SSNT SilverSun Technologies Inc

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): June 6, 2024

 

QXO, INC.

(Exact name of registrant as specified in its charter)

 

Delaware		000-50302		16-1633636
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

Five American Lane Greenwich, Connecticut		06831
(Address of principal executive offices)		(Zip Code)

 

888-998-6000

Registrant’s telephone number, including area code

 

SilverSun Technologies, Inc.

120 Eagle Rock Ave

East Hanover, NJ 07936

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

 

☐

Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.00001 per share		QXO		The NASDAQ Capital Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Introduction

As previously disclosed, QXO, Inc. (formerly known as SilverSun Technologies, Inc.) (the “Company” or “QXO”) entered into an Amended and Restated Investment Agreement (as amended from time to time, the “Investment Agreement”), dated April 14, 2024, among the Company, Jacobs Private Equity II, LLC, a Delaware limited liability company (“JPE”) and the other investors party thereto (each, an “Other Investor,” and together with JPE, the “Investors”), providing for, among other things, an aggregate investment by the Investors of $1,000,000,000 in cash in the Company (the “Equity Investment”).

 

On June 6, 2024, as contemplated by the Investment Agreement, the Company effected the 8-for-1 reverse stock split effective as of 9:00 a.m. Eastern Time (the “Reverse Stock Split”). As a result of the Reverse Stock Split, the Company’s issued and outstanding shares of common stock, par value $0.00001 per share (the “Common Stock”), has been reduced from 5,315,581 shares of Common Stock to 664,284 shares of Common Stock.

 

Following the effective time of the Reverse Stock Split, the Company and the Investors completed the Equity Investment pursuant to the Investment Agreement.

 

Item 1.01. Entry into a Material Definitive Agreement.

 

Stockholders’ Agreement

 

On June 6, 2024, as contemplated by the Investment Agreement, the Company entered into a stockholders’ agreement (the “Stockholders’ Agreement”), among the Company, JPE and the Other Investors, pursuant to which, among other things, each Other Investor agreed with the Company that such Other Investor will not, and will cause its affiliates not to, transfer all or any portion of the securities of the Company beneficially owned by such person until June 6, 2029, subject to certain exceptions provided in the Stockholders’ Agreement, including exceptions in the event JPE transfers any of its Securities (as defined below) or shares of Common Stock issuable upon conversion of the Preferred Stock or upon exercise of the Warrants.

 

Each Other Investor also agreed with the Company that such Other Investor will (a) appear in person or by proxy at any meeting of the Company’s stockholders and (b) vote, or cause to be voted, or execute written consents with respect to, as applicable, all voting securities of the Company that it beneficially owns (i) in favor of the election of each candidate designated or nominated for election by JPE, (ii) in favor of removal of each person designated for removal by JPE and (iii) except with respect to matters that would adversely affect such Other Investor in a manner disproportionate to any other Investor, in accordance with JPE’s written direction with respect to any other matter presented at such meeting of the Company’s stockholders.

 

The foregoing description of the Stockholders’ Agreement is not complete and is qualified in its entirety by reference to the complete text of the Stockholders’ Agreement, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

 

Registration Rights Agreement

 

On June 6, 2024, as contemplated by the Investment Agreement, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”), among the Company, JPE and the Other Investors, pursuant to which, among other things, the holders of the Securities have been provided with certain rights to cause the Company to register the sale of shares of Preferred Stock, Warrants and shares of Common Stock issued or issuable upon conversion of the Preferred Stock or upon exercise of the Warrants, in each case other than any such securities that are then freely transferable without registration pursuant to Rule 144 under the Securities Act without limitation as to volume, manner of sale or other restrictions under Rule 144. Securities that are subject to registration under the Registration Rights Agreement as provided above are referred to as “Registrable Securities.”

 

At any time on or after the closing of the Equity Investment, the holder or holders of Registrable Securities holding Registrable Securities constituting, in the aggregate, no less than a majority of the total number of Registrable Securities may request that the Company register the sale of such securities under the Securities Act of 1933, as amended (the “Securities Act”). Such majority holders may request a total of ten demand registrations.

 

If the Company registers its securities on a registration statement, the Company must give each Investor prompt written notice thereof (subject to certain exceptions). The Company must then include on such registration statement all Registrable Securities requested to be included therein (subject to certain exceptions).

 

Subject to certain exceptions, all expenses incurred in connection with the registration or sale of the Registrable Securities will be borne by the Company.

 

The foregoing description of the Registration Rights Agreement is not complete and is qualified in its entirety by reference to the complete text of the Registration Rights Agreement, a copy of which is attached hereto as Exhibit 10.2 and is incorporated herein by reference.

 

 

Item 3.02. Unregistered Sales of Equity Securities.

 

On June 6, 2024, pursuant to the Investment Agreement and after the effective time of the Reverse Stock Split, the Company issued to the Investors, for $1,000,000,000 in cash: (i) an aggregate of 1,000,000 shares of Convertible Perpetual Preferred Stock of the Company, par value $0.001 per share (the “Preferred Stock”), which are initially convertible into an aggregate of 219,007,375 shares of Common Stock at an initial conversion price of $4.566 per share, and (ii) warrants initially exercisable for an aggregate of 219,007,375 shares of Common Stock (the “Warrants,” and together with the Preferred Stock, the “Securities”). The Warrants have an exercise price of $4.566 per share of Common Stock with respect to 50% of the Warrants, $6.849 per share of Common Stock with respect to 25% of the Warrants, and $13.698 per share of Common Stock with respect to the remaining 25% of the Warrants. The Securities are subject to customary anti-dilution adjustments.

 

The Preferred Stock

 

The Preferred Stock has an initial liquidation preference of $1,000 per share, for an aggregate initial liquidation preference of $1,000,000,000. The Preferred Stock is convertible at any time, in whole or in part and from time to time, at the option of the holder thereof into a number of shares of Common Stock equal to the then-applicable liquidation preference divided by the conversion price, which initially is $4.566 per share of Common Stock (subject to customary anti-dilution adjustments). Shares of Preferred Stock are initially convertible into an aggregate of 219,007,375 shares of Common Stock (after giving effect to the Reverse Stock Split). The Preferred Stock will pay quarterly cash dividends equal to the greater of (i) the “as-converted” dividends on the underlying Common Stock for the relevant quarter and (ii) 9% of the then-applicable liquidation preference per annum. Accrued and unpaid dividends for any quarter will accrete to liquidation preference. The Preferred Stock is not redeemable or subject to any required offer to purchase and votes together with the Common Stock on an “as-converted” basis on all matters, except as otherwise required by law, and separately as a class with respect to certain matters implicating the rights of holders of shares of Preferred Stock.

 

The description of the Preferred Stock is qualified in its entirety by reference to the Certificate of Designation of Convertible Perpetual Preferred Stock, a copy of which is attached hereto as Exhibit 4.1 and is incorporated by reference herein.

 

The Warrants

 

Each Warrant will initially be exercisable at any time and from time to time from the closing date until June 6, 2034, at the option of the holder thereof, into one share of Common Stock. The Warrants have an exercise price of $4.566 per share of Common Stock with respect to 50% of the Warrants, $6.849 per share of Common Stock with respect to 25% of the Warrants, and $13.698 per share of Common Stock with respect to the remaining 25% of the Warrants, in each case subject to customary anti-dilution adjustments. The initial aggregate number of shares of Company common stock subject to Warrants is 219,007,375 shares.

 

The description of the Warrants is qualified in its entirety by reference to the Forms of Warrant Certificate, copies of which are attached hereto as Exhibits 4.2, 4.3 and 4.4 and are incorporated by reference herein.

 

The Securities described above were sold to the Investors in a transaction exempt from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering.

 

The information described under “Registration Rights Agreement” above in Item 1.01 is incorporated by reference herein.

 

 

Item 3.03. Material Modifications to Rights of Security Holders.

 

The information described above under Item 3.02 and below under Item 5.03 below is incorporated by reference herein.

 

Item 5.01. Changes in Control of Registrant.

 

On June 6, 2024 and after the effective time of the Reverse Stock Split, as part of the Equity Investment described in Item 3.02 above, the Company issued to JPE, for $900,000,000 in cash, (i) 900,000 shares of Preferred Stock, which are initially convertible into an aggregate of 197,106,637 shares of Common Stock, and (ii) 197,106,637 Warrants initially exercisable for an aggregate of 197,106,637 shares of Common Stock (with an exercise price of $4.566 per share of Common Stock with respect to 50% of the Warrants, $6.849 per share of Common Stock with respect to 25% of the Warrants, and $13.698 per share of Common Stock with respect to the remaining 25% of the Warrants, in each case subject to customary anti-dilution adjustments), which resulted in a change of control of the Company. After the effective time of the Reverse Stock Split but prior to the Equity Investment, there were 664,284 shares of Common Stock issued and outstanding.

 

Based upon 664,284 shares of Common Stock outstanding immediately after consummation of Reverse Stock Split, JPE has acquired in the aggregate approximately 89.73% of the total voting power of the Company’s capital stock before giving effect to the exercise of Warrants, and approximately 89.86% of the total voting power of the Company’s capital stock after giving effect to the exercise of all of the Warrants.

 

JPE used cash on hand of JPE to fund the purchase price for these shares of Preferred Stock and Warrants.

 

Pursuant to the A&R Charter (as defined below), JPE is entitled to designate persons to the board of directors of the Company (the “Board”), in connection with each meeting of stockholders at which directors are to be elected (i) all of the members of the Board, for so long as the Investors collectively own or control (together with their affiliates) Preferred Stock, shares of Common Stock or other voting securities, or Warrants exercisable for such securities, representing, in the aggregate, at least 80% of the total voting power of the capital stock of the Company, calculated on a fully-diluted, as-converted basis; (ii) 75% of the total number of seats (rounded to the nearest whole number) on the Board, for so long as the Investors collectively own or control (together with their affiliates) Preferred Stock, shares of Common Stock or other voting securities, or Warrants exercisable for such securities, representing, in the aggregate, at least 65% (but less than 80%) of the total voting power of the capital stock of the Company, calculated on a fully-diluted, as-converted basis; (iii) a majority of the total number of seats (rounded up to the nearest whole number) on the Board for so long as the Investors collectively own or control (together with their affiliates) Preferred Stock, shares of Common Stock or other voting securities, or Warrants exercisable for such securities, representing, in the aggregate, at least 45% (but less than 65%) of the total voting power of the capital stock of the Company, calculated on a fully-diluted, as-converted basis; (iv) 40% of the total number of seats (rounded up to the nearest whole number) on the Board for so long as the Investors collectively own or control (together with their affiliates) Preferred Stock, shares of Common Stock or other voting securities, or Warrants exercisable for such securities, representing, in the aggregate, at least 30% (but less than 45%) of the total voting power of the Company on a fully-diluted, as-converted basis; (v) 33% of the total number of seats (rounded up to the nearest whole number) on the Board for so long as the Investors collectively own or control (together with their affiliates) Preferred Stock, shares of Common Stock or other voting securities, or Warrants exercisable for such securities, representing, in the aggregate, at least 15% (but less than 30%) of the total voting power of the Company on a fully-diluted, as-converted basis; and (vi) two members of the Board for so long as the Investors collectively own or control (together with their affiliates) Preferred Stock, shares of Common Stock or other voting securities, or Warrants exercisable for such securities, representing, in the aggregate, at least 5% (but less than 15%) of the total voting power of the Company on a fully-diluted, as-converted basis.

 

The information described under Introduction, Item 1.01, Item 3.02 and Item 5.02 is incorporated by reference herein.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

 

Departure of Directors

 

Effective as of the closing of the Equity Investment, in accordance with the terms of the Investment Agreement, Mark Meller, Kenneth Edwards, Stanley Wunderlich and John Schachtel resigned from the Board and each of the committees of the Board.

 

Messrs. Edwards, Wunderlich and Schachtel resigned as members of the Audit Committee of the Board and the Nominating and Corporate Governance Committee of the Board, effective as of the closing of the Equity Investment. Messrs. Wunderlich and Schachtel resigned as members of the Compensation Committee of the Board, effective as of the closing of the Equity Investment.

 

Messrs. Meller’s, Edwards’s, Wunderlich’s and Schachtel’s decision to resign from the Board was not the result of any disagreement relating to the Company’s operations, policies or practices. The Company thanks Messrs. Meller, Edwards, Wunderlich and Schachtel for their commitment and service to the Company.

 

 

Increase in Size of the Board; Appointment of New Directors

 

In accordance with the terms of the Investment Agreement and the A&R Charter, effective as of the closing of the Equity Investment, the size of the Board was increased from four to six members.

 

In accordance with the A&R Charter, JPE has the right to designate all directors on the Board following the closing of the Equity Investment. Accordingly, the Board appointed each of the JPE designees as directors of the Company, effective immediately following the closing of the Equity Investment: Brad Jacobs, Jason Aiken, Marlene Colucci, Mario Harik, Mary Kissel and Allison Landry.

 

In accordance with the terms of the Investment Agreement and the A&R Charter, Mr. Jacobs was elected as the Chairman of the Board effective upon the closing of the Equity Investment.

 

The following biographical information is provided for the newly appointed members of the Board:

 

Brad Jacobs (Age 67)

 

Mr. Jacobs founded and led five public companies prior to QXO: United Waste Systems, Inc., United Rentals, Inc., XPO, Inc., and XPO’s spin-offs, GXO Logistics, Inc. and RXO, Inc. He serves as executive chairman of XPO and as non-executive chairman of GXO and RXO. Mr. Jacobs is the managing partner of JPE and Jacobs Private Equity, LLC.

 

Jason Aiken (Age 51)

 

Mr. Aiken has led the technologies segment of General Dynamics since 2023. Over the course of his 22-year tenure with General Dynamics, he served as the company’s chief financial officer from 2014 to 2024, and earlier as chief financial officer of General Dynamics subsidiary Gulfstream Aerospace, among other senior positions.

 

Marlene Colucci (Age 61)

 

Ms. Colucci is chief executive officer of The Business Council in Washington, D.C. since 2013. Previously, she was executive vice president of public policy for the American Hotel & Lodging Association, and earlier held positions as special assistant to the President of the United States in the Office of Domestic Policy, deputy assistant secretary with the Department of Labor’s Office of Congressional and Intergovernmental Affairs, and senior counsel with Akin Gump Strauss Hauer & Feld LLP. She is vice chair of the board of directors of GXO Logistics, Inc.

 

Mario Harik (Age 43)

 

Mr. Harik has led XPO, Inc. as chief executive officer since November 2022 and serves on its board. He joined XPO in 2011 as chief information officer, and held additional roles as chief customer officer and president, North American less-than-truckload. His prior career included chief information officer with Oakleaf Waste Management, chief technology officer with Tallan, Inc., and co-founder of G3 Analyst.

 

Mary Kissel (Age 47)

 

Ms. Kissel is executive vice president and senior policy advisor with Stephens Inc. She joined Stephens in 2021, following her role as senior advisor to the U.S. Secretary of State. Earlier, during 14 years with The Wall Street Journal, she served on the editorial board in New York, and as editorial page editor for Asia Pacific in Hong Kong. She began her career at Goldman Sachs. Ms. Kissel is a member of the Council on Foreign Relations, and a director of the American Australian Council. She is vice chair of the board of directors of RXO, Inc.

 

 

Allison Landry (Age 45)

 

Ms. Landry is a former senior transportation research analyst with Credit Suisse, covering the trucking, railroad, airfreight and logistics industries for more than 15 years. Previously, she was a financial analyst and senior accountant with OneBeacon Insurance Co. (now Intact Insurance Specialty Solutions). She serves as vice chair of the board of directors of XPO, Inc.

 

Each of Messrs. Jacobs, Aiken and Harik, and Mses. Colucci, Kissel and Landry has direct or indirect rights under the Registration Rights Agreement in his or her capacity as a direct or indirect holder of Registrable Securities.

 

As of the effective time of their election to the Board:

 

●

Each of Jason Aiken, Mary Kissel and Allison Landry was appointed to serve as a member of the Audit Committee and Jason Aiken was appointed chair of the Audit Committee;

 

●

Each of Marlene Colucci, Mary Kissel and Allison Landry was appointed to serve as members of the Compensation Committee (renamed the Compensation and Talent Committee, effective as of the closing of the Equity Investment), and Allison Landry was appointed chair of the Compensation and Talent Committee;

 

●

Each of Marlene Colucci and Mary Kissel was appointed to serve as a member of the Nominating and Corporate Governance Committee (renamed the Nominating, Corporate Governance and Sustainability Committee, effective as of the closing of the Equity Investment), and Marlene Colucci was appointed chair of the Nominating, Corporate Governance and Sustainability Committee; and

 

●

Allison Landry was appointed lead independent director of the Board.

 

Departure of Certain Officers

 

In accordance with the terms of the Investment Agreement, effective as of the closing of the Equity Investment, Mark Meller resigned as President, Chief Executive Officer of the Company, and Joe Macaluso resigned as Chief Financial Officer of the Company. Mr. Meller and Mr. Macaluso each remain employed by the Company. Mr. Meller’s decision to resign from the Board was not the result of any disagreement relating to the Company’s operations, policies or practices.

 

Appointment of Certain Officers; Employment Agreement with Mr. Jacobs

 

Mr. Jacobs was appointed as Chief Executive Officer of the Company, Christopher Signorello was appointed as Chief Legal Officer of the Company, Sean Smith was appointed interim Chief Financial Officer and Chief Accounting Officer of the Company and Mark Meller was appointed President, SilverSun Technologies, in each case, effective as of the closing of the Equity Investment. Biographical information with respect to Messrs. Jacobs, Signorello, Smith and Meller is included below.

 

Brad Jacobs (Age 67)

 

The biographical information for Mr. Jacobs listed above under “Increase in Size of the Board; Appointment of New Directors” is hereby incorporated by reference.

 

Christopher Signorello (Age 51)

 

Mr. Signorello previously served in senior legal roles with XPO, Inc., most recently as deputy general counsel and chief compliance officer from 2021 to 2023. Prior to XPO, he was with industrial and consumer products leader Henkel Corporation for nearly a decade, where he was associate general counsel, among other leadership positions. Earlier, he spent nine years with the product liability and commercial litigation practice groups at Goodwin Procter LLP.

 

 

Sean Smith (Age 44)

 

Mr. Smith has more than two decades of senior financial experience across multiple industries. From 2019 to 2024, he served as corporate controller for Chewy, Inc., a leading e-commerce retailer of pet supplies and medications. Prior to Chewy, he held key finance positions with XPO, Inc. over more than three years, most recently as corporate controller. He began his career with KPMG LLP.

 

Mark Meller (Age 64)

 

Mr. Meller was the President and Director of the Company from September 15, 2003 until June 6, 2024, and was Chief Executive Officer from September 1, 2004 until June 6, 2024. He was previously Chairman of the Board from May 10, 2009 until June 6, 2024. From September 2003 through January 2015, he was Chief Financial Officer of the Company.

 

No family relationships exist between either Mr. Jacobs, Mr. Signorello, Mr. Smith or Mr. Meller and any other directors or executive officers of the Company.

 

Each of Messrs Jacobs, Signorello and Smith have direct or indirect rights under the Registration Rights Agreement in their capacities as direct or indirect holders of Registrable Securities.

 

Other than as described above, there are no arrangements or understandings pursuant to which each of Messrs. Jacobs, Signorello, Meller and Smith were selected as officers or Messrs. Jacobs, Aiken and Harik and Mses. Colucci, Kissel and Landry were selected as directors. Other than as described above, there are no transactions to which the Company is or was a participant and in which Messrs. Jacobs, Aiken, Harik and Meller and Mses. Colucci, Kissel and Landry have a material interest subject to disclosure under Item 404(a) of Regulation S-K.

 

Employment Agreement with Mr. Jacobs

 

On June 5, 2024, the Company entered into an employment agreement (the “Employment Agreement”), effective as of the closing of the Equity Investment, with Mr. Jacobs for a five year term, pursuant to which Mr. Jacobs will be paid an annual base salary at an initial annual rate of $750,000 and his target annual bonus will initially be 100% of his base salary. Mr. Jacobs’s annual base salary and target annual bonus will increase (but not decrease) each calendar year of the term depending on the Company’s annualized revenue run rate as of the preceding December 31 as follows:

 

Potential Salary increases based on Annual Revenue Run Rate Band

 

Annualized Revenue Run Rate Band				Base Salary
$	1 Billion to $5 Billion			$	950,000
$	5 Billion to $10 Billion			$	1,150,000
$	10 Billion to $20 Billion			$	1,250,000
$	20 Billion to $30 Billion			$	1,500,000
	Greater than $30 Billion			$	1,700,000

 

Potential Target Bonus Amounts based on Annual Revenue Run Rate Band

 

 

Annualized Revenue Run Rate Band			Target Bonus Percentage		Target Bonus Amount
$	1 Billion to $5 Billion		135% of Base Salary		$	1,282,500
$	5 Billion to $10 Billion		150% of Base Salary		$	1,725,000
$	10 Billion to $20 Billion		165% of Base Salary		$	2,062,500
$	20 Billion to $30 Billion		200% of Base Salary		$	3,000,000
	Greater than $30 Billion		200% of Base Salary		$	3,400,000

 

Non-CIC Termination. In the event that either prior to a change in control of the Company or more than two years after a change in control of the Company occurs, the Company terminates Mr. Jacobs’s employment without cause, he will be entitled to receive, subject to his execution and nonrevocation of a release of claims in favor of the Company: (a) a cash payment equal to 12 months of his annual base salary; (b) a prorated target bonus for the year of termination of employment; and (c) healthcare benefit coverage for a period of 12 months from the date of termination (or a cash payment in lieu of such coverage). Mr. Jacobs will also be entitled to vesting of equity-based or other long-term incentive compensation awards to the extent set forth in the applicable award agreement.

 

 

In addition, if Mr. Jacobs resigns due to certain specified good reason events, he will be entitled to receive the healthcare benefit coverage for 12 months and vesting of equity-based or other long-term incentive compensation awards to the extent set forth in the applicable award agreement.

 

CIC Termination. In the event that upon or within the two-year period following a change in control of the Company, Mr. Jacobs’s employment is terminated by the Company without cause or he resigns for good reason, he will be entitled to receive, subject to his execution and nonrevocation of a release of claims in favor of the Company:: (a) a cash payment equal to 2.99 times the sum of his annual base salary and target bonus; (b) a prorated target bonus for the year of termination of employment; and (c) healthcare benefit coverage for a period of 24 months from the date of termination (or a cash payment in lieu of such coverage). Mr. Jacobs will also be entitled to vesting of equity-based or other long-term incentive compensation awards to the extent set forth in the applicable award agreement.

 

In the event that any benefits due or amounts payable to Mr. Jacobs in connection with a change in control of the Company constitute “parachute payments” within the meaning of Section 280G of the Code, then any such amounts will be reduced to avoid triggering the excise tax imposed by Section 4999 of the Code, provided that such reduction will be applied solely if it would result in Mr. Jacobs retaining a greater portion of the payments on a net after-tax basis.

 

Restrictive Covenants. Mr. Jacobs is generally subject to the following restrictive covenants: employee and customer non-solicitation covenants during his employment and for a period of two years thereafter; confidentiality and mutual non-disparagement covenants during his employment and thereafter; and non-competition covenants during his employment and for a period of 12 months thereafter (during which period the Company will make monthly noncompete payments to Mr. Jacobs equal to one-twelfth of his annual base salary), and the Company will have the right (other than following a change in control of the Company) to extend the non-compete period for up to three additional one-year periods so long as the Company pays Mr. Jacobs an amount equal to one-twelfth of his base salary for each month during each applicable one-year extension period.

 

Clawbacks. Mr. Jacobs is subject to any compensation recovery policy maintained by the Company, as in effect from time to time.

 

Grant of Initial Equity Awards. In connection with the execution of the Employment Agreement, on a date selected by the Compensation and Talent Committee of the Board (which is no later than 120 days after June 6, 2024) and subject to Mr. Jacobs’s continued employment through such date, the Company will grant to Mr. Jacobs an award of time-based restricted stock units relating to 3,832,676 shares of Common Stock (the “RSUs”) and an award of performance-based restricted stock units relating to 7,117,828 shares of Common Stock at target (the “PSUs”), pursuant to award agreements substantially in the form attached as exhibits to the Employment Agreement. Any RSUs and PSUs that vest will be settled in Common Stock. Except in the event of a change in control of the Company, all shares delivered in settlement of RSUs and PSUs (net of any shares withheld to cover taxes) will be subject to a transfer restriction that prohibits Mr. Jacobs from disposing of such shares prior to December 31, 2029. The Employment Agreement does not contemplate that any additional equity awards will be granted to Mr. Jacobs during the five-year term of the Employment Agreement.

 

RSU Vesting. The RSUs will vest in five tranches on each of the first five anniversaries of the grant date, with the first tranche covering 15% of the RSUs, each of the next two tranches covering 17.5% of the RSUs, and each of the final two tranches covering 25% of the awards. Vesting of RSUs will generally be subject to Mr. Jacobs’s continued service with the Company through the applicable vesting date.

 

PSU Vesting. The PSUs will be earned based on performance goals relating to the Company’s total stockholder return (“TSR”) compared to the TSR ranking of each company that is in the S&P 500 Index. The PSUs may be earned at a level ranging from zero to 225% of the target number, depending upon the degree of achievement of the applicable performance goal. The degree of achievement of the Company TSR relative to the S&P 500 companies’ TSR will be measured against a specified payout matrix, pursuant to which Company TSR below the 55^th percentile of the S&P 500 companies will result in zero payout, while achievement at the 90^th percentile or above will result in a payout of 225% of target. The performance goals for a portion of the PSUs will be measured over a cumulative performance period beginning on the grant date and ending on December 31, 2028 and the performance goals for the remainder of the PSUs will be measured based on designated performance periods that occur within such cumulative period. Vesting of the PSUs will generally be subject to Mr. Jacobs’s continued service through the applicable performance period.

 

 

Termination of Employment. The RSUs and PSUs will be subject to special rules providing for either partial or full vesting on a qualifying termination of employment, including due to death, disability, termination without cause or resignation due to specified good reason events.

 

The foregoing summary of the Employment Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Employment Agreement, a copy of which is attached hereto as Exhibit 10.3 and is incorporated by reference herein.

 

Termination of 2019 Equity and Incentive Plan

 

The SilverSun Technologies, Inc. 2019 Equity and Incentive Plan was terminated effective as of the closing of the Equity Investment and no further awards will be granted under such plan.

 

QXO, Inc. Chartered Aircraft Use Policy

 

The Company also adopted a chartered aircraft use policy which provides for business use of chartered aircraft by the Chief Executive Officer and, with the prior approval of the Chief Executive Officer, by other senior executives. The policy also permits the use of the chartered aircraft for the Chief Executive Officer’s spouse or guests on scheduled flights subject to certain limitations including that the annual value (reportable as imputed income or subject to disclosure in the proxy statement) must be less than $250,000.

 

The foregoing summary of the Chartered Aircraft Use Policy does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Chartered Aircraft Use Policy, a copy of which is attached hereto as Exhibit 10.4 and is incorporated by reference herein.

 

Item 5.03. Amendments to Certificate of Incorporation and Bylaws; Change in Fiscal Year.

 

On June 6, 2024, in accordance with the terms of the Investment Agreement, the Company filed the Fifth Amended and Restated Certificate of Incorporation (as amended, the “A&R Charter”) of the Company with the Secretary of State of the State of Delaware. The A&R Charter, among other things, (a) increased the number of authorized shares of Common Stock to 2,000,000,000 shares and 10,000,000 preferred shares of the Company; (b) effected an 8-for-1 reverse stock split of the Common Stock; (c) provides the circumstances under which the stockholders of the Company are able to act by written consent in lieu of a stockholder meeting; (d) provides the circumstances under which a special meeting of stockholders may be called; (e) designates the exclusive forums in which certain claims relating to the Company may be brought; (f) provides for exculpation of directors and officers to the extent permitted by the Delaware General Corporation Law; and (g) provides JPE with certain board designation rights. The A&R Charter became effective at 9:00 a.m., EDT, on June 6, 2024. The description of the A&R Charter is qualified in its entirety by reference to the A&R Charter, a copy of which is attached hereto as Exhibit 3.1 and is incorporated by reference herein.

 

On June 6, 2024, the Company filed a Certificate of Amendment to the Fifth Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Amendment”) of the Company with the Secretary of State of the State of Delaware to change the name of the Company to “QXO, Inc.” (the “Name Change”). The Certificate of Amendment became effective at 9:01 a.m., EDT, on June 6, 2024. In connection with the Name Change, the Company began trading on the Nasdaq Capital Market under the new ticker symbol “QXO”, effective at the open of the market on June 6, 2024. The description of the Certificate of Amendment is qualified in its entirety by reference to the Certificate of Amendment, a copy of which is attached hereto as Exhibit 3.2 and is incorporated by reference herein.

 

On June 6, 2024, in connection with the closing of the Equity Investment, the Company filed the Certificate of Designation designating the Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Delaware. The information described under “The Preferred Stock” in Item 3.02 above is incorporated herein by reference.

 

On June 6, 2024, in accordance with the Investment Agreement and effective as of the Closing of the Equity Investment, the Company amended and restated its bylaws (the “Amended and Restated Bylaws”). The description of the Amended and Restated Bylaws is qualified in its entirety by reference to the Amended and Restated Bylaws, a copy of which is attached hereto as Exhibit 3.3 and is incorporated by reference herein.

 

 

Item 5.05. Amendments to the Registrant’s Code of Ethics, or Waiver of a Provision of the Code of Ethics.

 

In connection with the closing of the Equity Investment, the Board adopted the Code of Business Ethics, effective as of the closing of the Equity Investment. A copy of the Company’s Code of Business Ethics is available on the Company’s website at www.qxo.com. The information on the Company’s website does not constitute part of this Current Report on Form 8-K and is not incorporated by reference herein. The description of the Code of Business Ethics is qualified in its entirety by reference to the Code of Business Ethics, a copy of which is attached hereto as Exhibit 14.1 and is incorporated by reference herein.

 

Item 8.01. Other Events.

 

On June 6, 2024, the Company issued a press release announcing the closing of the Equity Investment. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.

 

On June 6, 2024, the Company issued a press release regarding certain leadership appointments. A copy of the press release is attached as Exhibit 99.2 to this Current Report on Form 8-K and incorporated by reference herein.

