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EXHIBIT 4.1
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT (this "AGREEMENT") is made and entered into
as of ________________, 2000 by and among EPS Solutions Corporation, a Delaware
corporation (the "COMPANY") and each of the Company's stockholders party hereto
as evidenced by such stockholder's execution of the signature pages hereof or
receipt in transfer of stock of the Company from another party hereto.
The Company and its Stockholders (as defined below) desire to impose
certain restrictions and obligations on themselves and the stock of the Company
owned by each of the Stockholders.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises and agreements of the parties hereto and other good and valuable
consideration, the parties hereto hereby agree as follows:
1. DEFINITIONS
Capitalized terms used herein and not otherwise defined have the
respective meanings ascribed to them below.
"AFFILIATE" of the Company means any entity controlling, controlled by,
or under common control with the Company.
"MAJORITY CONSENT" to an action means consent to such action by
Stockholders possessing more than fifty percent (50%) of the total voting
interest represented by all outstanding voting securities of the Company.
"PERMITTED TRANSFEREES" means a Stockholder's spouse or direct lineal
descendants or the direct lineal descendants of the Stockholder's parents or
grandparents, or a trust for the benefit of the Stockholder or any of such
transferees; provided, however, that as a condition to any Transfer to any such
transferees, before such Transfer is consummated the transferee shall have first
entered into this Agreement or otherwise agreed in writing to be bound by and
hold Shares or interests therein pursuant to this Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means all equity securities of the Company now owned or
hereafter acquired.
"SPECIAL CONSENT" to an action means consent to such action by
Stockholders possessing more than sixty-six and two-thirds percent (66 2/3%) of
the total voting interest represented by all outstanding voting securities of
the Company.
"STOCKHOLDER" at any time means each person or entity who at that time
owns Shares and is party to this Agreement. No person will be a "Stockholder"
entitled to the benefits of
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ownership of Shares at any time prior to termination of this Agreement that such
person is not party to this Agreement.
"TRANSFER" means any transfer, sale, assignment, pledge, mortgage,
hypothecation, encumbrance, gift, grant, bequest, or other disposition of any
kind, of any Shares or any direct or indirect, contingent or non-contingent,
beneficial interest in any Shares. Without limitation, any transfer or
allocation of any rights in Shares upon death, pursuant to a marital dissolution
(whether by agreement or court decree), a voluntary or involuntary bankruptcy or
insolvency petition or proceeding, or any other court order or process shall be
a Transfer for purposes of this Agreement. Notwithstanding the foregoing,
however, any Transfer approved by Majority Consent or to a Permitted Transferee
shall not be considered to be a Transfer for purposes of this Agreement.
2. RESTRICTIONS ON TRANSFER
2.1 INVALIDITY OF TRANSFER NOT COMPLYING WITH THIS AGREEMENT. No
Transfer or attempted Transfer in contravention of this Agreement will be
effective for any purpose or confer on any transferee or attempted transferee
any rights whatsoever.
2.2 LEGEND ON SHARE CERTIFICATES. Certificates representing Shares shall
be stamped in a prominent manner with a legend substantially in the form set
forth below:
"THE TRANSFER, SALE, ASSIGNMENT, PLEDGE, MORTGAGE, HYPOTHECATION,
ENCUMBRANCE, GIFT OR OTHER DISPOSITION OF SHARES REPRESENTED HEREBY IS
RESTRICTED BY A STOCKHOLDER AGREEMENT, A COPY OF WHICH MAY BE OBTAINED
FROM THE COMPANY."
2.3 STOP TRANSFER. The Company shall not recognize, and shall issue
appropriate instructions to its transfer agent (if any) to stop, any Transfer or
attempted Transfer in contravention of this Agreement.
3. CONDITIONS OF TRANSFER
3.1 RIGHTS ON TRANSFER. If any Stockholder desires or is required to
make any Transfer, before such Transfer may be made, the Company shall have the
right (but not the obligation) to purchase, at the Purchase Price (as defined in
Section 4) and under the terms and conditions specified herein, any and all of
the Shares potentially subject to such Transfer.
