Offering. In the event that the Board approves an
-----------------------
initial public offering and sale of Common Stock (a "Public Offering") pursuant
---------------
to an effective registration statement under the Securities Act of 1933, as
amended, the holders of Common Stock shall take all necessary or desirable
actions in connection with the consummation of the Public Offering. In the
event that such Public Offering is an underwritten offering and the managing
underwriters advise the Company in writing that in their opinion the Common
Stock structure would adversely affect the marketability of the offering, each
holder of Common Stock shall consent to and vote for a recapitalization,
reorganization and/or exchange of the Common Stock into securities that the
managing underwriters and the Board find acceptable and equitable in the
circumstances and shall take all necessary or desirable actions in connection
with the consummation of the recapitalization, reorganization and/or exchange;
provided that the resulting securities take into account rights and preferences
--------
set forth in the Company's Amended and Restated Articles of Incorporation as in
effect immediately prior to such Public Offering.
14. Organic Change. Any recapitalization, reorganization,
--------------
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for
16
Common Stock is referred to herein as an "Organic Change." Except as provided in
--------------
a Sale of the Company or otherwise provided herein, after the consummation of
any Organic Change, each Option shall thereafter be exercisable for, rather than
the applicable Option Shares immediately theretofore acquirable and receivable
upon exercise of such Option, such shares of stock, securities or assets
(including cash) as may be issued or payable with respect to or in exchange for
the number and class of Option Shares immediately theretofore acquirable and
receivable upon exercise of such Option had such Organic Change not taken place.
15. Adjustment for Change in Common Stock. In the event of a
-------------------------------------
recapitalization, reorganization, stock split, stock dividend, combination of
shares, consolidation, merger or other change in any class of Common Stock, the
Board may, in order to prevent the dilution or enlargement of rights under any
Option, make appropriate changes in the number and type of shares or other
consideration covered by any unexercised Option which has not expired and its
applicable Option Price as is appropriate and equitable under the circumstances.
16. Holdback Agreement. Before and after the effective date of any
------------------
underwritten Public Offering, no holder of Executive Stock will effect any sale
or distribution of Common Stock during the period designated by the underwriters
managing such underwritten Public Offering with respect to such holder of
Executive Stock, but in no event shall any such period following the effective
date of any such underwritten Public Offering exceed 180 days.
17. Voting Agreement. Except as otherwise provided herein, from and after
----------------
the date hereof until the provisions of this Section 17 cease to be effective,
Executive and Executive's transferees shall vote all of their Option Shares and
take all other necessary or desirable actions within their control (including,
without limitation, attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings) as
requested from time to time by the holders of a majority of the shares of voting
Common Stock. The provisions of this Section 17 shall cease to be effective upon
the earlier of the consummation of (i) a Qualified Initial Public Offering, or
(ii) a ▇▇▇▇ Exit.
18. Definitions. The following terms are defined as follows:
-----------
"Affiliate" means, when used with reference to a specified Person, any
---------
Person that directly or indirectly controls or is controlled by or is under
common control with the specified Person. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise). It is understood and agreed that any portfolio company in which a
Bain Stockholder or any other Affiliates thereof which is a private equity fund
holds in excess of 30% of the outstanding capital stock is an "Affiliate" of
such Bain Stockholder for purposes of this Agreement and that any portfolio
company in which a Bear ▇▇▇▇▇▇▇ Stockholder or any Affiliate thereof that
invests primarily in equity securities holds in excess of 30% of the outstanding
capital stock is an "Affiliate" of such Bear ▇▇▇▇▇▇▇ Stockholder for purposes of
this Agreement.
17
"Bain Exit" means (i) a sale of all or substantially all of the
---------
consolidated assets of the Company to any Person other than the Bain
Stockholders or their Affiliates or (ii) the transfer or other disposition of at
least 95% of the outstanding shares of capital stock of the Company for cash or
marketable securities (in each case whether by merger, consolidation, sale of
the Company's capital stock or otherwise).