 

Forward-Looking Statements

 

This Current Report on Form 8-K contains forward-looking statements. Statements that are not historical facts, including statements about beliefs, expectations, targets or goals, are forward-looking statements. These statements are based on plans, estimates, expectations and/or goals at the time the statements are made, and readers should not place undue reliance on them. In some cases, readers can identify forward-looking statements by the use of forward-looking terms such as “may,” “will,” “should,” “expect,” “opportunity,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “target,” “goal,” or “continue,” or the negative of these terms or other comparable terms. Forward-looking statements involve inherent risks and uncertainties and readers are cautioned that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statements. Factors that could cause actual results to differ materially from those described herein include, among others:

 

●

risks associated with potential significant volatility and fluctuations in the market price of the Company’s common stock;

 

●

risks associated with the Company’s relatively low public float, which may result in its common stock experiencing significant price volatility;

 

●

risks associated with raising additional equity or debt capital from public or private markets to pursue the Company’s business plan following the closing of the Equity Investment, including in an amount that may significantly exceed the amount of the Equity Investment, and the effects that raising such capital may have on the Company and its business, including the risk of substantial dilution or that the Company’s common stock may experience a substantial decline in trading price;

 

●

the possibility that additional future financings may not be available to the Company on acceptable terms or at all;

 

●

the effect that the consummation of the Equity Investment and the other transactions contemplated by the Investment Agreement may have on the Company and its current or future business or on the price of the Company’s common stock;

 

●

the possibility that an active, liquid trading market for the Company’s common stock may not develop or, if developed, may not be sustained;

 

●

the possibility that the warrants and the preferred stock issued pursuant to the Investment Agreement may or may not be converted or exercised, and the economic impact on the Company and the holders of common stock of the Company that may result from either such exercise or conversion, including dilution, or the continuance of the preferred stock remaining outstanding, and the impact its terms, including its dividend, may have on the Company and the common stock of the Company;

 

●

uncertainties regarding the Company’s focus, strategic plans and other management actions;

 

●

the risk that the Company is or becomes highly dependent on the continued leadership of Brad Jacobs as chairman and chief executive officer and the possibility that the loss of Jacobs in these roles could have a material adverse effect on the Company’s business, financial condition and results of operations;

 

 

●

risks associated with becoming a “controlled company” following the closing of the Equity Investment, as defined under applicable stock exchange rules, including that Jacobs will be able to influence the Company’s management and affairs and all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions;

 

●

the risk that certain rules of the U.S. Securities and Exchange Commission (the “SEC”) may require that any registration statement the Company may file with the SEC be subject to SEC review and potential delay in its effectiveness, and that a registration statement must be filed and declared effective for any acquisition (including an all-cash acquisition), which would delay its consummation and could reduce the Company’s attractiveness as an acquirer for potential acquisition targets;

 

●

the possibility that the concentration of ownership by Jacobs may have the effect of delaying or preventing a change in control of the Company and might affect the market price of shares of the common stock of the Company;

 

●

the possibility that the Company’s status as a “controlled company” could cause the common stock of the Company to be less attractive to certain investors;

 

●

the risk that Jacobs’ past performance may not be representative of future results;

 

●

the risk that the Company is unable to retain world-class talent;

 

●

the risk that the failure to consummate any acquisition expeditiously, or at all, could have a material adverse effect on the Company’s business prospects, financial condition, results of operations or the price of the Company’s common stock;

 

●

risks that the Company may not be able to enter into agreements with acquisition targets on attractive terms, or at all, that agreed acquisitions may not be consummated, or, if consummated, that the anticipated benefits thereof may not be realized and that the Company encounter difficulties in integrating and operating such acquired companies, or that matters related to an acquired business (including operating results or liabilities or contingencies) may have a negative effect on the Company or its securities or ability to implement its business strategy, including that any such transaction may be dilutive or have other negative consequences to the Company and its value or the trading prices of its securities;

 

●

risks associated with cybersecurity and technology, including attempts by third parties to defeat the security measures of the Company and its business partners, and the loss of confidential information and other business disruptions;

 

●

the possibility that new investors in any future financing transactions could gain rights, preferences and privileges senior to those of the Company’s existing stockholders;

 

●

the possibility that building products distribution industry demand may soften or shift substantially due to cyclicality or seasonality or dependence on general economic conditions, including inflation or deflation, interest rates, consumer confidence, labor and supply shortages, weather and commodity prices;

 

●

the possibility that regional or global barriers to trade or a global trade war could increase the cost of products in the building products distribution industry, which could adversely impact the competitiveness of such products and the financial results of businesses in the industry;

 

●

risks associated with potential litigation related to the transactions contemplated by the Investment Agreement or related to any possible subsequent financing transactions or acquisitions or investments;

 

●

uncertainties regarding general economic, business, competitive, legal, regulatory, tax and geopolitical conditions; and

 

●

other factors, including those set forth in the Company’s filings with the SEC, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024, and subsequent Quarterly Reports on Form 10-Q.

 

Forward-looking statements herein speak only as of the date each statement is made. Neither the Company nor any person undertakes any obligation to update any of these statements in light of new information or future events, except to the extent required by applicable law.

 

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit Number		Description
3.1		Fifth Amended and Restated Certificate of Incorporation of the Company, dated June 6, 2024
3.2		Certificate of Amendment to the Fifth Amended and Restated Certificate of Incorporation of the Company, dated June 6, 2024
3.3		Amended and Restated Bylaws of the Company
4.1		Certificate of Designation of the Convertible Perpetual Preferred Stock of QXO, Inc.
4.2		Form of Warrant Certificate
4.3		Form of Warrant Certificate
4.4		Form of Warrant Certificate
10.1		Stockholders Agreement, dated as of June 6, 2024, by and among the Company, the Other Investors and JPE
10.2		Registration Rights Agreement, dated as of June 6, 2024, by and among the Company, the Other Investors and JPE
10.3+		Employment Agreement, dated as of June 5, 2024, by and between Brad Jacobs and the Company
10.4+		QXO, Inc. Chartered Aircraft Use Policy
14.1		QXO, Inc. Code of Business Ethics
99.1		Press Release Regarding Closing, dated June 6, 2024
99.2		Press Release Regarding Leadership Appointments, dated June 6, 2024
104		Cover Page Interactive Data File (embedded within Inline XBRL document)

 

*

Certain schedules and similar attachments have been omitted in reliance on Item 601(a)(5) of Regulation S-K. The Company will provide, on a supplemental basis, a copy of any omitted schedule or attachment to the SEC or its staff upon request.

 

+

Indicates a management contract or any compensatory plan, contract or arrangement.

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	QXO, INC.
Date: June 6, 2024	By:	/s/ Brad Jacobs
		Brad Jacobs
		Chief Executive Officer

 

 

 

-12-

Exhibit 3.1

 

FIFTH AMENDED and restated

CERTIFICATE OF INCORPORATION
OF
SILVERSUN TECHNOLOGIES, INC.

 

 

SilverSun Technologies, Inc. (the “Corporation”), a corporation organized and existing under the laws of the State of Delaware, pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware, as it may be amended (the “DGCL”), hereby certifies as follows:

 

1.

The name of this Corporation is SilverSun Technologies, Inc. The original Certificate of Incorporation was filed with the office of the Secretary of State of the State of Delaware on October 3, 2002 under the name iVoice Acquisition 1, Inc.

 

2.

A Certificate of Amendment to the original Certificate of Incorporation was filed with the office of the Secretary of State of the State of Delaware on April 24, 2003 under the name Trey Industries, Inc.

 

3.

An Amended and Restated Certificate of Incorporation was filed with the office of the Secretary of State of the State of Delaware on May 30, 2003 under the name Trey Industries, Inc.

 

4.

A Second Amended and Restated Certificate of Incorporation was filed with the office of the Secretary of State of the State of Delaware on September 5, 2003.

 

5.

A Third Amended and Restated Certificate of Incorporation was filed with the office of the Secretary of State of the State of Delaware on February 11, 2004.

 

6.

A Fourth Amended and Restated Certificate of Incorporation was filed with the office of the Secretary of State of the State of Delaware on June 27, 2011 under the name SilverSun Technologies, Inc.

 

7.

A Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation was filed with the office of the Secretary of State of the State of Delaware on January 29, 2015.

 

8.

Certificates of Elimination with respect to the Corporation’s previously issued Series A Preferred Stock and the Corporation’s previously issued Series B Preferred Stock were filed with the office of the Secretary of State of the State of Delaware on November 30, 2023 and September 9, 2019, respectively.

 

9.

In connection with the transactions contemplated by the Amended and Restated Investment Agreement, dated as of April 14, 2024 (the “Investment Agreement”), by and among the Corporation, Jacobs Private Equity II, LLC (the “Principal Investor”) and the other parties thereto, this Fifth Amended and Restated Certificate of Incorporation (this “Amended and Restated Certificate of Incorporation”) was duly adopted by the Board of Directors of the Corporation (the “Board of Directors”) in accordance with the provisions of Sections 242 and 245 of the DGCL, and by the affirmative vote of a majority of its stockholders at a special meeting in accordance with Section 211 of the DGCL, and is to become effective as of 9:00 a.m., Eastern time, on June 6, 2024.

 

10.

This Amended and Restated Certificate of Incorporation restates and amends the Fourth Amended and Restated Certificate of Incorporation (as amended) to read in its entirety as follows:

 

 

ARTICLE 1
NAME OF CORPORATION

 

The name of the Corporation is SilverSun Technologies, Inc.

 

ARTICLE 2
REGISTERED OFFICE; REGISTERED AGENT

 

The address of the registered office of the Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, County of New Castle, Delaware 19801. The name of the registered agent of the Corporation at such address is The Corporation Trust Company. The Corporation may have such other offices, either inside or outside of the State of Delaware, as the Board of Directors may designate or as the business of the Corporation may from time to time require.

 

ARTICLE 3
PURPOSE

 

The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the DGCL.

 

ARTICLE 4
STOCK

 

Section 1. Authorized Stock. The total number of authorized shares of capital stock of the Corporation shall be 2,010,000,000 shares, consisting of (i) 2,000,000,000 shares of common stock, par value $0.00001 per share (the “Common Stock”), and (ii) 10,000,000 shares of preferred stock, par value $0.001 per share (the “Preferred Stock”). For the avoidance of doubt, this Section 1 gives effect to, and will not be affected by, the reverse stock split contemplated by Section 4 of this ARTICLE 4.

 

Section 2. Common Stock.

 

(a) Except as otherwise provided by law, by this Amended and Restated Certificate of Incorporation, or by the resolution or resolutions adopted by the Board of Directors designating the rights, powers and preferences of any series of Preferred Stock, the holders of outstanding shares of Common Stock shall have the right to vote on all matters, including the election of directors, to the exclusion of all other stockholders, and holders of Preferred Stock shall not be entitled to receive notice of any meeting of stockholders at which they are not entitled to vote (except where otherwise provided in the certificate of designations governing such series). Each holder of record of Common Stock shall be entitled to one vote for each share of Common Stock standing in the name of the stockholder on the books of the Corporation.

 

(b) Subject to any rights granted to holders of shares of any class or series of Preferred Stock then outstanding, the holders of shares of Common Stock shall be entitled to receive such dividends and other distributions in cash, property, stock or otherwise as may be declared thereon by the Board of Directors at any time and from time to time out of assets or funds of the Corporation legally available therefor and shall share equally on a per share basis in such dividends and distributions.

 

 

(c) In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation, and subject to any rights granted to holders of shares of any class or series of Preferred Stock then outstanding, the holders of shares of Common Stock shall be entitled to receive all of the remaining assets of the Corporation available for distribution to its stockholders, ratably in proportion to the number of shares of Common Stock held by them.

 

Section 3. Preferred Stock. Shares of Preferred Stock may be authorized and issued in one (1) or more series. The Board of Directors (or any committee to which it may duly delegate the authority granted in this ARTICLE 4) is hereby empowered, by resolution or resolutions, to authorize the issuance from time to time of shares of Preferred Stock in one (1) or more series, for such consideration and for such corporate purposes as the Board of Directors (or such committee thereof) may from time to time determine, and by filing a certificate pursuant to applicable law of the State of Delaware as it presently exists or may hereafter be amended to establish from time to time for each such series the number of shares to be included in each such series and to fix the designations, powers, rights and preferences of the shares of each such series, and the qualifications, limitations and restrictions thereof to the fullest extent now or hereafter permitted by this Amended and Restated Certificate of Incorporation and the laws of the State of Delaware, including, without limitation, voting rights (if any), dividend rights, dissolution rights, conversion rights, exchange rights and redemption rights thereof, as shall be stated and expressed in a resolution or resolutions adopted by the Board of Directors (or such committee thereof) providing for the issuance of such series of Preferred Stock. Each series of Preferred Stock shall be distinctly designated. The authority of the Board of Directors with respect to each series of Preferred Stock shall include, but not be limited to, determination of the following:

 

(a) the designation of the series, which may be by distinguishing number, letter or title;

 

(b) the number of shares of the series, which number the Board of Directors may thereafter (except where otherwise provided in the certificate of designations governing such series) increase or decrease (but not below the number of shares thereof then outstanding);

 

(c) the amounts payable on, and the preferences, if any, of shares of the series in respect of dividends, and whether such dividends, if any, shall be cumulative or noncumulative;

 

(d) the dates at which dividends, if any, shall be payable;

 

(e) the redemption rights and price or prices, if any, for shares of the series;

 

(f) the terms and amount of any sinking fund provided for purchase or redemption of shares of the series;

 

(g) the amounts payable on, and the preferences, if any, of shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation;

 

 

(h) whether shares of the series shall be convertible into or exchangeable for shares of any other class or series, or any other security, of the Corporation or any other corporation, and, if so, the specification of such other class or series or such other security, the conversion or exchange price or prices or rate or rates, any adjustments thereof, the date or dates at which such shares shall be convertible or exchangeable and all other terms and conditions upon which such conversion or exchange may be made;

 

(i) the restrictions on the issuance of shares of the same series or of any other class or series; and

 

(j) the voting rights, if any, of the holders of shares of the series.

 

Section 4. Reverse Stock Split. Upon effectiveness of this Amended and Restated Certificate of Incorporation (the “Effective Time”), each eight (8) shares of the Common Stock then issued and outstanding or held by the Corporation as treasury stock shall, automatically and without any action on the part of the respective holders thereof, be combined and converted into one (1) share of Common Stock, without increasing or decreasing the par value of each share of Common Stock. No fractional shares shall be issued in connection with the foregoing combination and conversion and, in lieu thereof, any holder of Common Stock otherwise entitled to a fraction of a share of Common Stock shall, (i) in the case of a registered holder who holds Common Stock in book-entry form with the Corporation’s transfer agent, without further action on the part of such holder, and (ii) in the case of a registered holder who holds Common Stock in certificated form, upon delivery of a properly completed and duly executed transmittal letter from such holder and the surrender of such holder’s stock certificates, be entitled to receive cash for such holder’s fractional share based upon the net proceeds attributable to the sale of such fractional share following the aggregation and sale by the Corporation’s exchange agent of all fractional shares otherwise issuable. Each certificate and book-entry notation that immediately prior to the Effective Time represented shares of Common Stock (“Old Certificates”) shall thereafter represent that number of whole shares of Common Stock into which the shares of Common Stock represented by the Old Certificate shall have been combined, subject to the treatment of fractional share interests as described above.

 

ARTICLE 5
TERM

 

The term of existence of the Corporation shall be perpetual.

 

ARTICLE 6
BOARD OF DIRECTORS

 

Section 1. Number of Directors. Subject to any rights of the holders of any series of Preferred Stock and the rights set forth in Section 7 of this ARTICLE 6, the number of directors which shall constitute the Board of Directors shall be fixed from time to time exclusively pursuant to a resolution adopted by the affirmative vote of a majority of the total number of directors that the Corporation would have if there were no vacancies (the “Whole Board”).

 

Section 2. Term; Election of Directors. Subject to the rights of the holders of any series of Preferred Stock and the rights set forth in Section 7 of this ARTICLE 6, at each annual meeting of stockholders, the directors shall be elected for terms expiring at the next annual meeting of stockholders. Each director shall hold office for the term for which he or she is elected or appointed and until his or her successor shall be elected and qualified or until his or her earlier death, resignation, retirement, disqualification, or removal from office. Unless and except to the extent that the Amended and Restated Bylaws of the Corporation (as may hereafter be amended, the “Bylaws”) shall so require, the election of directors of the Corporation need not be by written ballot. Advance notice of stockholder nominations for the election of directors shall be given in the manner and to the extent provided in the Bylaws.

 

 

Section 3. Newly Created Directorships and Vacancies. Subject to applicable law and the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock and the rights set forth in Section 7 of this ARTICLE 6, and unless the Board of Directors otherwise determines, vacancies resulting from death, resignation, retirement, disqualification, removal from office or other cause, and newly created directorships resulting from any increase in the authorized number of directors, may be filled only by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board of Directors, or by a sole remaining director, and directors so chosen shall hold office until the next annual meeting of stockholders and until his or her successor shall have been duly elected and qualified or until any such director’s earlier death, resignation, removal, retirement or disqualification. No decrease in the number of authorized directors constituting the Whole Board shall shorten the term of any incumbent director.

 

Section 4. Removal of Directors. Subject to the rights of the holders of any series of Preferred Stock and the rights set forth in Section 7 of this ARTICLE 6, any director(s) of the Corporation may be removed from office, with or without cause, at any time by the affirmative vote of the holders of at least a majority of the voting power of all outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class (the “Voting Stock”).

 

Section 5. Rights of Holders of Preferred Stock. Notwithstanding the provisions of this ARTICLE 6, whenever the holders of one (1) or more series of Preferred Stock issued by the Corporation shall have the right, voting separately or together by series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorship shall be governed by the rights of such Preferred Stock as set forth in the certificate of designations governing such series.

 

Section 6. No Cumulative Voting. Except as may otherwise be set forth in the resolution or resolutions of the Board of Directors providing the issuance of a series of Preferred Stock, and then only with respect to such series of Preferred Stock, cumulative voting in the election of directors is specifically denied.

 

Section 7. Board Representation Rights.

 

(a) Effective as of the Closing (as defined in the Investment Agreement), the Board of Directors shall be reconstituted (and the Corporation and the Board of Directors shall cause such reconstitution to occur) such that (i) the number of seats on the Board of Directors shall be as directed by the Principal Investor, (ii) each of such directors (including Brad Jacobs) shall be a person designated by the Principal Investor, (iii) each standing committee of the Board of Directors shall be reconstituted in a manner designated by the Principal Investor and (iv) Brad Jacobs shall be appointed as the Chairman of the Board of Directors and Chief Executive Officer of the Corporation. The foregoing designations shall be made such that a majority of the Board of Directors and the members of each standing committee of the Board of Directors shall be independent as required in accordance with Nasdaq Stock Market LLC rules (or the rules of any other exchange on which the Corporation’s securities are then listed) and applicable securities laws. Each director designated by the Principal Investor in accordance with this Section 7 of this ARTICLE 6 is referred to herein as an “Principal Investor Appointee.”

 

 

(b) Subject to Sections 7(d), 7(e) and 7(f) of this ARTICLE 6, in connection with each meeting of stockholders at which directors are to be elected to serve on the Board of Directors, the Corporation shall take all necessary steps to nominate each Principal Investor Appointee (or such alternative persons who are proposed by the Principal Investor and notified to the Corporation on or prior to any date set forth in applicable law with respect to the nomination of directors) and to use its reasonable best efforts to cause the Board of Directors to unanimously recommend that the stockholders of the Corporation vote in favor of each Principal Investor Appointee for election to the Board of Directors. If, for any reason, a candidate designated as an Principal Investor Appointee is determined to be unqualified to serve on the Board of Directors because such appointment would constitute a breach of the fiduciary duties of the Board of Directors or applicable law or stock exchange requirements, the Principal Investor shall have the right to designate an alternative Principal Investor Appointee to be so appointed, and the provisions of this Section 7(b) of this ARTICLE 6 shall apply, mutatis mutandis, to such alternative Principal Investor Appointee.

 

(c) Each appointed or elected Principal Investor Appointee will hold his or her office as a director of the Corporation for such term as is provided in Section 2 of this ARTICLE 6 or until his or her death, resignation or removal from the Board of Directors or until his or her successor has been duly elected and qualified in accordance with the provisions of this Article VI. If any Principal Investor Appointee ceases to serve as a director of the Corporation for any reason during his or her term, the Corporation will use its reasonable best efforts to cause the Board of Directors to fill the vacancy created thereby with a replacement designated by the Principal Investor.

 

(d) Following the Closing, subject to applicable law and applicable stock exchange requirements, the Principal Investor shall have the right to designate persons to the Board of Directors, who shall be Principal Investor Appointees hereunder, as follows: (i) all of the members of the Board of Directors for so long as the Investors (as defined in the Investment Agreement) collectively own or control (together with their affiliates) Preferred Stock, Company Common Stock (as defined in the Investment Agreement) or other voting securities, or Warrants (as defined in the Investment Agreement) exercisable for such securities, representing, in the aggregate, at least eighty percent (80%) of the total voting power of the capital stock of the Corporation, calculated on a fully-diluted, as-converted basis, (ii) seventy-five percent (75%) of the total number of seats (rounded up to the nearest whole number) on the Board of Directors for so long as the Investors collectively own or control (together with their affiliates) Preferred Stock, Company Common Stock or other voting securities, or Warrants exercisable for such securities, representing, in the aggregate, at least sixty-five percent (65%) (but less than eighty percent (80%)) of the total voting power of the capital stock of the Corporation, calculated on a fully-diluted, as-converted basis, (iii) a majority of the total number of seats (rounded up to the nearest whole number) on the Board of Directors for so long as the Investors collectively own or control (together with their affiliates) Preferred Stock, Company Common Stock or other voting securities, or Warrants exercisable for such securities, representing, in the aggregate, at least forty-five percent (45%) (but less than sixty-five percent (65%)) of the total voting power of the capital stock of the Corporation, calculated on a fully-diluted, as-converted basis, (iv) forty percent (40%) of the total number of seats (rounded up to the nearest whole number) on the Board of Directors for so long as the Investors collectively own or control (together with their affiliates) Preferred Stock, Company Common Stock or other voting securities, or Warrants exercisable for such securities, representing, in the aggregate, at least thirty percent (30%) (but less than forty-five percent (45%)) of the total voting power of the capital stock of the Corporation, calculated on a fully-diluted, as-converted basis, (v) thirty-three percent (33%) of the total number of seats (rounded up to the nearest whole number) on the Board of Directors for so long as the Investors collectively own or control (together with their affiliates) Preferred Stock, Company Common Stock or other voting securities, or Warrants exercisable for such securities, representing, in the aggregate, at least fifteen (15%) (but less than thirty percent (30%)) of the total voting power of the capital stock of the Corporation, calculated on a fully-diluted, as-converted basis, and (vi) two members of the Board of Directors for so long as the Investors collectively own or control (together with their affiliates) Preferred Stock, Company Common Stock or other voting securities, or Warrants exercisable for such securities, representing, in the aggregate, at least five percent (5%) (but less than fifteen percent (15%)) of the total voting power of the capital stock of the Corporation, calculated on a fully-diluted, as converted basis.

 

 

(e) The Board of Directors shall have no obligation to appoint or nominate any Principal Investor Appointee if such appointment or nomination would violate applicable Law or stock exchange requirements or result in a breach by the Board of Directors of its fiduciary duties to its stockholders; provided, that the foregoing shall not affect the right of the Principal Investor to designate an alternate Principal Investor Appointee.

 

(f) The rights of the Principal Investor set forth in this Section 7 of this ARTICLE 6 shall be in addition to, and not in limitation of, such voting rights that the Principal Investor may otherwise have as a holder of capital stock of the Corporation (including any shares of Preferred Stock held by the Principal Investor).

 

ARTICLE 7
STOCKHOLDER ACTION

 

Section 1. Stockholder Action by Written Consent. Subject to the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders; provided that, if the Investors and their Affiliates (as such terms are defined in the Investment Agreement) collectively beneficially own at least 30% of the voting power of the outstanding shares of Voting Stock, then stockholders of the Corporation may act by written consent in lieu of a meeting to the extent permitted by the DGCL and in the manner provided in the Bylaws.

 

Section 2. Special Meetings of Stockholders. Subject to the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, special meetings of stockholders may only be called by or at the direction of (1) the Chair of the Board of Directors, (2) the Lead Independent Director (if one has been appointed), or (3) the Board of Directors pursuant to a resolution adopted by a majority of the Whole Board, and any power of stockholders to call a special meeting is specifically denied. At any special meeting of stockholders, only such business shall be conducted or considered as shall have been properly brought before the meeting pursuant to the Corporation’s notice of meeting.

 

 

ARTICLE 8
DIRECTOR AND OFFICER LIABILITY

 

To the fullest extent permitted by the DGCL, as the same exists or may hereafter be amended, a director or officer of the Corporation shall not be personally liable either to the Corporation or to any of its stockholders for monetary damages for breach of fiduciary duty as a director or officer. If the DGCL is amended after the filing of this Amended and Restated Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of a director or officer of the Corporation, in addition to the limitation on personal liability provided herein, will be limited to the fullest extent permitted by that law, as so amended. Any repeal or modification of this ARTICLE 8 by the stockholders of the Corporation will be prospective only and will not adversely affect any limitation on the personal liability of a director or officer of the Corporation existing at the time of that repeal or modification.

 

ARTICLE 9
INDEMNIFICATION

 

Section 1. In General. Each person who was or is a party or is otherwise threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter, a “Proceeding”), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was, at any time during which this ARTICLE 9 is in effect (whether or not such person continues to serve in such capacity at the time any indemnification or advancement of expenses pursuant hereto is sought or at the time any Proceeding relating thereto exists or is brought), a director or officer of the Corporation or, while serving as a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation (hereinafter, a “Covered Person”), shall be (and shall be deemed to have a contractual right to be) indemnified and held harmless by the Corporation (and any successor of the Corporation by merger or otherwise) to the fullest extent authorized by the DGCL as the same exists or may hereafter be amended or modified from time to time (but, in the case of any such amendment or modification, only to the extent that such amendment or modification permits the Corporation to provide greater indemnification rights than said law permitted the Corporation to provide prior to such amendment or modification), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such person in connection with such Proceeding if the person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful. Such indemnification shall continue as to a person who has ceased to be a director or officer of the Corporation or ceased serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation, and shall inure to the benefit of his or her heirs, executors and administrators; provided that, except as provided in Section 3 of this ARTICLE 9, the Corporation shall indemnify any such person seeking indemnification in connection with a Proceeding (or part thereof) initiated by such person only if such Proceeding (or part thereof) was authorized by the Board of Directors.

 

 

Section 2. Mandatory Advancement of Expenses. To the fullest extent authorized by the DGCL as the same exists or may hereafter be amended or modified from time to time (but, in the case of any such amendment or modification, only to the extent that such amendment or modification permits the Corporation to provide greater rights to advancement of expenses than said law permitted the Corporation to provide prior to such amendment or modification), each Covered Person shall have (and shall be deemed to have a contractual right to have) the right, without the need for any action by the Board of Directors, to be paid by the Corporation (and any successor of the Corporation by merger or otherwise) the expenses incurred in connection with any Proceeding in advance of its final disposition, such advances to be paid by the Corporation within twenty (20) days after the receipt by the Corporation of a statement or statements from the claimant requesting such advance or advances from time to time; provided that if the DGCL requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not, except to the extent specifically required by applicable law, in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter, the “Undertaking”) by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal (a “final disposition”) that such director or officer is not entitled to be indemnified for such expenses under this ARTICLE 9 or otherwise.

 

Section 3. Claims. If a claim for indemnification under this ARTICLE 9 is not paid in full by the Corporation within thirty (30) days after a written claim has been received by the Corporation, or if a request for advancement of expenses under Section 2 of this ARTICLE 9 is not paid in full by the Corporation within twenty (20) days after a statement pursuant to Section 2 of this ARTICLE 9 and the required Undertaking, if any, have been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim for indemnification or request for advancement of expenses and, if successful, in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action that, under the DGCL, the claimant has not met the standard of conduct which makes it permissible for the Corporation to indemnify the claimant for the amount claimed or that the claimant is not entitled to the requested advancement of expenses, but (except where the required Undertaking, if any, has not been tendered to the Corporation) the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Disinterested Directors (as defined in the Bylaws of the Corporation), Independent Counsel (as defined in the Bylaws of the Corporation) or stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including its Disinterested Directors, Independent Counsel or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

 

 

Section 4. Contract Rights; Amendment and Repeal; Non-Exclusivity of Rights.

 

(a) All of the rights conferred in this ARTICLE 9, as to indemnification, advancement of expenses and otherwise, shall be contract rights between the Corporation and each Covered Person to whom such rights are extended that vest at the commencement of such Covered Person’s service to or at the request of the Corporation and: (x) any amendment or modification of this ARTICLE 9 that in any way diminishes or adversely affects any such rights shall be prospective only and shall not in any way diminish or adversely affect any such rights with respect to such person; and (y) all of such rights shall continue as to any such Covered Person who has ceased to be a director or officer of the Corporation or ceased to serve at the Corporation’s request as a director, officer, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, as described herein, and shall inure to the benefit of such Covered Person’s heirs, executors and administrators.

 

(b) All of the rights conferred in this ARTICLE 9, as to indemnification, advancement of expenses and otherwise: (i) shall not be exclusive of any other rights to which any person seeking indemnification or advancement of expenses may be entitled or hereafter acquire under any statute, provision of this Amended and Restated Certificate of Incorporation, Bylaws, agreement, vote of stockholders or Disinterested Directors or otherwise both as to action in such person’s official capacity and as to action in another capacity while holding such office; and (ii) cannot be terminated or impaired by the Corporation, the Board of Directors or the stockholders of the Corporation with respect to a person’s service prior to the date of such termination.

 

Section 5. Insurance, Other Indemnification and Advancement of Expenses.

 

(a) The Corporation may maintain insurance, at its expense, to protect itself and any current or former director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.

 

(b) The Corporation may, to the extent authorized from time to time by the Board of Directors or the Chief Executive Officer, grant rights to indemnification and rights to advancement of expenses incurred in connection with any Proceeding in advance of its final disposition, to any current or former officer, employee or agent of the Corporation to the fullest extent permitted by applicable law.

 

Section 6. Severability. If any provision or provisions of this ARTICLE 9 shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (1) the validity, legality and enforceability of the remaining provisions of this ARTICLE 9 (including, without limitation, each portion of any paragraph of this ARTICLE 9 containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (2) to the fullest extent possible, the provisions of this ARTICLE 9 (including, without limitation, each such portion of any paragraph of this ARTICLE 9 containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

 

 

ARTICLE 10
AMENDMENTS

 

The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by the DGCL, and all rights herein are granted subject to this reservation.

 

ARTICLE 11
AMENDMENTS TO BYLAWS

 

In furtherance and not in limitation of the powers conferred by applicable law, the Board of Directors is expressly authorized to adopt, amend, alter or repeal the Bylaws of the Corporation, without the assent or vote of stockholders of the Corporation.

 

ARTICLE 12
EXCLUSIVE FORUM

 

Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for: (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim for or based on a breach of a fiduciary duty owed by any current or former director or officer or other employee of the Corporation to the Corporation or to the Corporation’s stockholders, including a claim alleging the aiding and abetting of such a breach of fiduciary duty, (c) any action asserting a claim against the Corporation or any current or former director or officer or other employee of the Corporation arising pursuant to any provision of the DGCL or this Certificate of Incorporation or the Bylaws (as either may be amended from time to time), (d) any action asserting a claim related to or involving the Corporation that is governed by the internal affairs doctrine, or (e) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the DGCL, shall be a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware). Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. This exclusive forum provision does not apply to claims arising under the Securities Exchange Act of 1934, as amended.

 

 

IN WITNESS WHEREOF, the undersigned has duly executed this Amended and Restated Certificate of Incorporation, this 6th day of June.

 

	By:	/s/ Mark Meller
	Name:	Mark Meller
	Title:	Chief Executive Officer

 

 

 

 

[Signature Page to Fifth A&R Certificate of Incorporation]

 

12

 

Exhibit 3.2

 

CERTIFICATE OF AMENDMENT

OF THE

FIFTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

SILVERSUN TECHNOLOGIES, INC.

 

Pursuant to Section 242 of the General

Corporation Law of the State of Delaware

 

*****

 

SilverSun Technologies, Inc. (the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “DGCL”), does hereby certify as follows:

 

FIRST: That Article 1 of the Fifth Amended and Restated Certificate of Incorporation of the Corporation is hereby amended in its entirety to read as follows (the “Amendment”):

 

“ARTICLE 1 NAME OF CORPORATION The name of the Corporation is QXO, Inc.”

 

SECOND: The Amendment was duly adopted in accordance with Section 242 of the DGCL.

 

THIRD: The Amendment shall become effective at 9:01 A.M. Eastern Time on June 6, 2024.

 

 

IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed on June 6, 2024.

 

	SILVERSUN TECHNOLOGIES, INC.
	By:	/s/ Mark Meller
	Name:	Mark Meller
	Title:	Chief Executive Officer

 

[Signature Page to Certificate of Amendment]

 

 

 

Exhibit 3.3

 

AMENDED AND RESTATED BYLAWS

OF

QXO, inc. (the “Corporation”) 

Incorporated under the Laws of the State of Delaware

 

 

Article I
OFFICES AND RECORDS

 

Section 1.1 Registered Office. The registered office of the Corporation in Delaware shall be as stated from time to time in the Certificate of Incorporation of the Corporation (as the same may be amended or restated from time to time, the “Certificate of Incorporation”).

 

Section 1.2 Other Offices. The Corporation may have such other offices, either inside or outside the State of Delaware, as the Board of Directors of the Corporation (the “Board of Directors”) may from time to time designate or as the business of the Corporation may require.

 

Section 1.3 Books and Records. The books and records of the Corporation may be kept inside or outside the State of Delaware at such place or places as may from time to time be designated by the Board of Directors.

 

Article II
STOCKHOLDERS

 

Section 2.1 Annual Meeting. The annual meeting of the stockholders of the Corporation shall be held on such date and at such time as may be fixed by resolution of the Board of Directors.

