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EXHIBIT 4.7
FORM OF
MHI ACQUISITION, INC.
FOUNDER PERFORMANCE STOCK PURCHASE AGREEMENT
This Agreement is made as of the 31st day of May 1995, by and between
MHI ACQUISITION, INC., a Delaware corporation (the "Company"), and
_____________________ (the "Founder").
In consideration of the mutual covenants and representations herein
set forth, the Company and the Founder agree as follows:
1. Purchase and Sale of the Stock. Subject to the terms and
conditions of this Agreement, the Company hereby agrees to sell to the Founder
and the Founder hereby agrees to purchase from the Company on the Closing (as
defined herein) _____________ shares of the Company's Class A Common Stock (the
"Shares"), at a price of $0.60 per share (the "Purchase Price"), for an
aggregate purchase price of $________________. The terms of this Agreement
shall not apply to any shares of capital stock of the Company held by the
Founder except for the Shares (and shares of stock issued upon conversion of
the Shares).
2. Closing. The closing of the purchase and sale of the Shares
hereunder shall be held at the offices of Wilson, Sonsini, Goodrich & Rosati,
650 Page Mill Road, Palo Alto, California at 7:00 a.m., local time, on May 31,
1995 (the "Closing") or at such other time and place as shall be mutually
agreed upon between the Company and the Founder. At the Closing, the Founder
shall deliver to the Company either cash or a check (or any combination
thereof), in the amount of the Purchase Price and the Company shall issue, as
promptly thereafter as practicable, a certificate, registered in the name of
the Founder. As a condition to closing, (a) the Series A Preferred Stock
Purchase Agreement, dated as of May 31, 1995, by and among the Company and the
purchasers named therein shall have been executed and delivered by the Company,
shall be in full force and effect and all conditions to closing thereunder
shall have been satisfied or waived, (b) the Registration Rights Agreement,
dated as of May 31, 1995, shall have been executed and delivered by the Company
and the other parties named therein and shall be in full force and effect and
(c) the Stockholders Agreement, dated as of May 31, 1995, shall have been
executed and delivered by the Company and the other parties named therein and
shall be in full force and effect.
3. Repurchase Option.
(a) In the event the Founder's continuous status as an
employee of or consultant to the Company (including a parent or subsidiary of
the Company) terminates for any or no reason, including resignation,
involuntary termination, death or disability (collectively, a "Termination"),
the Company shall have an irrevocable right, for a period of ninety (90) days
following the date of such Termination (as reasonably fixed and determined by
the Company) (the "Termination Date"), to repurchase any or all of the
Unreleased Shares (as defined in Section 4 hereof), at a price of $0.60 per
share (subject to adjustment as set forth in Section 9 hereof) (the "Repurchase
Price"). In addition, in the event there has been no Termination as of
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August 31, 1999 (the "Ending Date"), the Company shall have an irrevocable
right, for a period ending ten (10) days following the completion of the audit
of the Company's financial statements for the year ended August 31, 1999 (but
in no event shall the period extend beyond ninety (90) days following the
Ending Date) to purchase any or all of the Unreleased Shares, at the Repurchase
Price. The rights of the Company to repurchase Unreleased Shares as set forth
in this Section 3 is referred to herein as the "Repurchase Option."
The Repurchase Option shall be exercised by the Company
(subject to Sections 3(b) and 3(c) below) within ninety (90) days following the
Termination Date or Ending Date in accordance with Section 3(a) by delivering
or mailing to the Founder or the Founder's executor (i) written notice in the
manner provided in Section 12 hereof and (ii) a check in the amount of the
aggregate Repurchase Price. Upon delivery of such notice and the payment of
the aggregate Repurchase Price, as described above, the Company shall become
the legal and beneficial owner of the Shares being repurchased and all rights
and interest therein or relating thereto, and the Company shall have the right
to retain and transfer to its own name the number of Shares being repurchased
by the Company.