"Bain Sale of the Company" means (i) a sale of all or substantially all of
------------------------
the consolidated assets of the Company to one or more of the Bain Stockholders
or their Affiliates, or (ii) the transfer or other disposition to the Bain
Stockholders or their Affiliates of outstanding shares of capital stock of the
Company (in each case, whether by merger, consolidation, sale of the Company's
capital stock or otherwise) such that after giving effect to such transfer the
Bain Stockholders and their Affiliates own all or substantially all of the
outstanding shares of the Company's capital stock (in each case, whether by
merger, consolidation, sale of the Company's capital stock or otherwise).
"Bain Stockholders" means the Persons listed on the signature pages hereto
-----------------
as Bain Stockholders.
"Bear ▇▇▇▇▇▇▇ Stockholders" means ICST Acquisition Corporation, a Delaware
-------------------------
corporation.
"Board" means the Company's Board of Directors.
-----
"Cause" means (i) the commission of a felony, (ii) the commission of fraud
-----
having an adverse effect on the Company or any of its Subsidiaries or any of
their directors or shareholders, (iii) any material act or omission involving
dishonesty having an adverse effect on the Company or any of its Subsidiaries or
any of their directors or shareholders, (iv) gross negligence or willful
misconduct with respect to the Company or any of its Subsidiaries or substantial
failure to otherwise perform duties as reasonably directed in any such case
described in this clause (iv), for thirty days after written notice from the
Board and an opportunity to cure.
"Class A Common" means the Company's Class A Common, par value $.01 per
--------------
share.
"Class B Common" means the Company's Class B Common Stock, par value $.01
--------------
per share.
"Class L Common" means the Company's Class L Common Stock, par value $.01
--------------
per share.
"Common Stock" means, collectively, Class A Common, Class B Common, Class L
------------
Common and any other common stock authorized by the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
------------
time to time.
"Executive Stock" means (i) all shares of Issued Stock and (ii) all shares
---------------
of Common Stock issued with respect to the shares referred to in clause (i)
above by way of stock dividend or stock split in connection with any conversion,
merger, consolidation or recapitalization or other reorganization affecting the
Common Stock.
18
"Expiration Date" means, with respect to any Option, the date which is ten
---------------
(10) years after the date of this Agreement.
"Fair Market Value"of each share of Common Stock means the average of the
-----------------
closing prices of the sales of the appropriate class of Common Stock on all
securities exchanges on which such class of Common Stock may at the time be
listed, or, if there have been no sales on any such exchange on any day, the
average of the highest bid and lowest asked prices on all such exchanges at the
end of such day, or, if on any day such Common Stock is not so listed, the
average of the representative bid and asked prices quoted in the NASDAQ System
as of 4:00 P.M., New York time, or, if on any day such Common Stock is not
quoted in the NASDAQ System, of the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau Incorporated, or any similar successor organization,
in each such case averaged over a period of 21 days consisting of the day as of
which the Fair Market Value is being determined and the 20 consecutive business
days prior to such day. If at any time such class of Common Stock is not listed
on any securities exchange or quoted in the NASDAQ System or the over-the-
counter market, the Fair Market Value will be the fair value of such class of
Common Stock determined in good faith by the Board based on such factors as the
members thereof, in the exercise of their business judgment, consider relevant
without taking into account a discount for a minority position or illiquidity
but taking into account whether the Company is a privately held company or a
public company (with it being understood that as of the day immediately
following the date hereof, the Fair Market Value for each share of Class A
Common shall be $0.22 and for each share of Class L Common shall be $18 per
share notwithstanding that the Company is a private company). If the Executive
in good faith disagrees with such determination, the Board and the Executive
will negotiate in good faith to agree on such Fair Market Value. If such
agreement is not reached within 30 days after the delivery of the Company
Repurchase Notice, the Initial Repurchase Notice or the Supplemental Repurchase
Notice, Fair Market Value shall be determined by an independent and unaffiliated
appraiser (which shall be one of Valuation Research, BT ▇▇▇▇ ▇▇▇▇▇, Broadview
Associates or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇) selected by the Board, which appraiser shall be
instructed to submit to the Board and the Executive a report within 30 days of
its engagement setting forth such determination. The first $7,000 of the
expenses of such appraiser shall be borne by the Executive (and the remainder
shall be borne by the Company) unless the appraiser's valuation is at least 25%
greater than the amount determined by the Board, in which case, the costs of the
appraiser shall be borne by the Company. In the absence of manifest error, the
determination of such appraiser shall be final and binding upon all parties.