 

Section 2.2 Special Meeting. Subject to the rights of the holders of any series of stock having a preference over the Common Stock of the Corporation as to dividends, voting or upon liquidation (the “Preferred Stock”) with respect to such series of Preferred Stock, special meetings of the stockholders may only be called by or at the direction of: (1) the Chair of the Board of Directors, (2) the Lead Independent Director (if one has been appointed), or (3) the Board of Directors pursuant to a resolution adopted by the affirmative vote of a majority of the total number of directors that the Corporation would have if there were no vacancies (the “Whole Board”), and any power of stockholders to call a special meeting is specifically denied. At any special meeting of stockholders, only such business shall be conducted or considered as shall have been properly brought before the meeting pursuant to the Corporation’s notice of meeting. The Board of Directors may postpone, reschedule or cancel any special meeting of stockholders previously scheduled by the Board of the Directors.

 

Section 2.3 Date, Time and Place of Meeting. The Board of Directors or the Chair of the Board of the Board of Directors, as the case may be, may determine the date, time and place, if any, of meeting for any annual or special meeting of the stockholders, or may designate that the meeting be held by means of remote communication. If no determination is so made, the place of meeting shall be the principal office of the Corporation.

 

 

Section 2.4 Notice of Meeting. Written or printed notice, stating the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for stockholders entitled to notice of the meeting), and in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given by the Corporation not less than ten (10) days nor more than sixty (60) days before the date of the meeting, either personally, by electronic transmission in the manner provided in Section 232 of the General Corporation Law of the State of Delaware (except to the extent prohibited by Section 232(e) of the General Corporation Law of the State of Delaware) or by mail, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail with postage thereon prepaid, addressed to the stockholder at such stockholder’s address as it appears on the records of the Corporation. If notice is given by electronic transmission, such notice shall be deemed to be given at the times provided in the General Corporation Law of the State of Delaware. Such further notice shall be given as may be required by applicable law. Meetings may be held without notice if all stockholders entitled to vote are present, or if notice is waived by those not present in accordance with Section 7.4 of these Bylaws. Any previously scheduled meeting of the stockholders may be postponed, and (unless the Certificate of Incorporation otherwise provides) any special meeting of the stockholders may be cancelled, by resolution of the Board of Directors upon public notice given prior to the date previously scheduled for such meeting of stockholders.

 

Section 2.5 Quorum and Adjournment. Except as otherwise provided by law or by the Certificate of Incorporation, the holders of a majority of the Voting Stock (with all of the Voting Stock considered as a single class), represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, except that when specified business is to be voted on by a class or series of stock voting as a class, the holders of a majority of the shares of such class or series shall constitute a quorum of such class or series for the transaction of such business. The chair of the meeting, as set forth in Section 2.6 of these Bylaws, may adjourn the meeting from time to time, whether or not there is a quorum and for any reason. No notice of the time and place, if any, of adjourned meetings need be given except as required by applicable law. The stockholders present at a duly called meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

 

 

Section 2.6 Organization. Meetings of stockholders shall be presided over by such person as the Board of Directors may designate (including by specifying in the Corporation’s Corporate Governance Guidelines, if any) as chair of the meeting (who may be any of the officers or other persons specified below), or in the absence of such a designation or in the absence or inability to act of such person, the Chair of the Board, or if none or in the Chair of the Board’s absence or inability to act, the Chief Executive Officer, or if none or in the Chief Executive Officer’s absence or inability to act, a Vice President, or, if none of the foregoing is present or able to act, by a chair to be chosen by the holders of a majority of the shares entitled to vote who are present in person or by proxy at the meeting. The Secretary, or in the Secretary’s absence, an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present, the presiding officer of the meeting shall appoint any person present to act as secretary of the meeting. The Board of Directors shall be entitled to make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Directors, if any, the chair of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chair, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, (a) establishing an agenda or order of business for the meeting, (b) rules and procedures for maintaining order at the meeting and the safety of those present, (c) limitations on participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies and such other persons as the chair shall permit, (d) restrictions on entry to the meeting after the time fixed for the commencement thereof, (e) limitations on the time allotted to questions or comments by participants and regulation of the opening and closing of the polls for balloting and matters which are to be voted on by ballot and (f) restricting the use of cell phones, audio or video recording devices and similar devices at the meeting. Unless and to the extent determined by the Board of Directors or the chair of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

 

Section 2.7 Proxies. At all meetings of stockholders, a stockholder may vote by proxy executed in writing (or in such manner prescribed by the General Corporation Law of the State of Delaware) by the stockholder, or by such stockholder’s duly authorized attorney in fact. Any stockholder directly or indirectly soliciting proxies from other stockholders must use a proxy card color other than white, which shall be reserved for exclusive use by the Board of Directors.

 

Section 2.8 Order of Business.

 

(A) Annual Meetings of Stockholders. At any annual meeting of the stockholders, only such nominations of individuals for election to the Board of Directors shall be made, and only such other business shall be conducted or considered, as shall have been properly brought before the meeting. For nominations to be properly made at an annual meeting, and for other business to be properly brought before an annual meeting, such nominations and other business must be: (a) specified in the Corporation’s notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors; (b) otherwise made at the annual meeting by or at the direction of the Board of Directors; (c) otherwise properly requested to be brought before the annual meeting by a stockholder of the Corporation in accordance with Section 2.8 and Section 2.9 of these Bylaws; or (d) in accordance with Section 2.10. For nominations of individuals for election to the Board of Directors or other business to be properly requested by a stockholder to be made at or brought before an annual meeting pursuant to clause (c) above, a stockholder must: (i) be a stockholder of record at the time of giving of notice of such annual meeting by or at the direction of the Board of Directors, on the record date for determination of stockholders entitled to vote at such meeting, and at the time of the annual meeting; (ii) be entitled to vote at such annual meeting; and (iii) comply with the procedures set forth in these Bylaws as to such nomination or other business. Clauses (c) and (d) of this Section 2.8 shall be the exclusive means for a stockholder to make nominations and such clause (c) shall be the exclusive means for a stockholder to bring other business (other than matters properly brought under Rule 14a-8 under the Exchange Act and included in the Corporation’s notice of meeting) before an annual meeting of stockholders.

 

 

(B) Special Meetings of Stockholders. At any special meeting of the stockholders, only such business shall be conducted or considered as shall have been properly brought before the meeting. To be properly brought before a special meeting, such business must be: (a) specified in the Corporation’s notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors; or (b) otherwise brought before the special meeting by or at the direction of the Board of Directors.

 

Nominations of individuals for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting: (a) by or at the direction of the Board of Directors; or (b) by any stockholder of the Corporation who: (i) is a stockholder of record at the time of giving of notice of such special meeting, on the record date for determination of stockholders entitled to vote at such meeting, and at the time of the special meeting; (ii) is entitled to vote at the meeting; and (iii) complies with the procedures set forth in these Bylaws as to such nomination. This Section 2.8(B) shall be the exclusive means for a stockholder to make nominations before a special meeting of stockholders.

 

(C) General. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the chair of any annual or special meeting shall have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with these Bylaws and, if any proposed nomination or other business is not in compliance with these Bylaws, to declare that no action shall be taken on such nomination or other business and such nomination or other business shall be disregarded.

 

Section 2.9 Advance Notice of Stockholder Business and Nominations.

 

(A) Annual Meeting of Stockholders. Without qualification or limitation, for any nominations or any other business to be properly brought before an annual meeting by a stockholder pursuant to Section 2.8(A) of these Bylaws, the stockholder must have given timely notice thereof in writing to the Secretary in proper form, and in accordance with this Section 2.9 or Section 2.10, as applicable.

 

To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the Close of Business on the one hundred and twentieth (120^th) day and not later than the Close of Business on the ninetieth (90^th) day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder must be so delivered not earlier than the Close of Business on the one hundred and twentieth (120^th) day prior to the date of such annual meeting and not later than the Close of Business on the later of the ninetieth (90^th) day prior to the date of such annual meeting or, if the first Public Announcement of the date of such annual meeting is less than one hundred (100) days prior to the date of such annual meeting, the tenth (10^th) day following the day on which Public Announcement of the date of such meeting is first made by the Corporation. In no event shall any adjournment, recess, rescheduling or postponement of an annual meeting, or the Public Announcement thereof, commence a new time period for the giving of a stockholder’s notice as described above. For the avoidance of doubt, a stockholder shall not be entitled to make additional or substitute nominations following the expiration of the time periods set forth in these Bylaws.

 

 

Notwithstanding anything in the immediately preceding paragraph to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased by the Board of Directors, and there is no Public Announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least ten (10) days prior to the deadline for nominations that would otherwise be applicable under this Section 2.9(A), a stockholder’s notice required by this Section 2.9(A) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the Close of Business on the tenth (10^th) day following the day on which such Public Announcement is first made by the Corporation.

 

(B) Special Meetings of Stockholders. In the event a special meeting of stockholders is called pursuant to Section 2.2, a purpose of which is the election of one or more directors to the Board of Directors, any stockholder may nominate an individual or individuals (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting; provided that the stockholder gives timely notice thereof. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the Close of Business on the one hundred and twentieth (120^th) day prior to the date of such special meeting and not later than the Close of Business on the later of the ninetieth (90^th) day prior to the date of such special meeting or, if the first Public Announcement of the date of such special meeting is less than one hundred (100) days prior to the date of such special meeting, the tenth (10^th) day following the day on which Public Announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall any adjournment, recess, rescheduling or postponement of a special meeting of stockholders, or the Public Announcement thereof, commence a new time period for the giving of a stockholder’s notice as described above. For the avoidance of doubt, a stockholder shall not be entitled to make additional or substitute nominations following the expiration of the time periods set forth in these Bylaws.

 

Notwithstanding anything in the immediately preceding paragraph to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased by the Board of Directors, and there is no Public Announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least ten (10) days prior to the deadline for nominations that would otherwise be applicable under this Section 2.9(B), a stockholder’s notice required by this Section 2.9(B) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the Close of Business on the tenth (10^th) day following the day on which such Public Announcement is first made by the Corporation.

 

 

(C) Disclosure Requirements. To be in proper form, a stockholder’s notice pursuant to Section 2.8 or this Section 2.9 must include the following, as applicable:

 

(1) As to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made or business is brought, as applicable, a stockholder’s notice must set forth: (i) the name and address of such stockholder, as they appear on the Corporation’s books, of such beneficial owner, if any, and any persons that are acting in concert therewith; (ii) a representation that the stockholder giving the notice is a holder of record of Voting Stock entitled to vote at such meeting, will continue to be a stockholder of record of Voting Stock entitled to vote at such meeting through the date of such meeting and intends to appear in person or by proxy at the meeting to make such nomination or to propose such business; (iii) (A) the class or series and number of shares of the Corporation which are, directly or indirectly, owned of record and owned beneficially by such stockholder, such beneficial owner and their respective affiliates or associates, or others acting in concert therewith, (B) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any security of the Corporation or with a value derived, in whole or in part, from the value of any security of the Corporation, or any derivative or synthetic arrangement having the characteristics of a long position in any security of the Corporation, or any contract, derivative, swap or other transaction or series of transactions designed to produce economic benefits and risks that correspond substantially to the ownership of any security of the Corporation, including due to the fact that the value of such contract, derivative, swap or other transaction or series of transactions is determined by reference to the price, value or volatility of any security of the Corporation, whether or not such instrument, contract or right shall be subject to settlement in the underlying securities of the Corporation, through the delivery of cash or other property, or otherwise, and without regard to whether the stockholder of record, the beneficial owner, if any, or any of their respective affiliates or associates, or others acting in concert therewith, may have entered into transactions that hedge or mitigate the economic effect of such instrument, contract or right, or any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of securities of the Corporation (any of the foregoing, a “Derivative Instrument”) directly or indirectly owned beneficially by such stockholder, the beneficial owner, if any, or any of their respective affiliates or associates, or others acting in concert therewith, (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder, such beneficial owner or any of their respective affiliates or associates, or others acting in concert therewith has or pursuant to any proxy, contract, understanding or relationship may acquire any right to vote any security of the Corporation, (D) any agreement, arrangement, understanding, relationship or otherwise, including any repurchase or similar so-called “stock borrowing” agreement or arrangement, involving such stockholder, such beneficial owner or any of their respective affiliates or associates, or others acting in concert therewith, directly or indirectly, the intent, purpose or effect of which may be to mitigate loss to, transfer to or from any such person, in whole or in part, any of the economic consequences of ownership, or reduce the economic risk (of ownership or otherwise) of any security of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such stockholder, such beneficial owner or any of their respective affiliates or associates, or others acting in concert therewith, with respect to any security of the Corporation, or which provides, directly or indirectly, the opportunity to profit or share in any profit derived from any decrease in the price or value of any securities of the Corporation (any of the foregoing, a “Short Interest”); (E) any rights to dividends on the shares of the Corporation owned beneficially by such stockholder, such beneficial owner or any of their respective affiliates or associates, or others acting in concert therewith, that are separated or separable from the underlying shares of the Corporation; (F) any proportionate interest in securities of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership or similar entity in which such stockholder, such beneficial owner or any of their respective affiliates or associates, or others acting in concert therewith, is a general partner or, directly or indirectly, beneficially owns an interest in a general partner or is the manager or managing member or, directly or indirectly, beneficially owns any interest in the manager or managing member of such general or limited partnership or similar entity; (G) any performance-related fees (other than an asset-based fee) that such stockholder, such beneficial owner or any of their respective affiliates or associates, or others acting in concert therewith, is entitled to based on any increase or decrease in the value of securities of the Corporation or Derivative Instruments or Short Interests, if any; (H) any direct or indirect interest, including significant equity interests or any Derivative Instruments or Short Interests in any principal competitor of the Corporation held by such stockholder, such beneficial owner or any of their respective affiliates or associates, or others acting in concert therewith and (I) any direct or indirect interest of such stockholder, such beneficial owner and their respective affiliates or associates, or others acting in concert therewith, in any contract with, or any litigation involving, the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement) (sub-clauses (A) through (I) above of this Section 2.9(C)(1)(iii) shall be referred, collectively, as the “Ownership Information”); (iv) if any such stockholder, such beneficial owner or any of their respective affiliates or associates, or others acting in concert therewith, intends to engage in a solicitation with respect to a nomination or other business pursuant to this Section 2.9 or Section 2.10, a statement disclosing the name of each participant in such solicitation (as defined in Item 4 of Schedule 14A under the Exchange Act) and if involving a nomination a representation that such stockholder, such beneficial owner or any of their respective affiliates or associates, or others acting in concert, therewith intends to deliver a proxy statement and form of proxy to holders of at least sixty-seven percent (67%) of the Voting Stock; (v) a certification that each such stockholder, such beneficial owner or any of their respective affiliates or associates, or others acting in concert therewith, has complied with all applicable federal, state and other legal requirements in connection with its acquisition of shares or other securities of the Corporation and such person’s acts or omissions as a stockholder of the Corporation; (vi) the names and addresses of other shareholders (including beneficial owners) known by any such stockholder, such beneficial owner or any of their respective affiliates or associates, or others acting in concert therewith, to financially or otherwise materially support (it being understood, for example, that statement of an intent to vote for, or delivery of a revocable proxy to such proponent, does not require disclosure under this section, but solicitation of other stockholders by such supporting stockholder would require disclosure under this section) such nomination(s) or proposal(s), and to the extent known the class and number of all shares of the Corporation’s capital stock owned beneficially or of record by, and any other information contemplated by clause (iii) of this Section 2.9(C)(1) with respect to, such other stockholder(s) or other beneficial owner(s); (vii) all information that would be required to be set forth in a Schedule 13D filed pursuant to Rule 13d-1(a) or an amendment pursuant to Rule 13d-2(a) if such a statement were required to be filed under the Exchange Act and the rules and regulations promulgated thereunder by such stockholder, such beneficial owner and their respective affiliates or associates, or others acting in concert therewith, if any; and (viii) any other information relating to such stockholder, such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith, if any, that would be required to be disclosed in a proxy statement and form or proxy or other filings required to be made in connection with solicitations of proxies for, as applicable, the business proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder;

 

 

(2) If the notice includes any business other than a nomination of a director or directors that the stockholder proposes to bring before the meeting, a stockholder’s notice must, in addition to the matters set forth in Section 2.9(C)(1), also set forth: (i) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest of such stockholder, such beneficial owner and each of their respective affiliates or associates or others acting in concert therewith, if any, in such business; (ii) the text of the business proposal (including the text of any resolutions proposed for consideration and, in the event that such proposal includes a proposal to amend the Bylaws of the Corporation, the text of the proposed amendment); and (iii) a description of all agreements, arrangements and understandings between such stockholder, such beneficial owner and each of their respective affiliates or associates or others acting in concert therewith, if any, on the one hand, and any other person or persons (including their names), on the other hand, in connection with the business proposal by such stockholder;

 

(3) As to each individual, if any, whom the stockholder proposes to nominate for election or reelection to the Board of Directors, a stockholder’s notice must, in addition to the matters set forth in Section 2.9(C)(1), also set forth: (i) the name, age, business and residence address of such person; (ii) the principal occupation or employment of such person (present and for the past five (5) years); (iii) the completed and signed questionnaire, representation, agreement and majority voting-related conditional resignation required by Section 2.11 of these Bylaws; (iv) all information relating to such individual that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (including such individual’s written consent to being named in a proxy statement as a nominee) and a written statement of intent to serve as a director for the full term if elected; and (v) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three (3) years, and any other material relationships, between or among such stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation, all biographical and related party transaction and other information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant;

 

 

(4) In addition, to be considered timely, a stockholder’s notice shall further be updated and supplemented, if necessary, so that the information provided or required to be provided in such notice shall be true and correct as of the record date for determining the stockholders of record entitled to notice of the meeting (or any adjournment, recess, rescheduling or postponement thereof) and as of the date that is ten (10) days prior to the meeting (or any adjournment, recess, rescheduling or postponement thereof), and such update and supplement shall be delivered to the Secretary at the principal executive offices of the Corporation not later than (a) the later of (i) ten (10) days after the record date for determining the stockholders of record entitled to notice of the meeting (or any adjournment, recess, rescheduling or postponement thereof) or (ii) the first Public Announcement of the date of notice of such record date in the case of the update and supplement required to be made as of the record date, and (b) not later than eight (8) days prior to the date for the meeting (or any adjournment, recess, rescheduling or postponement thereof) in the case of the update and supplement required to be made as of ten (10) days prior to the meeting or any adjournment, recess, rescheduling or postponement thereof. The obligation to update and supplement as set forth in this paragraph or any other Section of these Bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any nomination or business proposal or to submit any new nomination or business proposal, including by changing or adding nominees, matters, business and or resolutions proposed to be brought before a meeting of the stockholders. In addition, if the stockholder giving the notice has delivered to the Corporation a notice relating to the nomination of directors, the stockholder giving the notice shall deliver to the Corporation no later than five (5) business days prior to the date of the meeting or, if practicable, any adjournment, recess, rescheduling or postponement thereof (or, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned, recessed, rescheduled, or postponed) reasonable evidence that it has complied with the requirements of Rule 14a-19 of the Exchange Act.

 

(5) The Corporation may also, as a condition to any such nomination or business being deemed properly brought before an annual or special meeting, require any stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or business proposal, as applicable, is made, or any proposed nominee to deliver to the Secretary, within five (5) business days of any such request, such other information as may reasonably be required by the Corporation or its Board of Directors, in its sole discretion, to determine (a) the eligibility of such proposed nominee to serve as a director of the Corporation, (b) whether such nominee qualifies as an “independent director” or “audit committee financial expert” under applicable law, securities exchange rule or regulation, or any publicly disclosed corporate governance guideline or committee charter of the Corporation or (c) such other information that the Board of Directors determines, in its sole discretion, could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee. Notwithstanding anything to the contrary, only persons who are nominated in accordance with the procedures set forth in these Bylaws, including, without limitation, Section 2.8, Section 2.9, Section 2.10, and Section 2.11 hereof, shall be eligible for election as directors; and

 

 

(6) Notwithstanding anything to the contrary in this Section 2.9, to the extent the stockholder of record giving the notice is acting solely at the direction of the beneficial owner and not also on its own behalf or in concert with a beneficial owner, and is not an affiliate or associate or such beneficial owner, information otherwise required by clauses (iii), (iv), (v) and (vi) of Section 2.9(C)(1) shall not be required of or with respect to such stockholder of record.

 

(D) Notwithstanding the provisions of these Bylaws, a stockholder giving the notice shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Bylaw; provided, however, that any references in these Bylaws to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the separate and additional requirements set forth in these Bylaws with respect to nominations or proposals as to any other business to be considered.

 

(E) Only persons who are nominated by stockholders in accordance with the procedures set forth in Section 2.8 and Section 2.9 or Section 2.10 shall be eligible to be elected at an annual or special meeting of stockholders of the Corporation to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in Section 2.8 and Section 2.9 or Section 2.10, as applicable. The procedures set forth in Section 2.8 and Section 2.9 or Section 2.10 for nomination for the election of directors by stockholders are in addition to, and not in limitation of, any procedures now in effect or hereafter adopted by or at the direction of the Board of Directors or any committee thereof.

 

(F) Notwithstanding the foregoing provisions of Section 2.8 and Section 2.9, if the stockholder giving the notice (or a qualified representative thereof) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or proposed business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.

 

(G) Except as otherwise provided by law, the Board of Directors or the chair of the meeting shall have the power (a) to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in Section 2.8 and Section 2.9 (including whether the stockholder or beneficial owner, if any, on whose behalf the nomination or business proposal is made solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in support of such stockholder’s nominee or business proposal in compliance with such stockholder’s representation as required by Section 2.9(C)(1)(v)) and (b) if any proposed nomination or business was not made or proposed in compliance with this Section 2.8 and Section 2.9, or if any of the information provided to the Company pursuant to this Section 2.8 or Section 2.9 was inaccurate, to declare that such nomination shall be disregarded or that such proposed business shall not be transacted.

 

 

(H) Nothing in these Bylaws shall be deemed to affect any rights: (a) of stockholders to request inclusion of business proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act; or (b) of the holders of any series of Preferred Stock if and to the extent provided for under law, the Certificate of Incorporation or these Bylaws. Subject to Rule 14a-8 under the Exchange Act and Section 2.10 of these Bylaws, nothing in these Bylaws shall be construed to permit any stockholder, or give any stockholder the right, to include or have disseminated or described in the Corporation’s proxy statement any nomination of director or directors or any other business proposal.

 

Section 2.10 Inclusion of Stockholder Director Nominations in the Corporation’s Proxy Materials.

 

(A) Subject to the terms and conditions set forth in these Bylaws, the Corporation shall include in its proxy materials for an annual meeting of stockholders the name, together with the Required Information (as defined below), of any person nominated for election (the “Stockholder Nominee”) to the Board of Directors by a stockholder or group of stockholders that satisfy the requirements of Section 2.9 and this Section 2.10, including qualifying as an Eligible Stockholder (as defined in paragraph (E) below) and that expressly elects at the time of providing the written notice required by this Section 2.10 (a “Proxy Access Notice”) to have its nominee included in the Corporation’s proxy materials pursuant to this Section 2.10.

 

(B) For purposes of this Section 2.10, the “Required Information” that the Corporation will include in its proxy statement is: (i) the information concerning the Stockholder Nominee and the Eligible Stockholder that the Corporation determines is required to be disclosed in the Corporation’s proxy statement by the regulations promulgated under the Exchange Act; and (ii) if the Eligible Stockholder so elects, a Statement (as defined in paragraph (G) below). The Corporation shall also include the name of the Stockholder Nominee in its proxy card. For the avoidance of doubt, and any other provision of these Bylaws notwithstanding, the Corporation may in its sole discretion solicit against, and include in the proxy statement (and other proxy materials) its own statements or other information relating to, any Eligible Stockholder and/or Stockholder Nominee, including any information provided to the Corporation with respect to the foregoing.

 

(C) To be timely, a stockholder’s Proxy Access Notice must be delivered to the principal executive offices of the Corporation within the time periods applicable to stockholder notices of nominations pursuant to Section 2.9(A) of these Bylaws. In no event shall any adjournment, recess, rescheduling or postponement of an annual meeting, the date of which has been announced by the Corporation, commence a new time period for the giving of a Proxy Access Notice.

 

 

(D) The number of Stockholder Nominees (including Stockholder Nominees that were submitted by an Eligible Stockholder for inclusion in the Corporation’s proxy materials pursuant to this Section 2.10 but either are subsequently withdrawn or that the Board of Directors decides to nominate as Board of Directors’ nominees) appearing in the Corporation’s proxy materials with respect to an annual meeting of stockholders shall not exceed the greater of (x) two (2) and (y) the largest whole number that does not exceed twenty percent (20%) of the number of directors in office as of the last day on which a Proxy Access Notice may be delivered in accordance with the procedures set forth in this Section 2.10 (such greater number, the “Permitted Number”); provided, however, that the Permitted Number shall be reduced by:

 

(1) the number of such director candidates for which the Corporation shall have received one or more valid stockholder notices nominating director candidates pursuant to Section 2.8 and Section 2.9 (but not Section 2.10) of these Bylaws, but only to the extent the Permitted Number after such reduction with respect to this clause equals or exceeds one (1);

 

(2) the number of directors in office or director candidates that in either case will be included in the Corporation’s proxy materials with respect to such annual meeting as an unopposed (by the Corporation) nominee pursuant to an agreement, arrangement or other understanding with a stockholder or group of stockholders (other than any such agreement, arrangement or understanding entered into in connection with an acquisition of Voting Stock, by such stockholder or group of stockholders, from the Corporation), other than any such director referred to in this clause who at the time of such annual meeting will have served as a director continuously, as a nominee of the Board of Directors, for at least two (2) annual terms, but only to the extent the Permitted Number after such reduction with respect to this clause equals or exceeds one (1); and

 

(3) the number of directors in office that will be included in the Corporation’s proxy materials with respect to such annual meeting for whom access to the Corporation’s proxy materials was previously provided pursuant to this Section 2.10, other than any such director referred to in this clause who at the time of such annual meeting will have served as a director continuously, as a nominee of the Board of Directors, for at least two (2) annual terms;

 

provided, further, that in the event the Board of Directors resolves to reduce the size of the Board of Directors effective on or prior to the date of the annual meeting, the Permitted Number shall be calculated based on the number of directors in office as so reduced. An Eligible Stockholder submitting more than one Stockholder Nominee for inclusion in the Corporation’s proxy statement pursuant to this Section 2.10 shall rank such Stockholder Nominees based on the order that the Eligible Stockholder desires such Stockholder Nominees to be selected for inclusion in the Corporation’s proxy statement and include such specified rank in its Proxy Access Notice. If the number of Stockholder Nominees pursuant to this Section 2.10 for an annual meeting of stockholders exceeds the Permitted Number, then the highest ranking qualifying Stockholder Nominee from each Eligible Stockholder will be selected by the Corporation for inclusion in the proxy statement until the Permitted Number is reached, going in order of the amount (largest to smallest) of the ownership position as disclosed in each Eligible Stockholder’s Proxy Access Notice. If the Permitted Number is not reached after the highest ranking Stockholder Nominee from each Eligible Stockholder has been selected, this selection process will continue as many times as necessary, following the same order each time, until the Permitted Number is reached.

 

 

(E) An “Eligible Stockholder” is one or more stockholders of record who own and have owned, or are acting on behalf of one or more beneficial owners who own and have owned (in each case as defined above), in each case continuously for at least three (3) years as of both the date that the Proxy Access Notice is received by the Corporation pursuant to this Section 2.10, and as of the record date for determining stockholders eligible to vote at the annual meeting, at least three percent (3%) of the aggregate voting power of the Voting Stock (the “Proxy Access Request Required Shares”), and who continue to own the Proxy Access Request Required Shares at all times between the date such Proxy Access Notice is received by the Corporation and the date of the applicable annual meeting; provided that the aggregate number of stockholders, and, if and to the extent that a stockholder is acting on behalf of one or more beneficial owners, of such beneficial owners, whose stock ownership is counted for the purpose of satisfying the foregoing ownership requirement shall not exceed twenty (20). Two (2) or more collective investment funds that are part of the same family of funds by virtue of being under common management and investment control, under common management and sponsored primarily by the same employer or a “group of investment companies” (as such term is defined in Section 12(d)(1)(G)(ii) of the Investment Company Act of 1940, as amended) (a “Qualifying Fund”) shall be treated as one stockholder for the purpose of determining the aggregate number of stockholders in this paragraph (E); provided that each fund included within a Qualifying Fund otherwise meets the requirements set forth in this Section 2.10. No shares may be attributed to more than one group constituting an Eligible Stockholder under this Section 2.10 (and, for the avoidance of doubt, no stockholder may be a member of more than one group constituting an Eligible Stockholder). A record holder acting on behalf of one or more beneficial owners will not be counted separately as a stockholder with respect to the shares owned by beneficial owners on whose behalf such record holder has been directed in writing to act, but each such beneficial owner will be counted separately, subject to the other provisions of this paragraph (E), for purposes of determining the number of stockholders whose holdings may be considered as part of an Eligible Stockholder’s holdings. For the avoidance of doubt, Proxy Access Request Required Shares will qualify as such if and only if the beneficial owner of such shares as of the date of the Proxy Access Notice has itself individually beneficially owned such shares continuously for the three-year (3 year) period ending on that date and through the other applicable dates referred to above (in addition to the other applicable requirements being met).

 

(F) No later than the final date when a Proxy Access Notice pursuant to this Section 2.10 may be timely delivered to the Secretary, an Eligible Stockholder (including each Constituent Holder) must provide the following information in writing to the Secretary:

 

(1) with respect to each Constituent Holder, the name and address of, and number of shares of Voting Stock owned by, such person;

 

 

(2) one or more written statements from the record holder of the shares (and from each intermediary through which the shares are or have been held during the requisite three-year (3-year) holding period) verifying that, as of a date within seven (7) days prior to the date the Proxy Access Notice is delivered to the Corporation, such person owns, and has owned continuously for the preceding three (3) years, the Proxy Access Request Required Shares, and such person’s agreement to provide:

 

i. within ten (10) days after the record date for the annual meeting, written statements from the record holder and intermediaries verifying such person’s continuous ownership of the Proxy Access Request Required Shares through the record date, together with any additional information reasonably requested to verify such person’s ownership of the Proxy Access Request Required Shares; and

 

ii. immediate notice if the Eligible Stockholder ceases to own any of the Proxy Access Request Required Shares prior to the date of the applicable annual meeting of stockholders;

 

(3) the information, representations and agreements contemplated by Section 2.9(C)(1), Section 2.9(C)(3), Section 2.9(C)(4) and Section 2.9(C)(5) of these Bylaws (with references to a “stockholder” therein to include such Eligible Stockholder (including each Constituent Holder));

 

(4) a representation that such person:

 

i. acquired the Proxy Access Request Required Shares in the ordinary course of business and neither the Eligible Stockholder nor the Stockholder Nominee nor their respective affiliates and associates acquired or is holding any securities of the Corporation with the intent to change or influence control of the Corporation;

 

ii. has not nominated and will not nominate for election to the Board of Directors at the annual meeting any person other than the Stockholder Nominee(s) being nominated pursuant to this Section 2.10;

 

iii. has not engaged and will not engage in, and has not been and will not be a “participant” in another person’s, “solicitation” within the meaning of Rule 14a-1(l) under the Exchange Act in support of the election of any individual as a director at the annual meeting other than its Stockholder Nominee(s) or a nominee of the Board of Directors;

 

iv. will not distribute to any stockholder any form of proxy for the annual meeting other than the form distributed by the Corporation; and

 

v. will provide facts, statements and other information in all communications with the Corporation and its stockholders that are and will be true and correct in all material respects and do not and will not omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, and will otherwise comply with all applicable laws, rules and regulations in connection with any actions taken pursuant to this Section 2.10;

 

(5) in the case of a nomination by a group of stockholders that together is such an Eligible Stockholder, the designation by all group members of one group member that is authorized to act on behalf of all members of the nominating stockholder group with respect to the nomination and matters related thereto, including withdrawal of the nomination; and

 

 

(6) an undertaking that such person agrees to:

 

i. assume all liability stemming from, and indemnify and hold harmless the Corporation and each of its directors, officers, and employees individually against any liability, loss or damages in connection with any threatened or pending action, suit or proceeding, whether legal, administrative or investigative, against the Corporation or any of its directors, officers or employees arising out of any legal or regulatory violation arising out of the Eligible Stockholder’s communications with the stockholders of the Corporation or out of the information that the Eligible Stockholder (including such person) provided to the Corporation

 

ii. promptly provide to the Corporation such other information as the Corporation may reasonably request; and

 

iii. file with the Securities and Exchange Commission any solicitation by the Eligible Stockholder of stockholders of the Corporation relating to the annual meeting at which the Stockholder Nominee will be nominated.