(b) In the event the Company desires to exercise the
Repurchase Option within ninety (90) days of a Termination Date or ninety (90)
days of an Ending Date as described in Section 3(a) (the "Exercise Period"),
but is precluded by law from exercising the Repurchase Option because the
Company at such time does not have sufficient legally available funds to make
the purchase under the Delaware General Corporation Law, or any similar or
succeeding law (a "Legal Restriction"), the Exercise Period in such event shall
be extended until such time as the Company has sufficient legally available
funds under law to make the purchase. In such event the Company shall deliver
to the Founder written notice prior to the expiration of the Exercise Period of
its desire to exercise the Repurchase Option and a description in reasonable
detail of the Legal Restriction. The Repurchase Option shall be exercised by
the Company (subject to Section 3(d)) in whole or in part from time to time
promptly but in no event more than fifteen (15) days after the Company has
sufficient legally available funds to do so (in accordance with the delivery
procedures described in the second paragraph of Section 3(a)).
(c) In the event the Company is unable to purchase all or
a portion of the Unreleased Shares (such Unreleased Shares are hereinafter
defined as the "Restricted Shares") due to (i) a Legal Restriction or (ii)
restrictions set forth in Section 6.28 of the Credit Agreement dated as of May
31, 1995, by and among MHI Acquisition Corporation I, a Delaware corporation,
the lenders named therein and Internationale Nederlander (U.S.) Capital
Corporation as agent, then Morgan Stanley Venture Capital Fund II, L.P., Morgan
Stanley Venture Capital Fund II, C.V. and/or Morgan Stanley Venture Investors
L.P. and/or their affiliates (collectively "Morgan Stanley"), Morgan Stanley
shall have the right to purchase the Restricted Shares within the Exercise
Period. The Repurchase Option may be exercised by
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Morgan Stanley in such event within the Exercise Period by delivering or
mailing to the Founder or the Founder's executor (i) written notice in the
manner provided in Section 12 hereof and (iv) a check in the amount of the
aggregate Repurchase Price. Upon delivery of such notice and the payment of
the aggregate Repurchase Price, as described above, Morgan Stanley shall become
the beneficial owner of the Shares being repurchased and all rights and
interests therein or relating thereto, and Morgan Stanley shall have the right
to direct the Company to transfer to Morgan Stanley in its own name the number
of Shares being purchased by Morgan Stanley.
(d) Nothing in this Agreement shall affect in any manner
whatsoever the right or power of the Company, or a parent or subsidiary of the
Company, from removing or otherwise terminating the Founder's status as an
employee of or consultant to the Company, subject to the provisions of any
applicable employment agreement.
4. Release of the Stock From Repurchase Option.
(a) The Shares subject to this Agreement shall be
released from the Repurchase Option on the earlier to occur of (i) ninety (90)
days after a Termination or (ii) ninety (90) days after the Ending Date. In
addition, the Shares subject to this Agreement shall be released from the
Repurchase Option at earlier dates upon the satisfaction of certain conditions
as set forth on Exhibit A hereto.
(b) Any shares of the Stock which have not yet been
released from the Company's Repurchase Option are referred to herein as the
"Unreleased Shares."
5. Representations of Founder. In connection with the Founder's
purchase of the Shares, the Founder hereby represents and warrants to the
Company as follows:
(a) Investment Intent; Capacity to Protect Interests.
The Founder is purchasing the Shares solely for his own account and not with a
view to or for sale in connection with any distribution of the Shares or any
portion thereof and not with any present intention of selling, offering to sell
or otherwise disposing of or distributing the Shares or any portion thereof in
any transaction other than a transaction exempt from registration under the
Securities Act of 1933 ("the Securities Act"). The Founder also represents
that the entire legal and beneficial interest of the Shares is being purchased,
and will be held for the Founder's account only and neither in whole or in part
for any other person. The Founder either has a pre-existing business or
personal relationship with the Company or one or more of its officers,
directors or controlling persons or, by reason of the Founder's business or
financial experience or the business or financial experience of the Founder's
financial advisors who are unaffiliated with and who are not compensated by the
Company or any affiliate or selling agent of the Company, directly or
indirectly, could be reasonably assumed to have the capacity to evaluate the
merits and risks of an investment in the Company and to protect the Founder's
own interests in connection with this transaction.
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(b) Resident. The Founder's principal residence is as
set forth on the signature page hereof.
