Document:

ntap-ex103_61.htm

Exhibit 10.3

NETAPP, INC.
RESTRICTED STOCK UNIT AGREEMENT (PERFORMANCE-BASED)

NetApp, Inc. (the “Company”) hereby grants you, (the “Participant”), an award of restricted stock units (“Restricted Stock Units”) under the NetApp, Inc. 1999 Stock Option Plan (the “Plan”). Subject to the provisions of Appendix A and Appendix B (both attached) and of the Plan, the principal features of this award are as follows:

Participant:

«FIRST_NAME» «MIDDLE_NAME» «LAST_NAME»

«ADDRESS_LINE_1»

«ADDRESS_LINE_2»

«CITY», «STATE» «ZIP_CODE»

«COUNTRY»

Grant Date: «GRANT_DATE»

Grant Number: «NUM»

Target Number of Restricted Stock Units: «SHARES» (the “Target Number of Restricted Stock Units”)1

Maximum Number of Restricted Stock Units: «SHARES» (the “Maximum Number of Restricted Stock Units”)2

Vesting of Restricted Stock Units: The Restricted Stock Units will vest according to the following schedule: 

General

The number of Restricted Stock Units that will become eligible for vesting as set forth below will depend upon the Company’s Adjusted Operating Income (or “AOI”) (as defined below) for the Performance Period (as defined below) and will be determined in accordance with this Agreement.  

The “Performance Period” will begin on the first day of the Company’s 2019 fiscal year (the “Commencement Date”) and end on the last day of the Company’s [__] fiscal year (the “Anniversary Date”).  Notwithstanding the foregoing, in the event of a Change in Control, or in the event Participant’s continuous Service is terminated due to Participant’s death or Permanent Disability (a “Qualifying Termination”), the Performance Period will be deemed to end upon the first to occur of the consummation of the Change in Control (the “Closing”) or the date of the Qualifying Termination for purposes of calculating the Company’s Adjusted Operating Income.  The first to occur of the Anniversary Date, the Closing, or a Qualifying Termination, is referred to herein as the “Period End Date.”

If Participant’s continuous Service terminates prior to the Period End Date due to his or her Retirement, Participant’s Restricted Stock Units will remain outstanding through the Period End Date and the number of Restricted Stock Units that become Eligible Restricted Stock Units (as defined below) will be measured as if Participant’s continuous Service had not terminated.

	
	 

	
1 
	
 This should be 50% of the total Target Number of Restricted Stock Units

	
2 
	
 This should be 200% of the above Target Number of Restricted Stock Units

1

Exhibit 10.3

If Participant’s continuous Service terminates prior to the Period End Date for any reason (other than as a result of a Qualifying Termination or due to Participant’s Retirement), the Restricted Stock Units will terminate and be cancelled and Participant will have no further rights with respect to such Restricted Stock Units.  Any Restricted Stock Units that do not become Eligible Restricted Stock Units as of the Period End Date will terminate and be cancelled and Participant will have no further rights with respect to such Restricted Stock Units.  

Lastly, vesting is subject to Participant’s continuous Service through the applicable vesting date, subject to the vesting acceleration provisions set forth below.

For purposes of this Agreement, “Retirement” will mean the voluntary termination of employment by the Participant either (a) on or after reaching 62 years of age or (b) on or after reaching 55 years of age following a minimum of ten (10) years of continuous service to the Company or its Subsidiaries.

Performance Matrix

The number of Restricted Stock Units that become eligible to vest (the “Eligible Restricted Stock Units”) will depend upon the Company’s Adjusted Operating Income as of the Period End Date, as described herein.  The number of Eligible Restricted Stock Units will be determined by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) in its sole discretion within forty-five (45) days of the Period End Date.

The “Company’s Adjusted Operating Income” means income from operations as determined by the Company’s written policy for reporting non-GAAP financial measures in its quarterly earnings release, as furnished to the SEC on Form 8-K, and related conference call, reduced by stock-based compensation;  provided, however, the Compensation Committee retains discretion to factor in any adjustments it deems appropriate when calculating AOI, which generally would be applied on an exception basis for unbudgeted, one-time, material items.  All determinations regarding the calculation of AOI will be made by the Compensation Committee in its sole discretion and all such determinations will be final and binding on the Company and Participant.

The AOI will be calculated on a cumulative basis as of the Period End Date and will be calculated by adding the AOI from each fiscal year that occurs during the Performance Period.  

Eligible Restricted Stock Unit Calculations:

				
	
Level *
	
Cumulative AOI**
	
Percentage of Target Number of Restricted Stock Units that Become Eligible Restricted Stock Units***
	
Number of Eligible Restricted Stock Units***

	
1
	
≥$ [_]
	
200%
	
[--]

	
2
	
$[_]
	
100%
	
[--]

	
3
	
$[__]
	
25%
	
[--]

	
4
	
<$[__]
	
0%
	
0

 

2

Exhibit 10.3

* The number of Target Number of Restricted Stock Units that will become Eligible Restricted Stock Units will be interpolated on a linear basis between levels 1 – 3.  The Percentage of Target Number of Restricted Stock Units that become Eligible Restricted Stock Units will be rounded to the nearest hundredth.

Please see Exhibit 1 for additional details.

** If the Period End Date occurs prior to the Anniversary Date, the “Cumulative AOI” amount for each level will be pro-rated based on the number of days that have elapsed between the Commencement Date and the Period End Date.

*** Any partial shares of Common Stock will be rounded down to the nearest whole share and any fractional shares will be forfeited for no consideration.

In no event may more than 100% of the Maximum Number of Restricted Stock Units be Eligible Restricted Stock Units.

Vesting

Eligible Restricted Stock Units will be scheduled to vest in accordance with the following schedule, subject to Participant’s continuous Service through the applicable vesting date: 100% of the Eligible Restricted Stock Units will vest on the Anniversary Date (subject to the following three paragraphs).  In the event Participant’s continuous Service terminates for any or no reason before the Anniversary Date, the Eligible Restricted Stock Units and Participant’s right to acquire shares of Common Stock thereunder will immediately terminate and such Eligible Restricted Stock Units will immediately be forfeited and cancelled (subject to the following three paragraphs).

Qualifying Termination

In the event of a Qualifying Termination that occurs prior to the Anniversary Date, the number of Eligible Restricted Stock Units that will vest on the new Period End Date will be pro-rated by multiplying the calculated number of Eligible Restricted Stock Units by a fraction with a numerator equal to (i) the number of completed calendar months that have elapsed between the Commencement Date and the Period End Date and a denominator equal to thirty-six (36) and any remaining Eligible Restricted Stock Units will immediately be forfeited and cancelled.

Retirement

If Participant’s continuous Service terminates due to his or her Retirement, the number of Eligible Restricted Stock Units that will vest on the Anniversary Date (or if earlier, upon a Closing) will be pro-rated by multiplying the calculated number of Eligible Restricted Stock Units by a fraction with a numerator equal to (i) the number of completed calendar months that have elapsed between the Commencement Date and the date Participant’s continuous Service is terminated due to his or her Retirement and a denominator equal to thirty-six (36) and any remaining Eligible Restricted Stock Units will immediately be forfeited and cancelled.  

Change in Control / Involuntary Termination

In the event of a Change in Control that occurs prior to the Anniversary Date, the Eligible Restricted Stock Units will be scheduled to vest as to 100% of the Eligible Restricted Stock Units on the Anniversary Date, subject to Participant’s continuous Service through such date.

Notwithstanding the foregoing, in the event of an Involuntary Termination on or following a Change in Control, 100% of the Eligible Restricted Stock Units will vest on the termination date.

3

Exhibit 10.3

For purposes of this Agreement, an “Involuntary Termination” means that Participant is terminated as a result of either (i) a termination of Participant’s employment by the Company without Cause (as defined in Participant’s Change of Control Severance Agreement with the Company (the “Severance Agreement”)) or (ii) Participant resigns from such employment for Good Reason (as defined in the Severance Agreement).

For purposes of clarification, the acceleration set forth in this Agreement is meant to be in lieu of, and not in addition to, any acceleration provisions set forth in the Severance Agreement.

Unless otherwise defined herein or in Appendix A or Appendix B, capitalized terms herein or in Appendix A or Appendix B will have the defined meanings ascribed to them in the Plan.

Participant acknowledges and agrees that by signature below of this Restricted Stock Unit Agreement which includes Appendix A and Appendix B hereto (the “Agreement”) will result in a contract between Participant and the Company with respect to this award of Restricted Stock Units. Participant agrees and acknowledges that this signature indicates Participant’s agreement and understanding that this award of Restricted Stock Units is subject to all of the terms and conditions contained in Appendix A and Appendix B and the Plan. For example, important additional information on vesting and forfeiture of the Restricted Stock Units is contained in Paragraphs 3 through 7 of Appendix A. PLEASE BE SURE TO READ ALL OF APPENDIX A AND APPENDIX B (FOR THE PARTICULAR COUNTRY THAT APPLIES TO PARTICIPANT), WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS AGREEMENT.

Participant should retain a copy of this Agreement. A copy of the Plan is available at http://fo.netapp.com/corporate-controller/stock/ and is available per request to Stock Administration.

I have read and accept this agreement.

 

 

	
Signature:________________________
	
_______________ Name of ParticipantDate

4

Exhibit 10.3

APPENDIX A

TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS

Grant # %%OPTION_NUMBER%-%

 

	
1.
	
Grant. The Company hereby grants to the Participant under the Plan an award of Restricted Stock Units, subject to all of the terms and conditions in this Agreement and the Plan.

	
2.
	
Company’s Obligation to Pay. Each Restricted Stock Unit represents the right to receive a share of Common Stock (or a cash amount equal to the value of a share on the date it becomes vested if the Company elects to settle the Restricted Stock Unit in cash) on the date it becomes vested. Unless and until the Restricted Stock Units will have vested in the manner set forth in Sections 3 and 4, the Participant will have no right to payment of any such Restricted Stock Units. Prior to actual payment of any vested Restricted Stock Units, such Restricted Stock Units will represent an unsecured obligation of the Company, payable (if at all) only from the general assets of the Company. 

	
3.
	
Vesting Schedule. Subject to Section 4, the Restricted Stock Units awarded by this Agreement will vest according to the vesting schedule set forth on the attached Restricted Stock Unit Agreement, subject to the Participant’s continuous Service through each such date. For purposes of clarification, Service shall include any notice of termination period (e.g., garden leave, etc.) during which the Participant is not providing active Service to the Company or one of
its affiliates.

	
4.
	
Forfeiture upon Termination of Continuous Service. Notwithstanding any contrary provision of this Agreement, if the Participant’s continuous Service terminates for any or no reason, the then-unvested Restricted Stock Units awarded by this Agreement will thereupon be forfeited at no cost to the Company and the Participant will have no further rights thereunder.

	
5.
	
Payment after Vesting. Any Restricted Stock Units that vest in accordance with Section 3 will be paid to the Participant (or in the event of the Participant’s death, to his or her estate) in whole shares of Common Stock, provided that to the extent determined appropriate by the Company, any federal, state, foreign and local withholding taxes (including but not limited to income tax, payment on account and social insurance contributions) with respect to such Restricted Stock Units will be paid by reducing the number of shares actually paid to the Participant (see Section 7). Subject to the provisions of Sections 2 and 5(b), vested Restricted Stock Units will be paid in whole shares of Common Stock as soon as practicable after vesting, but in each such case no later than the date that is two-and-one-half (2 1⁄2) months from the later of (i) the end of the Company’s tax year that includes the vesting date, or (ii) the end of Participant’s tax year that includes the vesting date.

	
 
	
a.
	
Notwithstanding anything in the Plan or this Agreement to the contrary, if the vesting of the balance, or some lesser portion of the balance, of the Restricted Stock Units is accelerated in connection with Participant’s termination of continuous Service (provided that such termination is a “separation from service” within the meaning of Section 409A to the extent Section 409A is applicable, as determined by the Company), other than due to death, and if (x) Participant is a “specified employee” within the meaning of Section 409A at the time of such termination of continuous Service and (y) the payment of such accelerated Restricted Stock Units will result in the imposition of additional tax under Section 409A if paid to Participant on or within the six (6) month period following Participant’s termination of continuous Service, then the payment of such 

5

Exhibit 10.3

	
 
		
accelerated Restricted Stock Units will not be made until the date six (6) months and one (1) day following the date of Participant’s termination of continuous Service, unless Participant dies following his or her termination, in which case, the Restricted Stock Units will be paid in shares of Common Stock in accordance with Section 6 as soon as practicable following his or her death. It is the intent of this Agreement to comply with the requirements of Section 409A so that none of the Restricted Stock Units provided under this Agreement or shares of Common Stock issuable thereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. For purposes of this Agreement, “Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and any proposed, temporary or final Treasury Regulations and Internal Revenue Service guidance thereunder, as each may be amended from time to time.

	
6.
	
Payments after Death. Any distribution or delivery to be made to the Participant under this Agreement will, if the Participant is then deceased, be made to the Participant’s designated beneficiary or in accordance with applicable local laws, or if no beneficiary survives the Participant, administrator or executor of the Participant’s estate or other party entitled to the rights under applicable local laws. Any such transferee must furnish the Company with (a) written notice of his or her status as transferee, and (b) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer.

	
7.
	
Withholding of Taxes. Notwithstanding any contrary provision of this Agreement, no Shares of Common Stock will be issued to the Participant, unless and until satisfactory arrangements (as determined by the Plan Administrator) will have been made by the Participant with respect to the payment of income (including federal, state, foreign and local taxes), employment, social insurance, payroll tax, payment on account and other taxes which the Company determines must be withheld with respect to such shares so issuable (the “Withholding Taxes”). Participant acknowledges that the ultimate liability for all Withholding Taxes legally due by the Participant is and remains the Participant’s responsibility and that the Company and/or the Participant’s actual employer
(the “Employer”) (i) make no representations or undertakings regarding the treatment of any Withholding Taxes in connection with any aspect of the Restricted Stock Units, including the grant of the Restricted Stock Units, the vesting of Restricted Stock Units, the settlement of the Restricted Stock Units in shares of Common Stock or the receipt of an equivalent cash payment, the subsequent sale of any shares of Common Stock acquired at vesting and the receipt of any dividends; and (ii) do not commit to structure the terms of the grant or any aspect of the
Restricted Stock Units to reduce or eliminate the Participant’s liability for Withholding Taxes.

To satisfy the Withholding Taxes, the Company may withhold otherwise deliverable shares of Common Stock upon vesting of Restricted Stock Units, according to the vesting schedule, having a fair market value equal to the minimum amount required to be withheld for the payment of the Withholding Taxes, or, if permitted by the Administrator in its sole discretion, such greater amount as the Administrator may determine if such amount would not have adverse accounting consequences, as the Administrator determines in its sole discretion, and both pursuant to such procedures as the Plan Administrator may specify from time to time. The Company will not retain fractional shares of Common Stock to satisfy any portion of the Withholding Taxes. If shares of Common Stock equal to the minimum amount are being withheld, and the Plan Administrator determines that the withholding of whole shares of Common Stock results in an over-withholding to meet the minimum tax withholding requirements, a reimbursement will be made to the Participant as soon as administratively possible.

If the Company does not withhold in shares of Common Stock as described above, prior to the issuance of shares of Common Stock upon vesting of Restricted Stock Units or the receipt of an equivalent cash payment, the 

6

Exhibit 10.3

Participant shall pay, or make adequate arrangements satisfactory to the Company or to the Employer (in their sole discretion) to satisfy all withholding and payment on account obligations of the Company and/or the Employer. In this regard, the Participant authorizes the Company or the Employer to withhold all applicable Withholding Taxes legally payable by the Participant from the Participant’s wages or other cash compensation payable to the Participant by the Company or the Employer or from any equivalent cash payment received upon vesting of the Restricted Stock Units. Alternatively, or in addition, if permissible under local law, the Company may allow Participant to satisfy the Withholding Taxes payable by the Participant, by providing irrevocable instructions to a Company-designated broker to sell a sufficient number of shares of Common Stock otherwise deliverable to the Participant having a Fair Market Value equal to the Withholding Taxes, provided that such sale does not violate Company policy or Applicable Laws.