3.2 EXERCISE OF RIGHTS.
(a) Written Notice. The transferring Stockholder shall give written
notice (for purposes of this Section 3, the "REQUEST TO TRANSFER") to the
Company of the number of Shares subject to the proposed Transfer (the "TRANSFER
SHARES") and the proposed terms of such Transfer, including the identity of the
proposed transferee and the price and other material terms, if any, of the
proposed Transfer.
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(b) The Company's Right. The Company shall have fifteen (15) days after
its receipt of a Request to Transfer under this Section 3 (for purposes of this
Section 3, the "COMPANY'S PURCHASE PERIOD") during which to exercise its right
to purchase, on the terms described in Section 4, the Transfer Shares or any
portion thereof by giving written notice to the transferring Stockholder of the
number of Transfer Shares, if any, as to which the Company is exercising its
right. The Company's failure to give written notice within the Company's
Purchase Period shall be deemed an election by the Company not to purchase any
Transfer Shares.
(c) Shares Not Purchased. The Stockholder proposing to make a Transfer
may Transfer any Transfer Shares not being purchased by the Company at any time
within one hundred twenty (120) days after the expiration of the Company's
Purchase Period; provided, however, that (i) such Transfer shall be on terms no
more favorable to the transferee than the terms specified in the applicable
Request to Transfer, (ii) the transferring Stockholder has obtained the
Company's consent to the person or entity to which the Transfer will be made and
the terms of the Transfer, which consent will not be unreasonably withheld,
provided that the Company may withhold consent, in its sole discretion, to any
lien or encumbrance upon Shares, and (iii) the transferee shall first enter into
this Agreement or otherwise agree in writing to be bound by and hold the
transferred Shares or interest therein pursuant to this Agreement.
(d) No Written Notice by Transferring Stockholder. If a Stockholder
purports to make a Transfer without providing a Request to Transfer, or a
purported Transfer is made or required to be made pursuant to a court order, the
Company's Purchase Period shall be deemed to start on the date on which the
Company's President or Chief Executive Officer obtains actual and complete
knowledge of the purported Transfer or order. Any such purported Transfer or
order shall be subject to the rights of the Company hereunder.
(e) Death. In case of a Transfer caused by the death of a Stockholder,
the provisions set forth above shall apply except that the deceased
Stockholder's heirs or administrators or legal representatives will be
substituted for the transferring Stockholder for such purposes.
4. PURCHASE PRICE AND PAYMENT
4.1 INITIAL PURCHASE PRICE. The "PURCHASE PRICE" applicable to the
purchase by the Company of any Shares pursuant to this Agreement shall be the
lesser of (a) the proposed sale price specified in the Request to Transfer, if
applicable, and (b) $_________ per Share (which is agreed to be a fair estimate
of the fair market value of the Company's stock as of the date hereof), subject
to adjustment as provided in Section 4.2 (the "AGREED PRICE", but in no event
will the Purchase Price be less than the minimum price, if any, required under
applicable law. Notwithstanding the foregoing, however, the Company may in its
discretion (but shall have no obligation to) pay any such higher price for any
Shares pursuant to this Agreement as the Company may determine, provided that
such a discretionary higher price paid by the Company for certain Shares shall
not create any obligation upon the Company to pay any discretionary higher price
for any other Shares.
4.2 ADJUSTED PURCHASE PRICE. During the ninety (90) day period
immediately preceding the commencement of each calendar year commencing with the
ninety (90) day period
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prior to calendar year 1999 (the "PRICING PERIOD" for the ensuing year) the
Company and the Stockholders acting by Special Consent shall agree in writing
upon the Agreed Price (which shall be a good faith estimate of the fair market
value of the Company's stock) relevant to any Transfer that might occur during
such immediately following calendar year. If for any reason the Company and the
Stockholders do not fix the Agreed Price as aforesaid or cannot agree on the
Agreed Price for any calendar year, the Agreed Price for such calendar year
shall be the then fair market value of the Shares as of the last day of the
Pricing Period for that calendar year, to be determined by an independent
appraiser of national standing selected by the Company. The Company, or the
Stockholders acting by Special Consent, may cause the Agreed Price applicable at
any time to be adjusted at any time and from time to time to a price (which
shall be a good faith estimate of the fair market value of the Company's stock)
agreed upon in writing by the Company and the Stockholders acting by Special
Consent, and if the Company and the Stockholders cannot reach such agreement,
then a price representing the fair market value of the Shares at such time as
determined by an independent appraiser of national standing selected by the
Company.