 

In addition, no later than the final date when a nomination pursuant to this Section 2.10 may be delivered to the Corporation, a Qualifying Fund whose stock ownership is counted for purposes of qualifying as an Eligible Stockholder must provide to the Secretary documentation reasonably satisfactory to the Board of Directors that demonstrates that the funds included within the Qualifying Fund satisfy the definition thereof. In order to be considered timely, any information required by this Section 2.10 to be provided to the Corporation must be supplemented (by delivery to the Secretary): (1) no later than ten (10) days following the record date for the applicable annual meeting, to disclose the foregoing information as of such record date; and (2) no later than eight (8) days before the annual meeting, to disclose the foregoing information as of the date that is no earlier than ten (10) days prior to such annual meeting. For the avoidance of doubt, the requirement to update and supplement such information shall not permit any Eligible Stockholder or other person to change or add any proposed Stockholder Nominee or be deemed to cure any defects or limit the remedies (including, without limitation, under these Bylaws) available to the Corporation relating to any defect.

 

(G) The Eligible Stockholder may provide to the Secretary, at the time the information required by this Section 2.10 is originally provided, a written statement for inclusion in the Corporation’s proxy statement for the annual meeting, not to exceed five hundred (500) words, in support of the candidacy of such Eligible Stockholder’s Stockholder Nominee (the “Statement”).

 

(H) Notwithstanding anything to the contrary contained in this Section 2.10, the Corporation may omit from its proxy materials any information or Statement that it, in good faith, believes is untrue in any material respect (or omits a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading), or would violate any applicable law, rule, regulation or listing standard.

 

 

(I) No later than the final date when a nomination pursuant to this Section 2.10 may be delivered to the Corporation, each Stockholder Nominee must provide the completed and signed questionnaire, representation, agreement and majority voting-related conditional resignation required by Section 2.11 of these Bylaws and:

 

(1) provide an executed agreement, in a form deemed satisfactory by the Board of Directors or its designee (which form shall be provided by the Corporation reasonably promptly upon written request of a stockholder), that such Stockholder Nominee consents to being named in the Corporation’s proxy statement and form of proxy card as a nominee and intends to serve as a director of the Corporation for the entire term if elected;

 

(2) complete, sign and submit all questionnaires, representations and agreements required by Section 2.11 of these Bylaws or of the Corporation’s directors generally; and

 

(3) provide such additional information as necessary to permit the Board of Directors to determine: (a) if any of the matters referred to in paragraph  (K) below apply; (b) if such Stockholder Nominee has any direct or indirect relationship with the Corporation other than those relationships that have been deemed categorically immaterial pursuant to the Corporation’s Corporate Governance Guidelines; or (c) is or has been subject to any event specified in Rule 506(d)(1) of Regulation D (or any successor rule) under the Securities Act of 1933 or Item 401(f) of Regulation S-K (or any successor rule) under the Exchange Act, without reference to whether the event is material to an evaluation of the ability or integrity of such Stockholder Nominee.

 

In the event that any information or communications provided by the Eligible Stockholder (or any Constituent Holder) or the Stockholder Nominee to the Corporation or its stockholders ceases to be true and correct in all material respects or omits a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading, each Eligible Stockholder or Stockholder Nominee, as the case may be, shall promptly notify the Secretary of any defect in such previously provided information and of the information that is required to correct any such defect; it being understood for the avoidance of doubt that providing any such notification shall not be deemed to cure any such defect or limit the remedies (including, without limitation, under these Bylaws) available to the Corporation relating to any such defect.

 

(J) Any Stockholder Nominee who is included in the Corporation’s proxy materials for a particular annual meeting of stockholders but either (1) withdraws from or becomes ineligible or unavailable for election at that annual meeting (other than by reason of such Stockholder Nominee’s disability or other health reason) or (2) does not receive votes cast in favor of the Stockholder Nominee’s election of at least twenty-five (25) percent of the shares represented in person or by proxy at the annual meeting will be ineligible to be a Stockholder Nominee pursuant to this Section 2.10 for the next two annual meetings. Any Stockholder Nominee who is included in the Corporation’s proxy statement for a particular annual meeting of stockholders, but subsequently is determined not to satisfy the eligibility requirements of this Section 2.10 or any other provision of these Bylaws, the Certificate of Incorporation or any applicable regulation any time before the annual meeting of stockholders, will not be eligible for election at the relevant annual meeting of stockholders.

 

 

(K) The Corporation shall not be required to include, pursuant to this Section 2.10, a Stockholder Nominee in its proxy materials for any annual meeting of stockholders, or, if the proxy statement already has been filed, to allow the nomination of (or vote with respect to) a Stockholder Nominee (and may declare such nomination ineligible), notwithstanding that proxies in respect of such vote may have been received by the Corporation:

 

(1) who is not independent under the listing standards of the principal U.S. exchange upon which the common stock of the Corporation is listed, any applicable rules of the Securities and Exchange Commission and any publicly disclosed standards used by the Board of Directors in determining and disclosing independence of the Corporation’s directors, who is not a “non-employee director” for the purposes of Rule 16b-3 under the Exchange Act (or any successor rule), in each case as determined by the Board of Directors;

 

(2) whose service as a member of the Board of Directors would violate or cause the Corporation to be in violation of these Bylaws, the Certificate of Incorporation, the rules and listing standards of the principal U.S. exchange upon which the common stock of the Corporation is traded, or any applicable law, rule or regulation;

 

(3) who is or has been, within the past (3) years, an officer or director of a competitor, as defined in Section 8 of the Clayton Antitrust Act of 1914, as amended, or who is a subject of a pending criminal proceeding, has been convicted in a criminal proceeding within the past ten (10) years or is subject to an order of the type specified in Rule 506(d) of Regulation D promulgated under the Securities Act;

 

(4) if the Eligible Stockholder (or any Constituent Holder) or applicable Stockholder Nominee otherwise breaches or fails to comply in any material respect with its obligations pursuant to this Section 2.10 or any agreement, representation or undertaking required by this Section; or

 

(5) if the Eligible Stockholder ceases to be an Eligible Stockholder for any reason, including, but not limited to, not owning the Proxy Access Request Required Shares through the date of the applicable annual meeting.

 

Clauses (1), (2), and (3) and, to the extent related to a breach or failure by the Stockholder Nominee, clause (4), will result in the exclusion from the proxy materials pursuant to this Section 2.10 of the specific Stockholder Nominee to whom the ineligibility applies, or, if the proxy statement already has been filed, the ineligibility of such Stockholder Nominee to be nominated; provided, however, that clause (5) and, to the extent related to a breach or failure by an Eligible Stockholder (or any Constituent Holder), clause (4) will result in the Voting Stock owned by such Eligible Stockholder (or Constituent Holder) being excluded from the Proxy Access Request Required Shares (and, if as a result the Proxy Access Notice shall no longer have been filed by an Eligible Stockholder, the exclusion from the proxy materials pursuant to this Section 2.10 of all of the applicable stockholder’s Stockholder Nominees from the applicable annual meeting of stockholders or, if the proxy statement has already been filed, the ineligibility of all of such stockholder’s Stockholder Nominees to be nominated).

 

 

(L) Notwithstanding the foregoing provisions of Section 2.10, if the Eligible Stockholder giving the Proxy Access Notice (or a qualified representative thereof) does not appear at the annual meeting of stockholders of the Corporation to present a nomination or proposed business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.

 

Section 2.11 Submission of Questionnaire, Representation and Agreement. To be eligible to be a nominee of any stockholder for election or reelection as a director of the Corporation, a person must deliver (in accordance with the time periods prescribed for delivery of notice under Section 2.9 or Section 2.10 of these Bylaws, as applicable) to the Secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of such individual and the background of any other person or entity on whose behalf, directly or indirectly, the nomination is being made, an irrevocable conditional resignation in accordance with the Corporation’s resignation policy in connection with majority voting, and a written representation and agreement (in the form of such questionnaire, irrevocable conditional resignation and representation and agreement provided by the Secretary, which form shall be provided by the Secretary upon written request of any stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or business proposal, as applicable, is made; provided such written request identifies both the stockholder making such request and the beneficial owner(s), if any, on whose behalf such request is being made) that such individual:

 

(A) (1) is not and will not become a party to: (a) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation; and (b) any Voting Commitment that could limit or interfere with such individual’s ability to comply, if elected as a director of the corporation, with such individual’s fiduciary duties under applicable law; and (2) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein;

 

(B) agrees to promptly provide to the Corporation such other information as the Corporation may reasonably request; and

 

(C) in such individual’s personal capacity and on behalf of any person or entity on whose behalf, directly or indirectly, the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply, with all applicable corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation publicly disclosed from time to time.

 

 

Section 2.12 Procedure for Election of Directors; Required Vote.

 

(A) Except as set forth below, election of directors at all meetings of the stockholders at which directors are to be elected shall be by ballot, and, subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, a majority of the votes cast at any meeting for the election of directors at which a quorum is present shall elect directors. For purposes of this Section 2.12, a majority of votes cast shall mean that the number of shares voted “for” a director’s election exceeds 50% of the number of votes cast with respect to that director’s election. Votes cast shall include direction to withhold authority in each case and exclude abstentions with respect to that director’s election. Notwithstanding the foregoing, in the event of a “contested election” of directors, directors shall be elected by the vote of a plurality of the votes cast at any meeting for the election of directors at which a quorum is present. For purposes of this Section 2.12, a “contested election” shall mean any election of directors in which the number of candidates for election as directors exceeds the number of directors to be elected, with the determination thereof being made by the Secretary as of the closing of the applicable notice of nomination period set forth in Section 2.9(A) and Section 2.9(B) of these Bylaws or under applicable law, based on whether one or more notice(s) of nomination were timely filed in accordance with said paragraphs of Section 2.9; provided, however, that the determination that an election is a “contested election” shall not be determinative as to the validity of a notice of nomination. If, prior to the time the Corporation mails its initial proxy statement in connection with such election of directors, one or more notices of nomination are withdrawn such that the number of candidates for election as director no longer exceeds the number of directors to be elected, the election shall not be considered a contested election, but in all other cases, once an election is determined to be a contested election, directors shall be elected by the vote of a plurality of the votes cast.

 

(B) If a nominee for director who is an incumbent director is not elected and no successor has been elected at such meeting, the committee delegated responsibility for director nominations and governance matters (the “Nominating and Corporate Governance Committee”) shall make a recommendation to the Board of Directors as to whether to accept or reject the conditional resignation of such director, or whether other action should be taken. The Board of Directors shall act on the tendered resignation, taking into account the Nominating and Corporate Governance Committee’s recommendation, and publicly disclose (by a press release, a filing with the Securities and Exchange Commission or other broadly disseminated means of communication) its decision regarding the tendered resignation and the rationale behind the decision within ninety (90) days from the date of the certification of the election results. The Nominating and Corporate Governance Committee in making its recommendation, and the Board of Directors in making its decision, may each consider any factors or other information that it considers appropriate and relevant. The director who tenders his or her resignation shall not participate in the recommendation of the Nominating and Corporate Governance Committee or the decision of the Board of Directors with respect to his or her resignation. If such incumbent director’s resignation is not accepted by the Board of Directors, such director shall continue to serve until the next annual meeting and until his or her successor is duly elected, or his or her earlier resignation or removal. If a director’s resignation is accepted by the Board of Directors pursuant to this Bylaw, or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board of Directors, in its sole discretion, may fill any resulting vacancy pursuant to the provisions of Section 3.9 of these Bylaws or may decrease the size of the Board of Directors pursuant to the provisions of Section 3.2 of these Bylaws.

 

(C) Except as otherwise provided by law, the Certificate of Incorporation, or these Bylaws, in all matters other than the election of directors, the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter shall be the act of the stockholders.

 

 

Section 2.13 Inspectors of Elections; Opening and Closing the Polls. The Board of Directors by resolution shall appoint one or more inspectors, which inspector or inspectors may, but does not need to, include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives, to act at the meetings of stockholders and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act or is able to act at a meeting of stockholders, the chair of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall have the duties prescribed by law.

 

The chair of the meeting shall be appointed by the inspector or inspectors to fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting.

 

Section 2.14 Stockholder Action by Written Consent. Stockholders of the Corporation may act by written consent solely to the extent permitted by the Certificate of Incorporation and these Bylaws. In the case of action to be taken by a stockholder or stockholders by written consent, no written consent shall be effective to take the action referred to therein, unless written consents signed by a sufficient number of stockholders to take such action are delivered to and received by the Corporation in accordance with this Section 2.14 within sixty (60) days of the date the earliest dated written consent was received by the Corporation in accordance with this Section 2.14.

 

Every written consent shall be signed by one or more persons who as of the record date are stockholders of record on such record date, shall bear the date of signature of each such stockholder, and shall set forth the name and address, as they appear in the Corporation’s books, of each stockholder signing such consent and the class and number of shares of the Corporation that are owned of record and beneficially by each such stockholder and shall be delivered to and received by the Secretary at the Corporation’s principal office by hand or by certified or registered mail, return receipt requested.

 

Section 2.15 Record Date for Action by Written Consent. In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall request the Board of Directors to fix a record date, which request shall be in proper form and delivered to the Secretary at the principal executive offices of the Corporation. To be in proper form, such request must be in writing and shall state the purpose or purposes of the action or actions proposed to be taken by written consent.

 

 

The Board of Directors shall promptly, but in all events within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten (10) days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business or to any officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action.

 

Section 2.16 Inspectors of Written Consent. In the event of the delivery, in the manner provided by Section 2.14 of these Bylaws, to the Corporation of the requisite written consent or consents to take corporate action and/or any related revocation or revocations, the Corporation shall engage nationally recognized independent inspectors of elections for the purpose of promptly performing a ministerial review of the validity of the consents and revocations. For the purpose of permitting the inspectors to perform such review, no action by written consent without a meeting shall be effective until such date as the independent inspectors certify to the Corporation that the consents delivered to the Corporation in accordance with Section 2.14 of these Bylaws represent at least the minimum number of votes that would be necessary to take the corporate action. Nothing contained in this Section 2.16 shall in any way be construed to suggest or imply that the Corporation or any stockholder shall not be entitled to contest the validity of any consent or revocation thereof, whether before or after such certification by the independent inspectors, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).

 

Article III
BOARD OF DIRECTORS

 

Section 3.1 General Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authorities by these Bylaws expressly conferred upon them, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these Bylaws required to be exercised or done by the stockholders.

 

Section 3.2 Number, Tenure and Qualifications. Subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, the number of directors shall be fixed from time to time exclusively pursuant to a resolution adopted by a majority of the Whole Board. No decrease in the number of authorized directors constituting the Whole Board shall shorten the term of any incumbent director.

 

The directors shall be elected at the annual meetings of stockholders as specified in the Certificate of Incorporation, except as otherwise provided in the Certificate of Incorporation and in these Bylaws, and each director of the Corporation shall hold office until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal.

 

 

Section 3.3 Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this Bylaw immediately after, and at the same place as, the annual meeting of stockholders. The Board of Directors may, by resolution, provide the time and place, if any, for the holding of additional regular meetings without other notice than such resolution.

 

Section 3.4 Special Meetings. Special meetings of the Board of Directors shall be called at the request of the Chair of the Board, the Chief Executive Officer, or a majority of the Board of Directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix the place, if any, and time of the meetings.

 

Section 3.5 Notice. Notice of any special meeting of directors shall be given to each director at such person’s business or residence in writing by hand delivery, first-class or overnight mail or courier service, email or facsimile transmission, or orally by telephone. If mailed by first-class mail, such notice shall be deemed adequately delivered when deposited in the United States mails so addressed, with postage thereon prepaid, at least five (5) days before such meeting. If by overnight mail or courier service, such notice shall be deemed adequately delivered when delivered to the overnight mail or courier service company at least twenty-four (24) hours before such meeting. If by email, facsimile transmission, telephone or by hand, such notice shall be deemed adequately delivered when the notice is transmitted at least twelve (12) hours before such meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting, except for amendments to these Bylaws, as provided under Section 9.2 of these Bylaws. A meeting may be held at any time without notice if all the directors are present or if those not present waive notice of the meeting in accordance with Section 7.4 of these Bylaws.

 

Section 3.6 Action by Consent of Board of Directors. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board, or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

 

Section 3.7 Virtual Meetings. Members of the Board of Directors, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of conference telephone, video conference or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

 

Section 3.8 Quorum. Subject to Section 3.9 of these Bylaws, a whole number of directors equal to at least a majority of the Whole Board shall constitute a quorum for the transaction of business, but if at any meeting of the Board of Directors there shall be less than a quorum present, a majority of the directors present may adjourn the meeting from time to time without further notice. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. The directors present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum.

 

 

Section 3.9 Vacancies. Subject to applicable law and the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, vacancies resulting from death, resignation, retirement, disqualification, removal from office or other cause, and newly created directorships resulting from any increase in the authorized number of directors, may be filled only by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board of Directors, or the sole remaining director and directors so chosen shall hold office for a term expiring at the next annual meeting of stockholders and until such director’s successor shall have been duly elected and qualified. No decrease in the number of authorized directors constituting the Board of Directors shall shorten the term of any incumbent director.

 

Section 3.10 Committees. The Board may designate any such committee as the Board considers appropriate, which shall consist of one or more directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee may to the extent permitted by law exercise such powers and shall have such responsibilities as shall be specified in the designating resolution. Each committee shall keep written minutes of its proceedings and shall report such proceedings to the Board when required.

 

A majority of any committee may determine its action and fix the time and place of its meetings, unless the Board shall otherwise provide. Notice of such meetings shall be given to each member of the committee in the manner provided for in Section 3.5 of these Bylaws. The Board shall have power at any time to fill vacancies in, to change the membership of, or to dissolve, any such committee. Nothing herein shall be deemed to prevent the Board from appointing one or more committees consisting, in whole or in part, of persons who are not directors of the Corporation; provided, however, that no such committee shall have or may exercise any authority of the Board.

 

Section 3.11 Removal. Subject to the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, any director, or the entire Board of Directors, may be removed from office at any time, with or without cause, only by the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of Voting Stock, voting together as a single class.

 

 

Article IV
OFFICERS

 

Section 4.1 Elected Officers. The elected officers of the Corporation shall be a Chief Executive Officer, a Secretary, a Treasurer, and such other officers (including, without limitation, a Chief Financial Officer) as the Board of Directors from time to time may deem proper. Any number of offices may be held by the same person. All officers elected by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this Article IV. Such officers shall also have such powers and duties as from time to time may be conferred by the Board of Directors or by any committee thereof. The Board or any committee thereof may from time to time elect, or the Chief Executive Officer may appoint, such other officers (including one or more Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers) and such agents, as may be necessary or desirable for the conduct of the business of the Corporation. Such other officers and agents shall have such duties and shall hold their offices for such terms as shall be provided in these Bylaws or as may be prescribed by the Board or such committee or by the Chief Executive Officer, as the case may be.

 

Section 4.2 Election and Term of Office. The elected officers of the Corporation shall be elected by the Board of Directors. Each officer shall hold office until such officer’s successor shall have been duly elected and shall have qualified or until such officer’s earlier resignation or removal.

 

Section 4.3 Chair of the Board. The Chair of the Board shall preside at all meetings of the stockholders and of the Board of Directors and shall have such powers and duties as may be conferred by the Board of Directors or contemplated by the Corporation’s Corporate Governance Guidelines and shall be the Chief Executive Officer of the Corporation.

 

Section 4.4 Chief Executive Officer. The Chief Executive Officer shall be responsible for the general management of the affairs of the Corporation and shall perform all duties incidental to his office which may be required by applicable law and all such other duties as are properly required of him by the Board of Directors. He shall make reports to the Board of Directors and the stockholders, and shall see that all orders and resolutions of the Board of Directors and of any committee thereof are carried into effect.

 

Section 4.5 Other Officers. The other officers of the Corporation shall have such powers and duties not inconsistent with these Bylaws as may from time to time be conferred upon them in or pursuant to resolutions of the Board of Directors, and shall have such additional powers and duties not inconsistent with such resolutions as may from time to time be assigned to them by any competent superior officer. The Board of Directors shall assign to one or more of the officers of the Corporation the duty to record the proceedings of the meetings of the stockholders and the Board of Directors in a book to be kept for that purpose.

 

Section 4.6 Removal. Any officer elected, or agent appointed, by the Board of Directors may be removed from office with or without cause by the affirmative vote of a majority of the Whole Board. Any officer or agent appointed by the Chief Executive Officer may be removed by the officer that appointed such officer or agent with or without cause. No elected officer shall have any contractual rights against the Corporation for compensation by virtue of such election beyond the date of the election of his or her successor, his or her death, or his or her resignation or removal, whichever event shall first occur, except as otherwise provided in an employment contract or under an employee deferred compensation plan. Except to the extent otherwise specifically provided by the Board of Directors or the Chief Executive Officer, any officer that is also an employee of the Corporation will cease to be an officer at such time as he or she ceases to be an employee of the Corporation.

 

 

Section 4.7 Vacancies. A newly created elected office and a vacancy in any elected office because of death, resignation, or removal may be filled by the Board of Directors. Any vacancy in an office appointed by the Chief Executive Officer because of death, resignation, or removal may be filled by the Chief Executive Officer.

 

Article V
STOCK CERTIFICATES AND TRANSFERS

 

Section 5.1 Certificated and Uncertificated Stock; Transfers. The interest of each stockholder of the Corporation may be evidenced by certificates for shares of stock in such form as the appropriate officers of the Corporation may from time to time prescribe or be uncertificated.

 

The shares of the stock of the Corporation shall be transferred on the books of the Corporation, in the case of certificated shares of stock, by the holder thereof in person or by such person’s attorney duly authorized in writing, upon surrender for cancellation of certificates for at least the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require; and, in the case of uncertificated shares of stock, upon receipt of proper transfer instructions from the registered holder of the shares or by such person’s attorney duly authorized in writing, and upon compliance with appropriate procedures for transferring shares in uncertificated form. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred.

 

The certificates of stock, if any, shall be signed, countersigned and registered in such manner as the Board of Directors may by resolution prescribe, which resolution may permit all or any of the signatures on such certificates to be in facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

 

Notwithstanding anything to the contrary in these Bylaws, at all times that the Corporation’s stock is listed on a stock exchange, the shares of the stock of the Corporation shall comply with all direct registration system eligibility requirements established by such exchange, including any requirement that shares of the Corporation’s stock be eligible for issue in book-entry form. All issuances and transfers of shares of the Corporation’s stock shall be entered on the books of the Corporation with all information necessary to comply with such direct registration system eligibility requirements, including the name and address of the person to whom the shares of stock are issued, the number of shares of stock issued and the date of issue. The Board of Directors shall have the power and authority to make such rules and regulations as it may deem necessary or proper concerning the issue, transfer and registration of shares of stock of the Corporation in both the certificated and uncertificated form.

 

Section 5.2 Lost, Stolen or Destroyed Certificates. No certificate for shares of stock in the Corporation shall be issued in place of any certificate alleged to have been lost, destroyed or stolen, except on production of such evidence of such loss, destruction or theft and on delivery to the Corporation of a bond of indemnity in such amount, upon such terms and secured by such surety, as the Board of Directors or any financial officer may in its or such person’s discretion require.

 

 

Section 5.3 Record Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by applicable law.

 

Section 5.4 Transfer and Registry Agents. The Corporation may from time to time maintain one or more transfer offices or agencies and registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors or by the Chief Executive Officer.

 

Article VI
INDEMNIFICATION

 

Section 6.1 Indemnification.

 

(A) Each person who was or is a party or is otherwise threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter, a “Proceeding”), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was, at any time during which this Bylaw is in effect (whether or not such person continues to serve in such capacity at the time any indemnification or advancement of expenses pursuant hereto is sought or at the time any Proceeding relating thereto exists or is brought), a director or officer of the Corporation or, while serving as a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation (hereinafter, a “Covered Person”), shall be (and shall be deemed to have a contractual right to be) indemnified and held harmless by the Corporation (and any successor of the Corporation by merger or otherwise) to the fullest extent authorized by the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended or modified from time to time (but, in the case of any such amendment or modification, only to the extent that such amendment or modification permits the Corporation to provide greater indemnification rights than said law permitted the Corporation to provide prior to such amendment or modification), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such person in connection with such Proceeding if the person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful. Such indemnification shall continue as to a person who has ceased to be a director or officer of the Corporation or ceased serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation, and shall inure to the benefit of his or her heirs, executors and administrators; provided that, except as provided in Section 6.1(D), the Corporation shall indemnify any such person seeking indemnification in connection with a Proceeding (or part thereof) initiated by such person only if such Proceeding (or part thereof) was authorized by the Board of Directors.

 

 

(B) Mandatory Advancement of Expenses. To the fullest extent authorized by the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended or modified from time to time (but, in the case of any such amendment or modification, only to the extent that such amendment or modification permits the Corporation to provide greater rights to advancement of expenses than said law permitted the Corporation to provide prior to such amendment or modification), each Covered Person shall have (and shall be deemed to have a contractual right to have) the right, without the need for any action by the Board of Directors, to be paid by the Corporation (and any successor of the Corporation by merger or otherwise) the expenses incurred in connection with any Proceeding in advance of its final disposition, such advances to be paid by the Corporation within twenty (20) days after the receipt by the Corporation of a statement or statements from the claimant requesting such advance or advances from time to time; provided that if the General Corporation Law of the State of Delaware requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not, except to the extent specifically required by applicable law, in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter, the “Undertaking”) by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal (a “final disposition”) that such director or officer is not entitled to be indemnified for such expenses under this Bylaw or otherwise.

 

(C) Indemnification in Respect of Successful Defense. Any indemnification of a director or officer of the Corporation or advance of expenses (including attorneys’ fees, costs and charges) under Section 6.1(A) or Section 6.1(B) shall be made promptly, and in any event within forty-five (45) days (or, in the case of an advance of expenses, twenty (20) days), provided that the director or officer has delivered the undertaking contemplated by Section 6.1(B), upon the written request of the director or officer. If a determination by the Corporation that the director or officer is entitled to indemnification pursuant to this Article VI is required, and the Corporation fails to respond within sixty days to a written request for indemnity, the Corporation shall be deemed to have approved the request.

 

 

(D) Procedure. To obtain indemnification under this Article VI, a claimant shall submit to the Corporation a written request, including therein or therewith such documentation and information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to indemnification. Upon written request by a claimant for indemnification, a determination, if required by applicable law, with respect to the claimant’s entitlement thereto shall be made as follows: (1) by a majority of Disinterested Directors (as hereinafter defined), even though less than a quorum; or (2) by a committee of Disinterested Directors designated by majority vote of the Disinterested Directors, even though less than a quorum; or (3) if there are no Disinterested Directors, or if the Disinterested Directors so direct, by Independent Counsel (as hereinafter defined), in a written opinion to the Board of Directors, a copy of which shall be delivered to the claimant; or (4) if a majority of the Disinterested Directors so directs, by a majority vote of the stockholders of the Corporation. In the event the determination of entitlement to indemnification is to be made by Independent Counsel, the Independent Counsel shall be selected by the Disinterested Directors, unless there shall have occurred within two years prior to the date of the commencement of the Proceeding for which indemnification is claimed a “Change of Control” as defined in the QXO, Inc. 2024 Omnibus Incentive Compensation Plan, in which case the Independent Counsel shall be selected by the claimant, unless the claimant shall request that such selection be made by the Disinterested Directors. If it is so determined that the claimant is entitled to indemnification, payment to the claimant shall be made within ten (10) days after such determination. If a claim for indemnification under this Article VI is not paid in full by the Corporation within thirty (30) days after a written claim pursuant to this Section 6.1(D) has been received by the Corporation, or if a request for advancement of expenses under this Article VI is not paid in full by the Corporation within twenty (20) days after a statement pursuant to Section 6.1(B) of these Bylaws and the required Undertaking, if any, have been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim for indemnification or request for advancement of expenses and, if successful, in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action that, under the General Corporation Law of the State of Delaware, the claimant has not met the standard of conduct which makes it permissible for the Corporation to indemnify the claimant for the amount claimed or that the claimant is not entitled to the requested advancement of expenses, but (except where the required Undertaking, if any, has not been tendered to the Corporation) the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Disinterested Directors, Independent Counsel or stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the Corporation (including its Disinterested Directors, Independent Counsel or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

 

(E) If a determination shall have been made pursuant to Section 6.1 of these Bylaws that the claimant is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to Section 6.1.

 

(F) The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to Section 6.1 that the procedures and presumptions of this Bylaw are not valid, binding and enforceable and shall stipulate in such proceeding that the Corporation is bound by all the provisions of this Bylaw.

 

 

Section 6.2 Contract Rights; Amendment and repeal; Non-Exclusivity of Rights

 

(A) All of the rights conferred in this Article VI, as to indemnification, advancement of expenses and otherwise, shall be contract rights between the Corporation and each Covered Person to whom such rights are extended that vest at the commencement of such Covered Person’s service to or at the request of the Corporation and: (x) any amendment or modification of this Article VI that in any way diminishes or adversely affects any such rights shall be prospective only and shall not in any way diminish or adversely affect any such rights with respect to such person; and (y) all of such rights shall continue as to any such Covered Person who has ceased to be a director or officer of the Corporation or ceased to serve at the Corporation’s request as a director, officer, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, as described herein, and shall inure to the benefit of such Covered Person’s heirs, executors and administrators.

 

(B) All of the rights conferred in this Article VI, as to indemnification, advancement of expenses and otherwise: (i) shall not be exclusive of any other rights to which any person seeking indemnification or advancement of expenses may be entitled or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote of stockholders or Disinterested Directors or otherwise both as to action in such person’s official capacity and as to action in another capacity while holding such office; and (ii) cannot be terminated or impaired by the Corporation, the Board of Directors or the stockholders of the Corporation with respect to a person’s service prior to the date of such termination.

 

Section 6.3 Insurance, Other Indemnification and Advancement of Expenses.

 

(A) The Corporation may maintain insurance, at its expense, to protect itself and any current or former director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of the State of Delaware.

 

(B) The Corporation may, to the extent authorized from time to time by the Board of Directors or the Chief Executive Officer, grant rights to indemnification and rights to advancement of expenses incurred in connection with any Proceeding in advance of its final disposition, to any current or former officer, employee or agent of the Corporation to the fullest extent permitted by applicable law.

 

Section 6.4 Notice. Any notice, request or other communication required or permitted to be given to the Corporation under this Article VI shall be in writing and either delivered in person or sent by telecopy, telex, telegram, overnight mail or courier service, or certified or registered mail, postage prepaid, return receipt requested, to the Secretary and shall be effective only upon receipt by the Secretary.

 

Section 6.5 Severability. If any provision or provisions of this Article VI shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (1) the validity, legality and enforceability of the remaining provisions of this Article VI (including, without limitation, each portion of any paragraph of this Article VI containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (2) to the fullest extent possible, the provisions of this Article VI (including, without limitation, each such portion of any paragraph of this Article VI containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

 

 

Article VII
MISCELLANEOUS PROVISIONS

 

Section 7.1 Fiscal Year. The fiscal year of the Corporation shall begin on the first day of January and end on the thirty-first day of December of each year.

 

Section 7.2 Dividends. The Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and the Certificate of Incorporation.

 

Section 7.3 Seal. The corporate seal shall have inscribed thereon the words “Corporate Seal,” the year of incorporation and around the margin thereof the words “QXO, Inc. – Delaware.”

 

Section 7.4 Waiver of Notice. Whenever any notice is required to be given to any stockholder or director of the Corporation under the provisions of the General Corporation Law of the State of Delaware, the Certificate of Incorporation or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to such notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at, nor the purpose of, any annual or special meeting of the stockholders or the Board of Directors or committee thereof need be specified in any waiver of notice of such meeting.

