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Exhibit 10.11
EXECUTION COPY
SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT is dated as of February 26, 1998, by and
among MCMS, Inc., an Idaho corporation and f/k/a Micron Custom Manufacturing
Services, Inc. (the "Company"); Cornerstone Equity Investors IV, L.P.
("Cornerstone"); MEI California, Inc. ("MEIC"); Randolph Street Partners II
("Randolph"); BT Investment Partners, Inc. ("BT"); and the other investors
listed in Appendix A hereto (the "Co-Investors").
As of the date hereof, Cornerstone, MEIC, Randolph, BT and the Other
Investors each own a number of shares of the Company's Common Stock and
Convertible Preferred Stock.
The Company and the Stockholders (as defined below) desire to enter
into this Agreement for the purposes, among others, of (i) establishing the
composition of the Board (as defined below), (ii) assuring continuity in the
management and ownership of the Company and (iii) limiting the manner and terms
by which the Stockholder Shares (as defined below) may be transferred.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. Definitions. As used herein, the following terms shall have the
following meanings:
"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). With respect to any Person who is an individual, "Affiliates" shall
also include, without limitation, any member of such individual's Family Group.
"Board" means the Company's board of directors.
"BT Investor" means any of BT or any of its Permitted Transferees.
"BT Shares" means all Stockholder Shares issued or issuable to any
BT Investor.
"Class A Common" means the Company's Class A Common Stock, par value
$.001 per share.
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"Class B Common" means the Company's Class B Common Stock, par value
$.001 per share.
"Class C Common" means the Company's Class C Common Stock, par value
$.001 per share.
"Common Stock" means collectively Class A Common, Class B Common,
Class C Common and any other common stock authorized by the Company.
"Convertible Preferred Stock" means collectively Series A
Convertible Preferred, Series B Convertible Preferred and Series C Convertible
Preferred.
"Cornerstone Investor" means any of Cornerstone or any of its
Permitted Transferees.
"Cornerstone Shares" means all Stockholder Shares issued or issuable
to any Cornerstone Investor.
"Family Group" means, with respect to any Person who is an
individual, (i) such Person's spouse, former spouse, ancestors and descendants
(whether natural or adopted), parents and their descendants and any spouse of
the foregoing persons (collectively, "relatives") or (ii) the trustee, fiduciary
or personal representative of such Person and any trust solely for the benefit
of such Person and/or such Person's relatives.
"Investor" means any of the Investors.
"Investors" means collectively the Cornerstone Investors, the BT
Investors, the Randolph Investors and the Other Investors.
"Investor Shares" means all Stockholder Shares issued or issuable to
any Investor.
"MEIC Holder" means any of MEIC or any of its Permitted Transferees.
"MEIC Shares" means all Stockholder Shares issued or issuable to any
MEIC Holder.
"Other Investors" means any of the Co-Investors or any of its
Permitted Transferees.
"Other Investor Shares" means all Stockholder Shares issued or
issuable to any Other Investor.
"Permitted Transferee" has the meaning set forth in Section 4(d)(ii)
hereof.
"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 Offering" means an underwritten public offering and sale of
the Common Stock pursuant to an effective registration statement under the
Securities Act; provided that a Public
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Offering shall not include an offering made in connection with a business
acquisition or combination pursuant to a registration statement on Form S-4 or
any similar form, or an employee benefit plan pursuant to a registration
statement on Form S-8 or any similar form.
"Public Sale" means any sale of Stockholder Shares to the public
pursuant to an offering registered under the Securities Act or to the public
pursuant to the provisions of Rule 144 (or any similar rule or rules then in
effect) under the Securities Act.
"Qualified Public Offering" means any offering by the Corporation of
its common equity securities to the public pursuant to an effective registration
statement under the Securities Act of 1933, as then in effect, or any comparable
statement under any similar federal statute then in force pursuant to which the
public offering price per share of which is not less than $14.00 (adjusted to
reflect stock dividends, stock splits or recapitalizations) after the date
hereof and results in aggregate cash proceeds to the Corporation of at least
$30,000,000 (before deduction of underwriting discounts and expenses).
"Randolph Investor" means any of Randolph or any of its Permitted
Transferees.
"Randolph Shares" means all Stockholder Shares issued or issuable to
any Randolph Investor.
"Regulatory Problem" shall mean, with respect to any holder of
Stockholder Shares, any set of facts, events or circumstances the existence of
which would cause such holder of Stockholder Shares to believe that there is a
substantial risk of assertion by a governmental entity (which belief shall be
reasonable in light of the prevailing regulatory environment) that such holder
of Stockholder Shares is or would be in violation of any law, regulation, rule
or other requirement of any governmental authority (including without
limitation, the Bank Holding Company Act of 1956, as amended and the rules and
regulations promulgated thereunder).
"Regulated Stockholder" shall mean any stockholder (i) that is
subject to the provisions of the Bank Holding Company Act and (ii) that holds
shares of Stockholder Shares of the Company.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Convertible Preferred" means the Company's Series A
Convertible Preferred Stock, par value $.001 per share.
"Series B Convertible Preferred" means the Company's Series B
Convertible Preferred Stock, par value $.001 per share.
"Series C Convertible Preferred" means the Company's Series C
Convertible Preferred Stock, par value $.001 per share.
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"Stockholder Shares" means (i) all shares of Common Stock held,
directly or indirectly, by the Stockholders, (ii) all shares of Convertible
Preferred Stock held, directly or indirectly, by the Stockholders, and (iii) all
equity securities issued or issuable directly or indirectly with respect to any
Common Stock referred to in clause (i) above or with respect to any Convertible
Preferred Stock referred to in clause (ii) above, in each case, by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular shares constituting Stockholder Shares, such shares will cease to be
Stockholder Shares when they have been Transferred in a Public Sale.
"Stockholders" means collectively the Investors and the MEIC
Holders.
"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.
"Transfer" means any voluntary or involuntary, direct or indirect
sale, transfer, conveyance, assignment, pledge, hypothecation, gift, delivery or
other disposition. Notwithstanding the foregoing, the conversion by any
Stockholder of any shares of any class of Common Stock or Convertible Preferred
Stock into any other class of Common Stock or Convertible Preferred Stock shall
not be deemed a "Transfer" for purposes of this Agreement, provided that such
Stockholder continues to own such converted shares immediately after such
conversion.
"Unaffiliated Third Party" means any Person who, immediately prior
to the contemplated transaction, (i) is not a Person who directly or indirectly
owns in excess of 5% of the outstanding shares of Common Stock on a
fully-diluted basis (a "5% Owner"), (ii) is not controlling, controlled by or
under common control with any such 5% Owner and (iii) is not the spouse or
descendent (by birth or adoption) of any such 5% Owner or a trust for the
benefit of such 5% Owner and/or such other Persons. 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
significantly direct management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
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2. Board of Directors.
(a) To the extent permitted by law, each Stockholder shall vote all
voting securities of the Company over which such Stockholder has voting
control, and shall take all other reasonably necessary or desirable actions
within such Stockholder's control (whether in such Stockholder's capacity as a
stockholder, director, member of a board committee or officer of the Company or
otherwise, and 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), and the Company shall take all necessary and desirable
actions within its control (including, without limitation, calling special board
and shareholder meetings), so that:
(i) the authorized number of directors of the Board shall be seven;
(ii) holders of record of a majority of the Cornerstone Shares
entitled to vote for directors of the Board will designate three of the
seven total directors of the Board (each a "Cornerstone Director") (the
three Cornerstone Directors shall initially be John A. Downer, Michael E.