4.3 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid by
delivering to the transferring Stockholder, or the legal representative of such
Stockholder, in the Company's discretion, a bank certified or cashier's check or
checks, or a promissory note bearing interest at seven percent (7%) and payable
in up to twelve (12) equal monthly amortizing installments of principal and
accrued interest, at a "CLOSING" to be held within ten (10) days of final
determination of the number of Shares that will be purchased by the Company
pursuant to its purchase rights under this Agreement and the price payable
therefor. At the Closing, the transferring Stockholder, or the Stockholder's
legal representative, shall deliver to the Company the certificate or
certificates representing the Shares to be purchased, duly endorsed or
accompanied by duly executed stock powers for transfer to the Company, if the
Shares are not already in the Company's custody. Delivery of the Shares to the
Company shall constitute the representation and warranty of the transferring
Stockholder to the Company that the Shares being purchased are delivered free
and clear of all claims, encumbrances, or other rights or interests of third
parties, including without limitation community property rights of spouses or
former spouses (other than liens created in compliance with this Agreement and
fully disclosed), and that the Company shall obtain good title to the Shares
(subject to this Agreement). All parties to a purchase of Shares under this
Agreement shall promptly execute and file all agreements, documents,
applications, and instruments and shall take such additional actions required by
applicable securities and other laws, rules, or regulations to effect the sales
of the Shares pursuant hereto.
4.4 FAILURE TO DELIVER SHARES. If any Stockholder obligated to transfer
Shares hereunder fails or refuses to deliver on a timely basis duly endorsed
certificates representing the Shares to be sold to the Company, the Company will
have the right to deposit the Purchase Price for such Shares in a special
account with any bank or trust company in the State of California, giving notice
of such deposit to the Stockholder obligated to sell, whereupon such Shares will
be deemed to have been purchased by the Company. All such monies, less any fees
and expenses charged by the bank or trust company, will be held by the bank or
trust company for the benefit of the selling Stockholder. All monies deposited
with the bank or trust company remaining
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unclaimed for six (6) years after the date of deposit must be repaid by the bank
or trust company to the Company on demand, and the selling Stockholder may
thereafter look only to the Company for payment.
5. GENERAL PROVISIONS
5.1 EQUITY SECURITIES. If the Company issues equity securities other
than common stock, or securities exercisable or convertible for common stock or
other equity securities, this Agreement shall be deemed to apply to such
securities in the same manner as to Shares hereunder, with such equity
securities weighted as equitable and appropriate hereunder, according to their
relative voting rights and/or liquidation or other preferential rights vis-a-vis
common stock or the number of shares of common stock ultimately issuable upon
their exercise or conversion.
5.2 SPOUSAL CONSENT; PERMITTED TRANSFEREES. Stockholders who are natural
persons shall cause their respective current and future spouses to execute and
deliver to the Company a Spousal Consent in the form of Exhibit A. Any Permitted
Transferee acquiring Shares or any interest therein shall take the same subject
to the terms of this Agreement, shall be a Stockholder for purposes of this
Agreement and may not make any Transfer except as provided in this Agreement.
Transfer of Shares to any Permitted Transferee shall be contingent upon
execution and delivery by the Permitted Transferee of this Agreement.
5.3 ADOPTEES. Adopted children shall be treated the same as biological
children for purposes of determining direct lineal descendancy hereunder.