(c) Information Concerning the Company. The Founder has
heretofore discussed the Company and its plans, operations and financial
condition with the Company's officers, knows that the Company is a highly
speculative business and has heretofore received all such information as the
Founder has deemed necessary and appropriate to enable the Founder to evaluate
the financial risk inherent in making an investment in the Shares, and the
Founder has received satisfactory and complete information concerning the
business and financial condition of the Company in response to all inquiries in
respect thereof.
(d) Economic Risk. The Founder realizes that the
purchase of the Shares will be a highly speculative investment and involves a
high degree of risk, and the Founder is able, without impairing his financial
condition, to hold the Shares for an indefinite period of time and to suffer a
complete loss on his investment.
(e) Restricted Securities. The Founder understands and
acknowledges that:
(i) The Shares have not been registered under the
Securities Act, and the Shares must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is
available (such as Rule 144 or the resale provisions of Rule 701 under the
Securities Act) and the Company is under no obligation to register the Shares;
(ii) The stock certificate representing the Shares
will be stamped with the legends specified in Section 8 hereof; and
(iii) The Company will make a notation in its
records of the aforementioned restrictions on transfer and legends.
(f) Disposition under the Securities Act. The Founder
understands that the Shares are restricted securities within the meaning of
Rule 144 promulgated under the Securities Act; that the exemption from
registration under Rule 144 will not be available in any event for at least two
years from the date of purchase and payment of the Shares (unless Rule 701
promulgated under the Securities Act is available), and even then will not be
available unless (i) a public trading market then exists for the Common Stock
of the Company, (ii) adequate information concerning the Company is then
available to the public and (iii) other terms and conditions of Rule 144 are
complied with; and that any sale of the Shares may be made only in limited
amounts in accordance with such terms and conditions. The Founder further
understands that the resale provisions of Rule 701, if available, will not
apply until ninety (90) days after the Company becomes subject to the reporting
obligations under the Securities Exchange Act of 1934. There can be no
assurance that the requirements of Rule 144 or Rule 701 will be met or that the
Shares will ever be saleable.
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(g) Further Limitations on Disposition. Without in any way
limiting the representations set forth above, the Founder further agrees that
he shall in no event make any disposition of all or any portion of the Shares
unless and until:
(i) (A) There is then in effect a Registration
Statement under the Securities Act covering such proposed disposition, and such
disposition is made in accordance with said Registration Statement; (B) the
resale provisions of Rule 701 or Rule 144 are available in the opinion of
counsel to the Company; or (C)(1) the Founder shall have notified the Company
of the proposed disposition and (2) the Founder shall have furnished the
Company at the reasonable request of the Company, with an opinion of the
Founder's counsel to the effect that such disposition will not require
registration of such Shares under the Securities Act; and,
(ii) The Shares proposed to be transferred shall
no longer be subject to the Repurchase Option set forth in Section 3 hereof.
(h) Section 83(b) Election. The Founder understands that
Section 83 of the Internal Revenue Code of 1986 (the "Code") taxes as ordinary
income the difference, if any, between the amount paid for the Shares and the
fair market value of the Shares as of the date any restrictions on the Shares
lapse. In this context, "restriction" means the right of the Company to buy
back the Shares pursuant to the Repurchase Option. The Founder understands
that he may elect to be taxed at the time the Shares are purchased rather than
when and as the Repurchase Option expires by filing an election under Section
83(b) of the Code with the Internal Revenue Service within thirty (30) days
after the date of purchase. Even if the fair market value of the Shares equals
the amount paid for the Shares, the election must be made to avoid adverse tax
consequences in the future. The form for making this election is attached as
Exhibit B hereto. The Founder understands that failure to make this filing
timely will result in the recognition of ordinary income by the Founder, as the
Repurchase Option lapses, on the difference between the purchase price and the
fair market value of the Shares at the time such restrictions lapse.
THE FOUNDER ACKNOWLEDGES THAT IT IS THE FOUNDER'S SOLE RESPONSIBILITY
AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF
THE FOUNDER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON
THE FOUNDER'S BEHALF.