Najjar and Mark Rossi);
(iii) any director designated pursuant to clause (ii) above shall be
removed from the Board or any committee thereof (with or without cause) at
the written request of the Stockholder or Stockholders which have the
right to designate such director hereunder, but only upon such written
request and under no other circumstances (in each case, determined on the
basis specified in clause (ii) above);
(iv) in the event that any director designated hereunder for any
reason ceases to serve as a member of the Board or any committee thereof
during such director's term of office, the resulting vacancy on the Board
or committee shall be filled by a director designated by the Stockholders
referred to in clause (ii) above; and
(v) at the Board's election, the composition of the board of
directors (or any similar governing body) of any of the Company's
Subsidiaries shall be the same as the Board; and
(vi) the Stockholders will agree to expand the size of the Board to
the extent necessary to fulfill the Company's obligations to any holder of
its preferred stock under the Company's certificate of incorporation.
(b) BT Observer. Prior to the consummation of a Qualified Public
Offering, so long as BT and its Affiliates (and not any of their respective
assigns) own at least 5% of the outstanding shares of Common Stock, BT and its
Affiliates who own Stockholder Shares (and not any of their respective assigns)
shall appoint a representative, which representative must be reasonably
acceptable to Cornerstone (the "BT Observer") (the initial BT Observer shall be
Cathy Madigan). BT and its Affiliates who own Stockholder Shares (and not any of
their respective assigns) may remove any such representative or appoint a new
representative if a vacancy in such position occurs for any reason by delivery
of a written notice to the Secretary of the Company; provided that any such new
representative must be reasonably acceptable to Cornerstone. The Company or the
applicable members of the Board will give the BT Observer oral or written notice
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of each meeting of the Board (whether annual or special) at the same time and in
the same manner as oral or written notice is given to the applicable members of
the Board (which notice may be waived by the BT Observer). Notwithstanding the
foregoing, if the BT Observer attends (or, in the case of a telephonic meeting,
listens by telephone to) any such meeting of the Board, then the BT Observer
shall be deemed to have had proper notice of such meeting. Notwithstanding
anything contained herein to the contrary, the failure of the BT Observer to be
given notice of a meeting of the Board pursuant to the immediately preceding
sentence or to attend such meeting shall not in any way affect the authority of
the Board to have or to adopt resolutions at such meeting or the legitimacy of
any actions taken by the Board at such meeting. Subject to the foregoing, the
Company will permit the BT Observer to attend (or, in the case of a telephonic
meeting, to listen by telephone to) each meeting of the Board as a non-voting
observer. The Company shall provide the BT Observer all written materials and
other information (including copies of meeting minutes) given to the members of
the Board in connection with any such meeting at the same time as such
information is delivered to the members of the Board and, if the BT Observer
does not attend (or, in the case of a telephonic meeting, does not listen by
telephone to) a meeting of the Board, the BT Observer will be entitled, upon
request, to receive a written or oral summary of the meeting from the Secretary
of the Company. If the Company takes any action by written consent in lieu of a
meeting of the Board, then the Company shall give prompt written notice of such
action to the BT Observer.
(c) The Company shall reimburse the directors of the Board for all
reasonable out-of-pocket expenses borne by such directors in connection with the
performance of their duties as directors of the Company and the BT Observer in
connection with attendance in any meeting of the Board.
(d) If any party fails to designate in writing a representative to
fill a director position pursuant to the terms of this Section 2, the election
of a Person to such director position shall be accomplished in accordance with
the Company's Articles of Incorporation and by-laws and applicable law. In the
event that, at any time, any provision of the Company's Articles of
Incorporation or by-laws is inconsistent with the requirements of any provision
of this Section 2, the Stockholders shall take such action as may be necessary
to amend any such provision in the Company's Articles of Incorporation or
by-laws, as the case may be, to conform with such requirements.
3. Conflicting Agreements. Each Stockholder represents that such
Stockholder has not granted and is not a party to any proxy, voting trust or
other agreement which is inconsistent with or conflicts with the provisions of
this Agreement, and no holder of Stockholder Shares shall grant any proxy or
become party to any voting trust or other agreement which is inconsistent with
or conflicts with the provisions of this Agreement.
4. Restrictions on Transfer of Stockholder Shares.
(a) General Restrictions.
(i) Prior to the earlier of (x) the second anniversary of the date
hereof and (y) the first day after the period commencing on the date
hereof and ending on the day the Company's financial statements are filed
with the SEC for the first full fiscal quarter after
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the Company consummates an initial Public Offering, subject to Section 7
hereof, an MEIC Holder may Transfer Stockholder Shares only (A) if such
MEIC Holder is exercising a tag-along right granted to such MEIC Holder
pursuant to Section 4(c), then to any Person, provided, that such Person
shall have complied with the requirements of Section 4(d)(ii), or (B)
pursuant to the terms of Section 5.
(ii) On or after the earlier of (x) the second anniversary of the
date hereof and (y) the first day after the period commencing on the date
hereof and ending on the day the Company's financial statements are filed
with the SEC for the first full fiscal quarter after the Company
consummates an initial Public Offering, subject to Section 7 hereof, an
MEIC Holder may Transfer Stockholder Shares only (A) in Public Sales, (B)
if such MEIC Holder has complied with the terms and requirements of
Section 4(b) or if such MEIC Holder is exercising a tag-along right
granted to such MEIC Holder pursuant to Section 4(c), then to any Person,
provided, that such Person shall have complied with the requirements of
Section 4(d)(ii), or (C) pursuant to the terms of Section 5.
(iii) Subject to Section 7 hereof, an Investor may Transfer
Stockholder Shares only (A) in Public Sales, (B) if such Investor has
complied with the terms and requirements of Sections 4(b) and 4(c), to the
extent applicable, or if such Investor is exercising a tag-along right
granted to such Investor pursuant to Section 4(c), then to any Person,
provided, that such Person shall have complied with the requirements of
Section 4(d)(ii), or (C) pursuant to the terms of Section 5.
(iv) Notwithstanding any other provision of this Agreement to the
contrary, in the event that a Regulated Stockholder shall reasonably and
in good faith determine that if such Regulated Stockholder shall continue
to hold some or all of the Stockholder Shares held by such Regulated
Stockholder, there is a material risk that such ownership will result in a
Regulatory Problem and such Regulatory Problem cannot be remedied by
converting such Stockholder Shares into another class of Stockholder
Shares, then, subject to Section 7 hereof, such Regulated Stockholder, may
Transfer all Stockholder Shares necessary to prevent such Regulatory
Problem to any Person without complying with the terms and requirements of
Sections 4(b) and 4(c); provided, that (w) such Regulated Stockholder
shall have delivered a written notice to the Company describing in
reasonable detail the nature of the Regulatory Problem, the amount, type
and class of Stockholder Shares to be Transferred and the identity of such
Person, (x) such Person is not a direct competitor of the Company or any
of its Subsidiaries, (y) such Person is reasonably acceptable to
Cornerstone and the Board, and (z) such Person shall have complied with
the requirements of Section 4(d)(ii). Without limiting the foregoing, at
the request of such Regulated Stockholder, the Company shall provide (and
authorize such Regulated Stockholder, to provide) financial and other
information concerning the Company to any prospective purchaser of such
securities owned by such Regulated Stockholder. The Company shall not be
required to provide any such information unless the recipient thereof
signs a confidentiality agreement reasonably satisfactory to the Company.