If the Participant fails to make satisfactory arrangements for the payment of the Withholding Taxes hereunder at the time any applicable Restricted Stock Units otherwise are scheduled to vest pursuant to Section 3, the Participant will permanently forfeit such Restricted Stock Units and any shares of Common Stock otherwise deliverable with respect thereto, and the Restricted Stock Units will not be issued
to Participant. 

	
8.
	
Rights as Stockholder. Neither the Participant nor any person claiming under or through the Participant will have any of the rights or privileges of a stockholder of the Company in respect of any shares of Common Stock deliverable hereunder (if any) unless and until certificates representing such shares are issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Participant.

	
9.
	
No Effect on Service. The Participant’s service with the Company and its Subsidiaries is on an at‐will basis only unless contrary to the terms of an employment agreement or applicable local law. Accordingly, the terms of the Participant’s service with the Company and its Subsidiaries will be determined from time to time by the Company or the Subsidiary employing or retaining the Participant (as the case may be), and the Company or the Subsidiary, as applicable, will have the right, which is hereby expressly reserved, to terminate or change the terms of the employment or service of the Participant at any time for any reason whatsoever, with or without good cause subject to the terms of the Participant’s employment agreement or applicable local law.

	
10.
	
Address for Notices. Any notice to be given to the Company under the terms of this Agreement will be addressed to the Company at 1395 Crossman Avenue, Sunnyvale, CA 94089, Attn: Stock Administration, or at such other address as the Company may hereafter designate in writing.

	
11.
	
Grant is Not Transferable. Except to the limited extent provided in Section 6, this grant and the rights and privileges conferred hereby will not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and will not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this grant, or any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, this grant and the rights and privileges conferred hereby immediately will become null and void.

	
12.
	
Leave of Absence. The vesting of Restricted Stock Units will not be suspended and will continue in accordance with the vesting schedule under this Agreement during Participant’s authorized leave of absence from the Corporation, or the Parent or Subsidiary employing Participant, subject to the remaining terms of this Agreement and the Plan.

7

Exhibit 10.3

	
13.
	
Binding Agreement. Subject to the limitation on the transferability of this grant contained herein, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

	
14.
	
Additional Conditions to Issuance of Stock. If at any time the Company determines, in its discretion, that the listing, registration or qualification of the shares of Common Stock upon any securities exchange or under any state, foreign or federal law, or the consent or approval of any governmental regulatory authority is necessary or desirable as a condition to the issuance of shares to the Participant (or his or her estate), such issuance will not occur unless and until such listing, registration, qualification, consent or approval will have been effected or obtained free of any conditions not acceptable to the Company. Where the Company determines that the delivery of the payment of any shares will violate federal or foreign securities laws or other applicable laws, the Company will defer delivery until the earliest date at which the Company reasonably anticipates that the delivery of shares will no longer cause such violation (to the extent such deferral is not in violation of such laws). The Company will make all reasonable efforts to meet the requirements of any such state, foreign or federal law or securities exchange and to obtain any such consent or approval of any such governmental authority. 

	
15.
	
Plan Governs. This Agreement is subject to all terms and provisions of the Plan. In the event of a conflict between one or more provisions of this Agreement and one or more provisions of the Plan, the provisions of the Plan will govern.

	
16.
	
Administrator Authority. The Plan Administrator will have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination of whether or not any Restricted Stock Units have vested). All actions taken and all interpretations and determinations made by the Plan Administrator in good faith will be final and binding upon Participant, the Company and all other interested persons. No member of the Plan Administrator will be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Agreement.

	
17.
	
Captions. Captions provided herein are for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

	
18.
	
Agreement Severable. In the event that any provision in this Agreement will be held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of this Agreement.

	
19.
	
Labor Law. By accepting this award of Restricted Stock Units, the Participant acknowledges that: (a) the grant of this award of Restricted Stock Units is a one-time benefit which does not create any contractual or other right to receive future grants of Restricted Stock Units, or benefits in lieu of Restricted Stock Units; (b) all determinations with respect to any future grants, including, but not limited to, the times when the Restricted Stock Units shall be granted, the number of shares of Common Stock issuable pursuant to each award of Restricted Stock Units, the time or times when Restricted Stock Units shall vest, will be at the sole discretion of the Company; (c) the Participant’s participation in the Plan is voluntary; (d) this award of Restricted Stock Units is an extraordinary item of compensation which is outside the scope of the Participant’s employment contract, if any; (e) this award of Restricted Stock Units is not part of the Participant’s normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; (f) the vesting of this award of Restricted Stock Units ceases upon termination of 

8

Exhibit 10.3

		
Service for any reason except as may otherwise be explicitly provided in the Plan or this Agreement; (g) the future value of the underlying shares of Common Stock is unknown and cannot be predicted with certainty; (h) this award of Restricted Stock Units has been granted to the Participant in the Participant’s status as an Employee, a non-employee member of the Board or a consultant or independent advisor of the Company or its Parent or Subsidiary; (i) any claims resulting from this award of Restricted Stock Units shall be enforceable, if at all, against the Company; (j) in consideration of the grant of this award, no claim or entitlement to compensation or damages shall arise from termination of the award or diminution in value of the award or any of the shares issuable under the award from termination of Participant’s Service by the Company or Employer, as applicable (and for any reason whatsoever and whether or not in breach of contract or local labor laws), and Participant irrevocably releases his or her Employer, the Company and its Subsidiaries, as applicable, from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Agreement, Participant shall be deemed to have irrevocably waived his or her entitlement to pursue such claim; and (k) in the event that Employer is not the Company, the grant of the award will not be interpreted to form an employment contract or relationship with the Company and, furthermore, the grant of the Restricted Stock Units will not be interpreted to form an employment contract with the Employer or any Subsidiary.

	
20.
	
Disclosure of Participant Information. 

	
 
	
a.
	
Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Participant’s personal data as described in this Agreement by and among, as applicable, Participant’s employer, the Company and its Subsidiaries for the exclusive purpose of implementing, administering and managing Participant’s participation in
the Plan.

	
 
	
b.
	
For Participants outside the U.S., Participant understands that Participant’s employer, the Company and its Subsidiaries, as applicable, hold certain personal information about Participant regarding Participant’s employment, the nature and amount of Participant’s compensation and the fact and conditions of Participant’s participation in the Plan, including, but not limited to, Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, health, job title, any shares of stock or directorships held in the Company and its Subsidiaries, details of all options, awards or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor, for the purpose of implementing, administering and managing the Plan (the “Data”). Participant understands that the Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in Participant’s country, or elsewhere, and that the recipient’s country may have different data privacy laws and protections than Participant’s country. Participant understands that Participant may request a list with the names and addresses of any potential recipients of the Data by contacting Participant’s local human resources representative. Participant authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Participant’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party. Participant understands that 

9

Exhibit 10.3

	
 
		
the Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan. Participant understands that Participant may, at any time, view the Data, request additional information about the storage and processing of the Data, require any necessary amendments to the Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing Participant’s local human resources representative. Participant understands, however, that refusing or withdrawing Participant’s consent may affect Participant’s ability to participate in the Plan. For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, Participant understands that Participant may contact his or her local human resources representative.

 

	
21.
	
Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California without resort to that State’s conflict-of-laws rules.

	
22.
	
Imposition of Other Requirements. The Company reserves the right to impose other requirements on Participant’s participation in the Plan, on the award and on any shares of Common Stock acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with any applicable law or facilitate the administration of the Plan. Participant agrees to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. Furthermore, Participant acknowledges that the laws of the country in which Participant is
working at the time of grant, vesting or the sale of shares of Common Stock received 
pursuant to this award (including any rules or regulations governing securities, foreign exchange, tax, labor, or other matters) may subject Participant to additional procedural or regulatory requirements that Participant is and will be solely responsible for and must fulfill.

	
23.
	
Translations. If Participant has received this Agreement or any other document or communication related to the Plan or this grant in a language other than English and the meaning in the translation is different than in the English version, the terms expressed in the English version will govern. 

	
24.
	
Appendix B. Notwithstanding any provisions in this Agreement, the award shall be subject to any special terms and conditions set forth in any appendix to this Agreement (the “Appendix B”) for Participant’s country. Moreover, if Participant relocates to one of the countries included in Appendix B, the special terms and conditions for such country will apply to Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. The Appendix B constitutes part of this Agreement.

10

Exhibit 10.3

APPENDIX B

ADDITIONAL TERMS AND CONDITIONS OF THE

NETAPP, INC. 

RESTRICTED STOCK UNIT AGREEMENT

Terms and Conditions

This Appendix B includes additional terms and conditions that govern the Restricted Stock Units granted to you under the Plan if you reside in one of the countries listed below. Certain capitalized terms used but not defined in this Appendix have the meanings set forth in the Plan and/or the Agreement.

Notifications

This Appendix also includes information regarding exchange controls and certain other issues of which you should be aware with respect to your participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of August 2013. Such laws are often complex and change frequently. As a result, the Company strongly recommends that you not rely on the information in this Appendix B as the only source of information relating to the consequences of your participation in the Plan because the information may be out of date at the time that the Restricted Stock Units vest or you sell shares acquired under the Plan.

In addition, the information contained herein is general in nature and may not apply to your particular situation and the Company is not in a position to assure you of a particular result. Accordingly, you are advised to seek appropriate professional advice as to how the relevant laws in your country may apply to your situation.

Finally, if you are a citizen or resident of a country other than the one in which you are currently working, the information contained herein may not be applicable to you. 

ARGENTINA

Notifications

Securities Law Information. Neither the Restricted Stock Units nor the issuance of the shares are publicly offered or listed on any stock exchange in Argentina. The offer is private and not subject to the supervision of any Argentine governmental authority.

Exchange Control Information. In the event that you transfer proceeds in excess of US$2,000,000 from the sale of shares into Argentina in a single month, you will be subject to certain exchange control laws. Please note that exchange control regulations in Argentina are subject to frequent change. You should consult with your personal legal advisor regarding any exchange control obligations that you
may have.

 

 

 

 

11

Exhibit 10.3

 

AUSTRALIA

Terms and Conditions

Australian Addendum. You understand and agree that the Restricted Stock Units are offered subject to and in accordance with the terms of the Plan and the Australian Addendum to the Plan. You further agree to be bound by the terms of the Plan as supplemented for implementation in Australia by the Australian Addendum and the terms of the Restricted Stock Unit as set forth in the Agreement.

AUSTRIA

Notifications

Exchange Control Information. If you hold shares obtained through the Plan outside of Austria, you must submit a report to the Austrian National Bank. An exemption applies if the value of the shares as of any given quarter does not exceed €30,000,000 or as of December 31 does not exceed €5,000,000. If the former threshold is exceeded, quarterly obligations are imposed, whereas if the latter threshold is exceeded, annual reports must be given. The annual reporting date is as of December 31 and the deadline for filing the annual report is March 31 of the following year.

When shares are sold, there may be exchange control obligations if the cash received is held outside Austria. If the transaction volume of all your accounts abroad exceeds €3,000,000, the movements and balances of all accounts must be reported monthly, as of the last day of the month, on or before the fifteenth day of the following month.

Consumer Protection Information. If the provisions of the Austrian Consumer Protection Act are applicable to the Agreement and the Plan, you may be entitled to revoke your acceptance of the Agreement under the conditions listed below:

	
i.
	
if you accept the Restricted Stock Units outside the business premises of the Company, you may be entitled to revoke your acceptance of the Agreement, provided the revocation is made within one week after you accept the Agreement.

	
ii.
	
The revocation must be in written form to be valid. It is sufficient if you return the Agreement to the Company or the Company's representative with language which can be understood as your refusal to conclude or honor the Agreement, provided the revocation is sent within the period set
forth above.

BELGIUM 

There are no country specific provisions.

BRAZIL 

Notifications

Exchange Control Information. If you are a resident or domiciled in Brazil, you will be required to submit an annual declaration of assets and rights held outside of Brazil (including shares of Company Common Stock) to the Central Bank of Brazil if the aggregate value of such assets and rights is equal to or greater than US$100,000.

12

Exhibit 10.3

BULGARIA 

There are no country specific provisions.

CANADA

Terms and Conditions

Form of Settlement. Restricted Stock Units granted to employees resident in Canada shall be paid in shares only. In no event shall any of such Restricted Stock Units be paid in cash, notwithstanding any discretion contained in the Plan to the contrary.

Authorization of Release and Transfer Necessary Personal Information. This provision supplements Section 20 of the Agreement:

You hereby authorize the Company and the Company's representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Plan. You further authorize the Company, any

Parent or Subsidiary and the administrator of the Plan to disclose and discuss the Plan with their advisors. You further authorize the Company and any Parent or Subsidiary to record such information and to keep such information in your employee file.

French Language Provision. The following provisions will apply if you are a resident of Quebec:

The parties acknowledge that it is their express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.

Les parties reconnaissent avoir exigé la redaction en anglais de cette convention ("Agreement"), ainsi que de tous documents exécutés, avis donnés et procedures judiciaries intentées, directement ou indirectement, relativement a la présente convention.

CHILE

Notifications

Securities Law Information. Neither the Company nor the shares that may be issued under this award are registered with the Chilean Registry of Securities or under the control of the Chilean Superintendence of Securities.

Exchange Control Information. It is your responsibility to make sure that you comply with exchange control requirements in Chile when the value of your share transaction is in excess of US$10,000.

If the Restricted Stock Units are paid in shares and the aggregate value of the shares exceeds US$10,000, you must sign Annex 1 of the Manual of Chapter XII of the Foreign Exchange Regulations and file it directly with the Central Bank within 10 days of the settlement of the Restricted Stock Units.

You are not required to repatriate funds obtained from the sale of shares acquired pursuant to your grant of Restricted Stock Units. However, if you decide to repatriate such funds, you must do so through the Formal Exchange Market if the amount of the funds exceeds US$10,000. In such case, you must report the payment to a commercial bank or registered foreign exchange office receiving the funds.

13

Exhibit 10.3

If your aggregate investments held outside of Chile exceeds US$5,000,000 (including shares acquired under the Plan), you must report the investments annually to the Central Bank. Annex 3.1 of Chapter XII of the Foreign Exchange Regulations must be used to file this report.

Please note that exchange control regulations in Chile are subject to change. You should consult with your personal legal advisor regarding any exchange control obligations that you may have prior to the vesting of the Restricted Stock Units.

Annual Tax Reporting Obligation. The Chilean Internal Revenue (the "CIRS") requires all taxpayers to provide information annually regarding: (i) the taxes paid abroad which they will use as a credit against Chilean income taxes, and (ii) the gains/losses from foreign investments. These annual reporting obligations must be complied with by submitting a sworn statement setting forth this information before March 15 of each year. The forms to be used to submit the sworn statement are Tax Form 1853 "Annual Sworn Statement Regarding Credits for Taxes Paid Abroad" and Tax Form 1851 "Annual Sworn Statement Regarding Investments Held Abroad." If you are not a Chilean citizen and have been a resident in Chile for less than three years, you are exempt from the requirement to file Tax Form 1853. These statements must be submitted electronically through the CIRS website at http://www.sii.cl.