5.4 EQUITABLE REMEDIES. The parties to this Agreement recognize and
agree that the Shares subject to this Agreement are of a peculiar and unique
character, that irreparable harm would occur if any of the obligations under
this Agreement were not performed in accordance with their specific terms or
otherwise breached, and that this Agreement may be enforced by an injunction or
injunctions to prevent Transfers or other dispositions of the Shares not in
accordance with the terms of this Agreement or by a decree for specific
performance of the provisions of this Agreement. The Company shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
specifically enforce its terms and provisions in addition to any other remedy at
law or in equity to which the Company is entitled.
5.5 AUTHORIZATION OF DIRECTORS. Subject to the provisions of this
Agreement, the Board of Directors of the Company shall have full authority to
prescribe regulations and conditions for the exercise of rights to purchase
Shares hereunder, the consummation of purchases and sales thereunder, and any
and all other matters necessary and convenient for the performance of this
Agreement.
5.6 COPY FOR INSPECTION. A copy of this Agreement shall be filed in the
principal office of the Company and shall be made available to Stockholders upon
request.
5.7 NOTICES. All written notices referred to in this Agreement shall be
communicated by means of registered or certified mail (return receipt
requested), facsimile (with confirmation
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of receipt) or personal delivery and shall be effective for purposes of
determining compliance with the time requirements herein (unless otherwise
specifically provided herein) at the time of personal delivery or facsimile
transmission, or upon deposit in the United States mail, postage fully prepaid,
addressed, if to the Company, at its then principal place of business, if to a
Stockholder, at the latest address of such Stockholder shown on the books of the
Company, or if to the legal representative of a deceased Stockholder or to such
deceased Stockholder's heirs at law, at the latest address of such deceased
Stockholder shown on the books of the Company. Any such notice shall be
conclusively deemed to have been received by the addressee for purposes hereof
when tendered at the address to which it is so addressed.
5.8 LEGAL HOLIDAYS. If any period of time specified in this Agreement
ends on a Saturday or Sunday or a legal holiday, as defined under the present or
any future laws of the State of California, then such period shall be construed
to include the next succeeding business day.
5.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors, heirs, executors, administrators and assigns of the parties hereto.
If any security subject to this Agreement or any right hereunder shall be
determined to be community property under the laws of California or any other
state or country, this Agreement shall bind the community interest of the
spouse, and such spouse's heirs, executors, administrators and assigns, as well
as the interest of the party in whose name the security is registered.
5.10 AMENDMENT. This Agreement may be amended only with the consent of
the Company and Majority Consent of the Stockholders.
5.11 TERMINATION OF AGREEMENT. This Agreement shall terminate upon the
earlier of: (a) the vote of the Stockholders acting by Special Consent, (b) the
dissolution of the Company, (c) the merger or other acquisition of the Company
in a transaction in which the Company is not the survivor and the Stockholders
do not own more than 50% of the voting securities or securities convertible or
exercisable for voting securities of the survivor of the merger, or (d) the
consummation of an underwritten public offering of the Company's equity
securities.
5.12 ARBITRATION.
(a) Any controversy or claim arising out of or relating to this
Agreement shall be solely and finally settled by arbitration administered by the
American Arbitration Association (the "AAA") in accordance with its Commercial
Arbitration Rules as then in effect (the "RULES"), except to the extent such
Rules vary from the following provisions. Notwithstanding the previous sentence,
the parties hereto may seek provisional remedies in courts of appropriate
jurisdiction, and such request shall not be deemed a waiver of the right to
compel arbitration of a dispute hereunder. The arbitration shall be conducted by
one independent and impartial arbitrator, appointed by the AAA; provided
however, if the claim and any counterclaim, in the aggregate, together with
other arbitrations that are consolidated pursuant to Section 5.12(f), exceed
Five Hundred Thousand Dollars ($500,000) (the "Threshold"), exclusive of
interest and attorneys' fees, the dispute shall be heard and determined by three
(3) arbitrators as provided herein (such arbitrator or arbitrators are
hereinafter referred to as the "ARBITRATOR"). The
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judgment of the award rendered by the Arbitrator may be entered in any court
having jurisdiction thereof. The arbitration proceedings shall be held in Orange
County, California unless the parties agree to another location.