(b) Right of First Refusal granted to the Company and the
Cornerstone Investors. Subject to Section 4(d)(i) (all terms defined in this
Section 4(b) shall be for purposes of this Section 4(b) only):
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(i) If at any time any MEIC Holder, any Randolph Investor, any BT
Investor or any Other Investors (a "Selling Holder") proposes to Transfer
any Stockholder Shares (other than pursuant to a Public Sale, pursuant to
the terms of Section 5, or if such Selling Holder is exercising a
tag-along right granted to such Selling Holder pursuant to Section 4(c)),
then such Selling Holder will, not fewer than twenty-five (25) business
days prior to making such Transfer, give notice (the "Transfer Notice") to
the Cornerstone Investors and to the Company specifying (x) the
Stockholder Shares proposed to be Transferred (the "Offered Shares"), (y)
the price (the "Offered Price") and the other terms and conditions upon
which such Selling Holder proposes to Transfer such Offered Shares, and
(z) the proposed Transferee(s). Notwithstanding the foregoing, each
potential Selling Holder agrees to use its best efforts to notify the
Cornerstone Investors and the Company within a reasonable time of the
occurrence of any discussions with any potential proposed Transferee which
have a reasonable likelihood of giving rise to such potential Selling
Holder having an obligation to deliver a Transfer Notice pursuant to this
Section 4(b).
(ii) The Transfer Notice will constitute an irrevocable offer (for
the time periods set forth in items (iii) and (iv) below) to Transfer any
of the Offered Shares to the Company and the Cornerstone Investors at the
Offered Price and on the terms specified in the Transfer Notice (the
"Offer to Sell"), except that if the proposed Transfer is to be wholly or
partly for consideration other than cash, then the Offer to Sell will
constitute an offer to Transfer the Offered Shares to the Company and the
Cornerstone Investors for a cash purchase price equal to the amount of
cash (if any) specified in the Transfer Notice, plus the fair market value
determined in the good faith judgement of the Board, at the date of the
Transfer Notice, of such non-cash consideration.
(iii) The Company will have fifteen (15) business days after its
receipt of the Transfer Notice (the "Company Exercise Period") during
which to notify the Selling Holder and the Cornerstone Investors in
writing of its election to purchase all or any portion of the Offered
Shares (an "Acceptance Notice").
(iv) If the Company has not elected to purchase all of the Offered
Shares, each Cornerstone Investor will have twenty (20) business days
after its receipt of the Transfer Notice (the "Cornerstone Exercise
Period") during which to notify the Selling Holder and the Company in
writing of its election to purchase all but not less than all of the
Offered Shares which the Company has not elected to purchase (such shares,
the "Cornerstone Offered Shares") (such written notice, also an
"Acceptance Notice"). Any Cornerstone Investor who delivers an Acceptance
Notice shall be referred to herein as a "Purchasing Cornerstone Investor".
If the Purchasing Cornerstone Investors elect to purchase in the aggregate
more than the Cornerstone Offered Shares, then the Cornerstone Offered
Shares shall be sold among the Purchasing Cornerstone Investors pro rata
based upon the number of Stockholder Shares then owned by such Purchasing
Cornerstone Investors or in such other manner as the Purchasing
Cornerstone Investors may agree.
(v) Upon the delivery of the Acceptance Notice(s), the Company
and/or the Purchasing Cornerstone Investor(s), as the case may be, and the
Selling Holder shall be firmly bound to consummate the purchase and sale
of the applicable Offered Shares in accordance with the Transfer Notice,
the Acceptance Notice(s) and the terms hereof. Subject
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to the provisions hereof, within ninety (90) days after the Selling
Holder's receipt of the last Acceptance Notice, the Company and/or the
Purchasing Cornerstone Investor(s), as the case may be, shall purchase and
the Selling Holder shall sell the applicable Offered Shares at a mutually
agreeable time and place (the "Offered Shares Closing").
(vi) At the Offered Shares Closing, the Selling Holder shall deliver
to the Company and/or the Purchasing Cornerstone Investor(s), as the case
may be, certificates representing the Offered Shares (which Offered Shares
shall be free and clear of any liens or encumbrances) to be purchased by
the Company and/or the Purchasing Cornerstone Investor(s), as the case may
be, and the Company and/or the Purchasing Cornerstone Investor(s), as the
case may be, shall deliver to the Selling Holder the applicable purchase
price for such Offered Shares by wire transfer of immediately available
funds to an account(s) designated by such Selling Holder.
(vii) If the Company and the Cornerstone Investors collectively do
not elect to purchase any or all of the Offered Shares in accordance with
Section 4(b)(iii) and 4(b)(iv), then, provided the Selling Holder has also
complied with the provisions of Section 4(c), if applicable, and no
Transferee is an Affiliate of the Selling Holder, the Selling Holder may
Transfer any or all of such Offered Shares (unless reduced pursuant to the
exercise of rights granted to other Stockholders in Section 4(c)), at a
price which is not less than the price specified in the Transfer Notice
and on other terms and conditions which are not materially more favorable
in the aggregate to any Transferee thereof than those specified in the
Transfer Notice, to any Person(s), but only to the extent that a binding
purchase and sale agreement has been executed between such Selling Holder
and such Transferee within 120 days after expiration of the Cornerstone
Exercise Period. Any Stockholder Shares not Transferred pursuant to such
an agreement within such 120-day period will be subject to the provisions
of this Section 4(b) upon subsequent Transfer.
(viii) The provisions of this Section 4(b) shall terminate upon the
consummation of a Qualified Public Offering; provided, that with respect
to any MEIC Holder, the provisions of this Section 4(b) shall terminate
upon the consummation of an initial Public Offering.
(c) Tag Along Rights.
(i) Tag Along Rights in the event of certain Transfers by the
Cornerstone Investors. Subject to Section 4(d)(i), at least 10 business
days prior to the Transfer by any of the Cornerstone Investors
(collectively, the "Cornerstone Transferring Stockholder") of any
Cornerstone Shares to a Person that is not an Affiliate of any Cornerstone
Investor (other than pursuant to a Public Sale, or pursuant to the terms
of Section 5), the Cornerstone Transferring Stockholder shall deliver a
written notice (the "Cornerstone Sale Notice") to the BT Investors, the
Randolph Investors and the Other Investors (collectively, the "Tagging
Investors") and to the Company, specifying in reasonable detail the
identity of the prospective transferee(s), the class and the number of the
Stockholder Shares to be Transferred, and the other material terms and
conditions of such contemplated Transfer. Any of the Tagging Investors may
elect to participate in such contemplated Transfer by delivering written
notice to the Cornerstone Transferring Stockholder within 5 business days
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after its receipt of the Cornerstone Sale Notice. If any of the Tagging
Investors elects to participate in such Transfer, each of the Tagging
Investors shall be entitled to sell in such contemplated Transfer, at the
same price and on the same terms, up to a number of each class of
Stockholder Shares to be Transferred equal to the product of (I) a
fraction, the numerator of which is the number of Stockholder Shares to be
sold by the Cornerstone Transferring Stockholder (after giving effect to
any reduction in the number of Stockholder Shares to be sold by such
Cornerstone Transferring Stockholder as a result of the inclusion of such
Stockholder Shares owned by such Other Investors) and the denominator of
which is the aggregate number of Stockholder Shares owned by the
Cornerstone Transferring Stockholder immediately prior to such Transfer,
multiplied by (II) the total number of Stockholder Shares owned by such
Other Investor immediately prior to such Transfer. Each Stockholder
Transferring Stockholder Shares pursuant to this Section 4(c)(i) shall pay
its pro rata share (based on the number of Stockholder Shares to be sold)
of the expenses incurred by the Stockholders in connection with such
Transfer and shall take all necessary and desirable actions as reasonably
directed by the Cornerstone Transferring Stockholder in connection with
the consummation of such Transfer, including without limitation executing
the applicable purchase agreement. The Cornerstone Transferring
Stockholder shall cause all applicable transferee(s) to execute a joinder
to this Agreement with respect to all Stockholder Shares Transferred
pursuant to this Section 4(c)(i). Any Transfer made by a Cornerstone
Transferring Stockholder pursuant to this Section 4(c)(i) or pursuant to
Section 4(c)(ii) shall satisfy the following conditions, (i) upon the
consummation of such Transfer, each Stockholder participating in such
Transfer will be entitled to receive (x) the same form and amount (on a
share-for-share basis) of consideration, with respect to each share of
Common Stock sold in such Transfer and (y) the same form and amount (on a
share-for share basis) of consideration, with respect to each shares of
Convertible Preferred Stock in such Transfer and (ii) if any holder of a
Common Stock or Convertible Preferred Stock is given the option as to the
form and amount of consideration to be received in connection with such
Transfer (other than to remedy a Regulatory Problem for such holder), then
each holder of Common Stock or Convertible Preferred Stock, as the case
may be, shall have given the same option. In connection with any Transfer
made pursuant to this Section 4(c) each Other Investor shall be entitled
to receive, and the Company and/or the Cornerstone Transferring
Stockholder shall deliver all information relating to the Company and its
Subsidiaries as such Other Investor shall reasonably request. The
Cornerstone Transferring Stockholder shall deliver to each Other Investor
a copy of the acquisition agreement (and related documents) relating to
any Transfer subject to this Section 4(c) in a reasonably timely manner to
allow for adequate review by each of the Other Investors and shall include
in the disclosure schedules attached thereto any information reasonably
requested to be included therein by such Other Investor. The right of the
BT Investors to participate in a Transfer pursuant to this Section 4(c)
shall not be contingent upon such BT Investor providing any indemnity in
connection with any such Transfer, unless the Cornerstone Transferring
Stockholder and all other sellers provide such an indemnity, and in the
event that all sellers are required to provide an indemnity in connection
with such Transfer, all parties hereto agree to enter into a contribution
agreement among themselves which provides that no Investor shall be liable
for more than the lesser of (A) its pro rata shares of any such
indemnification payments (based upon the total consideration received by
such Investor divided by the total consideration received by all sellers
in such Transfer) and (B) the net
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proceeds actually received by such Investor as consideration for its
shares of Common Stock in such Transfer.