CHINA

Terms and Conditions

The Participant agrees that Participant must (and that Participant shall) sell, transfer or otherwise dispose of the shares of Common Stock acquired pursuant to this award of Restricted Stock Units in such manner and subject to such terms and conditions as the Company or the Employer determines within six (6) months after the Participant’s termination of Service, or such other period of time as the Company or the Employer may designate from time to time to comply with applicable legal requirements, including any registration, regulation, requirement or other similar law, statute, rule or regulation promulgated or requested by the State Administration of Foreign Exchange (“SAFE”) or its local agency (the “Disposition Deadline”).  The Participant hereby authorizes the Company or the Employer and appoints the Company and the Employer as the Participant’s attorney-in-fact to sell on the Participant’s behalf any shares of Common Stock held by the Participant on or after the Disposition Deadline, without any further action, consent or instruction by the Participant.  The Participant further agrees and acknowledges that the Participant will be responsible and liable for all the costs associated with any such sale of shares of Common Stock and that neither the Company nor the Employer will be liable to the Participant or any other person or entity for any losses or other liabilities that may result to the Participant as a result of any such sale.

Exchange Control Requirements. You understand and agree that, pursuant to local exchange control requirements, you will be required to repatriate the cash proceeds from the immediate sale of the shares issued upon the vesting of the Restricted Stock Units to China. You further understand that, under local law, such repatriation of your cash proceeds may need to be effectuated through a special exchange control account established by the Company, Parent or Subsidiary or the Employer, and you hereby consent and agree that any proceeds from the sale of any shares issued upon the vesting of the Restricted Stock Units you acquire may be transferred to such special account prior to being delivered to you. If the proceeds from the sale of your shares are converted to local currency, you acknowledge that the Company is under no obligation to secure any exchange conversion rate, and the Company may face delays in converting the proceeds to local currency due to exchange control restrictions in China. You agree to bear the risk of any exchange conversion rate fluctuation between the date the Restricted Stock Units vest and the date of conversion of the proceeds from the sale of the shares issued upon vesting to local currency. You further agree to comply with any other requirements that may 

14

Exhibit 10.3

be imposed by the Company in the future in order to facilitate compliance with exchange control requirements in China.

CZECH REPUBLIC

Notifications

Exchange Control Information. The Czech National Bank may require you to fulfill certain notification duties in relation to the Restricted Stock Units and the opening and maintenance of a foreign account. However, because exchange control regulations change frequently and without notice, you should consult your personal legal advisor prior to the vesting of the Restricted Stock Units to ensure compliance with current regulations. It is your responsibility to comply with applicable Czech exchange control laws.

DENMARK

Notifications

Exchange Control Information. If you establish an account holding shares or an account holding cash outside Denmark, you must report the account to the Danish Tax Administration. The form which should be used in this respect can be obtained from a local bank. (Please note that these obligations are separate from and in addition to the obligations described below.)

Securities/Tax Reporting Information. If you hold shares acquired under the Plan in a brokerage account with a broker or bank outside Denmark, you are required to inform the Danish Tax Administration about the account. For this purpose, you must file a Form V (Erklaering V) with the Danish Tax Administration. The Form V must be signed both by you and by the applicable broker or bank where the account is held. By signing the Form V, the broker or bank undertakes to forward information to the Danish Tax Administration concerning the shares in the account without further request each year. By signing the Form V, you authorize the Danish Tax Administration to examine the account. A sample of the Form V can be found at the following website: www.skat.dk. 

In addition, if you open a brokerage account (or a deposit account with a U.S. bank) for the purpose of holding cash outside Denmark, you are also required to inform the Danish Tax Administration about this account. To do so, you must also file a Form K (Erklaering K) with the Danish Tax Administration. The Form K must be signed both by you and by the applicable broker or bank where the account is held. By signing the Form K, the broker/bank undertakes an obligation, without further request each year, to forward information to the Danish Tax Administration concerning the content of the account. By signing the Form K, you authorize the Danish Tax Administration to examine the account. A sample of Form K can be found at the following website: www.skat.dk.

FINLAND

There are no country specific provisions.

15

Exhibit 10.3

FRANCE 

Terms and Conditions

Consent to Receive Information in English. By accepting the Restricted Stock Units, you confirm having read and understood the Plan and the Agreement, which were provided in the English language. You accept the terms of those documents accordingly.

En acceptant cette attribution gratuite d'actions, vous confirmez avoir lu et comprenez le Plan et ce Contrat, incluant tous leurs termes et conditions, qui ont été transmis en langue anglaise. Vous acceptez les dispositions de ces documents en connaissance de cause.

Notifications

Exchange Control Information. If you hold shares of Common Stock outside of France or maintain a foreign bank account, you are required to report such to the French tax authorities when you file your annual tax return.

GERMANY

Notifications

Exchange Control Information. Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank. If you use a German bank to transfer a cross-border payment in excess of €12,500 in connection with the sale of shares acquired under the Plan, the bank will make the report for you. In addition, you must report any receivables, payables, or debts in foreign currency exceeding an amount of €5,000,000 on a monthly basis.

GREECE 

There are no country specific provisions.

HONG KONG

Terms and Conditions

Securities Notification.  Warning: The Restricted Stock Units and shares issued at vesting do not constitute a public offering of securities under Hong Kong law and are available only to employees of the Company, its Parent or Subsidiary. The Agreement, including this Appendix B, the Plan and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a "prospectus" for a public offering of securities under the applicable securities legislation in Hong Kong nor have the documents been reviewed by any regulatory authority in Hong Kong. The Restricted Stock Units are intended only for the personal use of each eligible employee of the Employer, the Company or any Parent or Subsidiary and may not be distributed to any other person. If you are in any doubt about any of the contents of the Agreement, including this Appendix B, or the Plan, you should obtain independent professional advice.

Settlement of Restricted Stock Units and Sale of Shares. In the event your Restricted Stock Units vest and shares are issued to you within six months of the grant date, you agree that you will not dispose of any shares acquired prior to the six-month anniversary of the grant date.

16

Exhibit 10.3

Notifications

Nature of Scheme. The Company specifically intends that the Plan will not be an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance.

HUNGARY

No country specific provisions.

INDIA

Notifications

Exchange Control Information. You understand that you must repatriate any proceeds from the sale of shares acquired under the Plan to India and convert the proceeds into local currency within 90 days of receipt. You will receive a foreign inward remittance certificate ("FIRC") from the bank where you deposit the foreign currency. You should maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India or the Employer requests proof of repatriation.

Tax Information. The amount subject to tax at vesting will partially be dependent upon a valuation that the Company will obtain from a Merchant Banker in India. The Company has no responsibility or obligation to obtain the most favorable valuation possible nor obtain valuations more frequently than required under Indian tax law.

INDONESIA

Notifications

Exchange Control Information. If you remit proceeds from the sale of shares into 

Indonesia, the Indonesian Bank through which the transaction is made will submit a report on the transaction to the Bank of Indonesia for statistical reporting purposes. For transactions of US$10,000 or more, a description of the transaction must be included in the report. Although the bank through which the transaction is made is required to make the report, you must complete a "Transfer Report Form." The Transfer Report Form will be provided to you by the bank through which the transaction is made.

IRELAND

Notifications

Director Notification Obligation. If you are a director, shadow director or secretary of the Company's Irish Subsidiary or affiliate, you must notify the Irish Subsidiary or affiliate in writing within five business days of receiving or disposing of an interest in the Company (e.g., Restricted Stock Units, shares, etc.), or within five business days of becoming aware of the event giving rise to the notification requirement or within five days of becoming a director or secretary if such an interest exists at the time. This notification requirement also applies with respect to the interests of a spouse or children under the age of 18 (whose interests will be attributed to the director, shadow director or secretary).

ISRAEL

Terms and Conditions

17

Exhibit 10.3

Trust Arrangement. You understand and agree that the Restricted Stock Units are offered subject to and in accordance with the terms of the trust agreement. Specifically, the shares issued upon vesting of the Restricted Stock Units shall be delivered to and controlled by a trustee appointed by the Company or its Subsidiary or affiliate in Israel (the "Trustee") for your benefit for at least such period of time as required by Section 102 or any shorter period determined under the Israeli Income Tax Ordinance [New Version] 1961 as now in effect or as hereafter amended (the 'Ordinance') or by the Israeli Tax Authority (the "Lock-Up Period"). The Restricted Stock Units and shares shall be controlled by the Trustee for the benefit of you and the provisions of Section 102 of the Ordinance and the Income Tax (Tax Abatement on the Grant of Shares to Employees) Regulations 2003 shall apply to such Restricted Stock Units or shares for all purposes. You shall be able, at any time, to request the sale of the shares or the release of the shares from the Trustee, subject to the terms of the Plan, this Agreement and any applicable law. Without derogating from the aforementioned, if the shares are released by the Trustee during the Lock-Up Period, the sanctions under Section 102 of the Ordinance shall apply to and be borne by you. The Shares shall not be sold or released from the control of the Trustee unless the Company, the Employer and the Trustee are satisfied that the full amount of Withholding Taxes due have been paid or will be paid in relation thereto.

ITALY

Terms and Conditions

Data Privacy Notice. The following provision replaces Section 20 of the Agreement:

Participant understands that the Employer and/or the Company may hold certain personal information about him or her, including, but not limited to, his or her name, home address and telephone number, date of birth, social security number (or any other social or national identification number), salary, nationality, job title, number of shares held and the details of all Restricted Stock Units or any other entitlement to shares awarded, cancelled, exercised, vested, unvested or outstanding (the “Data”) for the purpose of implementing, administering and managing Participant’s participation in the Plan. Participant is aware that providing the Company with the Data is necessary for the performance of this Agreement and that Participant’s refusal to provide such Data would make it impossible for the Company to perform its contractual obligations and may affect his or her ability to participate in the Plan. 

The Controller of personal data processing is NetApp, Inc., with registered offices at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, USA, and, pursuant to D.lgs 196/2003, its representative in Italy is NetApp Italia Srl. with registered offices at First Floor, Via Battistotti Sassi 11, Milan, Italy 20133. Participant understands that the Data may be transferred to the Company or any of its Subsidiaries or affiliates, or to any third parties assisting in the implementation, administration and management of the Plan, including any transfer required to a broker or other third party with whom Shares acquired pursuant to the vesting of the Restricted Stock Units or cash from the sale of Shares acquired pursuant to the Plan may be deposited. Furthermore, the recipients that may receive, possess, use, retain and transfer such Data for the above mentioned purposes may be located in Italy or elsewhere, including outside of the European Union and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than Italy. The processing activity, including the transfer of Participant’s personal data abroad, outside of the European Union, as herein specified and pursuant to applicable laws and regulations, does not require Participant’s consent thereto as the processing is necessary for the performance of contractual obligations related to the implementation, administration and management of the Plan. 

18

Exhibit 10.3

Participant understands that Data processing relating to the purposes above specified shall take place under automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Data are collected and with confidentiality and security provisions as set forth by applicable laws and regulations, with specific reference to D.lgs. 196/2003.

Participant understands that Data will be held only as long as is required by law or as necessary to implement, administer and manage his or her participation in the Plan. Participant understands that pursuant to art.7 of D.lgs 196/2003, he or she has the right, including but not limited to, access, delete, update, request the rectification of his or her personal Data and cease, for legitimate reasons, the Data processing. Furthermore, Participant is aware that his or her Data will not be used for direct marketing purposes. 

Plan Document Acknowledgment. In accepting the Restricted Stock Units, you acknowledge that you have received a copy of the Plan and the Agreement and have reviewed the Plan and the Agreement, including this Appendix B, in their entirety and fully understand and accept all provisions of the Plan and the Agreement, including this Appendix B. 

In addition, you further acknowledge that you have read and specifically and expressly approve without limitation the following clauses in the Agreement: Section 4 (Forfeiture upon Termination of Continuous Service); Section 7 (Withholding of Taxes); Section 19 (Labor Law); and Section 20 (Disclosure of Participant Information).

Notifications

Tax/Exchange Control Information. You are required to report on your annual tax return: 

(a) any transfers of cash or shares to or from Italy exceeding €10,000 or the equivalent amount in U.S. dollars; (b) any foreign investments or investments (including the shares issued at vesting of the Restricted Stock Units, cash or proceeds from the sale of shares acquired under the Plan) held outside of Italy exceeding €10,000 or the equivalent amount in U.S. dollars, if the investment may give rise to income in Italy (this will include reporting the shares issued at vesting of the Restricted Stock Units if the fair market value of such shares combined with other foreign assets exceed €10,000); and (c) the amount of the transfers to and from abroad which have had an impact during the calendar year on your foreign investments or investments held outside of Italy. You are exempt from the formalities in (a) if the investments are made through an authorized broker resident in Italy, as the broker will comply with the reporting obligation on your behalf.

JAPAN

There are no country specific provisions.

KAZAKHSTAN

Notifications

Exchange Control Information. Although Kazakh residents are no longer required to obtain a license from the National Bank of Kazakhstan before obtaining securities in foreign companies, you are nevertheless required to notify the National Bank of Kazakhstan when you acquire Shares under the Plan.

KOREA

Notifications

19

Exhibit 10.3

Exchange Control Information. If you realize US$500,000 or more from the sale of shares, Korean exchange control laws require you to repatriate the proceeds to Korea within 18 months of the sale.

LUXEMBOURG

Notifications

Exchange Control Information. You are required to report any inward remittances of funds to the Banque Central de Luxembourg and/or the Service Central de La Statistique et des Etudes Economiques within 15 working days following the month during the transaction occurred. If a Luxembourg financial institution is involved in the transaction, it generally will fulfill the reporting obligation on your behalf.

MALAYSIA

Notifications

Malaysian Insider Trading Notification. You should be aware of the Malaysian insider-trading rules, which may impact your acquisition or disposal of shares or rights to shares under the Plan. Under the Malaysian insider-trading rules, you are prohibited from acquiring or selling shares or rights to shares (e.g., an award under the Plan) when you are in possession of information which is not generally available and which you know or should know will have a material effect on the price of Shares once such information is generally available.

Director Notification Obligation. If you are a director of the Company's Malaysian Subsidiary or affiliate, you are subject to certain notification requirements under the Malaysian Companies Act. Among these requirements is an obligation to notify the Malaysian Subsidiary or affiliate in writing when you receive or dispose of an interest (e.g., an award under the Plan or shares) in the Company or any related company. Such notifications must be made within 14 days of receiving or disposing of any interest in the Company or any related company.

MEXICO

Terms and Conditions

Modification. By accepting the Restricted Stock Units, you understand and agree that any modification of the Plan or the Agreement or its termination shall not constitute a change or impairment of the terms and conditions of employment.

Policy Statement. The award of Restricted Stock Units the Company is making under the Plan is unilateral and discretionary and, therefore, the Company reserves the absolute right to amend it and discontinue it at any time without any liability.

The Company, with registered offices at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, U.S.A., is solely responsible for the administration of the Plan and participation in the Plan and the acquisition of shares does not, in any way, establish an employment relationship between you and the Company since you are participating in the Plan on a wholly commercial basis and the sole employer is as applicable, nor does it establish any rights between you and the Employer.

Plan Document Acknowledgment. By accepting the award of Restricted Stock Units, you acknowledge that you have received copies of the Plan, have reviewed the Plan and the Agreement in their entirety and fully understand and accept all provisions of the Plan and the Agreement.

20

Exhibit 10.3

In addition, by signing the Agreement, you further acknowledge that you have read and specifically and expressly approve the terms and conditions in the Agreement, in which the following is clearly described and established: (i) participation in the Plan does not constitute an acquired right; (ii) the Plan and participation in the Plan is offered by the Company on a wholly discretionary basis; (iii) participation in the Plan is voluntary; and (iv) the Company and any Parent, Subsidiary or affiliates are not responsible for any decrease in the value of the shares underlying the Restricted Stock Units.

Finally, you hereby declare that you do not reserve any action or right to bring any claim against the Company for any compensation or damages as a result of your participation in the Plan and therefore grant a full and broad release to the Employer, the Company and any Parent, Subsidiary or affiliates with respect to any claim that may arise under the Plan.