 

Section 7.5 Audits. The accounts, books and records of the Corporation shall be audited upon the conclusion of each fiscal year by an independent certified public accountant selected by the Board of Directors.

 

Section 7.6 Resignations. Any director or any officer, whether elected or appointed, may resign at any time by giving written notice of such resignation to the Chair of the Board, the Chief Executive Officer, or the Secretary, and such resignation shall be deemed to be effective as of the close of business on the date said notice is received by the Chair of the Board, the Chief Executive Officer, or the Secretary, or at such later time as is specified therein. Except to the extent specified in such notice, no formal action shall be required of the Board of Directors or the stockholders to make any such resignation effective.

 

Section 7.7 Definitions. For purposes of these Bylaws:

 

(1) “affiliate” and “associate” shall have the meanings ascribed thereto in Rule 405 under the Exchange Act; provided, however, that the term “partner” as used in the definition of “associate” shall not include any limited partner that is not involved in the management of the relevant partnership and the term “registrant” as used in such definition shall be deemed to also include any (a) stockholder giving a notice (or beneficial owner on whose behalf such notice is given) under Section 2.8 or Section 2.9 or (b) any Eligible Stockholder under Section 2.10 giving the Proxy Access Notice, in each case, or any affiliate or associate thereof.

 

 

(2) For purposes of these Bylaws (other than Section 2.9(C)(1)(iii)), “beneficial owner” shall have the meaning ascribed thereto under Section 13(d) of the Exchange Act, and “beneficially own” and “own beneficially” shall have correlative meanings. For purposes of Section 2.9(C)(1)(iii) of these Bylaws, “beneficial owner” shall have the meaning ascribed thereto under Section 13(d) of the Exchange Act, except that a person will also be deemed to be the beneficial owner of securities or other interests which such person has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to the exercise of any securities or under any agreement, arrangement or understanding (whether or not in writing), regardless of when such right may be exercised and regardless of whether or not they are conditional, and “beneficially own” and “own beneficially” shall have correlative meanings.

 

(3) “business day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York, NY are authorized or obligated by law or executive order to close.

 

(4) “Close of Business” shall mean 5:00 p.m. local time at the principal executive offices of the Corporation, and if an applicable deadline falls on the Close of Business on a day that is not a business day, then the applicable deadline shall be deemed to be the Close of Business on the immediately preceding business day.

 

(5) “Constituent Holder” shall mean any stockholder, collective investment fund included within a Qualifying Fund (as defined in Section 2.10(E)) or beneficial holder whose stock ownership is counted for the purpose of qualifying as holding the Proxy Access Request Required Shares (as defined in Section 2.10(E)) or qualifying as an Eligible Stockholder (as defined in Section 2.10(E));

 

(6) “delivery” of any notice or materials by a stockholder as required to be “delivered” under Section 2.9 shall be made by hand delivery, overnight courier service, or by certified or registered mail, return receipt required, in each case, to the Secretary at the principal executive offices of the Corporation.

 

(7) “Disinterested Director” means a director of the Corporation who is not and was not a party to the matter in respect of which indemnification is sought by the claimant.

 

(8) “Independent Counsel” means a law firm, a member of a law firm, or an independent practitioner, that is experienced in matters of corporation law and shall include any person who, under the applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either the Corporation or the claimant in an action to determine the claimant’s rights under this Bylaw.

 

 

(9) For purposes of Section 2.10 of these Bylaws, a stockholder (including any Constituent Holder) shall be deemed to “own” only those outstanding shares of Voting Stock as to which the stockholder itself (or such Constituent Holder itself) possesses: (a) the full voting rights pertaining to the shares; (b) the full economic interest in (including the opportunity for profit and risk of loss on) such shares; and (c) the full power to dispose of or direct the disposition of such shares. The number of shares calculated in accordance with the foregoing clauses (a), (b) and (c) shall be deemed not to include (and to the extent any of the following arrangements have been entered into by affiliates of the stockholder (or of any Constituent Holder), shall be reduced by) any shares (x) sold by such stockholder or Constituent Holder (or any of either’s affiliates) in any transaction that has not been settled or closed, including any short sale, (y) borrowed by such stockholder or Constituent Holder (or any of either’s affiliates) for any purposes or purchased by such stockholder or Constituent Holder (or any of either’s affiliates) pursuant to an agreement to resell, or (z) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar instrument, agreement or understanding entered into by such stockholder or Constituent Holder (or any of either’s affiliates), whether any such instrument, agreement or understanding is to be settled with shares or with cash based on the notional amount or value of Voting Stock, in any such case which instrument, or agreement or understanding has, or is intended to have, or if exercised by either party thereto would have, the purpose or effect of: (i) reducing in any manner, to any extent or at any time in the future, such stockholder’s or Constituent Holder’s (or either’s affiliate’s) full right to vote or direct the voting of any such shares; and/or (ii) hedging, offsetting or altering to any degree gain or loss arising from the full economic ownership of such shares by such stockholder or Constituent Holder (or either’s affiliate), other than any such arrangements solely involving a national or multi-national market index. A stockholder (including any Constituent Holder) shall “own” shares held in the name of a nominee or other intermediary so long as the stockholder itself (or such Constituent Holder itself) retains the right to instruct how the shares are voted with respect to the election of directors and the right to direct the disposition thereof and possesses the full economic interest in the shares. A stockholder’s (including any Constituent Holder’s) ownership of shares shall be deemed to continue during any period in which such person has (A) loaned such shares provided that such person has the power to recall such loaned shares on not more than five (5) business days’ notice or (B) delegated any voting power over such shares by means of a proxy, power of attorney or other instrument or arrangement which in all such cases is revocable at any time by the stockholder without any condition. The terms “owned,” “owning” and other variations of the word “own” shall have correlative meanings.

 

(10) “Public Announcement” shall mean any method (or combination of methods) of disclosure that is reasonably designed to provide broad, non-exclusionary distribution of the information to the public or the furnishing or filing of any document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.

 

(11)  “Public Company” shall mean any person with a class of equity securities registered pursuant to Section 12 of the Exchange Act, whether or not trading in such securities has been suspended.

 

 

(12) “Voting Stock” shall mean the outstanding shares of capital stock of the Corporation entitled to vote generally for the election of directors.

 

Article VIII
Contracts, Proxies, Etc.

 

Section 8.1 Contracts. Except as otherwise required by applicable law, the Certificate of Incorporation or these Bylaws, any contracts or other instruments may be executed and delivered in the name and on behalf of the Corporation by such officer or officers of the Corporation as the Board of Directors may from time to time direct. Such authority may be general or confined to specific instances as the Board may determine. Without limiting the foregoing, the Chair of the Board and the Chief Executive Officer may execute bonds, contracts, deeds, leases and other instruments to be made or executed by or on behalf of the Corporation. Subject to any restrictions imposed by the Board of Directors, the Chair of the Board and the Chief Executive Officer may delegate contractual powers to others under his jurisdiction, it being understood, however, that any such delegation of power shall not relieve such officer of responsibility with respect to the exercise of such delegated power.

 

Section 8.2 Proxies. Unless otherwise provided by resolution adopted by the Board of Directors, the Chair of the Board, the Chief Executive Officer, or any Vice President may from time to time appoint an attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation, any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing, in the name of the Corporation as such holder, to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal or otherwise, all such written proxies or other instruments as he or she may deem necessary or proper in the premises.

 

Article IX
AMENDMENTS

 

Section 9.1 By the Stockholders. Subject to the provisions of the Certificate of Incorporation, these Bylaws may be altered, amended or repealed, or new Bylaws enacted, at any special meeting of the stockholders if duly called for that purpose (provided that in the notice of such special meeting, notice of such purpose shall be given), or at any annual meeting, by the affirmative vote of a majority of the Voting Stock, voting together as a single class.

 

Section 9.2 By the Board of Directors. Subject to the laws of the State of Delaware, the Certificate of Incorporation and these Bylaws, these Bylaws may also be altered, amended or repealed, or new Bylaws enacted, by the Board of Directors.

 

 

-32-

 

Exhibit 4.1

 

CERTIFICATE OF DESIGNATION OF

CONVERTIBLE PERPETUAL PREFERRED STOCK OF
QXO, INC.

 

Pursuant to Section 151 of the
General Corporation Law of the State of Delaware

 

QXO, Inc., a Delaware corporation (the “Company”), certifies that pursuant to the authority contained in its Fifth Amended and Restated Certificate of Incorporation (as amended, the “Certificate of Incorporation”), and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware (the “DGCL”), the Board of Directors of the Company (the “Board of Directors”), by resolution adopted by unanimous written consent pursuant to Section 141(f) of the DGCL, on June 5, 2024, duly approved and adopted the following resolution, which resolution remains in full force and effect on the date hereof:

 

RESOLVED, that pursuant to the authority vested in the Board of Directors by the Certificate of Incorporation, the Board of Directors does hereby designate, create, authorize and provide for the issue of a series of the Company’s preferred stock, par value $0.001 per share, with an initial liquidation preference of $1,000 per share (the “Initial Liquidation Preference”), subject to accretion and adjustment as provided in Section 2(c) and Section 15(a) of this Certificate of Designation, which shall be designated as Convertible Perpetual Preferred Stock (the “Convertible Preferred Stock”), consisting of 1,000,000 shares, no shares of which have heretofore been issued by the Company, having the following powers, designations, preferences and relative, participating, optional and other special rights, and qualifications, limitations and restrictions thereof:

 

Certain defined terms used in this Certificate of Designation have the meanings assigned thereto in Section 13.

 

Section 1.  Ranking. The Convertible Preferred Stock shall rank, with respect to payment of dividends and distribution of assets upon the liquidation, winding-up or dissolution of the Company, (a) senior to the common stock, par value $0.00001 per share, of the Company (the “Common Stock”), whether now outstanding or hereafter issued, and to each other class or series of stock of the Company (including any series of preferred stock established after June 6, 2024 (the “Issue Date”) by the Board of Directors) the terms of which do not expressly provide that such class or series ranks senior to or pari passu with the Convertible Preferred Stock as to payment of dividends and distribution of assets upon the liquidation, winding-up or dissolution of the Company (collectively referred to as “Junior Stock”), (b) pari passu with each class or series of stock of the Company (including any series of preferred stock established after the Issue Date by the Board of Directors) the terms of which expressly provide that such class or series ranks pari passu with the Convertible Preferred Stock as to payment of dividends and distribution of assets upon the liquidation, winding-up or dissolution of the Company (collectively referred to as “Parity Stock”); and (c) junior to each other class or series of stock of the Company (including any series of preferred stock established after the Issue Date by the Board of Directors) the terms of which expressly provide that such class or series ranks senior to the Convertible Preferred Stock as to payment of dividends and distribution of assets upon the liquidation, winding-up or dissolution of the Company (collectively referred to as “Senior Stock”). The Company’s ability to issue Capital Stock that ranks pari passu with or senior to the Convertible Preferred Stock shall be subject to the provisions of Section 4.

 

 

Section 2.  Dividends. (a) General. Dividends on the Convertible Preferred Stock shall be payable quarterly, when, as and if declared by the Board of Directors or a duly authorized committee thereof, out of the assets of the Company legally available therefor, on the 15th calendar day (or the following Business Day if the 15th is not a Business Day) of January, April, July and October of each year (each such date being referred to herein as a “Dividend Payment Date”) at the rate per annum of 9% per share on the Accreted Liquidation Preference in effect at such time (subject to the following paragraph), which Accreted Liquidation Preference is subject to adjustment as provided in Section 15(a). The initial dividend on the Convertible Preferred Stock for the dividend period commencing on the Issue Date to but excluding July 15, 2024, will be $9.75 per share (subject to the following paragraph), and shall be payable, when, as and if declared, on July 15, 2024. The amount of dividends payable for any other period that is shorter or longer than a full quarterly dividend period will be computed on the basis of a 360-day year consisting of twelve 30-day months.

 

In the event that dividends are paid on shares of Common Stock in any dividend period with respect to the Convertible Preferred Stock, then the dividend payable in respect of each share of Convertible Preferred Stock for such period shall be equal to the greater of (i) the amount otherwise payable in respect of such share of Convertible Preferred Stock in accordance with the foregoing paragraph and (ii) the product of (A) the aggregate dividends payable per share of Common Stock in such dividend period times (B) the number of shares of Common Stock into which such share of Convertible Preferred Stock is then convertible.

 

A dividend period with respect to a Dividend Payment Date is the period commencing on the preceding Dividend Payment Date or, if none, the Issue Date, and ending on the day immediately prior to the next Dividend Payment Date. Dividends payable on a Dividend Payment Date shall be payable to Holders of record on the later of (x) the close of business on the first calendar day (or the following Business Day if such first calendar day is not a Business Day) of the calendar month in which the applicable Dividend Payment Date falls and (y) the close of business on the day on which the Board of Directors or a duly authorized committee thereof declares the dividend payable (each, a “Dividend Record Date”).

 

The Company shall make each dividend payment on the Convertible Preferred Stock in cash.

 

All references in this Certificate of Designation to dividends or to a dividend rate or accretion rate shall be deemed to reflect any adjustment to the dividend rate or accretion rate pursuant to this Certificate of Designation.

 

(b)  Payment Restrictions. No dividends or other distributions (other than a dividend or distribution payable solely in shares of Parity Stock or Junior Stock (in the case of Parity Stock) or Junior Stock (in the case of Junior Stock) and other than cash paid in lieu of fractional shares) may be declared, made or paid, or set apart for payment upon, any Parity Stock or Junior Stock, nor may any Parity Stock or Junior Stock be redeemed, purchased or otherwise acquired for any consideration (or any money paid to or made available for a sinking fund for the redemption of any Parity Stock or Junior Stock) by or on behalf of the Company (except by conversion into or exchange for shares of Parity Stock or Junior Stock (in the case of Parity Stock) or Junior Stock (in the case of Junior Stock)), unless all accrued and unpaid dividends (including any accrued and unpaid dividends that have accreted pursuant to Section 2(c) and are reflected in the Accreted Liquidation Preference) shall have been or contemporaneously are declared and paid in cash, or are declared and a sum of cash sufficient for the payment thereof is set apart for such payment, on the Convertible Preferred Stock and any Parity Stock for all dividend payment periods terminating on or prior to the date of such declaration, payment, redemption, purchase or acquisition. Notwithstanding the foregoing, if full dividends have not been paid on the Convertible Preferred Stock and any Parity Stock, dividends may be declared and paid on the Convertible Preferred Stock and such Parity Stock so long as the dividends are declared and paid pro rata so that the aggregate amounts of dividends declared per share on, and the amounts of such dividends declared in cash per share on, the Convertible Preferred Stock and such Parity Stock will in all cases bear to each other the same ratio that accrued and unpaid dividends per share on the shares of Convertible Preferred Stock and such other Parity Stock bear to each other.

 

 

(c)  Accretion. If the Company is unable to, or otherwise fails (for any reason) to, pay dividends in cash and in full on the Convertible Preferred Stock on any Dividend Payment Date as described above in Section 2(a), the Accreted Liquidation Preference of each share of Convertible Preferred Stock will be increased automatically as of the first day of the immediately succeeding dividend period by the Accretion Amount in respect of the unpaid dividends. If the Company pays a portion of the dividends payable on the Convertible Preferred Stock on a Dividend Payment Date and accretes the unpaid portion, the Company will pay the current portion equally and ratably to the Holders. The amount of dividends payable for any dividend period following a non-payment of dividends will be calculated on the basis of the Accreted Liquidation Preference of each share of Convertible Preferred Stock as of the first day of the relevant dividend period.

 

The Company may pay all or a portion of the amount by which the Accreted Liquidation Preference of a share of Convertible Preferred Stock exceeds the Initial Liquidation Preference of a share of Convertible Preferred Stock on (i) any Dividend Payment Date or (ii) any other date fixed by the Board of Directors or a duly authorized committee thereof. The Company shall make any such payment in cash and any such payment shall be made equally and ratably to the Holders. The Accreted Liquidation Preference of each share of Convertible Preferred Stock will be reduced as of the first day following the date of such payment by the amount of such payment (the “Paydown Amount”) and the amount of dividends will be calculated on the basis of the reduced Accreted Liquidation Preference for the period of time from the date of such reduction until the applicable Dividend Payment Date.

 

Section 3.  Liquidation Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company, each Holder shall be entitled to receive out of the assets of the Company available for distribution to stockholders of the Company, before any distribution of assets is made on the Common Stock or any other Junior Stock, an amount equal to the greater of (a) the aggregate Accreted Liquidation Preference attributable to shares of Convertible Preferred Stock held by such Holder, subject to adjustment as provided in Section 15(a), plus an amount equal to the sum of all accrued and unpaid dividends (whether or not declared) for the then-current dividend period, and (b) the product of (i) the amount per share that would have been payable upon such liquidation, dissolution or winding-up to the holders of shares of Common Stock or such other class or series of securities into which the Convertible Preferred Stock is then convertible (assuming the conversion of each share of Convertible Preferred Stock and without deduction for the Accreted Liquidation Preference otherwise payable pursuant to clause (a)), multiplied by (ii) the number of shares of Common Stock or such other securities into which the shares of Convertible Preferred Stock held by such Holder are then convertible.

 

 

None of (A) the sale of all or substantially all of the property or business of the Company (other than in connection with the voluntary or involuntary liquidation, dissolution or winding-up of the Company), (B) the merger, conversion or consolidation of the Company into or with any other Person or (C) the merger, conversion or consolidation of any other Person into or with the Company, shall constitute a voluntary or involuntary liquidation, dissolution or winding-up of the Company for the purposes of the immediately preceding paragraph.

 

In the event the assets of the Company available for distribution to Holders upon any liquidation, winding-up or dissolution of the Company, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such Holders are entitled pursuant to this Section 3, no such distribution shall be made on account of any shares of Parity Stock upon such liquidation, dissolution or winding-up unless proportionate distributable amounts shall be paid on account of the shares of Convertible Preferred Stock, ratably, in proportion to the full distributable amounts for which Holders and holders of any Parity Stock are entitled upon such liquidation, winding-up or dissolution, with the amount allocable to each series of such stock determined on a pro rata basis of the aggregate liquidation preference of the outstanding shares of each series and accrued and unpaid dividends to which each series is entitled.

 

Section 4.  Voting Rights. (a) The Holders shall be entitled to vote along with the holders of Common Stock on all matters on which holders of Common Stock are entitled to vote. The Holders shall participate in such votes as if the shares of Convertible Preferred Stock were converted into shares of Common Stock in accordance with this Certificate of Designation as of the record date for the determination of holders of Common Stock entitled to vote. In addition, each Holder shall have one vote for each share of Convertible Preferred Stock held by such Holder on all matters voted upon by the holders of Convertible Preferred Stock as a separate class, as well as voting rights specifically required by the DGCL from time to time.

 

(b)  So long as any Convertible Preferred Stock is outstanding, in addition to any other vote of stockholders of the Company required under applicable law or the Certificate of Incorporation, the affirmative vote or consent of the Holders of at least a majority of the outstanding shares of the Convertible Preferred Stock, voting separately as a single class, will be required (i) to amend, alter or repeal (whether by merger, consolidation or otherwise) any provision of this Certificate of Designation, (ii) to amend, alter or repeal (whether by merger, consolidation or otherwise) any provision of the Certificate of Incorporation or the bylaws of the Company if such amendment, alteration or repeal would have an adverse effect on the powers, preferences, privileges or rights of the Holders, (iii) to authorize, create, issue or increase the authorized amount of any Parity Stock or Senior Stock or any obligation or security convertible into, exchangeable for or evidencing a right to purchase any Parity Stock or Senior Stock, (iv) to reclassify any authorized stock of the Company into any Parity Stock or Senior Stock, or any obligation or security convertible into, exchangeable for or evidencing a right to purchase any Parity Stock or Senior Stock, or (v) for any increase or decrease in the authorized number of shares of Convertible Preferred Stock or issuance of shares of Convertible Preferred Stock after the Issue Date, provided that, for avoidance of doubt, no such vote shall be required for the Company to authorize, create, issue or increase the authorized amount of any Junior Stock or any obligation or security convertible into, exchangeable for or evidencing a right to purchase any Junior Stock.

 

 

Section 5.  Conversion at the Option of the Holder. (a) Each share of Convertible Preferred Stock is convertible, in whole or in part, at the option of the Holder thereof (“Optional Conversion”), into the number of shares of Common Stock (the “Conversion Rate”) obtained by dividing (i) the Accreted Liquidation Preference by (ii) the Conversion Price then in effect.

 

(b)  Holders who convert their shares of Convertible Preferred Stock on a day other than a Dividend Payment Date will not be entitled to any accrued dividends for the dividend period in which they convert their shares, as provided in the following sentence. Accordingly, shares of Convertible Preferred Stock surrendered for Optional Conversion after the close of business on a Dividend Record Date and before the opening of business on the immediately succeeding Dividend Payment Date must be accompanied by payment in cash of an amount equal to the dividend payable on such shares on such Dividend Payment Date. Such Holders will be entitled to receive the dividend payment on those shares on that Dividend Payment Date. A Holder on a Dividend Record Date who (or whose transferee) surrenders any shares for conversion on the corresponding Dividend Payment Date shall receive the dividend payable by the Company on the Convertible Preferred Stock on that date (and if the Company fails to pay such dividend, such Holder’s shares converted on such date will be converted at a Conversion Rate that reflects the Accreted Liquidation Preference after giving effect to such failure), and the converting Holder shall not be required to include payment in the amount of such dividend upon surrender of shares of Convertible Preferred Stock for conversion. Except as provided above, upon any Optional Conversion of shares of Convertible Preferred Stock, the Company shall make no payment or allowance for unpaid dividends, whether or not in arrears, on such shares of Convertible Preferred Stock as to which Optional Conversion has been effected.

 

(c)  The conversion right of a Holder shall be exercised by the Holder by the surrender to the Company of the certificates representing shares of Convertible Preferred Stock to be converted at any time during usual business hours at its principal place of business or the offices of the Transfer Agent, accompanied by written notice to the Company that the Holder elects to convert all or a portion of the shares of Convertible Preferred Stock represented by such certificate and specifying the name or names (with address) in which a certificate or certificates or other appropriate evidence of ownership representing shares of Common Stock are to be issued and (if so required by the Company or the Transfer Agent) by a written instrument or instruments of transfer in form reasonably satisfactory to the Company or the Transfer Agent duly executed by the Holder or its duly authorized legal representative and transfer tax stamps or funds therefor, if required pursuant to Section 15(f). The date on which a Holder satisfies the foregoing requirements for conversion is referred to herein as the “Conversion Date.” The Company will deliver shares of Common Stock (or such other class or series of securities into which the Convertible Preferred Stock is then convertible) due upon conversion, together with any cash in lieu of fractional shares in accordance with Section 14 hereof, in accordance with Section 6. Immediately prior to the close of business on the Conversion Date, each converting Holder shall be deemed to be the holder of record of the shares of Common Stock (or such other class or series of securities into which the Convertible Preferred Stock is then convertible) issuable upon conversion of such Holder’s Convertible Preferred Stock notwithstanding that the share register of the Company shall then be closed or that certificates or other appropriate evidence of ownership representing such Common Stock (or such other class or series of securities into which the Convertible Preferred Stock is then convertible) shall not then be actually delivered to such Holder. On the Conversion Date, all rights with respect to the shares of Convertible Preferred Stock so converted, including the rights, if any, to receive notices, will terminate, except the rights of Holders thereof to (i) receive certificates or other appropriate evidence of ownership representing the number of whole shares of Common Stock (or such other class or series of securities into which the Convertible Preferred Stock is then convertible) into which such shares of Convertible Preferred Stock have been converted and cash in lieu of any fractional shares, in accordance with Section 14 hereof and (ii) exercise the rights to which they are entitled as holders of Common Stock (or such other class or series of securities into which the Convertible Preferred Stock is then convertible).

 

 

Section 6.  Settlement upon Conversion. The Company shall satisfy its obligation to deliver shares of Common Stock (or such other class or series of securities into which the Convertible Preferred Stock is then convertible) upon conversion of Convertible Preferred Stock by delivering to Holders surrendering shares for conversion a number of shares of Common Stock (or such other class or series of securities into which the Convertible Preferred Stock is then convertible) equal to the product of (a) the aggregate number of shares of Convertible Preferred Stock to be converted multiplied by (b) the Conversion Rate then in effect (provided that the Company will deliver cash in lieu of fractional shares in accordance with Section 14), as soon as practicable after the third Trading Day (but in no event later than the fifth Business Day) following the Conversion Date.

 

Section 7.  Anti-dilution Adjustments. (a) The Conversion Price shall be subject to the following adjustments from time to time:

 

(i)  Stock Dividends. In case the Company shall pay or make a dividend or other distribution on the Common Stock in Common Stock, the Conversion Price, as in effect at the opening of business on the day following the date fixed for the determination of stockholders of the Company entitled to receive such dividend or other distribution, shall be adjusted by multiplying such Conversion Price by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution, such adjustment to become effective immediately after the opening of business on the day following the date fixed for such determination.

 

(ii)  Stock Purchase Rights. In case the Company shall issue to all holders of its Common Stock options, warrants or other rights entitling them to subscribe for or purchase shares of Common Stock for a period expiring within 60 days from the date of issuance of such options, warrants or other rights at a price per share of Common Stock less than the Market Value on the date fixed for the determination of stockholders of the Company entitled to receive such options, warrants or other rights (other than pursuant to a dividend reinvestment, share purchase or similar plan), the Conversion Price in effect at the opening of business on the day following the date fixed for such determination shall be adjusted by multiplying such Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock which the aggregate consideration expected to be received by the Company upon the exercise, conversion or exchange of such options, warrants or other rights (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) would purchase at such Market Value and the denominator of which shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock so offered for subscription or purchase, either directly or indirectly, such adjustment to become effective immediately after the opening of business on the day following the date fixed for such determination; provided, that no such adjustment to the Conversion Price shall be made if the Holders would be entitled to receive such options, warrants or other rights upon conversion at any time of shares of Convertible Preferred Stock into Common Stock; provided, further, however, that if any of the foregoing options, warrants or other rights are only exercisable upon the occurrence of a Triggering Event, then the Conversion Price will not be adjusted until such Triggering Event occurs or, if earlier, the applicable Conversion Date.

 

 

(iii)  Stock Splits, Reverse Splits and Combinations. In case outstanding shares of Common Stock shall be subdivided, split or reclassified into a greater number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such subdivision, split or reclassification becomes effective shall be proportionately reduced, and, conversely, in case outstanding shares of Common Stock shall be combined or reclassified into a smaller number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such combination or reclassification becomes effective shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision, split, reclassification or combination becomes effective.

 

(iv)  Debt, Asset or Security Distributions. (A) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock evidences of its indebtedness, assets or securities (but excluding any dividend or distribution of options, warrants or other rights referred to in paragraph (ii) of this Section 7(a), any dividend or distribution paid exclusively in cash, any dividend or distribution of shares of Capital Stock of any class or series, or similar equity interests, of or relating to a Subsidiary or other business unit in the case of a Spin-off referred to in the next subparagraph, or any dividend or distribution referred to in paragraph (i) of this Section 7(a)), the Conversion Price shall be reduced by multiplying the Conversion Price in effect immediately prior to the close of business on the date fixed for the determination of stockholders of the Company entitled to receive such distribution by a fraction, the numerator of which shall be the Market Value on the date fixed for such determination and the denominator of which shall be such Market Value plus the fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) of the portion of the assets, securities or evidences of indebtedness so distributed applicable to one share of Common Stock, such adjustment to become effective immediately prior to the opening of business on the day following the date fixed for the determination of stockholders of the Company entitled to receive such distribution. In any case in which this subparagraph (iv)(A) is applicable, subparagraph (iv)(B) of this Section 7(a) shall not be applicable.

 

 

(B)  In the case of a Spin-off, the Conversion Price in effect immediately prior to the close of business on the record date fixed for determination of stockholders of the Company entitled to receive such distribution shall be reduced by multiplying the Conversion Price by a fraction, the numerator of which shall be the Market Value and the denominator of which shall be the Market Value plus the Spin-off Market Value of the portion of those shares of Capital Stock or similar equity interests so distributed applicable to one share of Common Stock. Any adjustment to the Conversion Price under this subparagraph (iv)(B) will occur on the date that is the earlier of (1) the close of business on the tenth Trading Day from, and including, the effective date of the Spin-off and (2) the date of the Initial Public Offering (if any) of the securities being distributed in the Spin-off, if that Initial Public Offering is effected simultaneously with the Spin-off.

 

(v)  Tender Offers. In the case that a tender or exchange offer made by the Company or any Subsidiary of the Company for all or any portion of the Common Stock shall expire and such tender or exchange offer (as amended through the expiration thereof) shall require the payment to stockholders of the Company (based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of Purchased Shares) of aggregate consideration having a fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) per share of Common Stock that exceeds the Closing Sale Price of the Common Stock on the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer, then, immediately prior to the opening of business on the day after the date of the last time (the “Expiration Time”) tenders or exchanges could have been made pursuant to such tender or exchange offer (as amended through the expiration thereof), the Conversion Price shall be reduced by multiplying the Conversion Price immediately prior to the close of business on the date of the Expiration Time by a fraction (A) the numerator of which shall be equal to the product of (1) the Market Value on the date of the Expiration Time and (2) the number of shares of Common Stock outstanding (including any tendered or exchanged shares) on the date of the Expiration Time, and (B) the denominator of which shall be equal to (1) the product of (I) the Market Value on the date of the Expiration Time and (II) the number of shares of Common Stock outstanding (including any tendered or exchanged shares) on the date of the Expiration Time less the number of all shares validly tendered or exchanged, not withdrawn and accepted for payment on the date of the Expiration Time (such validly tendered or exchanged shares, up to any such maximum, being referred to as the “Purchased Shares”) plus (2) the amount of cash plus the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders of the Company pursuant to the tender or exchange offer (assuming the acceptance, up to any maximum specified in the terms of the tender or exchange offer, of Purchased Shares).

 

(b)  Calculation of Adjustments. Notwithstanding anything herein to the contrary, no adjustment under this Section 7 need be made to the Conversion Price unless such adjustment would require an increase or decrease of at least 1.0% of the Conversion Rate then in effect. Any lesser adjustment shall be carried forward and shall be made at the time of and together with the next subsequent adjustment, if any, which, together with any adjustment or adjustments so carried forward, shall result in an increase or decrease of at least 1.0% of such Conversion Rate; provided that any such adjustment of less than 1.0% that has not been made shall be made upon any Conversion Date. No adjustment under this Section 7 shall be made if such adjustment will result in a Conversion Price that is less than the par value of the Common Stock. All adjustments to the Conversion Rate shall be calculated to the nearest 1/10,000th of a share of Common Stock (or if there is not a nearest 1/10,000th of a share to the next lower 1/10,000th of a share). For the avoidance of doubt, if an event occurs that would trigger an adjustment to the Conversion Price pursuant to this Section 7 under more than one subsection hereof, such event, to the extent fully taken into account in a single adjustment, shall not result in multiple adjustments hereunder; provided, however, that if more than one subsection of this Section 7 is applicable to a single event, the subsection shall be applied that produces the largest adjustment.

 

 

(c)  Stockholder Rights Plans. Upon conversion of the Convertible Preferred Stock, to the extent that the Holders receive Common Stock, such Holders shall receive, in addition to the shares of Common Stock and any cash for fractional shares in accordance with Section 14, if any, the rights issued under any future stockholder rights plan the Company may establish whether or not such rights are separated from the Common Stock prior to conversion. A distribution of rights pursuant to any stockholder rights plan will not result in an adjustment to the Conversion Price pursuant to Section 7(a)(ii) or Section 7(a)(iv); provided that the Company has provided for the Holders to receive such rights upon conversion; provided, further, that the Holders shall not be permitted to receive such rights to the extent that any of the Holders or their respective Affiliates is the “Acquiring Person” under such stockholder rights plan.