(ii) Tag Along Rights granted to MEIC. Subject to Section 4(d)(i),
at least 10 business days prior to any Transfer after the date six months
after the date hereof by any of the Investors (the "Transferring
Stockholder") of any voting Stockholder Shares to a Person that is not an
Affiliate of any Transferring Stockholder, and is not a Stockholder or the
Company (other than pursuant to a Public Sale, pursuant to the terms of
Section 5, a Transfer to the Company or any Cornerstone Investor pursuant
to the terms of Section 4(b), or if such Transferring Stockholder is
exercising a tag-along right granted to such Transferring Stockholder
pursuant to this Section 4(c)), the Transferring Stockholder shall deliver
a written notice (the "Sale Notice") to MEIC or any of its Affiliates (and
not any of their respective assigns) and to the Company, specifying in
reasonable detail the identity of the prospective transferee(s), the class
and the number of the voting Stockholder Shares to be Transferred, and the
other material terms and conditions of such contemplated Transfer. MEIC or
any of its Affiliates (and not any of their respective assigns) may elect
to participate in such contemplated Transfer by delivering written notice
to the Transferring Stockholder within 7 business days after its receipt
of the Sale Notice. If MEIC or any of its Affiliates (and not any of their
respective assigns) elects to participate in such Transfer, MEIC or any of
its Affiliates (and not any of their respective assigns) shall be entitled
to sell in such contemplated Transfer, at the same price and on the same
terms, a number of each class of voting Stockholder Shares to be
Transferred equal to the product of (x) the quotient determined by
dividing the percentage of such class of Stockholder Shares owned by MEIC
or any of its Affiliates (and not any of their respective assigns)
(calculated on a fully diluted basis) by the aggregate percentage of such
class of Stockholder Shares owned collectively by the Stockholders
(calculated on a fully diluted basis) and (y) the aggregate number of
voting Stockholder Shares of such class to be sold in such contemplated
Transfer. If MEIC or any of its Affiliates (and not any of their
respective assigns) does not elect to participate in such Transfer, then
the Transferring Stockholder may Transfer any or all of the voting
Stockholder Shares described in the applicable Sale Notice, at a price
which is not more than the price specified in the applicable Sale Notice
and on other terms and conditions which are not materially more favorable
in the aggregate to the Transferring Stockholder than those specified in
the applicable Sale Notice, to the prospective transferee(s) specified in
the applicable Sale Notice, but only to the extent that a binding purchase
and sale agreement has been executed between such Transferring Stockholder
and any such prospective transferee(s) within 130 days after the
Transferring Stockholder delivered the applicable Sale Notice to MEIC. Any
Stockholder Shares not Transferred pursuant to such an agreement within
such 130-day period will be subject to the provisions of this Section
4(c)(ii) upon subsequent Transfer. Each Stockholder Transferring voting
Stockholder Shares pursuant to this Section 4(c)(ii) shall pay its pro
rata share (based on the number of voting Stockholder Shares to be sold)
of the expenses incurred by the Stockholders in connection with such
Transfer and shall take all necessary and desirable actions as reasonably
directed by the Transferring Stockholder in connection with the
consummation of such Transfer, including without limitation executing any
applicable purchase agreement. The Transferring Stockholder shall cause
all applicable transferee(s) to execute a joinder to this Agreement with
respect to all Stockholder Shares Transferred pursuant to this Section
4(c)(ii).
- 11 -
12
(iii) For purposes of this Section 4(c), (a) Class A Common, Class B
Common and Class C Common shall be deemed to be the same class of
Stockholders Shares, (b) Series A Convertible Preferred, Series B
Convertible Preferred and Series C Convertible Preferred shall be deemed
to be the same class of Stockholder Shares, and (c) Convertible Preferred
and Common Stock shall be deemed to be different classes of Stockholder
Shares; provided, however, that, notwithstanding the foregoing, Class B
Common and Series B Convertible Preferred shall not be deemed voting
Stockholder Shares for purposes of subparagraph (ii) above.
(iv) The provisions of Sections 4(c)(i) shall terminate upon the
consummation of a Qualified Public Offering. The provisions of Section
4(c)(ii) shall terminate upon the earlier of (x) the consummation of an
initial Public Offering and (y) the date MEIC or any of its Affiliates
(and not any of their respective assigns) cease to own any Stockholder
Shares.
(d) Permitted Transfers.
(i) The restrictions contained in Sections 4(a), 4(b) and 4(c) shall
not apply with respect to any Transfer of Stockholder Shares by any
Stockholder (A) in the case of an individual Stockholder, pursuant to
applicable laws of descent and distribution or to any member of such
Stockholder's Family Group, (B) in the case of a non-individual
Stockholder, to its employees or Affiliates, (C) in the case of
Cornerstone, to its partners in connection with a distribution by
Cornerstone of Stockholder Shares held by Cornerstone; provided, in each
case, that any such transferee shall have complied with the requirements
of Section 4(d)(ii).
(ii) Prior to any proposed transferee's acquisition of Stockholder
Shares pursuant to a Transfer permitted by Section 4(a)(i)(A), 4(a)(ii)(B)
or 4(a)(iii)(B) or Section 4(d)(i), such proposed transferee must agree to
take such Stockholder Shares subject to and to be fully bound by the terms
of this Agreement applicable to such Stockholder Shares by executing a
joinder to this Agreement substantially in the form attached hereto as
Exhibit A and delivering such executed joinder to the Secretary of the
Company prior to the effectiveness of such Transfer (unless such Transfer
is pursuant to applicable laws of descent and distribution, in which case,
such executed joinder shall be delivered to the Secretary of the Company
as soon as reasonably possible after such Transfer). All transferees
acquiring Stockholder Shares and executing a joinder in compliance with
this Section 4(d)(ii) are collectively referred to herein as "Permitted
Transferees".