Spanish Translation

Modification. Al aceptar las Unidades de Accion Restringida, usted reconoce y acuerda que cualquier modification del Plan o su terminacion no constituye un cambio o desmejora de los terminos y condiciones de empleo.

Declaracion de Politica. El Otorgarmiento de Unidades de Accion Restringida de la Compañia en virtud del Plan es unilateral y discrecional y, por lo tanto, la Compañia se reserva el derecho absoluto de modificar y discontinuar el mismo en cualquier tiempo, sin responsabilidad alguna.

La Compañia, con oficinas registradas ubicadas en, es la unica responsable de la administración del Plan y de la participación en el mismo y la adquisición de Acciones no establece de forma alguna una relación de trabajo entre usted y la Compañia, ya que su participación en el Plan es completamente comercial y el unico empleador es en caso de ser aplicable, asi como tampoco establece ningun derecho entre la persona que tenga el derecho a optar y el Empleador.

Reconocimiento del Documento del Plan. Al aceptar el Otorgamiento de las Unidades de Acciόn Restringida, usted reconoce que ha recibido copias del Plan, ha revisado el mismo, al igual que la totalidad del Acuerdo y, que ha entendido y aceptado completamente todas las disposiciones contenidas en el Plan y en el Acuerdo.

Adicionalmente, al firmar el Acuerdo, reconoce que ha leido, y que aprueba especifica y expresamente los términos y condiciones contenidos en la Renuncia de Derecho o Reclamo por Compensación del Acuerdo, en el cual se encuentra claramente descrito y establecido lo siguiente: (i) la participación en el Plan no constituye un derecho adquirido; (ii) el plan y la participación en el mismo es ofrecida por la Compañia de forma enteramente discrecional; (iii) la participación en el Plan es voluntaria; y (iv) la Compañia, asi como su Sociedad controlante, Subsidiaria o Filiales no son responsables por cualquier disminución en el valor de las Acciones en relación a las Unidades de Acciόn Restringida.

Finalmente, declara que no se reserva ninguna acciόn o derecho para interponer una demanda en contra de la Compañia por compensación, dano o perjuicio alguno como resultado de su participación en el Plan y, en consecuencia, otorga el más amplio finiquito al Empleador, asi como a la Compañia, a su Sociedad controlante, Subsidiaria o Filiales con respecto a cualquier demanda que pudiera originarse en virtud
del Plan.

NETHERLANDS

Notifications

21

Exhibit 10.3

Insider-Trading Notification. You should be aware of the Dutch insider-trading rules, which may impact the sale of shares issued to you at vesting and settlement of the award. In particular, you may be prohibited from effectuating certain transactions involving shares if you have inside information about the Company. If you are uncertain whether the insider-trading rules apply to you, you should consult your personal legal advisor.

NEW ZEALAND

There are no country specific provisions.

NIGERIA

There are no country specific provisions.

NORWAY 

There are no country specific provisions.

PHILIPPINES

Notifications

Securities Law Notice. You acknowledge that you are permitted to sell shares acquired under the Plan through the designated Plan broker appointed by the Company (or such other broker to whom you may transfer the Shares), provided that such sale takes place outside of the Philippines through the facilities of the NASDAQ Global Select Market on which the shares are listed.

POLAND

Notifications

Exchange Control Information. If you hold foreign securities (including shares) and maintain accounts abroad, you may be required to file certain reports with the National Bank of Poland. Specifically, if the value of securities and cash held in such foreign accounts exceeds €15,000, you must file reports on the transactions and balances of the accounts on a quarterly basis by the 20th day of the month following the end of each quarter and an annual report by no later than January 30 of the following calendar year. Such reports are filed on special forms available on the website of the National Bank of Poland.

PORTUGAL

Notifications

Exchange Control Information. If you receive shares upon vesting, the acquisition of the shares should be reported to the Banco de Portugal for statistical purposes. If the shares are deposited with a commercial bank or financial intermediary in Portugal, such bank or financial intermediary will submit the report on your behalf. If the shares are not deposited with a commercial bank or financial intermediary in Portugal, you are responsible for submitting the report to the Banco de Portugal.

ROMANIA 

Notifications

Exchange Control Information. If you deposit the proceeds from the sale of shares issued to you at vesting in a bank account in Romania, you may be required to provide the Romanian bank with appropriate 

22

Exhibit 10.3

documentation explaining the source of the  funds. You should consult your personal advisor to determine whether you will be required to submit such documentation to the Romanian bank.

23

Exhibit 10.3

RUSSIA

Terms and Conditions

U.S. Transaction. You understand that the Restricted Stock Units shall be valid and this Agreement shall be concluded and become effective only when the Agreement is electronically received by the Company in the United States. Upon vesting of the Restricted Stock Units, any shares to be issued to you shall be delivered to you through a bank or brokerage account in the United States. You are not permitted to sell the shares directly to other Russian legal entities or individuals.

Notifications

Exchange Control Information. Under current exchange control regulations, within a reasonably short time after sale of the shares acquired under the Plans, you must repatriate the sale proceeds to Russia. Such sale proceeds must be initially credited to you through a foreign currency account at an authorized bank in Russia. After the sale proceeds are initially received in Russia, they may be further remitted to foreign banks in accordance with Russian exchange control laws.

You are encouraged to contact your personal advisor before remitting your sale proceeds to Russia as exchange control requirements may change.

Securities Law Notification. This Appendix B, the Agreement, the Plan and all other materials that you may receive regarding participation in the Plan do not constitute advertising or an offering of securities in Russia. Absent any requirement under local law, the issuance of securities pursuant to the Plan has not and will not be registered in Russia; hence, the securities described in any Plan-related documents may not be used for offering or public circulation in Russia.

SAUDI ARABIA

Notifications

Securities Law Information. The Agreement may not be distributed in the Kingdom of Saudi Arabia except to such persons as are permitted under the Offers of Securities Regulations issued by the Capital Market Authority.

The Capital Market Authority does not make any representation as to the accuracy or completeness of the Agreement, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of the Agreement. You are hereby advised to conduct your own due diligence on the accuracy of the information relating to the Shares. If you do not understand the contents of the Agreement, you should consult an authorized financial advisor.

SINGAPORE

Notifications

Securities Law Information. The award of Restricted Stock Units is being made in reliance on section 273(1)(f) of the Securities and Futures Act (Cap. 289) ("SFA") pursuant to which it is exempt from the prospectus and registration requirements under the SFA.

24

Exhibit 10.3

Director Notification Obligation. If you are a director, associate director or shadow director of the Company's Singapore Subsidiary or affiliate, you are subject to certain notification requirements under the Singapore Companies Act. Among these requirements is an obligation to notify the Company's Singapore Subsidiary or affiliate in writing when you receive an interest (e.g, Restricted Stock Units or shares) in the Company or any Parent, Subsidiary or affiliate. In addition, you must notify the Company's Singapore Subsidiary or affiliate when you sell shares or shares of any Parent, Subsidiary or affiliate (including when you sell shares issued upon vesting and settlement of the award). These notifications must be made within two days of acquiring or disposing of any interest in the Company or any Parent, Subsidiary or affiliate. In addition, a notification of your interests in the Company or any Parent, Subsidiary or affiliate must be made within two days of becoming a director.

SLOVENIA 

There are no country specific provisions.

SOUTH AFRICA

Terms and Conditions

Taxes. By accepting the Restricted Stock Units, you agree that, immediately upon vesting and settlement of the Restricted Stock Units, you will notify the Employer of the amount of any gain realized. If you fail to advise the Employer of the gain realized upon vesting and settlement, you may be liable for a fine. You will be solely responsible for paying any difference between the actual tax liability and the amount withheld by the Employer.

Notifications

Exchange Control Information. Because no transfer of funds from South Africa is required under the awards, no filing or reporting requirements should apply when the award is granted or when Shares are issued upon vesting and settlement of the Restricted Stock Units. However, because the exchange control regulations are subject to change, you should consult your personal advisor prior to vesting and settlement of the award to ensure compliance with current regulations. You are responsible for ensuring compliance with all exchange control laws in South Africa.

SPAIN

Terms and Conditions

No Entitlement for Claims or Compensation. The following provision supplements 

Section 19 of the Agreement:

By accepting the award, you consent to participation in the Plan, and acknowledge that you have received a copy of the Plan document. You understand that the Company has unilaterally, gratuitously and in its sole discretion decided to make awards of Restricted Stock Units under the Plan to individuals who may be Consultants, Directors, Employees and Non-Employee Directors throughout the world. The decision is limited and entered into based upon the express assumption and condition that any Restricted Stock Units will not economically or otherwise bind the Company or any Parent or Subsidiary, including the Employer, on an ongoing basis, other than as expressly set forth in the Agreement. Consequently, you understand that the award is given on the assumption and condition that the Restricted Stock Units shall not become part of any employment contract (whether with the Company or any Parent, Subsidiary or affiliate, including the Employer) and shall not be considered a mandatory benefit, salary for any purpose (including severance compensation) or any other right 

25

Exhibit 10.3

whatsoever. Furthermore, you understand and freely accept that there is no guarantee that any benefit whatsoever shall arise from the award, which is gratuitous and discretionary, since the future value of the Restricted Stock Units and the underlying shares is unknown and unpredictable. You also understand that this award would not be made but for the assumptions and conditions set forth hereinabove; thus, you understand, acknowledge and freely accept that, should any or all of the assumptions be mistaken or any of the conditions not be met for any reason, the award, the Restricted Stock Units and any right to the underlying shares shall be null and void.

Notifications

Exchange Control Information. You must declare the acquisition of Shares to the Dirección General de Politica Comercial e Inversiones Exteriores ("DGPCIE") of the Ministerio de Economia for statistical purposes. You must also declare the ownership of any shares with the Directorate of Foreign Transactions each January while the shares are owned. In addition, you wish to import the share certificates into Spain, you must declare the importation of such securities to the DGPCIE.

When receiving foreign currency payments derived from the ownership of Shares (i.e., dividends or sale proceeds), you must inform the financial institution receiving the payment of the basis upon which such payment is made. You will need to provide the following information: (i) your name, address, and fiscal identification number; (ii) the name and corporate domicile of the Company; (iii) the amount of the payment and the currency used; (iv) the country of origin; (v) the reasons for the payment; and (vi) further information that may be required.

Tax Information. Effective October 2012, if you hold assets or rights outside of Spain (including shares acquired under the Plan), you may have to file an informational tax report with the tax authorities declaring such ownership. Generally, if the value of your foreign investments exceeds €50,000, you may have to file this informational return. Please note that reporting requirements are based on what you have previously disclosed and the increase in value of such and the total value of certain groups of foreign assets. Also, the thresholds for annual filing requirements may change each year Therefore, you should consult your personal advisor regarding whether you will be required to file an informational tax report for asset and rights that you hold abroad.

SWEDEN

There are no country specific provisions.

SWITZERLAND

Notifications

Securities Law Notification The award is considered a private offering in Switzerland; therefore, it is not subject to registration in Switzerland.

TAIWAN

Notifications

Exchange Control Information. You may acquire and remit foreign currency (including proceeds from the sale of shares) into and out of Taiwan up to US$5,000,000 per year. If the transaction amount is TWD$500,000 or more in a single transaction, you must submit a foreign exchange transaction form and also provide supporting documentation to the satisfaction of the remitting bank.

26

Exhibit 10.3

If the transaction amount is US$500,000 or more, you may be required to provide additional supporting documentation to the satisfaction of the remitting bank. Please consult your personal advisor to ensure compliance with applicable exchange control laws in Taiwan.

THAILAND

Notifications

Exchange Control Information. When you sell shares issued to you at vesting, you must repatriate all cash proceeds to Thailand and then convert such proceeds to Thai Baht within 360 days of repatriation. If the amount of your proceeds is US$20,000 or more, you must specifically report the inward remittance to the Bank of Thailand on a foreign exchange transaction form. If you fail to comply with these obligations, you may be subject to penalties assessed by the Bank of Thailand. You should consult your personal advisor before taking action with respect to remittance of proceeds from the sale of Shares into Thailand. You are responsible for ensuring compliance with all exchange control laws in Thailand.

TURKEY 

There are no country specific provisions.

UNITED ARAB EMIRATES

There are no country specific provisions.

UNITED KINGDOM 

Terms and Conditions

Joint Election. As a condition of participation in the Plan, you agree to accept any liability for secondary Class 1 NICs which may be payable by the Company and/or the Parent or Subsidiary employing or retaining you in connection with the Restricted Stock Units and any event giving rise to Tax-Related Items (the “Employer’s NICs”). Without limitation to the foregoing, you agree to enter into a joint election with the Company (the “Joint Election”), the form of such Joint Election being formally approved by HMRC, and to execute any other consents or elections required to accomplish the transfer of the Employer’s NICs to you. You further agree to execute such other joint elections as may be required between you and any successor to the Company and/or the Parent or Subsidiary employing or retaining you. You further agree that the Company and/or the Parent or Subsidiary employing or retaining you may collect Employer’s NICs from you by any of the means set forth in Section 7 of the Agreement.

If you do not enter into a Joint Election, if approval of the Joint Election has been withdrawn by HMRC or if such Joint Election is jointly revoked by you and the Company or the Parent or Subsidiary employing or retaining you, as applicable, the Company, in its sole discretion and without any liability to you, may choose not to issue or deliver any shares of Common Stock to you at vesting and you will forfeit your Restricted Stock Units.

Tax and National Insurance Contributions Acknowledgment. The following provisions supplement Section 7 of the Agreement:

You agree that if you do not pay or the Employer or the Company does not withhold from you the full amount of Withholding Taxes that you owe due to the vesting of the Restricted Stock Units, or the release or assignment of the Restricted Stock Units for consideration, or the receipt of any other benefit in connection with the Restricted Stock Units (the "Taxable Event") within 90 days after the Taxable Event, or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003, then the amount that should have 

27

Exhibit 10.3

been withheld shall constitute a loan owed by you to the Employer, effective 90 days after the Taxable Event. You agree that the loan will bear interest at the HMRC's official rate and will be immediately due and repayable by you, and the Company and/or the Employer may recover it at any time thereafter by withholding the funds from salary, bonus or any other funds due to you by the Employer, by withholding in Shares issued upon vesting and settlement of the Restricted Stock Units or from the cash proceeds from the sale of Shares or by demanding cash or a cheque from you. You also authorize the Company to delay the issuance of any Shares to you unless and until the loan is repaid in full.

Notwithstanding the foregoing, if you are an officer or executive director (as within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), the terms of the immediately foregoing provision will not apply. In the event that you are an officer or executive director and Withholding Taxes are not collected from or paid by you within 90 days of the Taxable Event, the amount of any uncollected Withholding Taxes may constitute a benefit to you on which additional income tax and national insurance contributions may be payable. You acknowledge that the Company or the Employer may recover any such additional income tax and national insurance contributions at any time thereafter by any of the means referred to in Section 7 of the Agreement.

UNITED STATES

There are no country specific provisions.