 

(d)  Notice of Adjustment. Whenever the Conversion Price is adjusted in accordance with this Section 7, the Company shall (i) compute the Conversion Price in accordance with this Section 7 and prepare and transmit to the Transfer Agent an Officer’s Certificate setting forth the Conversion Price, the method of calculation thereof in reasonable detail, and the facts requiring such adjustment and upon which such adjustment is based and (ii) as soon as practicable following the occurrence of an event that requires an adjustment to the Conversion Price pursuant to this Section 7 (or if the Company is not aware of such occurrence, as soon as practicable after becoming so aware), the Company or, at the request and expense of the Company, the Transfer Agent shall provide a written notice to the Holders of the occurrence of such event and a statement setting forth in reasonable detail the method by which the adjustment to the Conversion Price was determined and setting forth the adjusted Conversion Price.

 

(e)  Reversal of Adjustment. If the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, and shall thereafter (and before the dividend or distribution has been paid or delivered to stockholders) legally abandon its plan to pay or deliver such dividend or distribution, then thereafter no adjustment in the Conversion Price then in effect shall be required by reason of the taking of such record.

 

(f)  Exceptions to Adjustment. Notwithstanding the foregoing, the applicable Conversion Price shall not be adjusted:

 

(i)  upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Company’s securities and the investment of additional optional amounts in shares of Common Stock under any such plan;

 

 

(ii)  upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of its Subsidiaries;

 

(iii)  upon the issuance of any shares of Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of the Issue Date;

 

(iv)  in connection with (A) the issuance of the Convertible Preferred Stock or the Warrants to the Holders or their Affiliates pursuant to the terms of the Investment Agreement, (B) the issuance of shares of Common Stock to the Holders upon the exercise of the Warrants or the conversion of the Convertible Preferred Stock, or (C) any other transactions contemplated by and consummated in accordance with the Investment Agreement (including the Cash Dividend (as defined in the Investment Agreement) and the reverse stock split of the Common Stock that became effective prior to the Issue Date (the “Reverse Stock Split”));

 

(v)  for a change in the par value of the Common Stock; or

 

(vi)  for accrued and unpaid dividends on the Convertible Preferred Stock.

 

Section 8.  Recapitalizations, Reclassifications and Changes in the Company’s Stock. In the event of any reclassification of outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value and other than the Reverse Stock Split), or any consolidation or merger of the Company with or into another Person or any merger of another Person with or into the Company (other than a consolidation or merger in which the Company is the resulting or surviving Person and that does not result in any reclassification or change of outstanding Common Stock), or any sale or other disposition to another Person of all or substantially all of the assets of the Company (computed on a consolidated basis) (any of the foregoing, a “Transaction”), upon conversion of its shares of Convertible Preferred Stock, a Holder will be entitled to receive the kind and amount of securities (of the Company or another issuer), cash and other property receivable upon such Transaction by a holder of the number of shares of Common Stock into which such shares of Convertible Preferred Stock were convertible immediately prior to such Transaction, after giving effect to any adjustment event or, in the event holders of Common Stock have the opportunity to elect the form of consideration to be received in any Transaction, the weighted average of the forms and amounts of consideration received by the holders of the Common Stock, and, prior to or at the effective time of such Transaction, the Company or the successor or purchasing person, as the case may be, shall (and the Company shall cause such successor or purchasing person to) execute with the Holders an amendment to this Agreement providing for such change in the right to convert the shares of Convertible Preferred Stock. In the event that at any time, as a result of an adjustment made pursuant to this Certificate of Designation, the Holders shall become entitled upon conversion to any securities other than, or in addition to, shares of Common Stock, thereafter the number or amount of such other securities so receivable upon conversion shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock set forth in this Certificate of Designation.

 

 

Section 9.  Consolidation, Merger and Sale of Assets. (a) The Company, without the consent of the Holders (but subject, for avoidance of doubt, to the right of the Holders to vote on any such transaction in accordance with the first two sentences of Section 4(a)), may consolidate with or merge into any other Person or convey, transfer or lease all or substantially all its assets to any Person or may permit any Person to consolidate with or merge into, or transfer or lease all or substantially all its properties to, the Company; provided, that (i) the successor, transferee or lessee is organized under the laws of the United States or any political subdivision thereof; (ii) the shares of Convertible Preferred Stock will become shares of such successor, transferee or lessee, having in respect of such successor, transferee or lessee the same powers, preferences and relative participating, optional or other special rights and the qualification, limitations or restrictions thereon, the Convertible Preferred Stock had immediately prior to such transaction; and (iii) the Company delivers to the Transfer Agent an Officer’s Certificate and an Opinion of Counsel, acceptable to the Transfer Agent, stating that such transaction complies with this Certificate of Designation.

 

(b)  Upon any consolidation by the Company with, or merger by the Company into, any other Person or any conveyance, transfer or lease of all or substantially all the assets of the Company as described in Section 9(a), the successor resulting from such consolidation or into which the Company is merged or the transferee or lessee to which such conveyance, transfer or lease is made, will succeed to, and be substituted for, and may exercise every right and power of, the Company under the shares of Convertible Preferred Stock, and thereafter, except in the case of a lease, the predecessor (if still in existence) will be released from its obligations and covenants with respect to the Convertible Preferred Stock.

 

Section 10.  Notices. All notices referred to herein shall be in writing and, unless otherwise specified herein, all notices hereunder shall be deemed to have been given upon the earlier of receipt thereof or three (3) Business Days after the mailing thereof if sent by registered or certified mail with postage prepaid, or by private courier service addressed: (i) if to the Company, to its office at Five American Lane, Greenwich, CT 06831 (Attention: Chief Executive Officer), (ii) if to any Holder, to such Holder at the address of such Holder as listed in the stock record books of the Company (which may include the records of the Transfer Agent) or (iii) to such other address as the Company or any such Holder, as the case may be, shall have designated by notice similarly given.

 

Section 11.  Transfer of Securities. (a) The shares of Convertible Preferred Stock and the shares of Common Stock issuable upon conversion of the Convertible Preferred Stock (collectively, the “Securities”) have not been registered under the Securities Act or any other applicable securities laws and may not be offered or sold except in compliance with the registration requirements of the Securities Act and any other applicable securities laws, or pursuant to an exemption from registration under the Securities Act and any other applicable securities laws, or in a transaction not subject to such laws. The Securities will have the benefit of certain registration rights under the Securities Act pursuant to a Registration Rights Agreement entered into by the Company and the Holders on the Issue Date, a copy of which may be obtained from the Company by writing to it at QXO, Inc., Five American Lane, Greenwich, CT 06831, Attention: Chief Executive Officer.

 

(b)  Except in connection with a registration statement relating to the Securities, if shares of Convertible Preferred Stock in certificated form are delivered upon the transfer, exchange or replacement of shares of Convertible Preferred Stock bearing the Restricted Stock Legend, or if a request is made to remove such Restricted Stock Legend on shares of Convertible Preferred Stock, the shares of Convertible Preferred Stock so issued shall bear the Restricted Stock Legend and the Restricted Stock Legend shall not be removed unless there is delivered to the Company and the Transfer Agent such satisfactory evidence, which may include an Opinion of Counsel licensed to practice law in the State of New York, as may be reasonably required by the Company, that such shares of Convertible Preferred Stock are not “restricted securities” within the meaning of Rule 144 under the Securities Act. Upon provision of such satisfactory evidence, the Transfer Agent, at the direction of the Company, shall countersign and deliver shares of Convertible Preferred Stock that do not bear the Restricted Stock Legend.

 

 

(c)  Shares of Common Stock issued upon a conversion of the shares of Convertible Preferred Stock bearing the Restricted Stock Legend, prior to the first anniversary of the Issue Date, shall be in global form and bear a restricted common stock legend that corresponds to the Restricted Stock Legend (the “Restricted Common Stock Legend”).

 

Section 12.  Tax Treatment. The Company and the Holders agree that (i) it is intended that the Convertible Preferred Stock not constitute “preferred stock” within the meaning of Section 305 of the Internal Revenue Code of 1986, as amended, (the “Code”) and the Treasury Regulations promulgated thereunder and (ii) except to the extent otherwise required by a “determination” within the meaning of Section 1313(a) of the Code, neither the Company nor any Holder shall treat the Convertible Preferred Stock as such for U.S. federal income tax or withholding tax purposes or otherwise take any position inconsistent with such treatment on any tax return, in any tax audit, investigation, examination, claim, suit, inquiry or other proceeding or otherwise.

 

Section 13.  Definitions. (a) “Accretion Amount” per share of Convertible Preferred Stock for any Dividend Payment Date on which accrued dividends are not paid in full, means the product of (i) the accretion rate of 9% per annum, calculated on a quarterly basis, as such may be adjusted pursuant to Section 2(a), (ii) the Accreted Liquidation Preference as of the first day of the relevant dividend period and (iii) the fraction of the accrued dividends for that dividend period that were not paid in cash on the Dividend Payment Date.

 

(b)  “Accreted Liquidation Preference” per share of Convertible Preferred Stock means, as of any date, the Initial Liquidation Preference increased by the sum of the Accretion Amounts, if any, for all prior Dividend Payment Dates, and decreased by the sum of the Paydown Amounts, if any, for all prior Dividend Payment Dates or other dates on which Paydown Amounts were paid.

 

(c)  “Board of Directors” has the meaning set forth in the first paragraph of this Certificate of Designation.

 

(d)  “Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Transfer Agent.

 

(e)  “Business Day” means any day other than a Saturday or Sunday or any other day on which banks in the City of New York are authorized or required by law or executive order to close.

 

(f)  “Capital Stock” of any Person means any and all shares, interests, participations or other equivalents however designated of corporate stock or other equity participations, including partnership interests, whether general or limited, of such Person and any rights (other than debt securities convertible or exchangeable into an equity interest), warrants or options to acquire an equity interest in such Person.

 

 

(g)  “Certificate of Incorporation” has the meaning set forth in the first paragraph of this Certificate of Designation.

 

(h)  “Closing Sale Price” of a security on any date means the closing sale price per share (or if no closing sale price is reported, the average of the closing bid and ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices) on such date as reported on the over-the-counter “Pink Sheets” market or, if the security is listed on a national securities exchange, the principal national securities exchange on which the security is traded. In the absence of such a quotation, the Closing Sale Price of the security will be an amount determined in good faith by the Board of Directors to be the fair market value of such security, and such determination shall be conclusive.

 

(i)  “Code” has the meaning set forth in Section 12.

 

(j)  “Common Stock” has the meaning set forth in Section 1.

 

(k)  “Company” has the meaning set forth in the first paragraph of this Certificate of Designation.

 

(l)  “Conversion Date” has the meaning set forth in Section 5(c).

 

(m)  “Conversion Price” shall initially equal $4.566 per share of Common Stock, and shall be subject to adjustment as set forth in Section 7. For the avoidance of doubt, the Conversion Price takes into account the 8:1 reverse stock split of the Common Stock that became effective on June 6, 2024.

 

(n)  “Conversion Rate” has the meaning set forth in Section 5(a).

 

(o)  “Convertible Preferred Stock” has the meaning set forth in the first paragraph of this Certificate of Designation.

 

(p)  “DGCL” has the meaning set forth in the first paragraph of this Certificate of Designation.

 

(q)  “Dividend Payment Date” has the meaning set forth in Section 2(a).

 

(r)  “Dividend Record Date” has the meaning set forth in Section 2(a).

 

(s)  “Expiration Time” has the meaning set forth in Section 7(a)(v).

 

(t)  “Holder” means the Person in whose name a share of Convertible Preferred Stock is registered, in such Person’s capacity as a holder of such share of Convertible Preferred Stock.

 

(u)  “including” means “including, without limitation.”

 

(v)  “Initial Liquidation Preference” has the meaning set forth in the first paragraph of this Certificate of Designation.

 

 

(w)  “Initial Public Offering” means, in the event of a Spin-off, the first time securities of the same class or type as the securities being distributed in the Spin-off are bona fide offered to the public for cash.

 

(x)  “Investment Agreement” means the Amended and Restated Investment Agreement, dated as of April 14, 2024, by and among the Company, Jacobs Private Equity II, LLC, and the other “Investors” party thereto, which amends and restates in its entirety that certain Investment Agreement, dated as of December 3, 2023, by and among the Company and the Investors.

 

(y)  “Issue Date” has the meaning set forth in Section 1.

 

(z)  “Junior Stock” has the meaning set forth in Section 1.

 

(aa)  “Market Value” means, with respect to any date of determination, the average Closing Sale Price of the Common Stock for a five consecutive Trading Day period preceding the earlier of (i) the day preceding the date of determination and (ii) the day before the “ex date” with respect to the issuance or distribution requiring such computation; provided that, solely for purposes of Section 7(a)(iv)(B), the Market Value means the average of the daily Closing Sale Price of the Common Stock for the first 10 consecutive Trading Days after the effective date of the Spin-off (provided, further, that if an Initial Public Offering of the securities being distributed in the Spin-off is to be effected simultaneously with the Spin-off, the Market Value of the Common Stock means the Closing Sale Price of the Common Stock on the Trading Day on which the Initial Public Offering price of the securities being distributed in the Spin-off is determined). For purposes of this definition, the term “ex date” when used with respect to any issuance or distribution, means the first date on which the Common Stock trades, regular way, on the over-the-counter “Pink Sheets” market or, if the Common Stock is listed on a national securities exchange, the principal national securities exchange on which the Common Stock is traded at that time, without the right to receive the issuance or distribution.

 

(bb)  “Officer” means the Chairman of the Board, President, Chief Executive Officer, any Vice President, the Chief Financial Officer, the Chief Accounting Officer, the Treasurer, any Assistant Treasurer, the Controller, any Assistant Controller, the Secretary or any Assistant Secretary of the Company.

 

(cc)  “Officer’s Certificate” means a certificate signed by two Officers.

 

(dd)  “Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable to the Company or the Transfer Agent. The counsel may be an employee of or counsel to the Company or the Transfer Agent.

 

(ee)  “Optional Conversion” has the meaning set forth in Section 5(a).

 

(ff)  “Parity Stock” has the meaning set forth in Section 1.

 

(gg)  “Paydown Amount” has the meaning set forth in Section 2(c).

 

(hh)  “Person” means any natural person, corporation, limited liability company, partnership, joint venture, trust, business association, governmental entity or other entity.

 

 

(ii)  “Purchased Shares” has the meaning set forth in Section 7(a)(v).

 

(jj)  “Restricted Common Stock Legend” has the meaning set forth in Section 11(c).

 

(kk)  “Restricted Stock Legend” means a legend to the following effect:

 

“THE SECURITIES REPRESENTED BY THIS INSTRUMENT AND THE SECURITIES ISSUABLE UPON CONVERSION THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO A REGISTRATION STATEMENT RELATING THERETO IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.”

 

(ll)  “Securities” has the meaning set forth in Section 11(a).

 

(mm)  “Securities Act” means the Securities Act of 1933, as amended.

 

(nn)  “Senior Stock” has the meaning set forth in Section 1.

 

(oo)  “Spin-off” means a dividend or other distribution of shares of Capital Stock of any class or series, or similar equity interests, of or relating to a Subsidiary or other business unit of the Company.

 

(pp)  “Spin-off Market Value” means (a) in the case of securities to be distributed to the holders of the Common Stock in connection with a Spin-off that is not effected simultaneously with an Initial Public Offering of the securities being distributed in the Spin-off and where such securities are listed or quoted (or will be listed or quoted upon consummation of the Spin-off) on a U.S. national securities exchange, the average of the Closing Sale Price of those securities over the first 10 consecutive Trading Days after the effective date of the Spin-off, (b) in the case of securities being distributed in any Spin-off that is effected simultaneously with an Initial Public Offering, the Initial Public Offering price and (c) in the case of securities being distributed in any Spin-off not involving any Initial Public Offering of such securities and where such securities are not and will not be listed or quoted on a U.S. national securities exchange, the fair market value (on a per share basis) of such securities (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution).

 

(qq)  “Subsidiary” of any Person means any other Person (i) more than 50% of whose outstanding shares or securities representing the right to vote for the election of directors or other managing authority of such other Person are, now or hereafter, owned or controlled, directly or indirectly, by such first Person, but such other Person shall be deemed to be a Subsidiary only so long as such ownership or control exists, or (ii) which does not have outstanding shares or securities with such right to vote, as may be the case in a partnership, joint venture or unincorporated association, but more than 50% of whose ownership interest representing the right to make the decisions for such other Person is, now or hereafter, owned or controlled, directly or indirectly, by such first Person, but such other Person shall be deemed to be a Subsidiary only so long as such ownership or control exists.

 

 

(rr)  “Trading Day” means a day during which trading in securities generally occurs on the over-the-counter “Pink Sheets” market or, if the Common Stock is listed on a national securities exchange, the principal national securities exchange on which the Common Stock is traded.

 

(ss)  “Transaction” has the meaning set forth in Section 8.

 

(tt)  “Transfer Agent” means Pacific Stock Transfer, Inc. unless and until a successor is selected by the Company, and then such successor.

 

(uu)  “Triggering Event” means a specified event the occurrence of which entitles the holders of rights, options or warrants to exercise such rights, options or warrants.

 

(vv)  “Warrants” has the meaning set forth in the Investment Agreement.

 

Section 14.  Fractional Shares. No fractional shares of Common Stock shall be issued to Holders. In lieu of any fraction of a share of Common Stock that would otherwise be issuable in respect of the aggregate number of shares of the Convertible Preferred Stock surrendered by a Holder upon a conversion, such Holder shall have the right to receive an amount in cash (computed to the nearest cent) equal to the same fraction of the Closing Sale Price of the Common Stock on the Trading Day next preceding the date of conversion.

 

Section 15.  Miscellaneous. (a) The Accreted Liquidation Preference and the annual dividend rate and accretion rate set forth herein each shall be subject to equitable adjustment whenever there shall occur a stock split, combination, reclassification or other similar event involving the Convertible Preferred Stock. Such adjustments shall be determined in good faith by the Board of Directors and submitted by the Board of Directors to the Transfer Agent.

 

(b)  For the purposes of Section 7, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock.

 

(c)  If the Company shall take any action affecting the Common Stock, other than any action described in Section 7, that in the opinion of the Board of Directors would materially adversely affect the conversion rights of the Holders, then the Conversion Price for the Convertible Preferred Stock may be adjusted, to the extent permitted by law, in such manner, and at such time, as the Board of Directors may determine to be equitable in the circumstances.

 

(d)  The Company covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Common Stock for the purpose of effecting conversion of the Convertible Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all outstanding shares of Convertible Preferred Stock not theretofore converted. For purposes of this Section 15(d), the number of shares of Common Stock that shall be deliverable upon the conversion of all outstanding shares of Convertible Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single Holder.

 

(e)  The Company covenants that any shares of Common Stock issued upon conversion of the Convertible Preferred Stock shall be duly and validly issued and fully paid and nonassessable, free from preemptive rights and free from all taxes, liens, charges and security interests with respect to the issuance thereof, except for transfer restrictions imposed by applicable securities laws.

 

 

(f)  The Company shall pay all transfer, stamp, documentary, issue and other similar taxes due with respect to the issuance or delivery of shares of the Convertible Preferred Stock or shares of the Common Stock or other securities or property upon conversion of the Convertible Preferred Stock.

 

(g)  The Convertible Preferred Stock is not redeemable.

 

(h)  The Convertible Preferred Stock is not entitled to any preemptive or subscription rights in respect of any securities of the Company.

 

(i)  Whenever possible, each provision hereof shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions hereof. If a court of competent jurisdiction should determine that a provision hereof would be valid or enforceable if a period of time were extended or shortened or a particular percentage were increased or decreased, then such court may make such change as shall be necessary to render the provision in question effective and valid under applicable law.

 

(j)  Convertible Preferred Stock may be issued in fractions of a share which shall entitle the Holder, in proportion to such Holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions and have the benefit of all other rights of Holders.

 

(k)  Subject to applicable escheat laws, any monies set aside by the Company in respect of any payment with respect to shares of the Convertible Preferred Stock, or dividends thereon, and unclaimed at the end of two years from the date upon which such payment is due and payable shall revert to the general funds of the Company, after which reversion the Holders of such shares shall look only to the general funds of the Company for the payment thereof. Any interest accumulated on funds so deposited shall be paid to the Company from time to time.

 

(l)  Except as may otherwise be required by law, the shares of Convertible Preferred Stock shall not have any voting powers, preferences and relative, participating, optional or other special rights, other than those specifically set forth in this Certificate of Designation or the Certificate of Incorporation.

 

(m)  The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof.

 

(n)  If any of the voting powers, preferences and relative, participating, optional and other special rights of the Convertible Preferred Stock and qualifications, limitations and restrictions thereof set forth herein is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and relative, participating, optional and other special rights of Convertible Preferred Stock and qualifications, limitations and restrictions thereof set forth herein which can be given effect without the invalid, unlawful or unenforceable voting powers, preferences and relative, participating, optional and other special rights of Convertible Preferred Stock and qualifications, limitations and restrictions thereof shall, nevertheless, remain in full force and effect, and no voting powers, preferences and relative, participating, optional or other special rights of Convertible Preferred Stock and qualifications, limitations and restrictions thereof herein set forth shall be deemed dependent upon any other such voting powers, preferences and relative, participating, optional or other special rights of Convertible Preferred Stock and qualifications, limitations and restrictions thereof unless so expressed herein.

 

 

(o)  Shares of Convertible Preferred Stock that (i) have not been issued on or before the Issue Date or (ii) have been issued and reacquired in any manner, including shares of Convertible Preferred Stock purchased or converted, shall (upon compliance with any applicable provisions of the laws of Delaware) have the status of authorized but unissued shares of preferred stock of the Company undesignated as to series and may be designated or redesignated and issued or reissued, as the case may be, as part of any series of preferred stock of the Company; provided that any issuance of such shares as Convertible Preferred Stock must be in compliance with the terms hereof.

 

(p)  If any of the Convertible Preferred Stock certificates shall be mutilated, lost, stolen or destroyed, the Company shall issue, in exchange and in substitution for and upon cancellation of the mutilated Convertible Preferred Stock certificate, or in lieu of and substitution for the Convertible Preferred Stock certificate lost, stolen or destroyed, a new Convertible Preferred Stock certificate of like tenor and representing an equivalent amount of shares of Convertible Preferred Stock, but only upon receipt of evidence of such loss, theft or destruction of such Convertible Preferred Stock certificate and indemnity, if requested, reasonably satisfactory to the Company and the Transfer Agent.

 

 

IN WITNESS WHEREOF, the Company has caused this Certificate of Designation to be duly executed on this 6th day of June, 2024.

 

	QXO, INC.
	By:	/s/ Mark Meller
		Name:	Mark Meller
		Title:	Chief Executive Officer

 

 

 

[Signature Page to Certificate of Designation]

 

-19-

 

Exhibit 4.2

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT AND THE SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO A REGISTRATION STATEMENT RELATING THERETO IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.

 

WARRANTS TO PURCHASE COMMON STOCK OF
QXO, INC.

 

No. [●]             Certificate for [●] Warrants

 

This Warrant Certificate (“Warrant Certificate”) certifies that [INSERT NAME OF HOLDER], or registered assigns, is the registered holder of the number of Warrants set forth above. Each warrant represented hereby (a “Warrant”) entitles the holder thereof (the “Holder”), subject to the provisions contained herein, to purchase from QXO, Inc., a Delaware corporation (the “Company”), one share of the Company’s common stock, par value $0.00001 per share (“Company Common Stock”), subject to adjustment upon the occurrence of certain events specified herein, at the exercise price of $6.849 per share (the “Exercise Price”), subject to adjustment upon the occurrence of certain events specified herein.

 

This Warrant Certificate is issued under and in accordance with the Amended and Restated Investment Agreement, dated as of April 14, 2024 (the “Investment Agreement”), by and among Jacobs Private Equity II, LLC, the other Investors party thereto and the Company, which amends and restates in its entirety that certain Investment Agreement, dated as of December 3, 2023, by and among the Company and the Investors, and is subject to the terms and provisions contained in the Investment Agreement. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Investment Agreement.

 

ARTICLE I

 

Exercise Price; Exercise of Warrants and Expiration of Warrants

 

SECTION 1.01 Exercise Price. This Warrant Certificate shall entitle the Holder hereof, subject to the provisions of this Warrant Certificate, to purchase one share of Company Common Stock for each Warrant represented hereby, at the Exercise Price, in each case subject to all adjustments made on or prior to the date of exercise thereof as herein provided.

 

SECTION 1.02 Exercise of Warrants. The Warrants shall be exercisable in whole or in part from time to time on any Business Day beginning on the Issuance Date and ending on the Expiration Date in the manner provided for herein.

 

SECTION 1.03 Expiration of Warrants. Any unexercised Warrants shall expire and the rights of the Holder of such Warrants to purchase Company Common Stock shall terminate at the close of business on the Expiration Date.

 

 

SECTION 1.04 Method of Exercise; Payment of Exercise Price. (a) In order to exercise a Warrant, the Holder hereof must (i) surrender this Warrant Certificate to the Company, with the Exercise Subscription Form attached hereto as Annex I duly completed and executed, and (ii) unless the cashless exercise procedure specified in Section 1.04(d) below is specified in the applicable Exercise Subscription Form, pay in full the Exercise Price then in effect for the shares of Company Common Stock as to which this Warrant Certificate is submitted for exercise in the manner provided in paragraph (b) of this Section 1.04.

 

(b) Simultaneously with the exercise of each Warrant, payment in full of the Exercise Price shall be delivered to the Company, unless the cashless exercise procedure specified in Section 1.04(d) below is specified in the applicable Exercise Subscription Form. Such payment (if applicable) shall be made in cash, by bank wire transfer in immediately available funds to an account designated by the Company.

 

(c) If fewer than all the Warrants represented by this Warrant Certificate are surrendered, this Warrant Certificate shall be surrendered and a new Warrant Certificate of the same tenor and for the number of Warrants that were not surrendered shall promptly be executed and delivered to the Person or Persons as may be directed in writing by the Holder (subject to the terms hereof), and the Company shall register any new Warrant Certificate in the name of such Person or Persons. Any new Warrant Certificate shall be executed on behalf of the Company by its President, Chief Executive Officer, Chief Financial Officer or Secretary, either manually or by facsimile signature printed thereon. In case any Officer of the Company whose signature shall have been placed upon any Warrant Certificate shall cease to be such Officer of the Company before issue and delivery thereof, such Warrant Certificate may, nevertheless, be issued and delivered with the same force and effect as though such person had not ceased to be such Officer of the Company.

 

(d) Notwithstanding anything contained herein to the contrary, each Warrant may be exercised, in whole or in part, at any time or times on or after the Issuance Date and on or before the Expiration Date at the election of the Holder (in such Holder’s sole discretion) by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of shares of Company Common Stock equal to the quotient obtained by dividing ((A-B) * (X)) by (A), where:

 

(A) = the Closing Sale Price of a share of Company Common Stock on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Exercise Subscription Form;

 

(B) = the Exercise Price, as adjusted hereunder; and

 

(X) = the number of shares of Company Common Stock that would be issuable upon exercise of such Warrant in accordance with the terms of this Warrant Certificate if such exercise were by means of a cash exercise rather than a cashless exercise.

 

 

(e) Upon surrender of this Warrant Certificate in accordance with the foregoing provisions, the Company shall instruct the Transfer Agent to transfer to the Holder appropriate evidence of ownership of any shares of Company Common Stock or other securities or property (including cash) to which the Holder is entitled, registered or otherwise placed in, or payable to the order of, such name or names as may be directed in writing by the Holder (subject to the terms hereof), and shall deliver such evidence of ownership and any other securities or property (including cash) to the Person or Persons entitled to receive the same, together with an amount in cash in lieu of any fraction of a share as provided in Section 2.03. Upon payment of the Exercise Price therefor (or in accordance with the cashless exercise procedure specified in Section 1.04(d)), the Holder (or its designee) shall be deemed to own and have all of the rights associated with any Company Common Stock or other securities or property (including cash) to which it is entitled pursuant to this Warrant Certificate upon the surrender of this Warrant Certificate in accordance with the terms of this Warrant Certificate.

 

SECTION 1.05 Compliance with the Securities Act. (a) No Warrants or shares of Company Common Stock issued upon exercise thereof may be sold, transferred or otherwise disposed of (any such sale, transfer or other disposition, a “Sale”), except in compliance with the registration requirements of the Securities Act and any other applicable securities laws or an exemption from registration under the Securities Act and any other applicable securities laws, or in a transaction not subject to such laws. The Warrants and the shares of Company Common Stock issuable upon exercise of the Warrants will have the benefit of certain registration rights under the Securities Act pursuant to a Registration Rights Agreement entered into by the Company on the Issuance Date.

 

(b) Shares of Company Common Stock issued upon exercise of Warrants under a Warrant Certificate while such Warrant Certificate bears the legend set forth on the first page of this Warrant Certificate as of the Issuance Date shall, subject to Section 6.04, be in global form and bear the following legend:

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO A REGISTRATION STATEMENT RELATING THERETO IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.

 

ARTICLE II

 

Adjustments; Changes upon Certain Other Transactions

 

SECTION 2.01 Anti-dilution Adjustments. (a) The number of shares issuable upon exercise of the Warrants and the Exercise Price shall be subject to the following adjustments from time to time:

 

(i) Stock Dividends. In case the Company shall pay or make a dividend or other distribution on the Company Common Stock in Company Common Stock, the number of shares of Company Common Stock issuable upon exercise of each Warrant, as in effect at the opening of business on the day following the date fixed for the determination of stockholders of the Company entitled to receive such dividend or distribution, shall be adjusted so that the Holder shall thereafter be entitled to receive the number of shares of Company Common Stock that the Holder would have owned or have been entitled to receive after the happening of the dividend or other distribution, had such Warrant been exercised immediately prior to the date fixed for such determination; and, in the event of any such adjustment, the Exercise Price, as in effect at the opening of business on the day following the date fixed for the determination of stockholders of the Company entitled to receive such dividend or other distribution, shall be adjusted by multiplying such Exercise Price by a fraction of which the numerator shall be the number of shares of Company Common Stock outstanding at the close of business on the date fixed for such determination and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution. Such adjustments shall become effective immediately after the opening of business on the day following the date fixed for such determination.

 

 

(ii) Stock Purchase Rights. In case the Company shall issue to all holders of Company Common Stock options, warrants or other rights entitling them to subscribe for or purchase shares of Company Common Stock for a period expiring within 60 days from the date of issuance of such options, warrants or other rights at a price per share of Company Common Stock less than the Market Value on the date fixed for the determination of stockholders of the Company entitled to receive such options, warrants or other rights (other than pursuant to a dividend reinvestment, share purchase or similar plan), the number of shares of Company Common Stock issuable upon the exercise of each Warrant shall be adjusted by multiplying the number of shares of Company Common Stock issuable upon exercise of each Warrant, as in effect at the opening of business on the day following the date fixed for such determination, by a fraction, the numerator of which shall be the number of shares of Company Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Company Common Stock so offered for subscription or purchase, either directly or indirectly, and the denominator of which shall be the number of shares of Company Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Company Common Stock which the aggregate consideration expected to be received by the Company upon the exercise, conversion or exchange of such options, warrants or other rights (as determined in good faith by the Board, whose determination shall be conclusive and described in a Board Resolution) would purchase at such Market Value; and, in the event of any such adjustment, the Exercise Price in effect at the opening of business on the day following the date fixed for such determination shall be adjusted by multiplying such Exercise Price by a fraction, the numerator of which shall be the number of shares of Company Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Company Common Stock which the aggregate consideration expected to be received by the Company upon the exercise, conversion or exchange of such options, warrants or other rights (as determined in good faith by the Board, whose determination shall be conclusive and described in a Board Resolution) would purchase at such Market Value and the denominator of which shall be the number of shares of Company Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Company Common Stock so offered for subscription or purchase, either directly or indirectly. Such adjustments shall become effective immediately after the opening of business on the day following the date fixed for such determination; provided, however, that no such adjustments shall be made if the Holder would be entitled to receive such options, warrants or other rights upon exercise at any time of the Warrants; provided, further, however, that if any of the foregoing options, warrants or other rights are only exercisable upon the occurrence of a Triggering Event, then no such adjustments shall be made until such Triggering Event occurs or, if earlier, the applicable date of exercise.