(b) If a party hereto determines to submit a dispute for arbitration
pursuant to this Section 5.12, such party shall furnish the other party with
whom it has the dispute with a notice of arbitration as provided in the Rules
(an "ARBITRATION NOTICE") which, in addition to the items required by the Rules,
shall include a statement of the nature, with reasonable detail, of the dispute.
A copy of the Arbitration Notice shall be concurrently provided to the AAA,
along with a copy of this Agreement, and if pursuant to Section 5.12(a) one (1)
Arbitrator is to be appointed, a request to appoint the Arbitrator. If a party
has a counterclaim against the other party, such party shall furnish the party
with whom it has the dispute a notice of such claim as provided in the Rules (a
"NOTICE OF COUNTERCLAIM") within ten (10) days of receipt of the Arbitration
Notice, which, in addition to the items required by the Rules, shall include a
statement of the nature, with reasonable detail, of the dispute. A copy of the
Notice of Counterclaim shall be concurrently provided to the AAA. If the claim
set forth in the Notice of Counterclaim causes the aggregate amount in dispute
to exceed the Threshold, the Notice of Counterclaim shall so state. If pursuant
to Section 5.12(a) three (3) Arbitrators are to be appointed, within fifteen
(15) days after receipt of the Arbitration Notice or the Notice of Counterclaim
as applicable, each party shall select one person to act as Arbitrator and the
two (2) selected shall select a third arbitrator within ten (10) days of their
appointment. If the Arbitrators selected by the parties are unable or fail to
agree upon the third arbitrator within such time, the third arbitrator shall be
selected by the AAA. Each arbitrator shall be a practicing attorney or a retired
or former judge with at least twenty (20) years experience with and knowledge of
securities laws, complex business transactions, and mergers and acquisitions.
(c) Once the Arbitrator is selected, the Arbitrator shall schedule a
pre-hearing conference to reach agreement on procedural and scheduling matters,
arrange for the exchange of information, obtain stipulations and attempt to
narrow the issues.
(d) At the pre-hearing conference, the Arbitrator shall have the
discretion to order, to the extent the Arbitrator deems relevant and
appropriate, that each party may (i) serve a maximum of one set of no more than
twenty (20) requests for production of documents and one set of ten (10)
interrogatories (without subparts) upon the other parties; and (ii) depose a
maximum of three (3) witnesses. All objections to discovery are reserved for the
arbitration hearing except for objections based on privilege and proprietary or
confidential information. The responses to the document demand, the documents to
be produced thereunder, and the responses to the interrogatories shall be
delivered to the propounding party thirty (30) days after receipt by the
responding party of such document demand or interrogatory. Each deposition shall
be taken on reasonable notice to the deponent, and must be concluded within four
(4) hours and all depositions must be taken within forty-five (45) days
following the pre-hearing conference. Any party deposing an opponent's expert
must pay the expert's fee for attending the deposition. All discovery disputes
shall be decided by the Arbitrator.
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(e) The parties must file briefs with the Arbitrator at least three (3)
days before the arbitration hearing, specifying the facts each intends to prove
and analyzing the applicable law. The parties have the right to representation
by legal counsel throughout the arbitration proceedings. The presentation of
evidence at the arbitration hearing shall be governed by the Federal Rules of
Evidence. Oral evidence given at the arbitration hearing shall be given under
oath. Any party desiring a stenographic record may secure a court reporter to
attend the arbitration proceedings. The party requesting the court reporter must
notify the other parties and the Arbitrator of the arrangement in advance of the
hearing, and must pay for the cost incurred.
(f) Any arbitration can be consolidated with one or more arbitrations
involving other parties, which arise under agreement(s) between the Company and
such other parties, if more than one such arbitration is commenced and any party
thereto contends that two or more arbitrations are substantially related and
that the issues should be heard in one proceeding, the Arbitrator selected in
the first-filed of such proceedings shall determine whether, in the interests of
justice and efficiency, the proceedings should be consolidated before that
Arbitrator.