 

*****

 

 

28

Exhibit 10.3

EXHIBIT 1

 

Eligible Restricted Stock Unit Calculations:

				
	
Level *
	
Cumulative AOI**
	
Percentage of Target Number of Restricted Stock Units that Become Eligible Restricted Stock Units***
	
Number of Eligible Restricted Stock Units***

	
1
	
≥$[__]
	
200%
	
[--]

	
2
	
$[__]
	
195%
	
[--]

	
3
	
$[__]
	
190%
	
[--]

	
4
	
$[__]
	
185%
	
[--]

	
5
	
$[__]
	
180%
	
[--]

	
6
	
$[__]
	
175%
	
[--]

	
7
	
$[__]
	
170%
	
[--]

	
8
	
$[__]
	
165%
	
[--]

	
9
	
$[__]
	
160%
	
[--]

	
10
	
$[__]
	
155%
	
[--]

	
11
	
$[__]
	
150%
	
[--]

	
12
	
$[__]
	
145%
	
[--]

	
13
	
$[__]
	
140%
	
[--]

	
14
	
$[__]
	
135%
	
[--]

	
15
	
$[__]
	
130%
	
[--]

	
16
	
$[__]
	
125%
	
[--]

	
17
	
$[__]
	
120%
	
[--]

	
18
	
$[__]
	
115%
	
[--]

	
19
	
$[__]
	
110%
	
[--]

	
20
	
$[__]
	
105%
	
[--]

	
21
	
$[__]
	
100%
	
[--]

	
22
	
$[__]
	
95%
	
[--]

29

Exhibit 10.3

				
	
Level *
	
Cumulative AOI**
	
Percentage of Target Number of Restricted Stock Units that Become Eligible Restricted Stock Units***
	
Number of Eligible Restricted Stock Units***

	
23
	
$[__]
	
90%
	
[--]

	
24
	
$[__]
	
85%
	
[--]

	
25
	
$[__]
	
80%
	
[--]

	
26
	
$[__]
	
75%
	
[--]

	
27
	
$[__]
	
70%
	
[--]

	
28
	
$[__]
	
65%
	
[--]

	
29
	
$[__]
	
60%
	
[--]

	
30
	
$[__]
	
55%
	
[--]

	
31
	
$[__]
	
50%
	
[--]

	
32
	
$[__]
	
45%
	
[--]

	
33
	
$[__]
	
40%
	
[--]

	
34
	
$[__]
	
35%
	
[--]

	
35
	
$[__]
	
30%
	
[--]

	
36
	
$[__]
	
25%
	
[--]

	
37
	
$[__]
	
20%
	
[--]

	
38
	
$[__]
	
15%
	
[--]

	
39
	
$[__]
	
10%
	
[--]

	
40
	
$[__]
	
5%
	
[--]

	
41
	
<$[__]
	
0%
	
[--]

 

* The number of Target Number of Restricted Stock Units that will become Eligible Restricted Stock Units will be interpolated on a linear basis between levels 1 – 40.  The Percentage of Target Number of Restricted Stock Units that Become Eligible Restricted Stock Units will be rounded to the nearest hundredth.

** If the Period End Date occurs prior to the Anniversary Date, the “Cumulative AOI” amount for each level will be pro-rated based on the number of days that have elapsed between the Commencement Date and the Period End Date.

30

Exhibit 10.3

*** Any partial shares of Common Stock will be rounded down to the nearest whole share and any fractional shares will be forfeited for no consideration.

 

 

 

31Exhibit 4.1

 

 

Execution Version

  

 

INVESTOR RIGHTS AGREEMENT

 

by and between

 

AEGEAN MARINE PETROLEUM NETWORK INC.

 

and

 

MERCURIA ASSET HOLDINGS (HONG KONG) LIMITED

 

Dated as of August 21, 2018

 

 

TABLE OF CONTENTS

 

Page

 

ARTICLE I

DEFINITIONS

	
Section 1.1

	
Definitions

	
1

ARTICLE II

CORPORATE GOVERNANCE

	
Section 2.1

	
Composition of the Board

	
6

	
Section 2.2

	
Replacement of Investor Designee

	
6

	
Section 2.3

	
Voting Agreement

	
7

ARTICLE III

REGISTRATION RIGHTS

	
Section 3.1

	
Demand Registrations

	
7

	
Section 3.2

	
Piggyback Registrations

	
8

	
Section 3.3

	
Lock-Up Agreements

	
10

	
Section 3.4

	
Registration Procedures

	
10

	
Section 3.5

	
[RESERVED].

	
16

	
Section 3.6

	
Indemnification

	
16

	
Section 3.7

	
Rule 144

	
19

	
Section 3.8

	
Underwritten Registrations

	
19

	
Section 3.9

	
Registration Expenses

	
19

	
Section 3.10

	
Blackout Periods

	
20

ARTICLE IV

PRE-EMPTIVE RIGHTS

	
Section 4.1

	
Pre-Emptive Rights

	
20

	
Section 4.2

	
Procedures

	
21

	
Section 4.3

	
Limitations

	
21

ARTICLE V

STANDSTILL & NON-DISPARAGEMENT

	
Section 5.1

	
Standstill

	
21

	
Section 5.2

	
Non-Disparagement

	
22

 -i-

ARTICLE VI

REPRESENTATIONS

	
Section 6.1

	
Investor Representations

	
22

	
Section 6.2

	
Company Representations

	
22

ARTICLE VII

TERMINATION

	
Section 7.1

	
Termination

	
23

	
Section 7.2

	
Effect of Termination

	
23

ARTICLE VIII

MISCELLANEOUS

	
Section 8.1

	
Announcements

	
23

	
Section 8.2

	
Specific Performance

	
23

	
Section 8.3

	
Notices

	
23

	
Section 8.4

	
Assignment; Third Party Beneficiaries

	
25

	
Section 8.5

	
Amendment; Waiver

	
25

	
Section 8.6

	
Descriptive Headings

	
25

	
Section 8.7

	
Expenses

	
25

	
Section 8.8

	
Severability

	
25

	
Section 8.9

	
Further Assurances

	
25

	
Section 8.10

	
Construction

	
25

	
Section 8.11

	
Entire Agreement

	
26

	
Section 8.12

	
Governing Law; Jurisdiction

	
26

	
Section 8.13

	
Counterparts; Facsimile

	
27

	
Section 8.14

	
Effectiveness

	
27

 -ii-

INVESTOR RIGHTS AGREEMENT

 

This INVESTOR RIGHTS AGREEMENT (this "Agreement") is entered this 21st day of August, 2018 (the "Effective Date"), by and between Aegean Marine Petroleum Network, Inc. (the "Company") and Mercuria Asset Holdings (Hong Kong) Limited ("Investor").

 

W I T N E S S E T H:

 

WHEREAS, one or more affiliates of Investor (the "Lenders") agreed to restructure the Company's or certain of its Subsidiaries' current debt facilities by extending certain loans and  agreeing to make certain amendments and modifications to or otherwise waive certain compliance with and/or defaults of certain provisions thereof and thereunder (such debt facilities, as amended, modified or waived, being collectively referred to as the "Credit Facilities");

 

WHEREAS, in order to induce the Lenders to provide the Credit Facilities, the Company and Investor have entered into that certain Investment Agreement, dated as of August 19, 2018 (the "Investment Agreement"), pursuant to which, among other things, Investor will be issued by the Company 17,458,038 shares of Common Stock (as herein after defined) (the "Shares"), on the terms and subject to the conditions set forth therein; and

 

WHEREAS, in connection with the issuance of the Shares to Investor, the Company and Investor have entered into this Agreement for purposes, among others, of (a) providing the Investor with representation on the Company's Board of Directors (the "Board"), and (b) providing certain rights and restrictions in connection with the sale or transfer of the Shares, in each case, subsequent to the issuance of the Shares to Investor.

 

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 (as herein after defined) hereby agree as follows:

 

ARTICLE I

 DEFINITIONS

 

Section 1.1          Definitions.  When used in this Agreement, the following terms shall have the meanings set forth below:

 

(a)          "Action" means any legal, administrative, regulatory or other suit, action, claim, audit, assessment, arbitration or other proceeding, investigation or inquiry.

 

(b)          "Affiliate" shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with such Person.

 

(c)          "Agreement" shall have the meaning set forth in the Preamble.

 

(d)          "automatic shelf registration" shall have the meaning set forth in Section 3.4.

 

(e)          "Bankruptcy and Equity Exception" shall have the meaning set forth in Section 6.1(b).

 

 -1-

 

(f)          "Beneficially Own," "Beneficially Owned," or "Beneficial Ownership" shall have the meaning set forth in Rule 13d-3 of the rules and regulations promulgated under the Exchange Act.

 

(g)          "Blackout Notice" shall have the meaning set forth in Section 3.10.

 

(h)          "Blackout Period" shall have the meaning set forth in Section 3.10.

 

(i)           "Board" shall have the meaning set forth in the Recitals.

 

(j)           "Business Day" shall mean any day, other than a Saturday, Sunday or a day on which banking institutions in New York, New York are authorized or obligated to close.

 

(k)          "Common Stock" shall mean the common stock of the Company, having a par value of $.01 per share.

 

(l)           "Company" shall have the meaning set forth in the Preamble.

 

(m)         "Company Equity Securities" shall have the meaning set forth in Section 4.1.

 

(n)          "Company Expenses" shall have the meaning set forth in Section 3.9.

 

(o)          "Company Indemnitees" shall have the meaning set forth in Section 3.6(b).

 

(p)          "Company Securities" shall have the meaning set forth in Section 5.1(a).

 

(q)          "Convertible Securities" shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock, but excluding Options.

 

(r)           "Credit Facilities" shall have the meaning set forth in the Recitals.

 

(s)          "Demand Notice" shall have the meaning set forth in Section 3.1(a).

 

(t)          "Demand Registration" shall have the meaning set forth in Section 3.1(a).

 

(u)          "Effective Date" shall have the meaning set forth in the Preamble.

 

(v)          "Effective Period" shall mean a period beginning on the Effective Date and ending on the earlier of (i) such time as all securities of the Company which were Registrable Securities cease to be Registrable Securities and (ii) such time as Investor Beneficially Owns a number of shares of Common Stock representing less than 10% of the Common Stock on a fully diluted basis.

 

(w)         "Election Notice" shall have the meaning set out in Section 4.2(b).

 

(x)          "Equity Securities" shall have the meaning set forth in Section 4.1.

 

 -2-

 

(y)          "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the SEC from time to time thereunder.

 

(z)          "Excluded Transactions" shall mean (a) the issuance of shares of Common Stock, Options or Convertible Securities as a dividend or distribution on Shares, (b) the issuance of shares of Common Stock, Options or Convertible Securities by reason of a stock split, split-up or other distribution on shares of Common Stock, (c) the issuance of shares of Common Stock or Options to employees or directors of, or consultants or advisors to, the Company or any of its Subsidiaries pursuant to a compensatory plan, agreement or arrangement approved by the Board (including the Company's 2015 Equity Incentive Plan currently in effect), (d) the issuance of shares of Common Stock or Convertible Securities upon the exercise of Options or upon the conversion or exchange of Convertible Securities, in each case, provided such issuance is pursuant to the terms of such Option or Convertible Security, or (e) the issuance of shares of Common Stock, Options or Convertible Securities in connection with any merger, consolidation, acquisition or as bona fide payment for services.

 

(aa)        "General Notice" shall have the meaning set forth in Section 4.2.

 

(bb)        "Governmental Entity" shall mean any nation or government or any agency, public or regulatory authority, instrumentality, department, commission, court, arbitrator, ministry, tribunal or board of any nation or any government or political subdivision thereof, in each case, whether national, federal, tribal, provincial, state, regional, local or municipal, or any self-regulatory organization, including any stock exchange.

 

(cc)        "Holder Indemnitees" shall have the meaning set forth in Section 3.6(a).

 

(dd)       "Holders" shall mean Investor and any permitted transferee of Registrable Securities.

 

(ee)        "indemnified party" shall have the meaning set forth in Section 3.6(c).

 

(ff)          "indemnifying party" shall have the meaning set forth in Section 3.6(c).

 

(gg)        "Investment Agreement" shall have the meaning set forth in the Recitals.

 

(hh)        "Investor" shall have the meaning set forth in the Preamble.

 

(ii)          "Investor Designee" shall have the meaning set forth in Section 2.1.

 

(jj)          "Investor's Proportionate Share" shall have the meaning set forth in Section 4.2(b).

 

(kk)        "Issuer Free Writing Prospectus" means an issuer free writing prospectus, as defined in Rule 433 under the Securities Act, relating to an offer of the Registrable Securities.

 

(ll)          "Law" shall mean any statute, law, code, ordinance, rule or regulation, constitution, treaty, common law, judgment, settlement, decree or other legal enforceable requirement or rule of law of any Governmental Entity.

 

 -3-

 

(mm)       "Lenders" shall have the meaning set forth in the Recitals.

 

(nn)        "Losses" shall have the meaning set forth in Section 3.6(a).

 

(oo)        "Option" shall mean any right, option or warrant to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

 

(pp)        "Other Securities" shall mean shares of equity securities of the Company other than Registrable Securities.

 

(qq)        "Parties" shall mean the parties to this Agreement.

 

(rr)          "Party" shall mean either one of the Parties to this Agreement.

 

(ss)         "Person" shall mean an individual, corporation, partnership, limited liability company, association, trust, unincorporated organization, entity or group.

 

(tt)           "Piggyback Notice" shall have the meaning set forth in Section 3.1(f).

 

(uu)         "Piggyback Registration" shall have the meaning set forth in Section 3.1(f).

 

(vv)         "Prospectus" shall mean the prospectus included in any Registration Statement (including a prospectus that discloses information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement, any Issuer Free Writing Prospectus related thereto, and all other amendments and supplements to such prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such prospectus.

 

(ww)       "Majority of the Shares" shall mean shares of capital stock (including securities convertible into capital stock) representing, in the aggregate, the right to cast at least a majority of the votes entitled to be cast for the election of directors of the Company.

 

(xx)          "Registrable Securities" means (i) any shares of the Company Beneficially Owned by Investor acquired on or at any time after the date of this Agreement, (ii) Common Stock issued or issuable upon redemption or exchange of preferred stock of the Company, if any, (iii) any shares of Common Stock acquired by Investor and Beneficially Owned by Investor acquired on or at any time after the date of this Agreement and (iv) any securities issued directly or indirectly with respect to such shares described in clauses (i), (ii) or (iii) because of stock splits, stock dividends, reclassifications, mergers, consolidations, or similar events.  As to any particular Registrable Securities, once issued such securities shall cease to be Registrable Securities when (i) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such Registration Statement, (ii) such securities shall have been sold pursuant to Rule 144 (or any successor provision) under the Securities Act or could be sold in a single day pursuant to Rule 144 without volume, manner of sale or other limitations; (iii) such securities are

 

 -4-

 

no longer held by a person or entity other than the Company or any of its Subsidiaries; or (iv) such securities are no longer outstanding.

 

(yy)        "Registration Statement" means any registration statement of the Company under the Securities Act which permits the public offering of any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

 

(zz)         "Representatives" shall have the meaning set forth in Section 8.1(b).

 

(aaa)      "Requested Registrable Securities" shall have the meaning set forth in Section 3.1(c).

 

(bbb)     "Rule 144" means Rule 144 under the Securities Act, as such rule may be amended from time to time, or any successor rule that may be promulgated by the SEC.

 

(ccc)      "Rule 144A" means Rule 144A under the Securities Act, as such rule may be amended from time to time, or any successor rule that may be promulgated by the SEC.

 

(ddd)     "SEC" shall mean the United States Securities and Exchange Commission.

 

(eee)      "Securities Act" shall mean the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated by the SEC from time to time thereunder.

 

(fff)        "Selling Holder" shall mean each Holder of Registrable Securities included in a registration pursuant to Article III.

 

(ggg)     "Shares" shall have the meaning set forth in the Recitals.

 

(hhh)     "Short-Form Registration" shall have the meaning set forth in Section 3.1(f).

 

(iii)         "Standstill End Date" shall mean the earliest to occur of (i) August 31, 2020, (ii) the date that any Person or Persons unaffiliated with Investor commences an unsolicited tender offer or exchange offer for a Majority of the Shares, (iii) the date on which the Company enters into a definitive agreement with any Person or Persons unaffiliated with Investor (or the Company or any of its Affiliate publicly announces its intention to enter into any such agreement), involving a change-of-control transaction where the stockholders of the Company, as of immediately prior to such change-of-control transaction, cease to Beneficially Own, directly or indirectly, at least 50% of the Common Stock (whether by means of a merger, sale of equity, sale of assets or otherwise), and (iv) the date on which the Company or any of its affiliates becomes insolvent, files for bankruptcy or reorganizes in connection with a bankruptcy or insolvency proceeding.