Notwithstanding the foregoing, to the extent that the Company has determined
Fair Market Value through an independent and unaffiliated appraiser at any time
within the six month period prior to Executive's Termination Date, the Fair
Market Value set forth in such appraisal shall conclusively be deemed to be
"Fair Market Value" hereunder and shall be binding upon all parties hereto,
unless the Board, in its good faith discretion determines that acquisitions,
divestitures or other material events consummated during such six-month period
affect the valuation set forth in such appraisal.
"Family Group" means a Participant's spouse and descendants (whether
------------
natural or adopted) and any trust solely for the benefit of such Participant
and/or such Participant's spouse and/or descendants (natural or adopted) of
Participant and any corporation, limited liability company, partnership or other
entity the equity holders of which solely include such Participant, his or her
19
spouse or descendants (natural or adopted) or any trust for the benefit of such
Participant, his or her spouse or descendants (natural or adopted).
"Independent Third Party" means any Person who, immediately prior to the
-----------------------
contemplated transaction, does not own in excess of 5% of the Common Stock on a
fully diluted basis, who is not controlling, controlled by or under common
control with any such 5% owner of the Common Stock and who is not the spouse or
descendant (by birth or adoption) of any such 5% owner of the Common Stock.
"Issued Stock" means all shares of Common Stock issued upon the proper
------------
exercise of an Option.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity or
organization.
"Public Company" means a company any of whose securities are registered
--------------
pursuant to Section 12(b) or 12(g) of the Securities Exchange Act.
"Public Offering" means a public offering and sale of the Common Stock
---------------
pursuant to an effective registration statement under the Securities Act;
provided that a Public Offering shall not include an offering made in connection
with a business acquisition or combination or an employee benefit plan.
"Public Sale" means any sale of Common Stock to the public pursuant to an
-----------
offering registered under the Securities Act or to the public through a broker,
dealer or market maker pursuant to the provisions of Rule 144 (other than Rule
144(k) prior to the time the Company is a Public Company) adopted under the
Securities Act.
"Qualified Initial Public Offering" means the initial sale by the Company
---------------------------------
of any class or classes of the Common Stock in an offering registered under the
Securities Act of 1933, as amended from time to time, other than an offering
made solely in connection with a business acquisition or combination or an
employee benefit plan, but only if the aggregate gross proceeds received by the
Company and its stockholders in such initial sale or series of such sales in the
aggregate are in excess of $50 million.
"Sale of the Company" means (i) a Bain Sale of the Company, or (ii) an
-------------------
Unaffiliated Sale of the Company.
20
"Securities Act" means the Securities Act of 1933, as amended from time to
--------------
time.
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, limited liability company, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors thereof is at the time owned or controlled, directly
or indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, limited liability
company, association or other business entity, a majority of the partnership or
other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that
Person or a combination thereof. For purposes hereof, a Person or Persons shall
be deemed to have a majority ownership interest in a partnership, limited
liability company, association or other business entity if such Person or
Persons shall be allocated a majority of partnership, limited liability company,
association or other business entity gains or losses or shall be or control the
managing director, managing member, manager or a general partner of such
partnership, limited liability company, association or other business entity.
"Termination Date" means the date that Executive ceases to be employed by
----------------
the Company or any of its Subsidiaries for any reason.
"Unaffiliated Sale of the Company" means (i) a sale of all or substantially
--------------------------------
all of the consolidated assets of the Company to any Person other than the Bain
Stockholders or their Affiliates, or (ii) the transfer or other disposition to
any Person other than the Bain Stockholders or their Affiliates of more than 50%
of the outstanding shares of capital stock of the Company (in each case, whether
by merger, consolidation, sale of the Company's capital stock or otherwise).
"Valuation Date" shall mean (i) with respect to any Repurchase Option, the
--------------
date, if any, that the Company delivers a Repurchase Notice to a holder of
Executive Stock or (ii) with respect to any Put Right, the date, if any, that
the holder(s) of Executive Stock deliver a Put Notice to the Company.