(e) If (i) any event occurs pursuant to which Micron Electronics,
Inc. ceases to directly or indirectly own the MEIC Shares, (ii) any Transfer of
a majority interest in the residual equity securities of a Stockholder owning
Stockholder Shares occurs other than a Transfer to an Affiliate of Micron
Electronics, Inc., or (iii) any Stockholder Transfers Stockholder Shares to an
Affiliate and an event occurs which causes such Affiliate to cease to be an
Affiliate of such Stockholder, such event or Transfer shall be deemed a Transfer
of Stockholder Shares subject to all of the restrictions on Transfers of
Stockholder Shares set forth in this Agreement, including without limitation,
this Section 4.
- 12 -
13
5. Approved Sale.
(a) If the holders of a majority of the shares of voting
Stockholder Shares then outstanding, voting together as if a single class, (the
"Approving Stockholders") approve a sale of all or substantially all of the
Company's assets determined on a consolidated basis or a sale of all (or, for
accounting, tax or other reasons, substantially all) of the Company's
outstanding capital stock (other than capital stock which is not Common Stock or
convertible into Common Stock) (whether by merger, recapitalization,
consolidation, reorganization, combination or otherwise) to an Unaffiliated
Third Party or group of Unaffiliated Third Parties (each such sale, an "Approved
Sale"), then each holder of Stockholder Shares will vote for, consent to and
raise no objections against such Approved Sale subject to the terms set forth
below. In connection with any Stockholders exercising their rights under this
Section 5(a), such Stockholders shall send a written notice at least ten (10)
business days prior to any Approved Sale to all other Stockholders setting forth
the principal terms of the proposed Approved Sale. If the Approved Sale is
structured as (i) a merger or consolidation, each holder of Stockholder Shares
will waive any dissenters' rights, appraisal rights or similar rights in
connection with such merger or consolidation or (ii) a sale of stock, each
holder of Stockholder Shares will agree to sell all of its Stockholder Shares
and rights to acquire Stockholder Shares on the same terms and conditions as
applicable to all of the Stockholder Shares held by the Approving Stockholders.
Each holder of Stockholder Shares will take all reasonably necessary or
desirable actions in connection with the consummation of the Approved Sale as
reasonably requested by the Investors approving such Approved Sale including
without limitation (but subject to Section 5(c)) executing any applicable
purchase agreement.
(b) Each Stockholder will bear their pro-rata share (based
upon the number of shares sold) of the costs of any sale of Stockholder Shares
pursuant to an Approved Sale to the extent such costs are incurred for the
benefit of all holders of Stockholder Shares and are not otherwise paid by the
Company or the acquiring party. Costs incurred by any Stockholder on their own
behalf will not be considered costs of the transaction hereunder.
(c) The obligations of the Stockholders with respect to any
Approved Sale are subject to the satisfaction of the following conditions: (i)
in connection with the consummation of such Approved Sale, each Stockholder will
be entitled to receive (x) the same form and amount (on a share-for-share basis)
of consideration, with respect to each share of Common Stock sold in such
Approved Sale and (y) the same form and amount (on a share-for-share basis) of
consideration, with respect to each share of Convertible Preferred Stock sold in
such Approved Sale, (ii) if any holder of Common Stock or Convertible Preferred
Stock is given the option as to the form and amount of consideration to be
received in connection with such Approved Sale (other than to remedy a
Regulatory Problem for such holder), then each holder of Common Stock or
Convertible Preferred Stock, as the case may be, shall be given the same option,
(iii) if Cornerstone or any Affiliate of Cornerstone owns directly or indirectly
more than 5% of any class of capital stock of any of the Unaffiliated Third
Parties, then such Approved Sale shall have been approved by at least five of
the seven members of the Board (each such number to be reduced by any member of
the Board who is not eligible to vote on such Approved Sale) and the Board shall
have received a fairness opinion from a nationally recognized investment banking
firm with respect to the terms of such Approved Sale. No holder of BT Shares
shall be required to participate in an Approved Sale unless such holder receives
consideration that does not cause a Regulatory Problem for such holder or any of
its Affiliates, and (iv) no Investor shall be required to provide an indemnity
in connection with any
- 13 -
14
Approved Sale, unless all sellers in such Approved Sale provide such an
indemnity, and in the event that all sellers are required to provide an
indemnity in connection with the Approved Sale, all parties hereto agree to
enter into a contribution agreement among themselves which provides that no
Investor shall be liable for more than the less of (A) its pro rata share of
such indemnification payments (based upon the total consideration received by
such holder divided by the total consideration received by all seller sin such
Approved Sale) and (B) the net proceeds actually received by such holder as
consideration for its shares of proceeds actually received by such holder as a
consideration for its shares of capital stock of the Company in such Approved
Sale. In connection with any Approved Sale, each Investor shall be entitled to
receive, and the Company shall deliver all information relating to the Company
and its Subsidiaries as such Investor shall reasonably request. The Company
shall deliver to each Investor a copy of the acquisition agreement (and related
documents) relating to any Approved Sale in a reasonably timely manner to allow
for adequate review by the Investors and shall include in the disclosure
schedules attached thereto any information reasonably requested to be included
therein by such Investor. Notwithstanding anything contained herein to the
contrary, the term "consideration" as used in this subsection (c) shall not
include any management, advisory, closing, legal or similar fees received by any
Stockholder or any Affiliate of any Stockholder in connection with an Approved
Sale.
(d) The provisions of this Section 5 will terminate upon the
occurrence of the earlier of (i) the consummation of a Qualified Public Offering
and (ii) the date on which Cornerstone and its Affiliates no longer own at least
25% of the then outstanding shares of Common Stock.
6. Financial Statements and Access to Information.
(a) Financial Statements. The Company shall deliver to each
Stockholder who holds more than 5% of the then outstanding shares of Common
Stock:
(i) within 60 days after the end of each quarterly
accounting period in each fiscal year of the Company, unaudited consolidated
statements of income and cash flows of the Company and its Subsidiaries for such
quarterly period and unaudited consolidated balance sheets of the Company and
its Subsidiaries as of the end of such quarterly period. Such financial
statements shall be prepared in accordance with generally accepted accounting
principles, consistently applied, subject to the absence of footnote disclosures
and to normal year-end adjustments; and
(ii) within 120 days after the end of each fiscal year
of the Company, audited consolidated statements of income and cash flows of the
Company and its Subsidiaries for such fiscal year, and audited consolidated
balance sheets of the Company and its Subsidiaries as of the end of such fiscal
year. Such financial statement shall be prepared in accordance with generally
accepted accounting principles, consistently applied.
(b) Access to Information. The Company shall permit any
Stockholder who holds more than 10% of the then outstanding shares of Common
Stock and its representatives (including, without limitation, its legal counsel,
accountants and governmental authorities to which it is subject), during normal
business hours and such other times as any such holder may reasonably request,
to (i) visit and inspect any of the properties of the Company and its
Subsidiaries, (ii) examine the corporate and financial records of the Company
and its Subsidiaries and make
- 14 -
15
copies thereof or extracts therefrom and (iii) discuss the affairs, finances and
accounts of any such entities with any of the executive officers of the Company.
(c) Other Information. Prior to the consummation of a
Qualified Public Offering, so long as any BT Investor owns at least 5% of the
outstanding shares of Common Stock, the Company shall, with reasonable
promptness, deliver to such BT Investor who own Stockholder Shares (and not any
of their respective assigns) copies of any previously prepared financial data or
other previously prepared written information concerning the Company and its
Subsidiaries that such BT Investor (and not any of its assigns) may reasonably
request.