 

(jjj)         "Standstill Period" shall mean the period from and after the Effective Date until the Standstill End Date.

 

 -5-

 

(kkk)      "Subsidiary" shall mean, with respect to any Person, any other Person of which the first Person owns, directly or indirectly, securities or other ownership interests having voting power to elect a majority of the board of directors or other persons performing similar functions (or, if there are no such voting interests, more than 50% of the equity interests of the second Person).

 

(lll)         "WKSI" has the meaning set forth in Section 3.4.

 

ARTICLE II

 CORPORATE GOVERNANCE

 

Section 2.1          Composition of the Board.  From and after the Effective Date and for so long as the Investor, together with its Affiliates, Beneficially Owns at least 50% of the Shares (or, if, following the date of this Agreement, the Company shall engage in a reverse stock split, combine or otherwise reclassify the Shares or otherwise change the Shares into any other securities, then such securities as may outstanding as the result of such change), the Company shall take all actions necessary to appoint one designee of Investor (the "Investor Designee"), who shall initially be David Gallagher, to the Board promptly after the Effective Date, as a director of the Company upon review by the Company of a Directors & Officer's Questionnaire, which shall be the form that has been used by the Company historically (the "D&O Questionnaire") to be completed by him to conclude that no disclosure would be required under subclauses (2) through (8) of clause (f) of Section 401 of Regulation S-K promulgated under the Securities Act ("401(f) Disclosure").  Such actions shall include, but are not limited to, increasing the size of the Board to eight (8) directors (or such number of directors as is necessary or otherwise required to accommodate the Investor Designee becoming a member of the Board), or replacing an existing director with the Investor Designee, and causing the Investor Designee to be included in the slate of nominees recommended by the Board to the Company's stockholders for election as director at the Company's next annual meeting of the stockholders of the Company (which next annual meeting shall take place no later than August 31, 2019) and for reelection at every annual meeting thereafter at which directors are to be elected.  The Company shall use its best efforts to cause the election of the Investor Designee (but not greater efforts than used for the Company's other nominees).

 

Section 2.2          Replacement of Investor Designee.  From and after the Effective Date and for so long as the Investor, together with its Affiliates, Beneficially Owns at least 50% of the Shares (or, if, following the date of this Agreement, the Company shall engage in a reverse stock split, combine or otherwise reclassify the Shares or otherwise change the Shares into any other securities, then such securities as may outstanding as the result of such change), if the Investor Designee has resigned, died, or is otherwise unable to serve as director for any reason, the Investor shall designate an individual to be a replacement for such Investor Designee, who shall be reasonably acceptable to the Company (it being agreed that any Investor Designee that is either (a) a member, partner, director, officer or employee of Investor or Investor's Affiliates, or (b) another individual who qualifies as "independent" pursuant to New York Stock Exchange listing standards (other than any standards that take into account ownership of any shares of the Common Stock or other securities of the Company) shall be acceptable to the Company) in each case so long as (i) such replacement completes a D&O Questionnaire which is delivered to the Company and (ii) no 401(f) Disclosure will be required with respect to such replacement, and the

 

 -6-

 

Company, upon receiving written notice of the name of such replacement Investor Designee, shall cause such replacement Investor Designee to be installed in office in replacement of such former Investor Designee within fifteen (15) Business Days of the later of the Company's receipt of such written notice and a completed D&O Questionnaire from such replacement.

 

Section 2.3          Voting Agreement.  Investor agrees that, during the Standstill Period, it shall vote, or cause to be voted, in any vote of the stockholders of the Company, all shares of Common Stock Beneficially Owned by Investor as directed by the Board with respect to the election of directors and other matters that are considered "routine" under New York Stock Exchange Rule 452 pursuant to which a broker may vote shares on behalf of its clients without specific voting instructions from its clients.

 

ARTICLE III

 REGISTRATION RIGHTS

 

Section 3.1          Demand Registrations.

 

(a)          At any time and from time to time during the Effective Period, a Holder or group of Holders that Beneficially Owns a number of shares of Common Stock representing not less than ten percent (10%) of the Common Stock shall have the right by delivering a written notice to the Company (a "Demand Notice") to require the Company to, pursuant to the terms of this Agreement, register under and in accordance with the provisions of the Securities Act the number of Registrable Securities Beneficially Owned by Holders and requested by such Demand Notice to be so registered (a "Demand Registration").  A Demand Notice shall also specify the expected method or methods of disposition of the applicable Registrable Securities.  As promptly as practicable, but no later than seven (7) Business Days after receipt of a Demand Notice, the Company shall give written notice of such Demand Notice to all Holders of record of Registrable Securities.

 

(b)          Following receipt of a Demand Notice, the Company shall use its commercially reasonable efforts to file, as promptly as reasonably practicable, but not later than 30 days after receipt by the Company of such Demand Notice, a Registration Statement (including, without limitation, on Form S-1, Form F-1, Form S-3 or Form F-3 (or any comparable or successor form or forms or any similar long-form or short-form registration) by means of a shelf registration pursuant to Rule 415 under the Securities Act, if so requested and the Company is then eligible to use such a registration and if there is no then-currently effective shelf registration statement on file with the SEC which registers or is capable of registering without a post-effective amendment all the Registrable Securities requested to be registered) relating to the offer and sale of the Registrable Securities requested to be included therein by the initial requesting Holder and any other Holder of Registrable Securities that shall have made a written request to the Company for inclusion in such registration (which request shall specify the maximum number of Registrable Securities intended to be disposed of by such Holder) within 20 days after the receipt of the Demand Notice, in accordance with the method or methods of disposition of the applicable Registrable Securities elected by such Holders, and the Company shall use its commercially reasonable efforts to cause such Registration Statement to be declared effective under the Securities Act as promptly as practicable after the filing thereof. Notwithstanding anything

 

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contained herein, the Company shall not be required to file a registration statement unless the required financial statements are available.

 

(c)          If any of the Registrable Securities registered pursuant to a Demand Registration are to be sold in a firm commitment underwritten offering, and the managing underwriter(s) of such underwritten offering advise the Holders in writing that it is their good faith opinion that the total number or dollar amount of Registrable Securities proposed to be sold in such offering exceeds the total number or dollar amount of such securities that can be sold without having an adverse effect on the amount, price, timing or distribution of the Registrable Securities to be so included, then there shall be included in such offering the number or dollar amount of Registrable Securities that in the good faith opinion of such managing underwriter(s) can be sold without so adversely affecting such offering, and such number of Registrable Securities shall be allocated for inclusion as follows:  (i), first, the Registrable Securities for which inclusion in such demand offering was requested by the Investor and (ii) second, the Registrable Securities for which inclusion in such demand offering was requested by the other Holders (collectively, the "Requested Registrable Securities"), in each case, pro rata (if applicable), based on the number of Registrable Securities Beneficially Owned by the Investor and each such Holder.

 

(d)          The Holders collectively shall be entitled to request no more than four (4) Demand Registrations on the Company, except that if Holders other than the Investor request Demand Registrations that the Investor does not participate in, the Investor shall be entitled to a request an additional Demand Registration and in no event shall the Company be required to effect more than one Demand Registration in any six month period.

 

(e)          In the event of a Demand Registration, the Company shall be required to maintain the continuous effectiveness of the applicable Registration Statement for a period of at least 180 days after the effective date thereof or such shorter period in which all Registrable Securities included in such Registration Statement have actually been sold, except that if the Company is requested to file a shelf registration pursuant to Rule 415 of the Securities Act it shall be required to maintain the continuous effectiveness of such Registration Statement until all Registrable Securities initially covered thereby are no longer Registrable Securities.

 

(f)          Within sixty (60) days of becoming eligible to file a Form S-3 or Form F-3 or any comparable or successor form or forms or any similar short-form registration (including pursuant to Rule 415 under the Securities Act) ("Short-Form Registration"), the Company shall file a shelf registration statement on such form providing for the registration of, and the sale on a continuous or delayed basis of all of the Registrable Securities, pursuant to Rule 415 under the Securities Act, to permit the distribution of the Registrable Securities.  Upon filing a Short Form Registration, through the end of the Effective Period, the Company will use its commercially reasonable efforts to keep such Short-Form Registration effective with the SEC at all times and to refile such Short-Form Registration upon its expiration (if such expiration occurs prior to the end of the Effective Period), and to cooperate in any shelf take down by amending or supplementing the prospectus statement related to such Short-Form Registration as may reasonably be requested by the Holders or as otherwise required.

 

Section 3.2          Piggyback Registrations.

 

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(a)          If, at any time during the Effective Period, the Company (other than pursuant to Section 3.1) proposes or is required to file a registration statement under the Securities Act with respect to an offering of Common Stock or other equity securities, whether or not for sale for its own account (other than a registration statement (i) on Form S-4, Form S-8 or any successor forms thereto, (ii) filed solely in connection with any employee benefit or dividend reinvestment plan or (iii) pursuant to a Demand Registration in accordance with Section 3.1 hereof), in a manner that would permit registration of Registrable Securities for sale to the public under the Securities Act, then the Company shall use commercially reasonable efforts to give written notice of such proposed filing at least 30 days before the anticipated filing date (the "Piggyback Notice") to the Holders.  The Piggyback Notice shall offer the Holders the opportunity to include in such registration statement the number of Registrable Securities as they may request (a "Piggyback Registration").  Subject to Section 3.2(b) hereof, the Company shall use its commercially reasonable efforts to include in each such Piggyback Registration all Registrable Securities with respect to which the Company has received from any Holder written requests for inclusion therein within 15 days following receipt of any Piggyback Notice by such Holder, which request shall specify the maximum number of Registrable Securities intended to be disposed of by such Holder and the intended method of distribution thereof.  The Holders shall be permitted to withdraw all or part of the Registrable Securities from a Piggyback Registration at any time at least two (2) Business Days prior to the effective date of the Registration Statement relating to such Piggyback Registration.  The Company shall be required to maintain the effectiveness of the Registration Statement for a Piggyback Registration for a period of 180 days after the effective date thereof or such shorter period in which all Registrable Securities included in such Registration Statement have actually been sold.  No Piggyback Registration shall count towards registrations required under Section 3.1.

 

(b)          If any of the securities to be registered pursuant to the registration giving rise to the Holders' rights under this Section 3.2 are to be sold in an underwritten offering, the Holders shall be permitted to include all Registrable Securities requested to be included in such registration in such offering on the same terms and conditions as any Other Securities included therein; provided, however, that if such offering involves a firm commitment underwritten offering and the managing underwriter(s) of such underwritten offering advise the Company in writing that it is their good faith opinion that the total amount of Registrable Securities requested to be so included, together with all Other Securities that the Company and any other Persons having rights to participate in such registration intend to include in such offering, exceeds the total number or dollar amount of such securities that can be sold without having an adverse effect on the price, timing or distribution of the Registrable Securities to be so included together with all Other Securities, then there shall be included in such firm commitment underwritten offering the number or dollar amount of Registrable Securities and such Other Securities that in the good faith opinion of such managing underwriter(s) can be sold without so adversely affecting such offering, and such number of Registrable Securities and Other Securities shall be allocated for inclusion as follows:

 

(i)          first, all Other Securities being sold by the Company, in the case of a registration initiated by the Company, or by any Person (other than a Holder), in the case of a registration initiated by such Person, exercising a contractual right to demand registration;

 

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(ii)          second, all Registrable Securities requested to be included by the Holders, pro rata (if applicable), based on the number of Registrable Securities Beneficially Owned by each such Holder; and

 

(iii)          third, all Other Securities being sold by the Company (in the case of a registration in response to the exercise of Demand Registration other than by a Holder) or, in the case of a Company initiated registration, among any other holders of Other Securities requesting such registration, pro rata, based on the number of Other Securities Beneficially Owned by each such holder of Other Securities.

 

Section 3.3          Lock-Up Agreements.

 

(a)          Each Holder agrees, in connection with any underwritten offering made during the Effective Period pursuant to a Registration Statement filed pursuant to this Article III in which such Holder has elected to include Registrable Securities, if requested (pursuant to a written notice) by the managing underwriter(s), not to effect any public sale or distribution of any preferred stock or Common Stock of the Company (or securities redeemable for or convertible into or exchangeable or exercisable for such equity securities, in each case other than preferred stock) (except as part of such underwritten offering) during the period commencing not earlier than seven (7) days prior to and continuing for not more than ninety (90) days (or such shorter period as the managing underwriter(s) may permit) after the effective date of the related Registration Statement (or a Prospectus supplement if the offering is made pursuant to a "shelf" registration) pursuant to which such underwritten offering shall be made; provided, that such Holders shall only be so bound so long as and to the extent that each (i) other stockholder having registration rights with respect to the securities of the Company and (ii) executive officer of the Company is similarly bound.

 

(b)          With respect to each underwritten offering of Registrable Securities covered by a registration pursuant to Section 3.1, the Company agrees not to effect any public sale or distribution, or to file any registration statement (other than (x) any such registration statement required under Section 3.1 or (y) a registration statement (i) on Form S-4, Form S-8 or any successor forms thereto or (ii) filed solely in connection with any employee benefit or dividend reinvestment plan) covering any of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the period commencing not earlier than seven (7) days prior to and continuing for not more than ninety (90) days (or such shorter period as the managing underwriter(s) may permit) after the effective date of the related registration statement (or a Prospectus supplement if the offering is made pursuant to a "shelf" registration) pursuant to which such underwritten offering of Registrable Securities shall be made, in each case, as may be requested by the managing underwriter for such offering.

 

Section 3.4          Registration Procedures.  If and whenever the Company is required to use its commercially reasonable efforts to effect the registration of any Registrable Securities under the Securities Act as provided in Article III, the Company shall effect such registration to permit the sale of such Registrable Securities in accordance with the intended method or methods of disposition thereof, and pursuant thereto the Company shall cooperate in the sale of the securities and shall, as expeditiously as possible:

 

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(a)          Prepare and file with the SEC a Registration Statement or Registration Statements on such form which shall be available for the sale of the Registrable Securities by the Holders or the Company in accordance with the intended method or methods of distribution thereof, and use its commercially reasonable efforts to cause such Registration Statement to become effective and to remain effective as provided herein; provided, however, that before filing a Registration Statement or Prospectus or any amendments or supplements thereto (including documents that would be incorporated or deemed to be incorporated therein by reference), the Company shall furnish or otherwise make available to the Selling Holders, their counsel and the managing underwriter(s), if any, copies of all such documents proposed to be filed (including all exhibits thereto), which documents will be subject to the reasonable review and comment of such counsel, and such other documents reasonably requested by such counsel, including any comment letter from the SEC.

 

(b)          Prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement continuously effective during the period provided herein and comply in all material respects with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement, and cause the related Prospectus to be supplemented by any Prospectus supplement or Issuer Free Writing Prospectus as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of the securities covered by such Registration Statement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act.

 

(c)          Notify each Selling Holder and the managing underwriter(s), if any, promptly, and (if requested by any such Person) confirm such notice in writing, (i) when a Registration Statement, Prospectus or any Prospectus supplement, Issuer Free Writing Prospectus or post-effective amendment has been filed, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC or any other Governmental Entity for amendments or supplements to a Registration Statement or related Prospectus or Issuer Free Writing Prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose, and (v) of the existence of any fact of which the Company becomes aware that makes any statement made in such Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference or any Issuer Free Writing Prospectus related thereto untrue in any material respect or that requires the making of any changes in such Registration Statement, Prospectus, documents or Issuer Free Writing Prospectus so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, not misleading, and that in the case of any Prospectus or Issuer Free Writing Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

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(d)          Use its best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction at the reasonably earliest practical date.