6. Rights as Stockholder. Subject to the terms and conditions of
this Agreement, the Founder shall have all of the rights of a stockholder of
the Company with respect to the Shares from and after the date that the Founder
delivers full payment for the Shares until such time as the Founder disposes of
the Shares or the Company and/or its assignee(s) (or Morgan Stanley) exercises
the Repurchase Option hereunder. Upon such exercise, the Founder shall have no
further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions
of this Agreement, and the Founder shall
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forthwith cause the certificate(s) evidencing the Shares so purchased to be
surrendered to the Company for transfer or cancellation.
7. Escrow. As security for the faithful performance of this
Agreement, the Founder agrees, immediately upon receipt of the certificate(s)
evidencing the Shares, to deliver such certificate(s), together with a stock
power in the form of Exhibit C attached hereto, executed by the Founder and by
the Founder's spouse, if any (with the date and number of Shares left blank),
to the Secretary of the Company or its designee ("Escrow Agent"); said
documents are to be held by the Escrow Agent pursuant to the Joint Escrow
Instructions of the Company and the Founder set forth in Exhibit D attached
hereto and incorporated by this reference, which instructions shall also be
delivered to the Escrow Agent after the Closing.
8. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. The Founder understands and agrees that the
Company shall cause the legends set forth below or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing ownership
of the Shares together with any other legends that may be required by state or
federal securities laws:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH
SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RIGHTS AND RESTRICTIONS CONTAINED IN A STOCKHOLDERS
AGREEMENT AND A REGISTRATION RIGHTS AGREEMENT, EACH DATED AS
OF MAY 31, 1995, COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL
OFFICE OF THE CORPORATION."
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
A RIGHT OF REPURCHASE HELD BY THE ISSUER OR ITS ASSIGNEE(S),
AS SET FORTH IN THE FOUNDER PERFORMANCE STOCK PURCHASE
AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THIS
STOCK, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE
OF THE ISSUER. SUCH TRANSFER RESTRICTIONS ARE BINDING ON
TRANSFEREES OF THE STOCK.
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(b) Stop-Transfer Notices. The Founder agrees that, in
order to ensure compliance with the restrictions referred to herein, the
Company may issue appropriate "stop transfer" instructions to its transfer
agent, if any, and that, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be
required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Agreement
or (ii) to treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares shall have
been so transferred.
9. Adjustment for Stock Split. All references to the number of
Shares, the Purchase Price and the Repurchase Price of the Shares in this
Agreement shall be appropriately adjusted to reflect any stock split, stock
dividend or other change in the Shares which may be made by the Company after
the date of this Agreement.
10. Successors and Assigns. The Company may assign any of its
rights under this Agreement to single or multiple assignees, and this Agreement
shall inure to the benefit of the successors and assigns of the Company.
Subject to the restrictions on transfer herein set forth, this Agreement shall
be binding upon the Founder and his heirs, executors, administrators,
successors and assigns.
11. Governing Law; Severability. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware,
excluding that body of law pertaining to conflicts of law. Should any
provision of this Agreement be determined by a court of law to be illegal or
unenforceable, the other provisions shall nevertheless remain effective and
shall remain enforceable.
12. Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be effective when given, and
shall in any event be deemed to be given upon receipt or, if earlier, (a) five
(5) days after deposit with the U.S. Postal Service or other applicable postal
service, if delivered by first class mail, postage prepaid, (b) upon delivery,
if delivered by hand, (c) one business day after the business day of deposit
with Federal Express or similar overnight courier, freight prepaid or (d) one
business day after the business day of facsimile transmission, if delivered by
facsimile transmission with copy by first class mail, postage prepaid, and
shall be addressed (i) if to the Founder, at the Founder's address as set forth
beneath his signature to this Agreement, and (ii) if to the Company, at the
address of its principal corporate offices (attention: Secretary), or at such
other address as a party may designate by ten days' advance written notice to
the other party pursuant to the provisions above.
13. Further Instruments. The parties agree to execute such
further instruments and to take such further action as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
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14. Entire Agreement. This Agreement constitutes the entire
agreement of the parties and supersedes in its entirety all prior undertakings
and agreements of the Company and the Founder with respect to the subject
matter hereof.