7. Legend; Additional Restriction on Transfer.
(a) Each certificate or instrument evidencing Stockholder
Shares and each certificate or instrument issued in exchange for or upon the
Transfer of any Stockholder Shares (if such securities remain Stockholder Shares
(as defined herein) after such Transfer) shall be stamped or otherwise imprinted
with a legend in substantially the following form:
"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
REGISTRATION THEREUNDER. THE TRANSFER OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE IS SUBJECT TO A SHAREHOLDERS AGREEMENT DATED AS
OF FEBRUARY 26, 1998, AS MAY BE AMENDED FROM TIME TO TIME, BY AND
AMONG THE ISSUER AND CERTAIN OF THE ISSUER'S STOCKHOLDERS. A COPY OF
SUCH SHAREHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE
ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
The legend set forth above regarding the Shareholders Agreement shall be removed
from the certificates evidencing any securities which cease to be Stockholder
Shares. Upon the request of any holder of Stockholder Shares, the Company shall
remove the Securities Act legend set forth above from the certificate or
certificates for such Stockholder Shares; provided, that such Stockholder Shares
are eligible for sale pursuant to Rule 144(k) (or any similar rule or rules then
in effect) under the Securities Act.
(b) Unless waived by the Company, no Stockholder may Transfer
any Stockholder Shares (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
- 15 -
16
opinion of counsel reasonably acceptable in form and substance to the Company
further states that no subsequent Transfer of such Stockholder Shares will
require registration under the Securities Act, the Company will promptly upon
such Transfer deliver new certificates for such securities which do not bear the
Securities Act legend set forth in Section 7(a).
8. Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Stockholder Shares in violation of any provision of this
Agreement shall be null and void, and the Company shall not record such Transfer
on its books or treat any purported transferee of such Stockholder Shares as the
owner of such securities for any purpose.
9. Preemptive Rights.
(a) If at any time prior to the consummation of a Qualified
Public Offering the Company wishes to issue any Common Stock or any options,
warrants or other rights to acquire Common Stock or any notes or other
securities convertible or exchangeable into Common Stock (all such Common Stock
and other rights and securities, collectively, the "Equity Equivalents") to any
Person or Persons, the Company shall promptly deliver a notice of intention to
sell (the "Company's Notice of Intention to Sell") to each Investor setting
forth a description and the number of the Equity Equivalents proposed to be
issued and the proposed purchase price and terms of sale. Upon receipt of the
Company's Notice of Intention to Sell, each Investor shall have the right to
elect to purchase, at the price and on the terms stated in the Company's Notice
of Intention to Sell, a number of the Equity Equivalents equal to the product of
(i) such Investor's proportionate ownership of the outstanding shares of Common
Stock (calculated on a fully-diluted basis assuming all holders of then
outstanding warrants, options and convertible securities of the Company which
are in the money had converted such convertible securities or exercised such
warrants or options immediately prior to the taking of the record of the holders
of Common Stock for the purpose of determining whether they are entitled to
receive such offer) held by all Persons multiplied by (ii) the number of Equity
Equivalents proposed to be issued (as described in the applicable Company's
Notice of Intention to Sell). Such election shall be made by the electing
Investor by written notice to the Company within fifteen (15) business days
after receipt by such Investor of the Company's Notice of Intention to Sell (the
"Acceptance Period"). In the event that any Equity Equivalents proposed to be
issued at any time as contemplated by this Section 9 are either voting
securities or securities which are convertible, exercisable or exchangeable for
voting securities and for any reason one or more of the Investors determines in
its sole discretion that it would be detrimental to such Investor or its
Affiliates to purchase such Equity Equivalents as provided hereby, then the
Company shall make available to any such Investor an amount of alternative
securities equal to the amount of such Equity Equivalents as such Investor has
elected to purchase pursuant to the terms hereof which are identical to such
Equity Equivalents in all respects except for the fact that such alternate
securities shall be non-voting securities or convertible, exercisable or
otherwise exchangeable for non-voting securities (the "Alternative Securities")
upon such terms and conditions as such Investor may request.
(b) To the extent an effective election to purchase has not
been received from an Investor pursuant to subsection (a) above in respect of
the Equity Equivalents proposed to be issued pursuant to the applicable
Company's Notice of Intention to Sell, the Company may, at its election, during
a period of one hundred and twenty (120) days following the expiration of the
applicable Acceptance Period, issue and sell the remaining Equity Equivalents to
be issued and sold
- 16 -
17
to any Person at a price and upon terms not more favorable to such Person than
those stated in the applicable Company's Notice of Intention to Sell; provided,
however, that failure by an Investor to exercise its option to purchase with
respect to one issuance and sale of Equity Equivalents shall not affect its
option to purchase Equity Equivalents in any subsequent offering, sale and
purchase. In the event the Company has not sold any Equity Equivalents covered
by a Company's Notice of Intention to Sell, or entered into a binding agreement
to sell such Equity Equivalents, within such one hundred and twenty (120) day
period, the Company shall not thereafter issue or sell such Equity Equivalents,
without first offering such Equity Equivalents to each Investor in the manner
provided in this Section 9.
(c) If an Investor gives the Company notice, pursuant to the
provisions of this Section 9, that such Investor desires to purchase any Equity
Equivalents or Alternative Securities, payment therefor shall be by check or
wire transfer of immediately available funds, against delivery of the securities
(which securities shall be issued free and clear of any liens or encumbrances)
at the executive offices of the Company at the closing dated fixed by the
Company for the sale of all such Equity Equivalents. In the event that any
proposed sale is for a consideration other than cash, such Investors may pay
cash in lieu of all (but not part) of such other consideration, in the amount
determined reasonably and in good faith by the Board to represent the fair value
of such consideration other than cash.
(d) The preemptive rights contained in this Section 9 shall
not apply to (i) the issuance of shares or units of Equity Equivalents as a
stock dividend or upon any subdivision, split or combination of the outstanding
shares of Common Stock; (ii) the issuance of Equity Equivalents upon conversion,
exchange or redemption of any outstanding convertible or exchangeable
securities; (iii) the issuance of Equity Equivalents upon exercise of any
outstanding options or warrants; or (iv) the issuance of Equity Equivalents to
any employee or director of the Company or any of its subsidiaries.
(e) The provisions of this Section 9 shall terminate upon the
consummation of a Qualified Public Offering.
10. Amendment and Waiver. No modification, amendment or waiver of
any provision of this Agreement shall be effective against the Company or the
Stockholders unless such modification, amendment or waiver is approved in
writing by, respectively, the Company or the holders of 75% of the Stockholder
Shares; provided, that no amendment shall be effective without the consent of a
Stockholder to the extent that such amendment would adversely affect the rights
or obligations of such Stockholder hereunder in any material respect. The
failure of any party to enforce any of the provisions of this Agreement shall in
no way be construed as a waiver of such provisions and shall not affect the
right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms. Each Stockholder shall remain a party to
this Agreement only so long as such person is the holder of record of
Stockholder Shares.
11. Severability. Whenever possible, each provision of this
Agreement shall 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 shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced
- 17 -
18
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
12. Entire Agreement. Except as otherwise expressly set forth
herein, this document embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof 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.
13. Termination. This Agreement will automatically terminate and be
of no further force or effect immediately after the consummation of an Approved
Sale.
14. Successors and Assigns. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Stockholder Shares and the respective successors, heirs and assigns
of each of them, so long as they hold Stockholder Shares.
15. Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
16. Remedies. The parties hereto shall be entitled to enforce their
rights under this Agreement specifically to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that the Company and any Stockholder may in his, hers, or its sole
discretion apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive relief (without posting a bond or other
security) in order to enforce or prevent any violation of the provisions of this
Agreement.
17. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when delivered if delivered
personally, sent via a nationally recognized overnight courier, or sent via
facsimile to the recipient, or if sent by certified or registered mail, return
receipt requested, will be deemed to have been given two business days
thereafter. Such notices, demands and other communications will be sent to the
address indicated below:
To the Company:
MCMS, Inc.
16399 Franklin Road
Nampa, Idaho 83687
Attention: President
Telecopy No.: (208) 893-8711
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19
With a copy, which shall not constitute notice, to:
Cornerstone Equity Investors, LLC
717 Fifth Avenue, Suite 1100
New York, NY 10022
Attention: Tony Downer
Michael E. Najjar
Telecopy No.: (212) 826-6798
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Frederick Tanne, Esq.
Telecopy No.: (212) 446-4900
To MEIC:
MEI California, Inc.
c/o Micron Electronics, Inc.
900 East Karcher Road
Nampa, Idaho 83687
Attention: General Counsel
Telecopy No: (208) 898-7411
With a copy, which shall not constitute notice, to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Barry A. Bryer
Telecopy No: (212) 403-2000
To Cornerstone:
Cornerstone Equity Investors, LLC
717 Fifth Avenue, Suite 1100
New York, NY 10022
Attention: Tony Downer
Michael E. Najjar
Telecopy No.: (212) 826-6798
- 19 -
20
With a copy, which shall not constitute notice, to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Frederick Tanne, Esq.
Telecopy No.: (212) 446-4900
To BT:
BT Investment Partners, Inc.
130 Liberty Street
New York, New York 10006
Attention: Joseph Wood
Telecopy No.: (212) 250-8375
With a copy, which shall not constitute notice, to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: John M. Reiss
Telecopy No.: (212) 354-8113
To Randolph:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Frederick Tanne, Esq.
Telecopy No.: (212) 446-4900
To Chris Anton:
c/o MCMS, Inc.
16399 Franklin Road
Nampa, Idaho 83687
Telecopy No.: (208) 898-2796
To Jess Asla:
c/o MCMS, Inc.
16399 Franklin Road
Nampa, Idaho 83687
Telecopy No.: (208) 898-2796
- 20 -
21
To John McCarvel:
c/o MCMS, Inc.
16399 Franklin Road
Nampa, Idaho 83687
Telecopy No.: (208) 898-2796
To Robert F. Subia:
c/o MCMS, Inc.
16399 Franklin Road
Nampa, Idaho 83687
Telecopy No.: (208) 898-2796
To R. Stephen Cheheyl:
130 Lane's End
Concord, Massachussets 01742
Telecopy No.: (978) 369-4607
To Finis Connor:
The Connor Group
San Carlos and Fourth Street
Unit No. 2
Carmel, CA 93921
Telecopy No.: (408) 625-8613
To Nicholas Keating:
2477 Jackson Street
San Francisco, CA 94115
Telephone No.: (650) 771-2989
To Oak Investment Partners VII, Limited Partnership:
Oak Investment Partners
525 University Avenue, Suite 1300
Palo Alto, CA 94301
Attention: Fredric W. Harman
Telecopy No.: (650) 328-6345
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22
To Oak VII Affiliate Fund, Limited Partnership:
Oak Investment Partners
525 University Avenue, Suite 1300
Palo Alto, CA 94301
Attention: Fredric W. Harman
Telecopy No.: (650) 328-6345
To Norman Nie:
c/o Oak Investment Partners
525 University Avenue, Suite 1300
Palo Alto, CA 94301
Attention: Fredric W. Harman
Telecopy No.: (650) 328-6345
To August Capital, L.P. for itself and as nominee for August Capital
Strategic Partners, L.P. and August Capital Associates, L.P.:
August Capital Management, L.L.C.
2480 Sandy Hill, Suite 101
Menlo Park, CA 94025
Attention: Mark G. Wilson
Telecopy No.: (650) 234-9910
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
18. Governing Law. The corporate law of the State of Idaho will
govern all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.
19. Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
* * * * *
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23
IN WITNESS WHEREOF, the parties hereto have executed this
Shareholders Agreement as of the date first above written.
MCMS, INC.
By: /s/ Robert F. Subia
------------------------------------
Name: Robert F. Subia
Title: President and CEO
CORNERSTONE EQUITY INVESTORS IV, L.P.
By: Cornerstone IV, L.L.C.,
as General Partner
By: /s/ Michael E. Najjor
------------------------------------
Name: Michael E. Najjor
Title: Managing Director
MEI CALIFORNIA, INC.
By:
------------------------------------
Name:
Title:
RANDOLPH STREET PARTNERS II
By:
------------------------------------
A General Partner
24
IN WITNESS WHEREOF, the parties hereto have executed this
Shareholders Agreement as of the date first above written.
MCMS, INC.
By:
------------------------------------
Name:
Title:
CORNERSTONE EQUITY INVESTORS IV, L.P.
By: Cornerstone IV, L.L.C.,
as General Partner
By:
------------------------------------
Name:
Title:
MEI CALIFORNIA, INC.
By: /s/ T. Erik Oaas
------------------------------------
Name: T. Erik Oaas
Title: Executive Vice-President
RANDOLPH STREET PARTNERS II
By:
------------------------------------
A General Partner
25
IN WITNESS WHEREOF, the parties hereto have executed this
Shareholders Agreement as of the date first above written.
MCMS, INC.
By:
------------------------------------
Name:
Title:
CORNERSTONE EQUITY INVESTORS IV, L.P.
By: Cornerstone IV, L.L.C.,
as General Partner
By:
------------------------------------
Name:
Title:
MEI CALIFORNIA, INC.
By:
------------------------------------
Name:
Title:
RANDOLPH STREET PARTNERS II
By: /s/ [Illegible]
------------------------------------
A General Partner
26
CONTINUATION OF SIGNATURES FOR THIS SHAREHOLDERS AGREEMENT:
BT INVESTMENT PARTNERS, INC.
By: /s/ Joseph G. Wood
----------------------------------
Name: JOSEPH G. WOOD
Title: M. D.
CO-INVESTORS
------------------------------------
Chris Anton
------------------------------------
Jess Asla
------------------------------------
John McCarvel
------------------------------------
Robert F. Subia
------------------------------------
R. Stephen Cheheyl
------------------------------------
Finis Connor
------------------------------------
Nicholas Keating
27
CONTINUATION OF SIGNATURES FOR THIS SHAREHOLDERS AGREEMENT:
BT INVESTMENT PARTNERS, INC.
By:
----------------------------------
Name:
Title:
CO-INVESTORS
/s/ Chris Anton
------------------------------------
Chris Anton
------------------------------------
Jess Asla
------------------------------------
John McCarvel
------------------------------------
Robert F. Subia
------------------------------------
R. Stephen Cheheyl
------------------------------------
Finis Connor
------------------------------------
Nicholas Keating
28
CONTINUATION OF SIGNATURES FOR THIS SHAREHOLDERS AGREEMENT:
BT INVESTMENT PARTNERS, INC.
By:
----------------------------------
Name:
Title:
CO-INVESTORS
------------------------------------
Chris Anton
/s/ Jess Asla
------------------------------------
Jess Asla
------------------------------------
John McCarvel
------------------------------------
Robert F. Subia
------------------------------------
R. Stephen Cheheyl
------------------------------------
Finis Connor
------------------------------------
Nicholas Keating
29
CONTINUATION OF SIGNATURES FOR THIS SHAREHOLDERS AGREEMENT:
BT INVESTMENT PARTNERS, INC.