 

(e)          Furnish or make available to each Selling Holder, and each managing underwriter, if any, without charge, such number of conformed copies of the Registration Statement and each post-effective amendment thereto, including financial statements (but excluding schedules, all documents incorporated or deemed to be incorporated therein by reference, and all exhibits, unless requested in writing by such Holder, counsel or managing underwriter(s)), and such other documents, as such Holders or such managing underwriter(s) may reasonably request, and upon request a copy of any and all transmittal letters or other correspondence to or received from, the SEC or any other Governmental Entity relating to such offering.

 

(f)          Deliver to each Selling Holder, and the managing underwriter(s), if any, without charge, as many copies of the Prospectus or Prospectuses (including each form of Prospectus and any Issuer Free Writing Prospectus related to any such Prospectuses) and each amendment or supplement thereto as such Persons may reasonably request in connection with the distribution of the Registrable Securities; and the Company, subject to the last paragraph of this Section 3.4, hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the Selling Holders and the managing underwriter(s), if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any such amendment or supplement thereto.

 

(g)          Prior to any public offering of Registrable Securities, use its commercially reasonable efforts to register or qualify or cooperate with the Selling Holders, the managing underwriter(s), if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or "Blue Sky" laws of such jurisdictions within the United States as any seller or managing underwriter(s) reasonably requests in writing and to keep each such registration or qualification (or exemption therefrom) effective during the period such Registration Statement is required to be kept effective and to take any other action that may be necessary or advisable to enable such Selling Holders to consummate the disposition of such Registrable Securities in such jurisdiction; provided, however, that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject.

 

(h)          Cooperate with the Selling Holders and the managing underwriter(s), if any, to facilitate the timely preparation and delivery of certificates (not bearing any legends) representing Registrable Securities to be sold after receiving written representations from each Selling Holder that the Registrable Securities represented by the certificates so delivered by such Selling Holder will be transferred in accordance with the Registration Statement, and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriter(s), if any, or the Selling Holders may request at least two (2) Business Days prior to any sale of Registrable Securities.

 

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(i)          Use its commercially reasonable efforts to cause the Registrable Securities covered by the Registration Statement to be registered with or approved by such other Governmental Entities within the United States, except as may be required solely as a consequence of the nature of such Selling Holder's business, in which case the Company will cooperate in all reasonable respects with the filing of such Registration Statement and the granting of such approvals, as may be necessary to enable the seller or sellers thereof or the managing underwriter(s), if any, to consummate the disposition of such Registrable Securities.

 

(j)          Subject to Section 3.10, as soon as practicable after the occurrence of any event contemplated by Section 3.4(c)(ii), (c)(iii), (c)(iv) or (c)(v) above, prepare a supplement or post-effective amendment to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference or an Issuer Free Writing Prospectus related thereto, or file any other required document so that, as thereafter delivered to the Selling Holders, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(k)          Enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings) and take all such other actions reasonably requested by the Holders of a majority of the Registrable Securities being sold in connection therewith or by the managing underwriter(s), if any, to expedite or facilitate the disposition of such Registrable Securities, and in connection therewith, whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten registration, (i) make such representations and warranties to the Selling Holders and the managing underwriter(s), if any, with respect to the business of the Company and its Subsidiaries, and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers in underwritten offerings, and, if true, confirm the same if and when requested, (ii) use its commercially reasonable efforts to furnish to the Selling Holders of such Registrable Securities opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriter(s), if any, and counsel to the Selling Holders of the Registrable Securities), addressed to each Selling Holder of Registrable Securities and each of the managing underwriter(s), if any, covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such counsel and managing underwriter(s), (iii) use its commercially reasonable efforts to obtain "cold comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any Subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement) who have certified the financial statements included in such Registration Statement, addressed to each Selling Holder of Registrable Securities (unless such accountants shall be prohibited from so addressing such letters by applicable standards of the accounting profession) and each of the managing underwriter(s), if any, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings, (iv) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures substantially to the effect set forth in Section 3.6 hereof with respect

 

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to all parties to be indemnified pursuant to said Section and (v) deliver such documents and certificates as may be reasonably requested by the Holders, their counsel and the managing underwriter(s), if any, to evidence the continued validity of the representations and warranties made pursuant to clause (i) above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company.  The above shall be done at each closing under such underwriting or similar agreement, or as and to the extent required thereunder.

 

(l)          Upon execution of a customary confidentiality agreement (in the case of the Selling Holders only), make available for inspection by a representative of the Selling Holders, the managing underwriter(s), if any, and any attorneys or accountants retained by such Selling Holders or managing underwriter(s), at the offices where normally kept, during reasonable business hours, financial and other records, pertinent corporate documents and properties of the Company and its Subsidiaries, and cause the officers, directors and employees of the Company and its Subsidiaries to supply all information in each case reasonably requested by any such representative, managing underwriter(s), attorney or accountant in connection with such Registration Statement.

 

(m)          Cause its officers to use their commercially reasonable efforts to support the marketing of the Registrable Securities covered by the Registration Statement (including, without limitation, by participation in up to an aggregate of four (4) "road shows") taking into account the Company's business needs.

 

(n)          Otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the SEC and any applicable national securities exchange, and make available to its security holders, as soon as reasonably practicable (but not more than eighteen (18) months) after the effective date of the Registration Statement, an earnings statement which shall satisfy the provisions of Section 11(a) of the Securities Act.

 

(o)          Take all reasonable action to ensure that any Issuer Free Writing Prospectus utilized in connection with any registration covered by Section 3.1 or 3.2 complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related Prospectus, Prospectus supplement and related documents, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(p)          Promptly incorporate in a Prospectus supplement or post-effective amendment to the applicable registration statement such information as the lead underwriter or underwriters, if any, and the Selling Holders holding a majority of each class of Registrable Securities being sold agree (with respect to the relevant class) should be included therein relating to the plan of distribution with respect to such class of Registrable Securities; and make all required filings of such Prospectus supplement or post-effective amendment as promptly as reasonably practicable after being notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment.

 

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(q)          Cooperate with each Selling Holder and each underwriter or agent, if any, participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA.

 

(r)          Use its best efforts to cause all such Registrable Securities registered pursuant to such Registration Statement to be listed and remain on each securities exchange and automated interdealer quotation system on which identical securities issued by the Company are then listed.

 

(s)          Provide a transfer agent and registrar for all Registrable Securities registered pursuant to such Registration Statement a CUSIP number for all such Registrable Securities, in each case not later than the effective date of the applicable Registration Statement.

 

(t)          Use its best efforts to take all other steps necessary to effect the registration of Registrable Securities contemplated hereby.

 

To the extent the Company is a well-known seasoned issuer (as defined in Rule 405 under the Securities Act) (a "WKSI") at the time any Demand Registration request is submitted to the Company, and such Demand Registration request requests that the Company file an automatic shelf registration statement (as defined in Rule 405 under the Securities Act) (an "automatic shelf registration statement") on Form S-3, the Company shall file an automatic shelf registration statement which covers those Registrable Securities which are requested to be registered.  Subject to Section 3.5, if the automatic shelf registration statement has been outstanding for at least three years, at the end of the third year the Company shall, upon written request by the Holders, refile a new automatic shelf registration statement covering the Registrable Securities, if there are any remaining Registrable Securities covered thereunder.  If at any time when the Company is required to re-evaluate its WKSI status the Company determines that it is not a WKSI, the Company shall use its commercially reasonable efforts to refile the shelf registration statement on Form S-3 and keep such registration statement effective during the period during which such registration statement is required to be kept effective.

 

The Company may require each Selling Holder to furnish to the Company in writing such customary information required in connection with such registration regarding such Selling Holder and the distribution of such Registrable Securities as the Company may, from time to time, reasonably request in writing and the Company may exclude from such registration the Registrable Securities of any Selling Holder who unreasonably fails to furnish such information within a reasonable time after receiving such request.

 

Each Selling Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.4(c)(ii), (c)(iii), or (c)(v) hereof, such Holder will forthwith discontinue disposition of such Registrable Securities covered by such Registration Statement or Prospectus until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3.4(j) hereof, or until it is advised in writing by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus; provided, however, that the Company shall extend the time periods under Section 3.1 and Section 3.2 with respect to the length of time that the

 

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effectiveness of a Registration Statement must be maintained by the amount of time the Holder is required to discontinue disposition of such securities.

 

Section 3.5          [RESERVED].

 

Section 3.6          Indemnification.

 

(a)          Indemnification by the Company.  The Company shall indemnify and hold harmless, to the fullest extent permitted by Law, each Selling Holder whose Registrable Securities are covered by a Registration Statement or Prospectus, the officers, directors, partners (limited and general), members, managers, shareholders, accountants, attorneys, agents and employees of each of them, each Person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) each such Selling Holder and the officers, directors, partners (limited and general), members, managers, shareholders, accountants, attorneys, agents and employees of each such controlling Person, each underwriter (including any Holder that is deemed to be an underwriter pursuant to any SEC comments or policies), if any, and each Person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) such underwriter (collectively, "Holder Indemnitees"), from and against any and all losses, claims, damages, liabilities, expenses (including, without limitation, costs of preparation and reasonable attorneys' fees and any other reasonable fees or expenses incurred by such party in connection with any investigation or Action), judgments, fines, penalties, charges and amounts paid in settlement (collectively, "Losses"), as incurred, arising out of or based upon (i) any untrue statement (or alleged untrue statement) of a material fact contained in any applicable Registration Statement, any document incorporated by reference therein or any other offering circular, amendment of or supplement to any of the foregoing or other document incident to any such registration, qualification, or compliance, or the omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement (or alleged untrue statement) of a material fact contained in any preliminary or final Prospectus, any document incorporated by reference therein or any Issuer Free Writing Prospectus, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (iii) any violation by the Company of any Law applicable in connection with any such registration, qualification, or compliance; provided, that the Company will not be liable to a Selling Holder or underwriter, as the case may be, in any such case to the extent that any such Loss arises out of or is based on any untrue statement or omission by such Selling Holder or underwriter, as the case may be, but only to the extent that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement (or in any preliminary or final Prospectus contained therein, any document incorporated by reference therein or Issuer Free Writing Prospectus related thereto), offering circular, amendment of or supplement to any of the foregoing or other document in reliance upon and in conformity with written information furnished to the Company by such Selling Holder or underwriter for inclusion in such document; and provided, further, that the Company will not be liable to any Person who participates as an underwriter in any underwritten offering or sale of Registrable Securities, or to any Person who is a Selling Holder in any non-underwritten offering or sale of Registrable Securities, or any other Person, if any, who controls such underwriter or Selling Holder within the meaning of the Securities Act, under the indemnity agreement in this

 

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Section 3.6 with respect to any preliminary Prospectus or the final Prospectus (including any amended or supplemented preliminary or final Prospectus), as the case may be, to the extent (i) that any such loss, claim, damage or liability of such underwriter, Selling Holder or controlling Person results from the fact that such underwriter or Selling Holder sold Registrable Securities to a Person to whom there was not sent or given (if at such time a Prospectus is required to be delivered under the Securities Act), at or prior to the written confirmation of such sale, a copy of the final Prospectus as then amended or supplemented, whichever is most recent, if the Company has previously furnished copies thereof to such underwriter or Selling Holder and such final Prospectus, as then amended or supplemented, has corrected any such misstatement or omission or (ii) sales were made during a Blackout Period.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any Holder Indemnitee or any other Holder and shall survive the transfer of such securities.  The foregoing indemnity agreement is in addition to any liability that the Company may otherwise have to each Holder Indemnitee.

 

(b)          Indemnification by Selling Holders.  In connection with any Registration Statement in which a Selling Holder is participating by registering Registrable Securities, such Selling Holder agrees, severally but not jointly, to indemnify and hold harmless, to the fullest extent permitted by Law, the Company, the officers and directors of the Company, and each Person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) the Company, and each underwriter, if any, and each Person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) such underwriter (collectively, "Company Indemnitees"), from and against any and all Losses, as incurred, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such Registration Statement (or in any preliminary or final Prospectus contained therein, any document incorporated by reference therein or Issuer Free Writing Prospectus related thereto) or any other offering circular or any amendment of or supplement to any of the foregoing or any other document incident to such registration, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a final or preliminary Prospectus, in light of the circumstances under which they were made) not misleading, in each case solely to the extent that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such Registration Statement (or in any preliminary or final Prospectus contained therein, any document incorporated by reference therein or Issuer Free Writing Prospectus related thereto), offering circular, or any amendment of or supplement to any of the foregoing or other document in reliance upon and in conformity with written information furnished to the Company by such Selling Holder for inclusion in such document.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any of its directors, officers or controlling Persons.  The Company may require as a condition to its including Registrable Securities in any Registration Statement filed hereunder that the holder thereof acknowledge its agreement to be bound by the provisions of this Agreement (including Section 3.6) applicable to it.

 

(c)          Conduct of Indemnification Proceedings.  If any Person shall be entitled to indemnity hereunder (an "indemnified party"), such indemnified party shall give prompt notice to the party from which such indemnity is sought (the "indemnifying party") of any claim or of the commencement of any Action with respect to which such indemnified party seeks

 

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indemnification or contribution pursuant hereto; provided, however, that the delay or failure to so notify the indemnifying party shall not relieve the indemnifying party from any obligation or liability except to the extent that the indemnifying party has been actually, materially and economically prejudiced by such delay or failure.  The indemnifying party shall have the right, exercisable by giving written notice to an indemnified party promptly after the receipt of written notice from such indemnified party of such claim or Action, to assume, at the indemnifying party's expense, the defense of any such Action, with counsel reasonably satisfactory to such indemnified party; provided, however, that an indemnified party shall have the right to employ separate counsel in any such Action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless:  (i) the indemnifying party agrees to pay such fees and expenses; (ii) the indemnifying party fails promptly to assume, or in the event of a conflict of interest cannot assume, the defense of such Action or fails to promptly employ counsel reasonably satisfactory to such indemnified party, in which case the indemnified party shall also have the right to employ counsel; or (iii) in the indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist in respect of such Action; provided, further, however, that the indemnifying party shall not, in connection with any one such Action or separate but substantially similar or related Actions in the same jurisdiction, arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one firm of attorneys (together with appropriate local counsel) at any time for all of the indemnified parties, or for fees and expenses that are not reasonable.  Whether or not such defense is assumed by the indemnifying party, such indemnified party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld or delayed).  The indemnifying party shall not consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by all claimants or plaintiffs to such indemnified party of a release, in form and substance reasonably satisfactory to the indemnified party, from all liability in respect of such claim or litigation.  Each indemnified party shall furnish such information regarding itself or the claim in question as an indemnifying party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim and litigation therefrom.

 

(d)          Contribution.

 

(i)          If the indemnification provided for in this Section 3.6 is unavailable to an indemnified party in respect of any Losses (other than in accordance with its terms), then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and such indemnified party, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations.  The relative fault of such indemnifying party, on the one hand, and indemnified party, on the other hand, shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been taken by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent any such action, statement or omission.

 

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(ii)          The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 3.6(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph.

 

(iii)          No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

 

Section 3.7          Rule 144.  The Company covenants that it will timely file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Holder, use commercially reasonable efforts to make publicly available other information which would permit sales pursuant to Rule 144 under the Securities Act or any similar rules or regulations hereafter adopted by the SEC), and it will use commercially reasonable efforts to take such further action as any Holder may reasonably request to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the SEC.

 

Section 3.8          Underwritten Registrations.

 

(a)          If any offering of Registrable Securities pursuant to any Demand Registration or shelf registration is an underwritten offering, the Company and the Holders holding a majority of the Registrable Securities to be sold in such offering, shall mutually select the investment bank or investment banks and managers marketing the offering; provided, that the Company shall propose the names of three nationally recognized investment banks to serve as the lead underwriter for any such offering and the Holders holding a majority of the Registrable Securities to be sold in such offering shall have the right to select as lead underwriter one of the three proposed investment banks.  The Company shall have the right to select the investment bank or investment banks and managers to market any incidental or Piggyback Registration.