19. Notices. Any notice provided for in this Agreement must be in writing
-------
and must be personally delivered, received by certified mail, return receipt
requested, or sent by guaranteed overnight delivery service, to the Investors at
the addresses indicated in the Company's records and to the other recipients at
the address indicated below:
To the Company:
Integrated Circuit Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
21
With copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
3000 Two ▇▇▇▇▇ Square
▇▇/▇▇/ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and:
▇▇▇▇ Capital, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Yoo ▇▇▇ ▇▇▇
and
ICST Acquisition Corp.
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
and
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, P.C.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
To Executive:
at Executive's last address
on the records of the Company
22
or such other address or to the attention of such other person as the recipient
party will have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or mailed.
20. Severability. Whenever possible, each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
21. Complete Agreement. This Agreement embodies the complete agreement
------------------
and understanding among the parties and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
Without limiting the foregoing, all Executive Stock and stock option agreements
between the Company and Executive which existed immediately prior to the Merger
are hereby canceled and terminated.
22. Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which will be deemed to be an original and all of which
taken together will constitute one and the same agreement.
23. Successors and Assigns; Transfer. This Agreement is intended to bind
--------------------------------
and inure to the benefit of and be enforceable by Executive and the Company and
their respective successors, heirs and assigns, provided that Executive may not
assign any of his rights or obligations, except as expressly provided by the
terms of this Agreement. Prior to Transferring any shares of Executive Stock
(other than in a Public Sale or any Approved Sale) to any person or entity,
Executive will cause the prospective transferee to execute and deliver to the
Company an agreement containing the rights and restrictions set forth herein
with respect to such shares of Executive Stock.
24. Governing Law. The corporate law of the Commonwealth of Pennsylvania
-------------
will govern all questions concerning the relative rights of the Company and its
stockholders. All other issues concerning the enforceability, validity and
binding effect of this Agreement will be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania, without giving effect to any
choice of law or conflict of law provision or rule that would cause the
application of the law of any jurisdiction other than the Commonwealth of
Pennsylvania.
25. Remedies. The parties hereto acknowledge and agree that money damages
--------
may not be an adequate remedy for any breach of the provisions of this Agreement
and that any party hereto will have the right to injunctive relief, in addition
to all of its other rights and remedies at law or in equity, to enforce the
provisions of this Agreement.
23
26. Effect of Transfers in Violation of Agreement. The Company will not
---------------------------------------------
be required (a) to transfer on its books any shares of Executive Stock which
have been sold or transferred in violation of any of the provisions set forth in
this Agreement or (b) to treat as owner of such shares of Executive Stock, to
accord the right to vote as such owner or to pay dividends to any transferee to
whom such shares of Executive Stock have been transferred in violation of this
Agreement.
27. Amendments and Waivers. Any provision of this Agreement may be
----------------------
amended or waived only with the prior written consent of the Company (with
approval of the Board) and Executive; provided that Sections 3, 4, 8, 11, 29 and
-------- ----
30 are for the express benefit of the Bain Stockholders and/or the Bear ▇▇▇▇▇▇▇
Stockholders and there shall be no amendment to (or other amendment to this
Agreement which has the effect of amending) any of Sections 3, 4, 8, 11, 29 or
30 or this Section 26 in a manner adverse to the Bain Stockholders without first
obtaining the written consent of the Bain Stockholders or in a manner adverse to
the Bear ▇▇▇▇▇▇▇ Stockholders without first obtaining the written consent of the
Bear ▇▇▇▇▇▇▇ Stockholders, as applicable
28. Rights of Executive. Nothing in this Agreement shall interfere with
-------------------
or limit in any way the right of the Company or any Subsidiary to terminate
Executive's employment at any time (with or without cause), or confer upon
Executive any right to continue in the employ of the Company or any Subsidiary
for any period of time or to continue to receive Executive's current (or other)
rate of compensation.