 

 

(iii) Stock Splits, Reverse Splits and Combinations. In case outstanding shares of Company Common Stock shall be subdivided, split or reclassified into a greater number of shares of Company Common Stock, then the number of shares of Company Common Stock issuable upon exercise of each Warrant in effect at the opening of business on the day following the date upon which such subdivision, split or reclassification becomes effective shall be adjusted so that the Holder shall thereafter be entitled to receive the number of shares of Company Common Stock that the Holder would have owned or would have been entitled to receive had such Warrant been exercised immediately prior to such subdivision, split or reclassification becoming effective; and, in the event of any such adjustment, the Exercise Price in effect at the opening of business on the day following the date upon which such subdivision, split or reclassification becomes effective shall be proportionately reduced. Conversely, in case outstanding shares of Company Common Stock shall be combined or reclassified into a smaller number of shares of Company Common Stock, then the number of shares of Company Common Stock issuable upon exercise of each Warrant in effect at the opening of business on the day following the date upon which such combination or reclassification becomes effective shall be adjusted so that the Holder shall thereafter be entitled to receive the number of shares of Company Common Stock that the Holder would have owned or would have been entitled to receive had such Warrant been exercised immediately prior to such combination or reclassification becoming effective; and, in the event of any such adjustment, the Exercise Price in effect at the opening of business on the day following the date upon which such combination or reclassification becomes effective shall be proportionately increased. Such adjustments shall become effective immediately after the opening of business on the day following the date upon which such subdivision, split, reclassification or combination becomes effective.

 

(iv) Debt, Asset or Security Distributions. (A) In case the Company shall, by dividend or otherwise, distribute to all holders of Company Common Stock evidences of its indebtedness, assets or securities (but excluding any dividend or distribution of options, warrants or other rights referred to in paragraph (ii) of this Section 2.01(a), any dividend or distribution paid exclusively in cash, any dividend or distribution of shares of Capital Stock of any class or series, or similar equity interests, of or relating to a Subsidiary or other business unit in the case of a Spin-off referred to in the next subparagraph, or any dividend or distribution referred to in paragraph (i) of this Section 2.01(a)), then the number of shares of Company Common Stock issuable upon the exercise of each Warrant immediately prior to the close of business on the record date fixed for the determination of stockholders of the Company entitled to receive such distribution shall be increased to a number determined by multiplying the number of shares of Company Common Stock issuable upon the exercise of such Warrant immediately prior to the date fixed for such determination by a fraction, the numerator of which shall be the Market Value on the date fixed for such determination plus the fair market value (as determined in good faith by the Board, whose determination shall be conclusive and described in a Board Resolution) of the portion of the assets or evidences of indebtedness so distributed applicable to one share of Company Common Stock and the denominator of which shall be the Market Value on the date fixed for such determination; and, in the event of any such adjustment, the Exercise Price shall be reduced by multiplying the Exercise Price in effect immediately prior to the close of business on the date fixed for the determination of stockholders of the Company entitled to receive such distribution by a fraction, the numerator of which shall be the Market Value on the date fixed for such determination and the denominator of which shall be such Market Value plus the fair market value (as determined in good faith by the Board, whose determination shall be conclusive and described in a Board Resolution) of the portion of the assets, securities or evidences of indebtedness so distributed applicable to one share of Company Common Stock. Such adjustments shall become effective immediately prior to the opening of business on the day following the date fixed for the determination of stockholders of the Company entitled to receive such distribution. In any case in which this subparagraph (iv)(A) is applicable, subparagraph (iv)(B) of this Section 2.01(a)(iv) shall not be applicable.

 

 

(B) In the case of a Spin-off, the number of shares of Company Common Stock issuable upon the exercise of each Warrant immediately prior to the close of business on the record date fixed for determination of stockholders of the Company entitled to receive such distribution shall be increased to a number determined by multiplying the number of shares of Company Common Stock issuable upon the exercise of such Warrant immediately before the close of business on such date by a fraction, the numerator of which shall be the Market Value plus the Spin-off Market Value of the portion of those shares of Capital Stock or similar equity interests so distributed applicable to one share of Company Common Stock, and the denominator of which shall be the Market Value; and, in the event of any such adjustment, the Exercise Price in effect immediately prior to the close of business on the date fixed for determination of stockholders of the Company entitled to receive such distribution shall be reduced by multiplying the Exercise Price by a fraction, the numerator of which shall be the Market Value and the denominator of which shall be the Market Value plus the Spin-off Market Value of the portion of those shares of Capital Stock or similar equity interests so distributed applicable to one share of Company Common Stock. Any adjustments under this subparagraph (iv)(B) will occur on the date that is the earlier of (1) the close of business on the tenth Trading Day from, and including, the effective date of the Spin-off and (2) the date of the Initial Public Offering (if any) of the securities being distributed in the Spin-off, if that Initial Public Offering is effected simultaneously with the Spin-off.

 

(v) Tender Offers. In the case that a tender or exchange offer made by the Company or any Subsidiary of the Company for all or any portion of the Company Common Stock shall expire and such tender or exchange offer (as amended through the expiration thereof) shall require the payment to stockholders of the Company (based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of Purchased Shares) of aggregate consideration having a fair market value (as determined in good faith by the Board, whose determination shall be conclusive and described in a Board Resolution) per share of Company Common Stock that exceeds the Closing Sale Price of the Company Common Stock on the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer, then, immediately prior to the opening of business on the day after the date of the last time (the “Expiration Time”) tenders or exchanges could have been made pursuant to such tender or exchange offer (as amended through the expiration thereof), the number of shares of Company Common Stock issuable upon the exercise of each Warrant immediately prior to the close of business on the date of the Expiration Time shall be increased to a number determined by multiplying the number of shares of Company Common Stock issuable upon exercise of each Warrant immediately prior to the close of business on the date of the Expiration Time by a fraction (A) the numerator of which shall be equal to (1) the product of (I) the Market Value on the date of the Expiration Time and (II) the number of shares of Company Common Stock outstanding (including any tendered or exchanged shares) on the date of the Expiration Time less the number of all shares validly tendered or exchanged, not withdrawn and accepted for payment on the date of the Expiration Time (such validly tendered or exchanged shares, up to any such maximum, being referred to as the “Purchased Shares”) plus (2) the amount of cash plus the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders of the Company pursuant to the tender or exchange offer (assuming the acceptance, up to any maximum specified in the terms of the tender or exchange offer, of Purchased Shares), and (B) the denominator of which shall be equal to the product of (1) the Market Value on the date of the Expiration Time and (2) the number of shares of Company Common Stock outstanding (including any tendered or exchanged shares) on the date of the Expiration Time; and, in the event of any such adjustment, the Exercise Price shall be reduced by multiplying the Exercise Price immediately prior to the close of business on the date of the Expiration Time by a fraction (A) the numerator of which shall be equal to the product of (1) the Market Value on the date of the Expiration Time and (2) the number of shares of Company Common Stock outstanding (including any tendered or exchanged shares) on the date of the Expiration Time, and (B) the denominator of which shall be equal to (1) the product of (I) the Market Value on the date of the Expiration Time and (II) the number of shares of Company Common Stock outstanding (including any tendered or exchanged shares) on the date of the Expiration Time less the number of Purchased Shares plus (2) the amount of cash plus the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders of the Company pursuant to the tender or exchange offer (assuming the acceptance, up to any maximum specified in the terms of the tender or exchange offer, of Purchased Shares).

 

 

(b) Calculation of Adjustments. Notwithstanding anything herein to the contrary, no adjustment under this Section 2.01 need be made to the number of shares issuable upon exercise of a Warrant or the Exercise Price unless such adjustment would require an increase or decrease of at least 1.0% of the number of shares issuable upon exercise of the Warrants or the Exercise Price immediately prior to the making of such adjustment. Any lesser adjustment shall be carried forward and shall be made at the time of and together with the next subsequent adjustment, if any, which, together with any adjustment or adjustments so carried forward, shall result in an increase or decrease of at least 1.0% of the number of shares issuable upon exercise of a Warrant or the Exercise Price immediately prior to the making of such adjustment; provided that any such adjustment of less than 1.0% that has not been made shall be made upon any exercise of the Warrants. No adjustment to the Exercise Price under this Section 2.01 shall be made if such adjustment will result in an Exercise Price that is less than the par value of the Company Common Stock. All adjustments to the number of shares issuable upon exercise of the Warrants or the Exercise Price shall be calculated to the nearest 1/10,000th of a share of Company Common Stock (or if there is not a nearest 1/10,000th of a share to the next lower 1/10,000th of a share) or the nearest $0.0001 (or if there is not a nearest $0.0001 to the next lower $0.0001), as the case may be. For the avoidance of doubt, if an event occurs that would trigger an adjustment pursuant to this Section 2.01 under more than one subsection hereof, such event, to the extent fully taken into account in a single adjustment, shall not result in multiple adjustments hereunder; provided, however, that if more than one subsection of this Section 2.01 is applicable to a single event, the subsection shall be applied that produces the largest adjustment.

 

(c) Stockholder Rights Plans. Upon exercise of the Warrants, to the extent that the Holder receives Company Common Stock, the Holder shall receive, in addition to the shares of Company Common Stock and any cash for fractional shares in accordance with Section 2.03, if any, the rights issued under any future stockholder rights plan the Company may establish whether or not such rights are separated from the Company Common Stock prior to exercise. A distribution of rights pursuant to any stockholder rights plan will not result in an adjustment to the number of shares issuable upon exercise of the Warrants or the Exercise Price pursuant to Section 2.01(a)(ii) or Section 2.01(a)(iv), provided that the Company has provided for the Holder to receive such rights upon exercise; provided, further, that the Holders shall not be permitted to receive such rights to the extent that any of the Holders or their respective Affiliates is the “Acquiring Person” under such stockholder rights plan.

 

(d) Reversal of Adjustment. If the Company shall take a record of the holders of Company Common Stock for the purpose of entitling them to receive a dividend or other distribution, and shall thereafter (and before the dividend or distribution has been paid or delivered to stockholders) legally abandon its plan to pay or deliver such dividend or distribution, then thereafter no adjustment in the number of shares issuable upon exercise of the Warrants or the Exercise Price then in effect shall be required by reason of the taking of such record.

 

(e) Exceptions to Adjustment. Notwithstanding the foregoing, the applicable number of shares issuable upon exercise of the Warrants and the Exercise Price shall not be adjusted:

 

(i) upon the issuance of any shares of Company Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Company’s securities and the investment of additional optional amounts in shares of Company Common Stock under any such plan;

 

(ii) upon the issuance of any shares of Company Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of its Subsidiaries;

 

(iii) upon the issuance of any shares of Company Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of the Issuance Date;

 

 

(iv) in connection with (A) the issuance of the Warrants or the Preferred Stock to the Holders or their Affiliates pursuant to the terms of the Investment Agreement, (B) the issuance of shares of Common Stock to the Holders upon the exercise of the Warrants or the conversion of the Preferred Stock, or (C) any other transactions contemplated by and consummated in accordance with the Investment Agreement (including the Cash Dividend (as defined in the Investment Agreement) and the reverse stock split of the Common Stock that became effective prior to the Issuance Date (the “Reverse Stock Split”));

 

(v) for a change in the par value of the Company Common Stock; or

 

(vi) for accrued and unpaid dividends on the Preferred Stock.

 

SECTION 2.02 Recapitalizations, Reclassifications and Changes in the Company’s Stock. In the event of any reclassification of outstanding shares of Company Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value and other than the Reverse Stock Split), or any consolidation or merger of the Company with or into another Person or any merger of another Person with or into the Company (other than a consolidation or merger in which the Company is the resulting or surviving Person and that does not result in any reclassification or change of outstanding Company Common Stock), or any sale or other disposition to another Person of all or substantially all of the assets of the Company (computed on a consolidated basis) (any of the foregoing, a “Transaction”), upon exercise of the Warrants, the Holder will be entitled to receive the kind and amount of securities (of the Company or another issuer), cash and other property receivable upon such Transaction by a holder of the number of shares of Company Common Stock issuable upon exercise of the Warrants immediately prior to such Transaction, after giving effect to any adjustment event or, in the event holders of Company Common Stock have the opportunity to elect the form of consideration to be received in any Transaction, the weighted average of the forms and amounts of consideration received by the holders of Company Common Stock, and, prior to or at the effective time of such Transaction, the Company or the successor or purchasing person, as the case may be, shall (and the Company shall cause such successor or purchasing person to) execute with the Holder an amendment to this Agreement providing for such change in the rights to exercise the Warrants. In the event that at any time, as a result of an adjustment made pursuant to this Warrant Certificate, the Holder shall become entitled upon exercise to any securities other than, or in addition to, shares of Company Common Stock, thereafter the number or amount of such other securities so receivable upon exercise and the Exercise Price therefor shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Company Common Stock set forth in this Warrant Certificate.

 

SECTION 2.03 Fractional Shares. No fractional shares of Company Common Stock shall be issued to the Holder upon exercise of any Warrant. In lieu of any fraction of a share of Company Common Stock that would otherwise be issuable upon exercise of the aggregate number of Warrants exercised by the Holder, the Holder shall have the right to receive an amount in cash (computed to the nearest cent) equal to the same fraction of the Closing Sale Price of a share of Company Common Stock on the Trading Day next preceding the date of exercise.

 

SECTION 2.04 Notice of Adjustment. Whenever the number of shares of Company Common Stock or other stock or property issuable upon the exercise of each Warrant or the Exercise Price is adjusted, as herein provided, the Company shall (a) compute such adjustment in accordance with this Article II and prepare and transmit to the Transfer Agent an Officer’s Certificate setting forth the adjustment, the method of calculation thereof in reasonable detail and the facts requiring such adjustment and upon which such adjustment is based and (b) as soon as practicable following the occurrence of an event that requires an adjustment pursuant to this Article II (or if the Company is not aware of such occurrence, as soon as practicable after becoming so aware), the Company or, at the request and expense of the Company, the Transfer Agent shall provide a written notice to the holders of Warrants (including the Holder) of the occurrence of such event and a statement setting forth in reasonable detail the method by which the adjustment was determined and setting forth the adjusted amount.

 

 

ARTICLE III

 

Warrant Transfer Books

 

SECTION 3.01 Warrant Transfer Books. (a) The Company shall keep at its principal place of business a register in which the Company shall provide for the registration of Warrant Certificates and of any exchanges of Warrant Certificates as herein provided.

 

(b) At the option of the Holder, Warrant Certificates may be exchanged at such office and upon payment of the charges hereinafter provided. Whenever any Warrant Certificates are so surrendered for exchange, the Company shall execute and deliver the Warrant Certificates that the Holder is entitled to receive.

 

(c) All Warrant Certificates issued upon any registration of transfer or exchange of Warrant Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits, as the Warrant Certificates surrendered for such registration of transfer or exchange.

 

(d) Every Warrant Certificate surrendered for registration of exchange shall (if so required by the Company) be duly endorsed, or be accompanied by a written instrument of transfer in form reasonably satisfactory to the Company, duly executed by the Holder or his attorney duly authorized in writing.

 

(e) No service charge shall be payable by the Holder for any registration of transfer or exchange of this Warrant Certificate, and the Company shall pay any taxes or other governmental charges that may be imposed in connection with any registration of exchange of Warrant Certificates.

 

(f) This Warrant Certificate when duly endorsed in blank shall be deemed negotiable and when this Warrant Certificate shall have been so endorsed, the Holder hereof may be treated by the Company and all other Persons dealing therewith as the absolute owner hereof for any purpose and as the Person entitled to exercise the rights represented hereby.

 

ARTICLE IV

 

Voting

 

SECTION 4.01 No Voting Rights. Prior to the exercise of the Warrants, the Holder, in its capacity as such, shall not be entitled to any rights of a stockholder of the Company, including the right to vote or to consent with respect to any matter.

 

 

ARTICLE V

 

Covenants

 

SECTION 5.01 Reservation of Company Common Stock for Issuance on Exercise of Warrants. The Company covenants that it will at all times reserve and keep available, free from preemptive rights and solely for the purpose of issue upon exercise of the Warrants as herein provided, out of its authorized but unissued Company Common Stock, such number of shares of Company Common Stock as shall then be issuable upon the exercise of all Warrants issuable hereunder and all other Warrant Certificates. The Company covenants that all shares of Company Common Stock issuable upon exercise of the Warrants shall, upon such issue, be duly and validly issued and fully paid and non-assessable, free from preemptive rights and free from all taxes, liens, charges and security interests with respect to the issuance thereof.

 

SECTION 5.02 Notice of Dividends. At any time when the Company declares any dividend or other distribution on the Company Common Stock, it shall give notice to the holders of all the then outstanding Warrants (including the Holder) of any such declaration not less than 15 days prior to the related record date for such dividend or distribution.

 

SECTION 5.03 HSR Act Compliance. If the Holder determines that a notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the “HSR Act”), is required in connection with the exercise of the Warrants represented by this Warrant Certificate, the Company shall reasonably cooperate with the Holder by (a) promptly effecting all necessary notifications and other filings under the HSR Act that are required to be made by the Company and (b) responding as promptly as reasonably practicable to all inquiries or requests received from the United States Federal Trade Commission (the “FTC”), the Department of Justice (the “DOJ”) or any other governmental authority in connection with such notifications and other filings. For the avoidance of doubt, nothing in this Section 5.03 shall require that the Company or any of its Subsidiaries commit to any divestiture, license or hold separate or similar arrangement with respect to the business, assets or properties of the Company or any of its Subsidiaries. Any such notifications and responses by the Company will be in full compliance with the requirements of the HSR Act. The Company shall, to the extent legally permissible, keep the Holder reasonably apprised of the status of any communications with, and any inquiries or requests for additional information from, the FTC, the DOJ or such other governmental authority. The Company shall pay the filing fees in connection with the above filings, and shall otherwise each bear its costs and expenses in connection with the preparation of such filings and responses to inquires or requests.

 

SECTION 5.04 Certain Other Events. If any event occurs as to which the provisions of Article II are not strictly applicable or, if strictly applicable, would not fairly protect the rights of the holders of the Warrants in accordance with the essential intent and principles of such provisions, then the Board shall make such adjustments in the application of such provisions, in accordance with such essential intent and principles, as shall be reasonably necessary, in the good faith judgment of the Board, to protect such purchase rights as aforesaid; provided that no adjustments shall be made pursuant to this Section 5.04 if such adjustment would adversely affect the Holder.

 

 

ARTICLE VI

 

Miscellaneous

 

SECTION 6.01 Tax Matters. The Company shall pay all transfer, stamp, documentary, issue and other similar taxes due with respect to the issuance or delivery of the Warrants or shares of Company Common Stock or other securities or property upon exercise of the Warrants.

 

SECTION 6.02 Surrender of Warrant Certificate. This Warrant Certificate, if surrendered for exercise or purchase, shall be promptly canceled by the Company and shall not be reissued by the Company. The Company shall destroy such canceled Warrant Certificate.

 

SECTION 6.03 Mutilated, Destroyed, Lost or Stolen Warrant Certificate. (a) If (i) this Warrant Certificate is mutilated and surrendered to the Company or (ii) the Company receives evidence to its satisfaction of the destruction, loss or theft of this Warrant Certificate, and there is delivered to the Company such appropriate affidavit of loss, applicable processing fee and indemnity as may be reasonably required by the Company to save it harmless, then, in the absence of notice to the Company that this Warrant Certificate has been acquired by a bona fide purchaser, the Company shall execute and deliver, in exchange for this Warrant Certificate if mutilated or in lieu of this Warrant Certificate if destroyed, lost or stolen, a new Warrant Certificate of like tenor and for a like aggregate number of Warrants.

 

(b) Upon the issuance of any new Warrant Certificate under this Section 6.03, the Company shall pay any taxes or other governmental charges that may be imposed in relation thereto and other expenses in connection therewith.

 

(c) Every new Warrant Certificate executed and delivered pursuant to this Section 6.03 in lieu of any destroyed, lost or stolen Warrant Certificate shall constitute an original contractual obligation of the Company, whether or not the destroyed, lost or stolen Warrant Certificate shall be at any time enforceable by anyone.

 

(d) The provisions of this Section 6.03 are exclusive and shall preclude (to the extent lawful) all other rights or remedies with respect to the replacement of a mutilated, destroyed, lost or stolen Warrant Certificate.

 

SECTION 6.04 Removal of Legends. (a) In the event (i) the transfer of the Warrants or the shares of Company Common Stock issued upon exercise of the Warrants is registered under the Securities Act or (ii) there is delivered to the Company such satisfactory evidence, which may include an Opinion of Counsel licensed to practice law in the State of New York, as may be reasonably required by the Company, that such Warrants or shares are not “restricted securities” within the meaning of Rule 144 under the Securities Act, the Company shall, or shall direct the Transfer Agent to, and the Transfer Agent shall, upon surrender by the Holder of this Warrant Certificate or certificates evidencing such shares of Company Common Stock, as applicable, to the Company or the Transfer Agent, exchange such certificates for certificates without the legend set forth on the first page of this Warrant Certificate as of the Issuance Date or referred to in Section 1.05(b), as applicable.

 

 

(b) In order to effect a Sale of Warrants or shares of Company Common Stock issued upon exercise of the Warrants (other than pursuant to an effective registration statement under the Securities Act), the Holder shall (i) give written notice to the Company of its intention to effect such Sale, which notice shall describe the manner and circumstances of the proposed transaction in reasonable detail and shall include a certification by the Holder to the effect that such proposed Sale may be effected without registration under the Securities Act or under applicable state securities laws, and (ii) provide such additional certifications of the Holder or its transferee or Opinions of Counsel (which shall be reasonably satisfactory to the Company) as the Company may reasonably request solely in order to confirm the availability of the applicable exemption from the registration requirements of applicable securities laws.

 

SECTION 6.05 Notices. All notices referred to herein shall be in writing and, unless otherwise specified herein, all notices hereunder shall be deemed to have been given upon the earlier of receipt thereof or three (3) Business Days after the mailing thereof if sent by registered or certified mail with postage prepaid, or by private courier service addressed: (i) if to the Company, to its office at Five American Lane, Greenwich, CT 06831 (Attention: Chief Executive Officer), (ii) if to any Holder, to such Holder at the address of such Holder as listed in the stock record books of the Company (which may include the records of the Transfer Agent) or (iii) to such other address as the Company or any such Holder, as the case may be, shall have designated by notice similarly given.

 

SECTION 6.06 Applicable Law. This Warrant Certificate and each Warrant represented hereby and all rights arising hereunder shall be construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.

 

SECTION 6.07 Persons Benefiting. This Warrant Certificate shall be binding upon and inure to the benefit of the Company and its successors, assigns, beneficiaries, executors and administrators, and the Holder from time to time of the Warrants represented hereby. Except as otherwise expressly provided herein, nothing in this Warrant Certificate is intended or shall be construed to confer upon any Person, other than the Company and the Holder from time to time of the Warrants represented hereby, any right, remedy or claim under or by reason of this Warrant Certificate or any part hereof.

 

SECTION 6.08 Supplements or Amendments. This Warrant Certificate may not be supplemented or amended without the written approval of both the Holder and the Company.

 

SECTION 6.09 Headings. The descriptive headings of the several Articles and Sections of this Warrant Certificate are inserted for convenience and shall not control or affect the meaning or construction of any of the provisions hereof.

 

SECTION 6.10 Copies of Agreements. Copies of the Investment Agreement and the Registration Rights Agreement referred to herein are on file at the principal place of business of the Company and may be obtained by writing to the Company at the address set forth in Section 6.05.

 

 

ARTICLE VII

 

Definitions.

 

As used in this Warrant Certificate, the following terms shall have the following meanings:

 

“Affiliate” means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified.

 

“Board” means the board of directors of the Company.

 

“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board and to be in full force and effect on the date of such certification, and delivered to the Transfer Agent.

 

“Business Day” means any day other than a Saturday or Sunday or any other day on which banks in the City of New York are authorized or required by law or executive order to close.

 

“Capital Stock” of any Person means any and all shares, interests, participations or other equivalents however designated of corporate stock or other equity participations, including partnership interests, whether general or limited, of such Person and any rights (other than debt securities convertible or exchangeable into an equity interest), warrants or options to acquire an equity interest in such Person.

 

The “Closing Sale Price” of a security on any date means the closing sale price per share (or if no closing sale price is reported, the average of the closing bid and ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices) on such date as reported on the over-the-counter “Pink Sheets” market or, if the security is listed on a national securities exchange, the principal national securities exchange on which the security is traded. In the absence of such a quotation, the Closing Sale Price of the security will be an amount determined in good faith by the Board to be the fair market value of such security, and such determination shall be conclusive.

 

“Company” has the meaning set forth in the introduction to this Warrant Certificate, and its successors and assigns.

 

“Company Common Stock” has the meaning set forth in the introduction to this Warrant Certificate.

 

“DOJ” has the meaning set forth in Section 5.03.

 

“Exercise Price” has the meaning set forth in the introduction to this Warrant Certificate.

 

“Expiration Date” means the tenth anniversary of the Issuance Date.

 

“Expiration Time” has the meaning set forth in Section 2.01(a)(v).

 

“FTC” has the meaning set forth in Section 5.03.

 

“Holder” means the initial Holder of this Warrant Certificate and any permitted assignee or transferee thereof, in such Person’s capacity as a holder of Warrants.

 

“HSR Act” has the meaning set forth in Section 5.03.

 

“including” means “including, without limitation.”

 

 

“Initial Public Offering” means, in the event of a Spin-off, the first time securities of the same class or type as the securities being distributed in the Spin-off are bona fide offered to the public for cash.

 

“Investment Agreement” has the meaning set forth in the introduction to this Warrant Certificate.

 

“Issuance Date” means June 6, 2024.

 

“Market Value” means, with respect to any date of determination, the average Closing Sale Price of the Company Common Stock for a five consecutive Trading Day period preceding the earlier of (a) the day preceding the date of determination and (b) the day before the “ex date” with respect to the issuance or distribution requiring such computation; provided that, solely for purposes of Section 2.01(a)(iv)(B), the Market Value means the average of the daily Closing Sale Price of the Company Common Stock for the first 10 consecutive Trading Days after the effective date of the Spin-off (provided, further, that if an Initial Public Offering of the securities being distributed in the Spin-off is to be effected simultaneously with the Spin-off, the Market Value of the Company Common Stock means the Closing Sale Price of the Company Common Stock on the Trading Day on which the Initial Public Offering price of the securities being distributed in the Spin-off is determined). For purposes of this definition, the term “ex date,” when used with respect to any issuance or distribution, means the first date on which the Company Common Stock trades, regular way, on the over-the-counter “Pink Sheets” market or, if the Company Common Stock is listed on a national securities exchange, the principal national securities exchange on which the Company Common Stock is traded at that time, without the right to receive the issuance or distribution.

 

“Officer” means the Chairman of the Board, President, Chief Executive Officer, any Vice President, the Chief Financial Officer, the Chief Accounting Officer, the Treasurer, any Assistant Treasurer, the Controller, any Assistant Controller, the Secretary or any Assistant Secretary of the Company.

 

“Officer’s Certificate” means a certificate signed by two Officers.

 

“Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable to the Company or the Transfer Agent. The counsel may be an employee of or counsel to the Company or the Transfer Agent.

 

“Person” means any natural person, corporation, limited liability company, partnership, joint venture, trust, business association, governmental entity or other entity.

 

“Preferred Stock” has the meaning set forth in the Investment Agreement.

 

“Purchased Shares” has the meaning set forth in Section 2.01(a)(v).

 

“Sale” has the meaning set forth in Section 1.05(a).

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Spin-off” means a dividend or other distribution of shares of Capital Stock of any class or series, or similar equity interests, of or relating to a Subsidiary or other business unit of the Company.

 

 

“Spin-off Market Value” means (a) in the case of securities to be distributed to the holders of the Common Stock in connection with a Spin-off that is not effected simultaneously with an Initial Public Offering of the securities being distributed in the Spin-off and where such securities are listed or quoted (or will be listed or quoted upon consummation of the Spin-off) on a U.S. national securities exchange, the average of the Closing Sale Price of those securities over the first 10 consecutive Trading Days after the effective date of the Spin-off, (b) in the case of securities being distributed in any Spin-off that is effected simultaneously with an Initial Public Offering, the Initial Public Offering price and (c) in the case of securities being distributed in any Spin-off not involving any Initial Public Offering of such securities and where such securities are not and will not be listed or quoted on a U.S. national securities exchange, the fair market value (on a per share basis) of such securities (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution).

 

“Subsidiary” of any Person means any other Person (a) more than 50% of whose outstanding shares or securities representing the right to vote for the election of directors or other managing authority of such other Person are, now or hereafter, owned or controlled, directly or indirectly, by such first Person, but such other Person shall be deemed to be a Subsidiary only so long as such ownership or control exists, or (b) which does not have outstanding shares or securities with such right to vote, as may be the case in a partnership, joint venture or unincorporated association, but more than 50% of whose ownership interest representing the right to make the decisions for such other Person is, now or hereafter, owned or controlled, directly or indirectly, by such first Person, but such other Person shall be deemed to be a Subsidiary only so long as such ownership or control exists.

 

“Trading Day” means a day during which trading in securities generally occurs on the over-the-counter “Pink Sheets” market or, if the Company Common Stock is listed on a national securities exchange, the principal national securities exchange on which the Company Common Stock is traded.

 

“Transaction” has the meaning set forth in Section 2.02.

 

“Transfer Agent” means Pacific Stock Transfer Company unless and until a successor is selected by the Company, and then such successor.

 

“Triggering Event” means a specified event the occurrence of which entitles the holders of rights, options or warrants to exercise such rights, options or warrants.

 

“Warrants” has the meaning set forth in the introduction to this Warrant Certificate.

 

	QXO, INC.
	By
		Name:	Mark Meller
		Title:	Chief Executive Officer

 

 

ANNEX I

 

EXERCISE SUBSCRIPTION FORM

 

(To be executed only upon exercise of Warrant)

 

To: QXO, Inc. (the “Company”)

 

The undersigned irrevocably exercises the Warrants represented by the Warrant Certificate for the purchase of one share (subject to adjustment in accordance with the Warrant Certificate) of Company Common Stock, par value $0.00001 per share, for each such Warrant.

 

The undersigned:

 

☐ herewith makes payment of $_______ (such payment being by bank wire transfer in immediately available funds), all at the Exercise Price and on the terms and conditions specified in the Warrant Certificate.

 

☐ hereby elects the cancellation of such number of shares of Company Common Stock as is necessary, in accordance with the formula set forth in Section 1.04(d) of the Warrant Certificate, to exercise this Warrant with respect to the number of shares of Company Common Stock purchasable pursuant to the cashless exercise procedure set forth in Section 1.04(d) of the Warrant Certificate.

 

The undersigned surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the shares of Company Common Stock deliverable upon the exercise of such Warrants be registered in the name and delivered at the address specified below.

 

Date:
	(Signature of Owner)*
	(Street Address)
	(City)	(State)	(Zip Code)

 

Securities to be issued to:

 

Please insert social security or identifying number:

 

Name:

 

Street Address:

 

City, State and Zip Code:

 

*	The signature must correspond with the name as written upon the face of the Warrant Certificate in every particular, without alteration or any change whatsoever.

 

 

 

Exhibit 4.3

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT AND THE SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO A REGISTRATION STATEMENT RELATING THERETO IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.

 

WARRANTS TO PURCHASE COMMON STOCK OF
QXO, INC.

 

No. [●]                 Certificate for [●] Warrants

 

This Warrant Certificate (“Warrant Certificate”) certifies that [INSERT NAME OF HOLDER], or registered assigns, is the registered holder of the number of Warrants set forth above. Each warrant represented hereby (a “Warrant”) entitles the holder thereof (the “Holder”), subject to the provisions contained herein, to purchase from QXO, Inc., a Delaware corporation (the “Company”), one share of the Company’s common stock, par value $0.00001 per share (“Company Common Stock”), subject to adjustment upon the occurrence of certain events specified herein, at the exercise price of $13.698 per share (the “Exercise Price”), subject to adjustment upon the occurrence of certain events specified herein.

 

This Warrant Certificate is issued under and in accordance with the Amended and Restated Investment Agreement, dated as of April 14, 2024 (the “Investment Agreement”), by and among Jacobs Private Equity II, LLC, the other Investors party thereto and the Company, which amends and restates in its entirety that certain Investment Agreement, dated as of December 3, 2023, by and among the Company and the Investors, and is subject to the terms and provisions contained in the Investment Agreement. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Investment Agreement.