15. Third Party Beneficiaries. The parties agree that Morgan
Stanley shall be a third party beneficiary to this Agreement.
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16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
THE COMPANY:
MHI ACQUISITION, INC.,
a Delaware corporation
By:
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Its:
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Address:
-------
2501 Cedar Springs Road
Suite 600, LB 15
Dallas, Texas 75201
THE FOUNDER:
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(signature)
Address:
-------
2501 Cedar Springs Road
Suite 600, LB 15
Dallas, Texas 75201
(FOUNDER PERFORMANCE STOCK PURCHASE AGREEMENT SIGNATURE PAGE - _______________)
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EXHIBIT A
Vesting Schedule
1. Performance Based Vesting. The Founder's shares (the
"Shares") of Class A Common Stock of the Company, subject to rights of
repurchase (the "Repurchase Option") pursuant to that certain Founders
Performance Stock Purchase Agreement dated May 31, 1995 to which this vesting
schedule is attached as Exhibit A, shall vest and be released from the
Repurchase Option upon the achievement of certain performance criteria in
accordance with the following schedule.
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Fiscal Year Ended August 31,
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1995 1996 1997 1998 1999
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Target $3.5 MM $5.5 MM $7.5 MM $9.0 MM $10.5 MM
EBDITA(1)
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Vesting(2) 12.5% 25.0% 25.0% 25.0% 12.5%
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% Target 100% 100% 100% 100% 100% 100%
Achieved 90% 90% 90% 95% 95% 95%
80% 50% 90% 90% 90%
70% 80% 80% 80%
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-Shares Earned-
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(1) EBDITA means, for any period, without duplication, the sum of the
following for the Company for such period determined in accordance
with generally accepted accounting principles: (a) consolidated net
income of the Company, plus (b) consolidated interest expense, plus
(c) taxes to the extent deducted in determining consolidated net
income, plus (d) depreciation, amortization expense, and other
non-cash items to to the extent deducted in determining consolidated
net income, plus (e) any extraordinary items or non-recurring events
reducing consolidated net income. To the extent that the Company
exceeds the EBDITA Target for any given fiscal year, the excess amount
can be carried forward toward meeting the following year's target. In
the event that the Company sell any corporate subsidiary or division
of the Company during any year set forth above, the Target EBDITA for
that year and all subsequent years shall be reduced by the amount of
the projected earnings attributable to such subsidiary or division for
the year of the sale and all subsequent years.
(2) Percentage of shares released from Repurchase Option.
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Examples
If EBDITA for the fiscal year ended August 31, 1996 is $6.0 million,
Founder will vest 25% of his Shares (with a $500,000 carryforward to be applied
to EBDITA for the following year). If EBDITA for such year is between
$4,950,000 and $5,499,999, Founder will vest 22.5% (25% x 90%) of his Shares.
If EBDITA for such fiscal year is between $4,400,000 and $4,949,999, Founder
will vest 12.5% (25% x 50%) of his Shares. If EBDITA for such year is
$4,399,999 or less, Founder will not vest as to any of his Shares for such
year.
2. Additional Vesting Provisions. Notwithstanding the foregoing
performance based vesting schedule set forth in Section 1 above, the Founder's
Shares shall vest and be released from the Repurchase Option in full in
accordance with the following provisions:
(i) Founder's Shares shall vest in full on the date
Morgan Stanley Venture Capital Fund II, L.P., Morgan Stanley Venture Capital
Fund II, C.V. and Morgan Stanley Venture Investors, L.P., or affiliates of such
funds, prior o the Company's initial public offering, shall own in the
aggregate less than 50% of the outstanding voting securities of the Company
based on the capitalization of the Company as of the date of this Agreement
(this Section 2(i) shall terminate upon the Closing of the Company's initial
public offering); and
(ii) In the event of a merger of the Company with or into
another corporation, or the sale of all or substantially all of the assets of
the Company, or any other corporate reorganization in which consolidation,
merger, sale of assets or reorganization the stockholders immediately prior to
such transaction will not hold (by virtue of the securities issued in such
transaction) at least fifty (50%) of the voting power of the surviving,
continuing or purchasing entity, the Founder's Shares shall vest in full upon
the closing of such a transaction.
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