29. Certain Transactions with Bain. Following the date of the
------------------------------
consummation of the Merger, (i) the Company will not effect a Sale of the
Company to a portfolio company of the Bain Stockholders, and (ii) the Company
will not agree to consummate (or consummate) any non-material transaction other
than on an arms-length basis or otherwise enter into or consummate any material
transaction whether or not on an arms-length basis with the Bain Stockholders or
their Affiliates, other than pursuant to agreements entered on or prior to the
date hereof or agreed upon by the Non-Bain Directors, in each case unless such
transaction has been approved by the Non-Bain Directors (which for purposes of
this Section 29 shall include the approval of any director appointed by the Bear
▇▇▇▇▇▇▇ Stockholders pursuant to the Voting Agreement).
30. Rights Granted to the Bain Stockholders, the Bear ▇▇▇▇▇▇▇ Stockholders
----------------------------------------------------------------------
and their Affiliates. Any rights granted to the Bain Stockholders, the Bear
--------------------
▇▇▇▇▇▇▇ Stockholders and their Affiliates hereunder may also be exercised (in
whole or in part) by their designees (which may be Affiliates).
31. Offset. Whenever the Company or any of its Subsidiaries is to pay any
------
sum to Executive or any Affiliate or related person thereof, any amounts that
such Executive or such Affiliate or related person owes to the Company or any of
its Subsidiaries may be deducted from that sum before payment.
32. Further Assurances. Executive shall execute and deliver all
------------------
documents, provide all information, and take or refrain from taking such actions
as may be necessary or appropriate to achieve the proposes of this Agreement.
In addition, in connection with any Sale of the Company
24
structured to achieve pooling of interest accounting treatment, Executive will
take such actions as requested by the Board as are necessary to achieve and
maintain pooling of interest treatment.
33. Deemed Transfer of Executive Stock. If the Bain Stockholders, the
----------------------------------
Bear ▇▇▇▇▇▇▇ Stockholders and/or the Company shall make available, at the time
and place and in the amount and form provided in this Agreement, the
consideration for the Option Shares to be repurchased in accordance with the
provisions of this Agreement, then from and after such time, the person from
whom such shares are to be repurchased shall no longer have any rights as a
holder of such shares (other than the right to receive payment of such
consideration in accordance with this Agreement), and such shares shall be
deemed purchased in accordance with the applicable provisions hereof and the
Bain Stockholders, the Bear ▇▇▇▇▇▇▇ Stockholders and the Company, as the case
may be, shall be deemed the owner and holder of such shares, whether or not the
certificates therefor have been delivered as required by this Agreement.
34. Construction. References herein to this Agreement and any other
------------
agreement shall mean references to such agreement, as amended, modified,
supplemented or waived from time to time.
* * * * *
25
IN WITNESS WHEREOF, the parties have executed this Executive Stock and
Option Agreement on the day and year first above written.
INTEGRATED CIRCUIT SYSTEMS, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇
--------------------------------
By: ▇▇▇▇ ▇. ▇▇▇
Its: President
/s/ ▇▇▇▇ ▇. ▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇
with respect to paragraphs 3, 4, 8, 11, 26, 29 and
--------------------------------------------------
30 only:
-------
BAIN STOCKHOLDERS:
-----------------
▇▇▇▇ CAPITAL FUND VI, L.P.
By: ▇▇▇▇ Capital Partners VI, L.P.
Its: General Partner
By: ▇▇▇▇ Capital Investors VI, Inc.
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: Managing Director
BCIP TRUST ASSOCIATES II
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
BCIP TRUST ASSOCIATES II-B
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
BCIP ASSOCIATES II
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
BCIP ASSOCIATES II-B
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
with respect to paragraphs 3, 4, 8, 11, 26, 29 and
--------------------------------------------------
30 only:
-------
BAIN STOCKHOLDERS:
-----------------
BCIP ASSOCIATES II-C
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
PEP INVESTMENTS PTY LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
with respect to paragraphs 3, 4, 8, 11, 26, 29 and
--------------------------------------------------
30 only:
-------
BAIN STOCKHOLDERS:
-----------------
▇▇▇▇▇▇▇▇ STREET PARTNERS II
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Its: ______________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇, ▇.▇.▇.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Its: ______________________________
with respect to paragraphs 3, 4, 8, 11, 26, 29 and
--------------------------------------------------
30 only:
-------
BEAR ▇▇▇▇▇▇▇ STOCKHOLDERS:
-------------------------
ICST ACQUISITION CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Its:____________________________