 

(b)          No Person may participate in any underwritten registration hereunder unless such Person (i) agrees to sell the Registrable Securities or Other Securities it desires to have covered by the registration on the basis provided in any underwriting arrangements in customary form (including pursuant to the terms of any over-allotment or "green shoe" option requested by the managing underwriter, provided that no such person will be required to sell more than the number of Registrable Securities that such Person has requested the Company to include in any registration), and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.

 

Section 3.9          Registration Expenses.  The Selling Holders shall pay, pro rata based on Registered Securities sold in the offering, all fees, disbursements and commissions of any investment bank or investment banks and managers (including in any underwritten offering, the cost of all underwriting discounts and selling commissions and similar fees applicable to the sale

 

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of such securities) and except as noted in the following sentence, fees and expenses of legal counsel for any Holder and all transfer taxes, if any.  The Company shall pay all reasonable documented expenses incident to the Company's performance of or compliance with its obligations under this Article III, including, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the SEC, all applicable securities exchanges and/or the Financial Industry Regulatory Authority and (B) of compliance with securities or Blue Sky laws including any fees and disbursements of counsel for the underwriter(s) in connection with Blue Sky qualifications of the Registrable Securities), (ii) printing expenses, (iii) messenger, telephone and delivery expenses of the Company, (iv) fees and disbursements of counsel for the Company and one firm of counsel for all Holders in connection with each registration and offering, (v) expenses of the Company incurred in connection with any road show, and (vi) fees and disbursements of all independent certified public accountants (including, without limitation, the expenses of any "cold comfort" letters required by this Agreement) and any other Persons, including special experts retained by the Company.

 

Section 3.10          Blackout Periods.  With respect to any Registration Statement, or amendment or supplement thereto, whether filed or to be filed pursuant to this Agreement, if the Company shall determine, in its good faith judgment, that to maintain the effectiveness of such Registration Statement or file an amendment or supplement thereto (or, if no Registration Statement has yet been filed, to file such a Registration Statement) would (i) require the public disclosure of material non-public information concerning any transaction or negotiations involving the Company or any of its Subsidiaries that would materially interfere with such transaction or negotiations, (ii) require the public disclosure of material non-public information concerning the Company at a time when its directors and executive officers are restricted from trading in the Company securities or (iii) otherwise materially interfere with financing plans, acquisition activities or business activities of the Company, the Company may, for one or more reasonable periods (a "Blackout Period"), and in any event for not more than ninety (90) days per year in the aggregate and no more than three (3) times per year, notify the Holders whose sales of Registrable Securities are covered (or to be covered) by such Registration Statement (a "Blackout Notice") that such Registration Statement is unavailable for use (or will not be filed as requested).  Upon the receipt of any such Blackout Notice, during the Blackout Period set forth in such notice, the Holders shall forthwith discontinue use of the prospectus contained in any effective Registration Statement.

 

 

ARTICLE IV

 PRE-EMPTIVE RIGHTS

 

Section 4.1          Pre-Emptive Rights.  From and after the Effective Date and until such time as Investor, together with its Affiliates, owns less than 15% of the Common Stock then outstanding each time (a) the Company proposes to issue or sell any Common Stock (or any Options or Convertible Securities) of the Company ("Company Equity Securities") or (b) any Subsidiary of the Company proposes to offer for sale or issue equity to any Person other than (i) to a wholly-owned Subsidiary of the Company or the Company or (ii) sales approved by the Board of all of the common stock or equivalent thereof of a Subsidiary (together with Company

 

 -20-

 

 

Equity Securities, "Equity Securities"), in each case other than in an Excluded Transaction, the Company shall offer such Equity Securities to Investor equal to Investor's Proportionate Share (as hereinafter defined) at the same price and on substantially the same terms as the proposed sale in accordance with this Article IV.

 

Section 4.2          Procedures.

 

(a)          The Company shall deliver a written notice ("General Notice") to Investor stating (i) its intention to issue or sell Equity Securities other than in an Excluded Transaction, (ii) the number of such Equity Securities to be offered (iii) the price and terms upon which it intends to offer such Equity Securities and (iv) Investor's Proportionate Share of such offering.

 

(b)          By written notification received by the Company within ten (10) calendar days after Investor's receipt of the General Notice (the "Election Notice"), Investor may elect to purchase, at the price and on the terms specified in the General Notice, up to that portion of such Equity Securities that equals the proportion that (i) the number of shares of Common Stock then held by Investor bears to (ii) the total number of shares of Common Stock then outstanding (such proportion, "Investor's Proportionate Share").

 

Section 4.3          Limitations.  The rights provided in this Article IV shall not be applicable to Equity Securities issued in any Excluded Transaction.  In addition to the foregoing, the rights provided in this Article IV shall not be applicable with respect to Investor in any subsequent issuance or sale of Equity Securities if (a) at the time of such issuance or sale, Investor is not an "accredited investor," as that term is then defined in Rule 501(a) of the Securities Act, and (b) such issuance or sale of Equity Securities is otherwise being offered only to accredited investors.

 

ARTICLE V

 STANDSTILL & NON-DISPARAGEMENT

 

Section 5.1          Standstill.  Except with the Board's prior written consent, during the Standstill Period, Investor shall not, and shall cause each of its controlled Affiliates not to, directly or indirectly:

 

(a)          acquire any securities of the Company or any of its Subsidiaries of any class, series or tranche, or rights or options to acquire any such securities (collectively, "Company Securities") such that Investor, together with its Affiliates, Beneficially Owns more than 49% of the outstanding Common Stock, unless such acquisition occurs pursuant to the terms of an offer made by Investor to all holders of such class, series or tranche of Company Securities;

 

(b)          publicly propose or offer to engage in any merger, consolidation or other business combination transaction involving the Company, other than as permitted pursuant to clause (a) above; or

 

(c)          enter into any agreement or arrangement or transaction in order to engage in a "short sale" of any Company Security.

 

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Section 5.2          Non-Disparagement.  During the Standstill Period, neither Party shall, and shall cause each of their respective controlled Affiliates not to, directly or indirectly, publicly make any disparaging statement about the other Party or its Subsidiaries or any of their respective officers or directors that is reasonably foreseeable by the Person making such statement to cause reputational harm to the other Party, its Subsidiaries or any of their respective officers or directors; provided, however, the foregoing shall not prohibit a Party or its Affiliates or any of their respective officers or directors from (i) giving truthful statements in response a lawful subpoena or court order or as testimony in any legal or regulatory process or proceeding or (ii) filing any documents in any legal or regulatory process or proceeding as is required by Law.

 

ARTICLE VI

 REPRESENTATIONS

 

Section 6.1          Investor Representations.  Investor represents and warrants as follows:

 

(a)          Power and Authority.  Investor has all requisite corporate, limited liability company or other power and authority to execute, deliver and perform its obligations under this Agreement.  The execution, delivery and performance of this Agreement by the Investor have been duly authorized by all necessary action on the part of the Investor.

 

(b)          Binding Effect.  This Agreement has been duly executed and delivered by Investor and, assuming the due authorization, execution and delivery hereof by the Company, constitutes a legal, valid and binding obligation of the Investor, enforceable against the Investor in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar Laws of general application affecting or relating to the enforcement of creditors' rights generally and (ii) is subject to general principles of equity, whether considered in a proceeding at law or in equity (the "Bankruptcy and Equity Exception").

 

Section 6.2          Company Representations.  The Company represents and warrants as follows:

 

(a)          Power and Authority.  The Company has all necessary corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution, delivery and performance by the Company of this Agreement have been duly authorized and approved by the Board, and no other corporate action on the part of the Company is necessary to authorize the execution, delivery and performance by the Company of this Agreement.

 

(b)          Binding Effect.  This Agreement has been duly executed and delivered by the Company and, assuming due authorization, execution and delivery hereof by Investor, this Agreement constitutes, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject, as to enforceability, to the Bankruptcy and Equity Exception.

 

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ARTICLE VII

 TERMINATION

 

Section 7.1          Termination.  This Agreement may be terminated at any time by the mutual written consent of the Parties hereto.

 

Section 7.2          Effect of Termination.  From and after a termination in accordance with Section 7.1(a), this Agreement shall become null and void and of no further force and effect; provided, however, notwithstanding any such termination, Sections 8.2, 8.3, 8.8 and 8.13 shall continue in full force and effect indefinitely.  The termination of this Agreement shall not affect any rights or obligations that shall have arisen or accrued prior the date of such termination.

 

ARTICLE VIII

 MISCELLANEOUS

 

Section 8.1          Announcements.  Neither the Company nor Investor shall make any public announcement with respect to the existence or terms of this Agreement without the prior approval of the other Party, which shall not be unreasonably withheld, conditioned or delayed.  Notwithstanding the foregoing, nothing in this Section 8.1 shall prevent any Party from making any public announcement it reasonably considers necessary in order to satisfy its obligations under applicable Law or under the rules of any securities exchange. The Company may file and refer to this Agreement in its public filings with the Securities and Exchange Commission.

 

Section 8.2          Specific Performance.  The Parties hereby acknowledge and agree that the failure of any Party to perform its agreements and covenants hereunder shall cause irreparable injury to the other Party for which damages, even if available, shall not be an adequate remedy.  Accordingly, each Party hereby consents, in addition to and not in lieu of monetary damages and other relief, to the issuance of injunctive relief to compel performance of such Party's obligations and to the granting of the remedy of specific performance of its obligations hereunder.

 

Section 8.3          Notices.  Any notice or other communication required or permitted under this Agreement will be deemed to have been duly given and made if (x) in writing and served by personal delivery upon the party for whom it is intended, (y) one Business Day after being delivered by a nationally recognized overnight delivery service or by certified mail, registered mail or courier service, return-receipt received, or (z) delivered by electronic mail with receipt confirmed (if delivered during the regular business hours of the recipient):

 

(a)          if to the Company, to:

 

Aegean Marine Petroleum Network Inc.

10, Akti Kondili

185 45, Piraeus

Greece

Attention:  Spyros Fokas

Email:  S.Fokas@ampni.com

with a copy to:

 

 -23-

 

 

Kirkland & Ellis LLP

601 Lexington Avenue

New York, NY 10022

Attention:  Christian Nagler

Email:  cnagler@kirkland.com

Fax: (212) 446-4660

 

(b)          if to Investor, to:

 

Mercuria Asset Holdings (Hong Kong) Limited

 c/o Mercuria Energy Group Limited

63rd Floor

Almas Tower

Dubai UAE

Attention:  Henry Birt or Ghazi Mahmoodzaki S. Abualsaud

Email:  hbirt@mercuria.com and

gabu@mercuria.com

with a copy to:

 

Mercuria Energy Group Limited

 50 Rue du Rhône

1204 Geneva

Switzerland

 Attention:  François Sornay

Email:  fsornay@mercuria.com

Mercuria Energy Trading, Inc.

20 E. Greenway Plaza, Suite 650

Houston, Texas 77046

Attention:  Mark L. Greenberg

Email:  mgreenberg@mercuria.com

Milbank, Tweed, Hadley & McCloy

28 Liberty Street

New York, New York 10005

Attention:  Scott W. Golenbock

Email:  sgolenbock@milbank.com

or such other address as such Party may hereafter specify by notice to the other Party.  For purposes of this Section 8.3, the "regular business hours of the recipient" shall mean the hours between 8:00 am and 5:00 pm on any Business Day of the recipient in the jurisdiction in which the recipient's address is located or, if delivery is made outside of the foregoing hours or on a day that is not a Business Day of the recipient, then delivery shall be deemed to have occurred on the next Business Day of the recipient.

 

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Section 8.4          Assignment; Third Party Beneficiaries.  Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties (whether by operation of Law or otherwise) without the prior written consent of the other Party, other than an assignment by Investor to an Affiliate provided that such (a) Affiliate assumes all of Investor's agreements and obligations hereunder and (b) no such assignment shall relieve Investor from any of its agreements and obligations hereunder, unless and to the extent such agreements and obligations are fully assumed by such Affiliate.  Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of each of the Parties to this Agreement and their respective permitted successors and assigns.  Notwithstanding anything contained in this Agreement to the contrary, nothing in this Agreement, express or implied, is intended or shall be construed to confer upon or give to any Person, other than the Parties to this Agreement and their respective successors and assigns, or other Persons who become bound by the terms of this Agreement, any rights or remedies under or by reason of this Agreement.

 

Section 8.5          Amendment; Waiver.  This Agreement may be amended, modified, waived or altered only in a writing signed by both of the Parties.  The failure of a Party to insist upon the performance of any provision hereof shall not constitute a waiver of, or estoppel against, assertion of the right to require such performance, nor shall a waiver or estoppel in one case or instance imply a waiver or estoppel with respect to any other case or instance, whether of similar nature or otherwise.

 

Section 8.6          Descriptive Headings.  The descriptive headings of this Agreement are inserted for convenience only and shall not constitute a part of this Agreement.

 

Section 8.7          Expenses.  Each Party shall bear its own costs and expenses in connection with the negotiation, execution and performance of this Agreement.

 

Section 8.8          Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of applicable Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible.

 

Section 8.9          Further Assurances.  The Parties agree to cooperate fully in the execution, acknowledgment and delivery of all instruments, agreements and other papers and to take such other actions as may be necessary to further carry out and fully accomplish the intent and purposes of this Agreement.

 

Section 8.10          Construction.  The Parties have participated jointly in the negotiation and drafting of this Agreement.  If any ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.  Wherever in this Agreement a singular word appears, it shall also

 

 -25-

 

 

include the plural wherever required by the context, and vice versa.  Wherever in this Agreement a masculine, feminine or neutral pronoun appears, it shall also include each other gender wherever required by the context.

 

Section 8.11          Entire Agreement.  This Agreement and the Investment Agreement constitute the entire agreement between the Parties respecting the subject matter of this Agreement and supersedes all prior agreements, negotiations, understandings, representations and statements respecting the subject matter of this Agreement, whether written or oral.

 

Section 8.12          Governing Law; Jurisdiction.

 

(a)          This Agreement shall be governed by and construed in accordance with the internal Laws of the State of New York applicable to agreements made and to be performed entirely within such state, without regard to conflicts of Laws principles thereof that would require or permit the application of the Law of another jurisdiction.

 

(b)          The Parties agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the United States District Court for the Southern District of New York or any New York State court sitting in New York County, as long as such court shall have subject matter jurisdiction over such suit, action or proceeding, and that any cause of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the State of New York, and each of the Parties hereby irrevocably consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.

 

(c)          EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.12.

 

 -26-

 

 

Section 8.13          Counterparts; Facsimile.  This Agreement and any amendments hereto may be executed in one or more counterparts, each of which shall be deemed an original and all such counterparts shall constitute one and the same instrument.  Any executed counterpart delivered by facsimile or other means of electronic transmission shall be deemed an original for all purposes.

 

Section 8.14          Effectiveness.  This Agreement shall not become effective unless and until the Effective Date shall have occurred.

 

[Signature Pages Follow]

 

 

 -27-

IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement on the date first written above.

 

	 	
AEGEAN MARINE PETROLEUM NETWORK, INC.

 

	 	 	 
	 	 	 
	 	
By:

	
/s/ Spyridon Fokas

	 	
Name:  Spyridon Fokas

Title:    General Counsel

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Investor Rights Agreement]

	 	
MERCURIA ASSET HOLDINGS (HONG KONG) LIMITED

	 	 	 
	 	 	 
	 	
By:

	 /s/ Nikolay Valchinkovski
	 	 	
Name: Nikolay Valchinkovski

	 	 	
Title:   Director

 

 

 

 

 

 

[Signature Page to Investor Rights Agreement]

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