(g) The Arbitrator's award shall be in writing, signed by the Arbitrator
and shall contain a concise statement regarding the reasons for the disposition
of any claim.
(h) To the extent permissible under applicable law, the award of the
Arbitrator shall be final. It is the intent of the parties that the arbitration
provisions hereof be enforced to the fullest extent permitted by applicable law.
5.13 ATTORNEYS' FEES AND COSTS. If any party to this Agreement brings
any action or proceeding, at law or equity, to enforce this Agreement or on
account of any breach of this Agreement, the prevailing party or parties shall
be entitled to recover from the non-prevailing party or parties the reasonable
attorneys' fees and costs of the prevailing party or parties incurred in such
action. If there is more than one non-prevailing party in such action, the
non-prevailing parties shall each be liable only for the portion of the
attorneys' fees and costs of the prevailing party or parties as the court or
arbitration determines are fairly allocable to such non-prevailing party in
light of all of the facts and circumstances, including relative fault among all
non-prevailing parties, provided that all attorneys' fees and costs of the
prevailing party or parties will be allocated.
5.14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument.
5.15 GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware, without
regard to its conflicts-of-law principles.
5.16 SUBMISSION TO JURISDICTION. All actions or proceedings arising in
connection with this Agreement or any other Transaction Document for preliminary
or injunctive relief or matters not subject to arbitration, if any, shall be
tried and litigated exclusively in the state or federal courts located in the
County of Orange, State of California. The aforementioned choice
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of venue is intended by the parties to be mandatory and not permissive in
nature, thereby precluding the possibility of litigation between the parties
with respect to or arising out of this Agreement or any other Transaction
Document in any jurisdiction other than that specified in this paragraph. Each
party hereby waives any right it may have to assert the doctrine of forum non
conveniens or similar doctrine or to object to venue with respect to any
proceeding brought in accordance with this paragraph, and stipulates and
acknowledges that it has had sufficient minimum contacts with California such
that the State and Federal courts located in the County of Orange, State of
California shall have in personam jurisdiction over each of them for the purpose
of litigating any such dispute, controversy, or proceeding. Each party hereby
authorizes and accepts service of process sufficient for personal jurisdiction
in any action against it as contemplated by this Section by registered or
certified mail, return receipt requested, postage prepaid, to its address on the
records of the Company. Nothing herein shall affect the right of any party to
serve process in any other manner permitted by law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
PROFITSOURCE CORPORATION STOCKHOLDER
By: By:
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Name: (Signature of Stockholder)
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Title:
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(Printed Name of Stockholder)
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EXHIBIT A
TO
STOCKHOLDER AGREEMENT
EPS SOLUTIONS CORPORATION
SPOUSAL CONSENT
The undersigned is the spouse of ___________ and acknowledges that he or
she has read the Purchase Agreement pursuant to which shares of common stock of
ProfitSource Corporation, a v Delaware corporation (the "COMPANY") were acquired
by the spouse of the undersigned (the "PURCHASE AGREEMENT"), the Stockholder
Agreement among the Company and its Stockholders, including the spouse of the
undersigned (the "STOCKHOLDER AGREEMENT"), and the Voting Agreement pursuant to
which the spouse of the undersigned surrenders certain voting rights associated
with the common stock of the Company acquired by the spouse of the undersigned
(the "VOTING AGREEMENT"). The undersigned clearly understands the provisions of
the Purchase Agreement, the Stockholder Agreement, and the Voting Agreement
(collectively, the "AGREEMENTS"), and is aware that, by the provisions of the
Agreements, the undersigned and his or her spouse have agreed to subject all
their interest in the Company, including any community property, joint tenancy,
or tenancy in common interest, to the terms of the Agreements, including
provisions of the Agreements that restrict their ability to sell or transfer or
vote their interest in the Company. The undersigned hereby expressly approves of
and agrees to be bound by the provisions of the Agreements in their entirety.
The undersigned acknowledges having had the opportunity to consult the
undersigned's own separate counsel with respect to this consent.
Date:
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(Signature of spouse)
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(Printed name of spouse)