By:
----------------------------------
Name:
Title:
CO-INVESTORS
------------------------------------
Chris Anton
------------------------------------
Jess Asla
/s/ John McCarvel
------------------------------------
John McCarvel
------------------------------------
Robert F. Subia
------------------------------------
R. Stephen Cheheyl
------------------------------------
Finis Connor
------------------------------------
Nicholas Keating
30
CONTINUATION OF SIGNATURES FOR THIS SHAREHOLDERS AGREEMENT:
BT INVESTMENT PARTNERS, INC.
By:
----------------------------------
Name:
Title:
CO-INVESTORS
------------------------------------
Chris Anton
------------------------------------
Jess Asla
------------------------------------
John McCarvel
/s/ Robert F. Subia
------------------------------------
Robert F. Subia
------------------------------------
R. Stephen Cheheyl
------------------------------------
Finis Connor
------------------------------------
Nicholas Keating
31
CONTINUATION OF SIGNATURES FOR THIS SHAREHOLDERS AGREEMENT:
BT INVESTMENT PARTNERS, INC.
By:
----------------------------------
Name:
Title:
CO-INVESTORS
------------------------------------
Chris Anton
------------------------------------
Jess Asla
------------------------------------
John McCarvel
------------------------------------
Robert F. Subia
/s/ R. Stephen Cheheyl
------------------------------------
R. Stephen Cheheyl
------------------------------------
Finis Connor
------------------------------------
Nicholas Keating
32
CONTINUATION OF SIGNATURES FOR THIS SHAREHOLDERS AGREEMENT:
BT INVESTMENT PARTNERS, INC.
By:
----------------------------------
Name:
Title:
CO-INVESTORS
------------------------------------
Chris Anton
------------------------------------
Jess Asla
------------------------------------
John McCarvel
------------------------------------
Robert F. Subia
------------------------------------
R. Stephen Cheheyl
/s/ Finis Connor
------------------------------------
Finis Connor
------------------------------------
Nicholas Keating
33
CONTINUATION OF SIGNATURES FOR THIS SHAREHOLDERS AGREEMENT:
BT INVESTMENT PARTNERS, INC.
By:
----------------------------------
Name:
Title:
CO-INVESTORS
------------------------------------
Chris Anton
------------------------------------
Jess Asla
------------------------------------
John McCarvel
------------------------------------
Robert F. Subia
------------------------------------
R. Stephen Cheheyl
------------------------------------
Finis Connor
/s/ Charles Nicholas Keating
/s/ Carleen B. Keating
------------------------------------
Charles Nicholas Keating, Jr AND
Carleen B. Keating, JT/WROS
34
OAK INVESTMENT PARTNERS VII, LIMITED
PARTNERSHIP
By: Oak Associates VII, LLC
By: /s/ Fredric W. Harman
---------------------------------------
Name: Fredric W. Harman
Title: Managing Member
OAK VII AFFILIATE FUND, LIMITED
PARTNERSHIP
By: Oak VII Affiliates, LLC
By: /s/ Fredric W. Harman
---------------------------------------
Name: Fredric W. Harman
Title: Managing Member
--------------------------------------------
Norman Nie
AUGUST CAPITAL, L.P. for itself and as
nominee for August Capital Strategic
Partners, L.P. and August Capital
Associates, L.P.
By: August Capital Management, L.L.C.,
its general partner
By:
---------------------------------------
Name: Mark G. Wilson
Title: Member
35
OAK INVESTMENT PARTNERS VII, LIMITED
PARTNERSHIP
By: Oak Associates VII, LLC
By:
---------------------------------------
Name: Fredric W. Harman
Title: Managing Member
OAK VII AFFILIATE FUND, LIMITED
PARTNERSHIP
By: Oak VII Affiliates, LLC
By:
---------------------------------------
Name: Fredric W. Harman
Title: Managing Member
/s/ Norman Nie
--------------------------------------------
Norman Nie
AUGUST CAPITAL, L.P. for itself and as
nominee for August Capital Strategic
Partners, L.P. and August Capital
Associates, L.P.
By: August Capital Management, L.L.C.,
its general partner
By:
---------------------------------------
Name: Mark G. Wilson
Title: Member
36
OAK INVESTMENT PARTNERS VII, LIMITED
PARTNERSHIP
By: Oak Associates VII, LLC
By:
---------------------------------------
Name: Fredric W. Harman
Title: Managing Member
OAK VII AFFILIATE FUND, LIMITED
PARTNERSHIP
By: Oak VII Affiliates, LLC
By:
---------------------------------------
Name: Fredric W. Harman
Title: Managing Member
--------------------------------------------
Norman Nie
AUGUST CAPITAL, L.P. for itself and as
nominee for August Capital Strategic
Partners, L.P. and August Capital
Associates, L.P.
By: August Capital Management, L.L.C.,
its general partner
By: /s/ Mark G. Wilson
---------------------------------------
Name: Mark G. Wilson
Title: Member
37
APPENDIX A
Chris Anton
Jess Asla
August Capital, L.P. for itself and as nominee for August Capital Strategic
Partners, L.P. and August Capital Associates, L.P.
R. Stephen Cheheyl
Finis Connor
Nicholas Keating
John McCarvel
Norman Nie
Oak VII Affiliate Fund, Limited Partnership
Oak Investment Partners VII, Limited Partnership
Robert F. Subia
38
EXHIBIT A
FORM OF JOINDER TO
SHAREHOLDERS AGREEMENT
THIS JOINDER to the Shareholders Agreement dated as of February 26,
1998 by and among MCMS, Inc., an Idaho corporation (the "Company"), and certain
stockholders of the Company (the "Agreement"), is made and entered into as of
_________ by and between the Company and _________________ ("Holder").
Capitalized terms used herein but not otherwise defined shall have the meanings
set forth in the Agreement.
WHEREAS, Holder has acquired certain Stockholder Shares and the
Agreement and the Company require Holder, as a holder of such Stockholder
Shares, to become a party to the Agreement, and Holder agrees to do so in
accordance with the terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Joinder hereby agree as
follows:
1. Agreement to be Bound. Holder hereby agrees that upon execution
of this Joinder, it shall become a party to the Agreement and shall be fully
bound by, and subject to, all of the covenants, terms and conditions of the
Agreement as though an original party thereto and shall be deemed a [Cornerstone
Investor/BT Investor/Randolph Investor/Other Investors/MEIC Holder] and a
Stockholder for all purposes thereof. In addition, Holder hereby agrees that all
Common Stock held by Holder shall be deemed [Cornerstone/BT/Randolph/Other
Investors/MEIC] Shares and Stockholder Shares for all purposes of the Agreement.
2. Successors and Assigns. Except as otherwise provided herein, this
Joinder shall bind and inure to the benefit of and be enforceable by the Company
and its successors, heirs and assigns and Holder and any subsequent holders of
Stockholder Shares and the respective successors, heirs and assigns of each of
them, so long as they hold any Stockholder Shares.
3. Counterparts. This Joinder may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
4. Notices. For purposes of Section 16 of the Agreement, all
notices, demands or other communications to the Holder shall be directed to:
[Name]
[Address]
[Facsimile Number]
5. Governing Law. The corporate law of Idaho shall govern all issues
concerning the relative rights of the Company and its stockholders. All other
questions concerning the construction, validity and interpretation of this
Joinder shall be governed by
39
and construed in accordance with the domestic laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
6. Descriptive Headings. The descriptive headings of this Joinder
are inserted for convenience only and do not constitute a part of this Joinder.
* * * * *
- 2 -
40
IN WITNESS WHEREOF, the parties hereto have executed this Joinder as
of the date first above written.
MCMS, INC.
By:
----------------------------------
Name:
Title:
[HOLDER]
By:
----------------------------------
Name:
Title:
- 3 -