 

ARTICLE I

 

Exercise Price; Exercise of Warrants and Expiration of Warrants

 

SECTION 1.01 Exercise Price. This Warrant Certificate shall entitle the Holder hereof, subject to the provisions of this Warrant Certificate, to purchase one share of Company Common Stock for each Warrant represented hereby, at the Exercise Price, in each case subject to all adjustments made on or prior to the date of exercise thereof as herein provided.

 

SECTION 1.02 Exercise of Warrants. The Warrants shall be exercisable in whole or in part from time to time on any Business Day beginning on the Issuance Date and ending on the Expiration Date in the manner provided for herein.

 

SECTION 1.03 Expiration of Warrants. Any unexercised Warrants shall expire and the rights of the Holder of such Warrants to purchase Company Common Stock shall terminate at the close of business on the Expiration Date.

 

 

SECTION 1.04 Method of Exercise; Payment of Exercise Price. (a) In order to exercise a Warrant, the Holder hereof must (i) surrender this Warrant Certificate to the Company, with the Exercise Subscription Form attached hereto as Annex I duly completed and executed, and (ii) unless the cashless exercise procedure specified in Section 1.04(d) below is specified in the applicable Exercise Subscription Form, pay in full the Exercise Price then in effect for the shares of Company Common Stock as to which this Warrant Certificate is submitted for exercise in the manner provided in paragraph (b) of this Section 1.04.

 

(b) Simultaneously with the exercise of each Warrant, payment in full of the Exercise Price shall be delivered to the Company, unless the cashless exercise procedure specified in Section 1.04(d) below is specified in the applicable Exercise Subscription Form. Such payment (if applicable) shall be made in cash, by bank wire transfer in immediately available funds to an account designated by the Company.

 

(c) If fewer than all the Warrants represented by this Warrant Certificate are surrendered, this Warrant Certificate shall be surrendered and a new Warrant Certificate of the same tenor and for the number of Warrants that were not surrendered shall promptly be executed and delivered to the Person or Persons as may be directed in writing by the Holder (subject to the terms hereof), and the Company shall register any new Warrant Certificate in the name of such Person or Persons. Any new Warrant Certificate shall be executed on behalf of the Company by its President, Chief Executive Officer, Chief Financial Officer or Secretary, either manually or by facsimile signature printed thereon. In case any Officer of the Company whose signature shall have been placed upon any Warrant Certificate shall cease to be such Officer of the Company before issue and delivery thereof, such Warrant Certificate may, nevertheless, be issued and delivered with the same force and effect as though such person had not ceased to be such Officer of the Company.

 

(d) Notwithstanding anything contained herein to the contrary, each Warrant may be exercised, in whole or in part, at any time or times on or after the Issuance Date and on or before the Expiration Date at the election of the Holder (in such Holder’s sole discretion) by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of shares of Company Common Stock equal to the quotient obtained by dividing ((A-B) * (X)) by (A), where:

 

(A) = the Closing Sale Price of a share of Company Common Stock on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Exercise Subscription Form;

 

(B) = the Exercise Price, as adjusted hereunder; and

 

(X) = the number of shares of Company Common Stock that would be issuable upon exercise of such Warrant in accordance with the terms of this Warrant Certificate if such exercise were by means of a cash exercise rather than a cashless exercise.

 

 

(e) Upon surrender of this Warrant Certificate in accordance with the foregoing provisions, the Company shall instruct the Transfer Agent to transfer to the Holder appropriate evidence of ownership of any shares of Company Common Stock or other securities or property (including cash) to which the Holder is entitled, registered or otherwise placed in, or payable to the order of, such name or names as may be directed in writing by the Holder (subject to the terms hereof), and shall deliver such evidence of ownership and any other securities or property (including cash) to the Person or Persons entitled to receive the same, together with an amount in cash in lieu of any fraction of a share as provided in Section 2.03. Upon payment of the Exercise Price therefor (or in accordance with the cashless exercise procedure specified in Section 1.04(d)), the Holder (or its designee) shall be deemed to own and have all of the rights associated with any Company Common Stock or other securities or property (including cash) to which it is entitled pursuant to this Warrant Certificate upon the surrender of this Warrant Certificate in accordance with the terms of this Warrant Certificate.

 

SECTION 1.05 Compliance with the Securities Act. (a) No Warrants or shares of Company Common Stock issued upon exercise thereof may be sold, transferred or otherwise disposed of (any such sale, transfer or other disposition, a “Sale”), except in compliance with the registration requirements of the Securities Act and any other applicable securities laws or an exemption from registration under the Securities Act and any other applicable securities laws, or in a transaction not subject to such laws. The Warrants and the shares of Company Common Stock issuable upon exercise of the Warrants will have the benefit of certain registration rights under the Securities Act pursuant to a Registration Rights Agreement entered into by the Company on the Issuance Date.

 

(b) Shares of Company Common Stock issued upon exercise of Warrants under a Warrant Certificate while such Warrant Certificate bears the legend set forth on the first page of this Warrant Certificate as of the Issuance Date shall, subject to Section 6.04, be in global form and bear the following legend:

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO A REGISTRATION STATEMENT RELATING THERETO IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.

 

ARTICLE II

 
Adjustments; Changes upon Certain Other Transactions

 

SECTION 2.01 Anti-dilution Adjustments. (a) The number of shares issuable upon exercise of the Warrants and the Exercise Price shall be subject to the following adjustments from time to time:

 

(i) Stock Dividends. In case the Company shall pay or make a dividend or other distribution on the Company Common Stock in Company Common Stock, the number of shares of Company Common Stock issuable upon exercise of each Warrant, as in effect at the opening of business on the day following the date fixed for the determination of stockholders of the Company entitled to receive such dividend or distribution, shall be adjusted so that the Holder shall thereafter be entitled to receive the number of shares of Company Common Stock that the Holder would have owned or have been entitled to receive after the happening of the dividend or other distribution, had such Warrant been exercised immediately prior to the date fixed for such determination; and, in the event of any such adjustment, the Exercise Price, as in effect at the opening of business on the day following the date fixed for the determination of stockholders of the Company entitled to receive such dividend or other distribution, shall be adjusted by multiplying such Exercise Price by a fraction of which the numerator shall be the number of shares of Company Common Stock outstanding at the close of business on the date fixed for such determination and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution. Such adjustments shall become effective immediately after the opening of business on the day following the date fixed for such determination.

 

 

(ii) Stock Purchase Rights. In case the Company shall issue to all holders of Company Common Stock options, warrants or other rights entitling them to subscribe for or purchase shares of Company Common Stock for a period expiring within 60 days from the date of issuance of such options, warrants or other rights at a price per share of Company Common Stock less than the Market Value on the date fixed for the determination of stockholders of the Company entitled to receive such options, warrants or other rights (other than pursuant to a dividend reinvestment, share purchase or similar plan), the number of shares of Company Common Stock issuable upon the exercise of each Warrant shall be adjusted by multiplying the number of shares of Company Common Stock issuable upon exercise of each Warrant, as in effect at the opening of business on the day following the date fixed for such determination, by a fraction, the numerator of which shall be the number of shares of Company Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Company Common Stock so offered for subscription or purchase, either directly or indirectly, and the denominator of which shall be the number of shares of Company Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Company Common Stock which the aggregate consideration expected to be received by the Company upon the exercise, conversion or exchange of such options, warrants or other rights (as determined in good faith by the Board, whose determination shall be conclusive and described in a Board Resolution) would purchase at such Market Value; and, in the event of any such adjustment, the Exercise Price in effect at the opening of business on the day following the date fixed for such determination shall be adjusted by multiplying such Exercise Price by a fraction, the numerator of which shall be the number of shares of Company Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Company Common Stock which the aggregate consideration expected to be received by the Company upon the exercise, conversion or exchange of such options, warrants or other rights (as determined in good faith by the Board, whose determination shall be conclusive and described in a Board Resolution) would purchase at such Market Value and the denominator of which shall be the number of shares of Company Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Company Common Stock so offered for subscription or purchase, either directly or indirectly. Such adjustments shall become effective immediately after the opening of business on the day following the date fixed for such determination; provided, however, that no such adjustments shall be made if the Holder would be entitled to receive such options, warrants or other rights upon exercise at any time of the Warrants; provided, further, however, that if any of the foregoing options, warrants or other rights are only exercisable upon the occurrence of a Triggering Event, then no such adjustments shall be made until such Triggering Event occurs or, if earlier, the applicable date of exercise.

 

 

(iii) Stock Splits, Reverse Splits and Combinations. In case outstanding shares of Company Common Stock shall be subdivided, split or reclassified into a greater number of shares of Company Common Stock, then the number of shares of Company Common Stock issuable upon exercise of each Warrant in effect at the opening of business on the day following the date upon which such subdivision, split or reclassification becomes effective shall be adjusted so that the Holder shall thereafter be entitled to receive the number of shares of Company Common Stock that the Holder would have owned or would have been entitled to receive had such Warrant been exercised immediately prior to such subdivision, split or reclassification becoming effective; and, in the event of any such adjustment, the Exercise Price in effect at the opening of business on the day following the date upon which such subdivision, split or reclassification becomes effective shall be proportionately reduced. Conversely, in case outstanding shares of Company Common Stock shall be combined or reclassified into a smaller number of shares of Company Common Stock, then the number of shares of Company Common Stock issuable upon exercise of each Warrant in effect at the opening of business on the day following the date upon which such combination or reclassification becomes effective shall be adjusted so that the Holder shall thereafter be entitled to receive the number of shares of Company Common Stock that the Holder would have owned or would have been entitled to receive had such Warrant been exercised immediately prior to such combination or reclassification becoming effective; and, in the event of any such adjustment, the Exercise Price in effect at the opening of business on the day following the date upon which such combination or reclassification becomes effective shall be proportionately increased. Such adjustments shall become effective immediately after the opening of business on the day following the date upon which such subdivision, split, reclassification or combination becomes effective.

 

(iv) Debt, Asset or Security Distributions. (A) In case the Company shall, by dividend or otherwise, distribute to all holders of Company Common Stock evidences of its indebtedness, assets or securities (but excluding any dividend or distribution of options, warrants or other rights referred to in paragraph (ii) of this Section 2.01(a), any dividend or distribution paid exclusively in cash, any dividend or distribution of shares of Capital Stock of any class or series, or similar equity interests, of or relating to a Subsidiary or other business unit in the case of a Spin-off referred to in the next subparagraph, or any dividend or distribution referred to in paragraph (i) of this Section 2.01(a)), then the number of shares of Company Common Stock issuable upon the exercise of each Warrant immediately prior to the close of business on the record date fixed for the determination of stockholders of the Company entitled to receive such distribution shall be increased to a number determined by multiplying the number of shares of Company Common Stock issuable upon the exercise of such Warrant immediately prior to the date fixed for such determination by a fraction, the numerator of which shall be the Market Value on the date fixed for such determination plus the fair market value (as determined in good faith by the Board, whose determination shall be conclusive and described in a Board Resolution) of the portion of the assets or evidences of indebtedness so distributed applicable to one share of Company Common Stock and the denominator of which shall be the Market Value on the date fixed for such determination; and, in the event of any such adjustment, the Exercise Price shall be reduced by multiplying the Exercise Price in effect immediately prior to the close of business on the date fixed for the determination of stockholders of the Company entitled to receive such distribution by a fraction, the numerator of which shall be the Market Value on the date fixed for such determination and the denominator of which shall be such Market Value plus the fair market value (as determined in good faith by the Board, whose determination shall be conclusive and described in a Board Resolution) of the portion of the assets, securities or evidences of indebtedness so distributed applicable to one share of Company Common Stock. Such adjustments shall become effective immediately prior to the opening of business on the day following the date fixed for the determination of stockholders of the Company entitled to receive such distribution. In any case in which this subparagraph (iv)(A) is applicable, subparagraph (iv)(B) of this Section 2.01(a)(iv) shall not be applicable.

 

 

(B) In the case of a Spin-off, the number of shares of Company Common Stock issuable upon the exercise of each Warrant immediately prior to the close of business on the record date fixed for determination of stockholders of the Company entitled to receive such distribution shall be increased to a number determined by multiplying the number of shares of Company Common Stock issuable upon the exercise of such Warrant immediately before the close of business on such date by a fraction, the numerator of which shall be the Market Value plus the Spin-off Market Value of the portion of those shares of Capital Stock or similar equity interests so distributed applicable to one share of Company Common Stock, and the denominator of which shall be the Market Value; and, in the event of any such adjustment, the Exercise Price in effect immediately prior to the close of business on the date fixed for determination of stockholders of the Company entitled to receive such distribution shall be reduced by multiplying the Exercise Price by a fraction, the numerator of which shall be the Market Value and the denominator of which shall be the Market Value plus the Spin-off Market Value of the portion of those shares of Capital Stock or similar equity interests so distributed applicable to one share of Company Common Stock. Any adjustments under this subparagraph (iv)(B) will occur on the date that is the earlier of (1) the close of business on the tenth Trading Day from, and including, the effective date of the Spin-off and (2) the date of the Initial Public Offering (if any) of the securities being distributed in the Spin-off, if that Initial Public Offering is effected simultaneously with the Spin-off.

 

(v) Tender Offers. In the case that a tender or exchange offer made by the Company or any Subsidiary of the Company for all or any portion of the Company Common Stock shall expire and such tender or exchange offer (as amended through the expiration thereof) shall require the payment to stockholders of the Company (based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of Purchased Shares) of aggregate consideration having a fair market value (as determined in good faith by the Board, whose determination shall be conclusive and described in a Board Resolution) per share of Company Common Stock that exceeds the Closing Sale Price of the Company Common Stock on the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer, then, immediately prior to the opening of business on the day after the date of the last time (the “Expiration Time”) tenders or exchanges could have been made pursuant to such tender or exchange offer (as amended through the expiration thereof), the number of shares of Company Common Stock issuable upon the exercise of each Warrant immediately prior to the close of business on the date of the Expiration Time shall be increased to a number determined by multiplying the number of shares of Company Common Stock issuable upon exercise of each Warrant immediately prior to the close of business on the date of the Expiration Time by a fraction (A) the numerator of which shall be equal to (1) the product of (I) the Market Value on the date of the Expiration Time and (II) the number of shares of Company Common Stock outstanding (including any tendered or exchanged shares) on the date of the Expiration Time less the number of all shares validly tendered or exchanged, not withdrawn and accepted for payment on the date of the Expiration Time (such validly tendered or exchanged shares, up to any such maximum, being referred to as the “Purchased Shares”) plus (2) the amount of cash plus the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders of the Company pursuant to the tender or exchange offer (assuming the acceptance, up to any maximum specified in the terms of the tender or exchange offer, of Purchased Shares), and (B) the denominator of which shall be equal to the product of (1) the Market Value on the date of the Expiration Time and (2) the number of shares of Company Common Stock outstanding (including any tendered or exchanged shares) on the date of the Expiration Time; and, in the event of any such adjustment, the Exercise Price shall be reduced by multiplying the Exercise Price immediately prior to the close of business on the date of the Expiration Time by a fraction (A) the numerator of which shall be equal to the product of (1) the Market Value on the date of the Expiration Time and (2) the number of shares of Company Common Stock outstanding (including any tendered or exchanged shares) on the date of the Expiration Time, and (B) the denominator of which shall be equal to (1) the product of (I) the Market Value on the date of the Expiration Time and (II) the number of shares of Company Common Stock outstanding (including any tendered or exchanged shares) on the date of the Expiration Time less the number of Purchased Shares plus (2) the amount of cash plus the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders of the Company pursuant to the tender or exchange offer (assuming the acceptance, up to any maximum specified in the terms of the tender or exchange offer, of Purchased Shares).

 

 

(b) Calculation of Adjustments. Notwithstanding anything herein to the contrary, no adjustment under this Section 2.01 need be made to the number of shares issuable upon exercise of a Warrant or the Exercise Price unless such adjustment would require an increase or decrease of at least 1.0% of the number of shares issuable upon exercise of the Warrants or the Exercise Price immediately prior to the making of such adjustment. Any lesser adjustment shall be carried forward and shall be made at the time of and together with the next subsequent adjustment, if any, which, together with any adjustment or adjustments so carried forward, shall result in an increase or decrease of at least 1.0% of the number of shares issuable upon exercise of a Warrant or the Exercise Price immediately prior to the making of such adjustment; provided that any such adjustment of less than 1.0% that has not been made shall be made upon any exercise of the Warrants. No adjustment to the Exercise Price under this Section 2.01 shall be made if such adjustment will result in an Exercise Price that is less than the par value of the Company Common Stock. All adjustments to the number of shares issuable upon exercise of the Warrants or the Exercise Price shall be calculated to the nearest 1/10,000th of a share of Company Common Stock (or if there is not a nearest 1/10,000th of a share to the next lower 1/10,000th of a share) or the nearest $0.0001 (or if there is not a nearest $0.0001 to the next lower $0.0001), as the case may be. For the avoidance of doubt, if an event occurs that would trigger an adjustment pursuant to this Section 2.01 under more than one subsection hereof, such event, to the extent fully taken into account in a single adjustment, shall not result in multiple adjustments hereunder; provided, however, that if more than one subsection of this Section 2.01 is applicable to a single event, the subsection shall be applied that produces the largest adjustment.

 

(c) Stockholder Rights Plans. Upon exercise of the Warrants, to the extent that the Holder receives Company Common Stock, the Holder shall receive, in addition to the shares of Company Common Stock and any cash for fractional shares in accordance with Section 2.03, if any, the rights issued under any future stockholder rights plan the Company may establish whether or not such rights are separated from the Company Common Stock prior to exercise. A distribution of rights pursuant to any stockholder rights plan will not result in an adjustment to the number of shares issuable upon exercise of the Warrants or the Exercise Price pursuant to Section 2.01(a)(ii) or Section 2.01(a)(iv), provided that the Company has provided for the Holder to receive such rights upon exercise; provided, further, that the Holders shall not be permitted to receive such rights to the extent that any of the Holders or their respective Affiliates is the “Acquiring Person” under such stockholder rights plan.

 

(d) Reversal of Adjustment. If the Company shall take a record of the holders of Company Common Stock for the purpose of entitling them to receive a dividend or other distribution, and shall thereafter (and before the dividend or distribution has been paid or delivered to stockholders) legally abandon its plan to pay or deliver such dividend or distribution, then thereafter no adjustment in the number of shares issuable upon exercise of the Warrants or the Exercise Price then in effect shall be required by reason of the taking of such record.

 

(e) Exceptions to Adjustment. Notwithstanding the foregoing, the applicable number of shares issuable upon exercise of the Warrants and the Exercise Price shall not be adjusted:

 

(i) upon the issuance of any shares of Company Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Company’s securities and the investment of additional optional amounts in shares of Company Common Stock under any such plan;

 

(ii) upon the issuance of any shares of Company Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of its Subsidiaries;

 

(iii) upon the issuance of any shares of Company Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of the Issuance Date;

 

 

(iv) in connection with (A) the issuance of the Warrants or the Preferred Stock to the Holders or their Affiliates pursuant to the terms of the Investment Agreement, (B) the issuance of shares of Common Stock to the Holders upon the exercise of the Warrants or the conversion of the Preferred Stock, or (C) any other transactions contemplated by and consummated in accordance with the Investment Agreement (including the Cash Dividend (as defined in the Investment Agreement) and the reverse stock split of the Common Stock that became effective prior to the Issuance Date (the “Reverse Stock Split”));

 

(v) for a change in the par value of the Company Common Stock; or

 

(vi) for accrued and unpaid dividends on the Preferred Stock.

 

SECTION 2.02 Recapitalizations, Reclassifications and Changes in the Company’s Stock. In the event of any reclassification of outstanding shares of Company Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value and other than the Reverse Stock Split), or any consolidation or merger of the Company with or into another Person or any merger of another Person with or into the Company (other than a consolidation or merger in which the Company is the resulting or surviving Person and that does not result in any reclassification or change of outstanding Company Common Stock), or any sale or other disposition to another Person of all or substantially all of the assets of the Company (computed on a consolidated basis) (any of the foregoing, a “Transaction”), upon exercise of the Warrants, the Holder will be entitled to receive the kind and amount of securities (of the Company or another issuer), cash and other property receivable upon such Transaction by a holder of the number of shares of Company Common Stock issuable upon exercise of the Warrants immediately prior to such Transaction, after giving effect to any adjustment event or, in the event holders of Company Common Stock have the opportunity to elect the form of consideration to be received in any Transaction, the weighted average of the forms and amounts of consideration received by the holders of Company Common Stock, and, prior to or at the effective time of such Transaction, the Company or the successor or purchasing person, as the case may be, shall (and the Company shall cause such successor or purchasing person to) execute with the Holder an amendment to this Agreement providing for such change in the rights to exercise the Warrants. In the event that at any time, as a result of an adjustment made pursuant to this Warrant Certificate, the Holder shall become entitled upon exercise to any securities other than, or in addition to, shares of Company Common Stock, thereafter the number or amount of such other securities so receivable upon exercise and the Exercise Price therefor shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Company Common Stock set forth in this Warrant Certificate.

 

SECTION 2.03 Fractional Shares. No fractional shares of Company Common Stock shall be issued to the Holder upon exercise of any Warrant. In lieu of any fraction of a share of Company Common Stock that would otherwise be issuable upon exercise of the aggregate number of Warrants exercised by the Holder, the Holder shall have the right to receive an amount in cash (computed to the nearest cent) equal to the same fraction of the Closing Sale Price of a share of Company Common Stock on the Trading Day next preceding the date of exercise.

 

SECTION 2.04 Notice of Adjustment. Whenever the number of shares of Company Common Stock or other stock or property issuable upon the exercise of each Warrant or the Exercise Price is adjusted, as herein provided, the Company shall (a) compute such adjustment in accordance with this Article II and prepare and transmit to the Transfer Agent an Officer’s Certificate setting forth the adjustment, the method of calculation thereof in reasonable detail and the facts requiring such adjustment and upon which such adjustment is based and (b) as soon as practicable following the occurrence of an event that requires an adjustment pursuant to this Article II (or if the Company is not aware of such occurrence, as soon as practicable after becoming so aware), the Company or, at the request and expense of the Company, the Transfer Agent shall provide a written notice to the holders of Warrants (including the Holder) of the occurrence of such event and a statement setting forth in reasonable detail the method by which the adjustment was determined and setting forth the adjusted amount.

 

 

ARTICLE III

 
Warrant Transfer Books

 

SECTION 3.01 Warrant Transfer Books. (a) The Company shall keep at its principal place of business a register in which the Company shall provide for the registration of Warrant Certificates and of any exchanges of Warrant Certificates as herein provided.

 

(b) At the option of the Holder, Warrant Certificates may be exchanged at such office and upon payment of the charges hereinafter provided. Whenever any Warrant Certificates are so surrendered for exchange, the Company shall execute and deliver the Warrant Certificates that the Holder is entitled to receive.

 

(c) All Warrant Certificates issued upon any registration of transfer or exchange of Warrant Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits, as the Warrant Certificates surrendered for such registration of transfer or exchange.

 

(d) Every Warrant Certificate surrendered for registration of exchange shall (if so required by the Company) be duly endorsed, or be accompanied by a written instrument of transfer in form reasonably satisfactory to the Company, duly executed by the Holder or his attorney duly authorized in writing.

 

(e) No service charge shall be payable by the Holder for any registration of transfer or exchange of this Warrant Certificate, and the Company shall pay any taxes or other governmental charges that may be imposed in connection with any registration of exchange of Warrant Certificates.

 

(f) This Warrant Certificate when duly endorsed in blank shall be deemed negotiable and when this Warrant Certificate shall have been so endorsed, the Holder hereof may be treated by the Company and all other Persons dealing therewith as the absolute owner hereof for any purpose and as the Person entitled to exercise the rights represented hereby.

 

ARTICLE IV

 

Voting

 

SECTION 4.01 No Voting Rights. Prior to the exercise of the Warrants, the Holder, in its capacity as such, shall not be entitled to any rights of a stockholder of the Company, including the right to vote or to consent with respect to any matter.

 

 

ARTICLE V

 

Covenants

 

SECTION 5.01 Reservation of Company Common Stock for Issuance on Exercise of Warrants. The Company covenants that it will at all times reserve and keep available, free from preemptive rights and solely for the purpose of issue upon exercise of the Warrants as herein provided, out of its authorized but unissued Company Common Stock, such number of shares of Company Common Stock as shall then be issuable upon the exercise of all Warrants issuable hereunder and all other Warrant Certificates. The Company covenants that all shares of Company Common Stock issuable upon exercise of the Warrants shall, upon such issue, be duly and validly issued and fully paid and non-assessable, free from preemptive rights and free from all taxes, liens, charges and security interests with respect to the issuance thereof.

 

SECTION 5.02 Notice of Dividends. At any time when the Company declares any dividend or other distribution on the Company Common Stock, it shall give notice to the holders of all the then outstanding Warrants (including the Holder) of any such declaration not less than 15 days prior to the related record date for such dividend or distribution.

 

SECTION 5.03 HSR Act Compliance. If the Holder determines that a notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the “HSR Act”), is required in connection with the exercise of the Warrants represented by this Warrant Certificate, the Company shall reasonably cooperate with the Holder by (a) promptly effecting all necessary notifications and other filings under the HSR Act that are required to be made by the Company and (b) responding as promptly as reasonably practicable to all inquiries or requests received from the United States Federal Trade Commission (the “FTC”), the Department of Justice (the “DOJ”) or any other governmental authority in connection with such notifications and other filings. For the avoidance of doubt, nothing in this Section 5.03 shall require that the Company or any of its Subsidiaries commit to any divestiture, license or hold separate or similar arrangement with respect to the business, assets or properties of the Company or any of its Subsidiaries. Any such notifications and responses by the Company will be in full compliance with the requirements of the HSR Act. The Company shall, to the extent legally permissible, keep the Holder reasonably apprised of the status of any communications with, and any inquiries or requests for additional information from, the FTC, the DOJ or such other governmental authority. The Company shall pay the filing fees in connection with the above filings, and shall otherwise each bear its costs and expenses in connection with the preparation of such filings and responses to inquires or requests.

 

SECTION 5.04 Certain Other Events. If any event occurs as to which the provisions of Article II are not strictly applicable or, if strictly applicable, would not fairly protect the rights of the holders of the Warrants in accordance with the essential intent and principles of such provisions, then the Board shall make such adjustments in the application of such provisions, in accordance with such essential intent and principles, as shall be reasonably necessary, in the good faith judgment of the Board, to protect such purchase rights as aforesaid; provided that no adjustments shall be made pursuant to this Section 5.04 if such adjustment would adversely affect the Holder.

 

 

ARTICLE VI

 
Miscellaneous

 

SECTION 6.01 Tax Matters. The Company shall pay all transfer, stamp, documentary, issue and other similar taxes due with respect to the issuance or delivery of the Warrants or shares of Company Common Stock or other securities or property upon exercise of the Warrants.

 

SECTION 6.02 Surrender of Warrant Certificate. This Warrant Certificate, if surrendered for exercise or purchase, shall be promptly canceled by the Company and shall not be reissued by the Company. The Company shall destroy such canceled Warrant Certificate.

 

SECTION 6.03 Mutilated, Destroyed, Lost or Stolen Warrant Certificate. (a) If (i) this Warrant Certificate is mutilated and surrendered to the Company or (ii) the Company receives evidence to its satisfaction of the destruction, loss or theft of this Warrant Certificate, and there is delivered to the Company such appropriate affidavit of loss, applicable processing fee and indemnity as may be reasonably required by the Company to save it harmless, then, in the absence of notice to the Company that this Warrant Certificate has been acquired by a bona fide purchaser, the Company shall execute and deliver, in exchange for this Warrant Certificate if mutilated or in lieu of this Warrant Certificate if destroyed, lost or stolen, a new Warrant Certificate of like tenor and for a like aggregate number of Warrants.

 

(b) Upon the issuance of any new Warrant Certificate under this Section 6.03, the Company shall pay any taxes or other governmental charges that may be imposed in relation thereto and other expenses in connection therewith.

 

(c) Every new Warrant Certificate executed and delivered pursuant to this Section 6.03 in lieu of any destroyed, lost or stolen Warrant Certificate shall constitute an original contractual obligation of the Company, whether or not the destroyed, lost or stolen Warrant Certificate shall be at any time enforceable by anyone.

 

(d) The provisions of this Section 6.03 are exclusive and shall preclude (to the extent lawful) all other rights or remedies with respect to the replacement of a mutilated, destroyed, lost or stolen Warrant Certificate.

 

SECTION 6.04 Removal of Legends. (a) In the event (i) the transfer of the Warrants or the shares of Company Common Stock issued upon exercise of the Warrants is registered under the Securities Act or (ii) there is delivered to the Company such satisfactory evidence, which may include an Opinion of Counsel licensed to practice law in the State of New York, as may be reasonably required by the Company, that such Warrants or shares are not “restricted securities” within the meaning of Rule 144 under the Securities Act, the Company shall, or shall direct the Transfer Agent to, and the Transfer Agent shall, upon surrender by the Holder of this Warrant Certificate or certificates evidencing such shares of Company Common Stock, as applicable, to the Company or the Transfer Agent, exchange such certificates for certificates without the legend set forth on the first page of this Warrant Certificate as of the Issuance Date or referred to in Section 1.05(b), as applicable.

 

 

(b) In order to effect a Sale of Warrants or shares of Company Common Stock issued upon exercise of the Warrants (other than pursuant to an effective registration statement under the Securities Act), the Holder shall (i) give written notice to the Company of its intention to effect such Sale, which notice shall describe the manner and circumstances of the proposed transaction in reasonable detail and shall include a certification by the Holder to the effect that such proposed Sale may be effected without registration under the Securities Act or under applicable state securities laws, and (ii) provide such additional certifications of the Holder or its transferee or Opinions of Counsel (which shall be reasonably satisfactory to the Company) as the Company may reasonably request solely in order to confirm the availability of the applicable exemption from the registration requirements of applicable securities laws.

 

SECTION 6.05 Notices. All notices referred to herein shall be in writing and, unless otherwise specified herein, all notices hereunder shall be deemed to have been given upon the earlier of receipt thereof or three (3) Business Days after the mailing thereof if sent by registered or certified mail with postage prepaid, or by private courier service addressed: (i) if to the Company, to its office at Five American Lane, Greenwich, CT 06831 (Attention: Chief Executive Officer), (ii) if to any Holder, to such Holder at the address of such Holder as listed in the stock record books of the Company (which may include the records of the Transfer Agent) or (iii) to such other address as the Company or any such Holder, as the case may be, shall have designated by notice similarly given.

 

SECTION 6.06 Applicable Law. This Warrant Certificate and each Warrant represented hereby and all rights arising hereunder shall be construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.

 

SECTION 6.07 Persons Benefiting. This Warrant Certificate shall be binding upon and inure to the benefit of the Company and its successors, assigns, beneficiaries, executors and administrators, and the Holder from time to time of the Warrants represented hereby. Except as otherwise expressly provided herein, nothing in this Warrant Certificate is intended or shall be construed to confer upon any Person, other than the Company and the Holder from time to time of the Warrants represented hereby, any right, remedy or claim under or by reason of this Warrant Certificate or any part hereof.

 

SECTION 6.08 Supplements or Amendments. This Warrant Certificate may not be supplemented or amended without the written approval of both the Holder and the Company.

 

SECTION 6.09 Headings. The descriptive headings of the several Articles and Sections of this Warrant Certificate are inserted for convenience and shall not control or affect the meaning or construction of any of the provisions hereof.

 

SECTION 6.10 Copies of Agreements. Copies of the Investment Agreement and the Registration Rights Agreement referred to herein are on file at the principal place of business of the Company and may be obtained by writing to the Company at the address set forth in Section 6.05.

 

 

ARTICLE VII

 

Definitions.

 

As used in this Warrant Certificate, the following terms shall have the following meanings:

 

“Affiliate” means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified.

 

“Board” means the board of directors of the Company.

 

“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board and to be in full force and effect on the date of such certification, and delivered to the Transfer Agent.

 

“Business Day” means any day other than a Saturday or Sunday or any other day on which banks in the City of New York are authorized or required by law or executive order to close.

 

“Capital Stock” of any Person means any and all shares, interests, participations or other equivalents however designated of corporate stock or other equity participations, including partnership interests, whether general or limited, of such Person and any rights (other than debt securities convertible or exchangeable into an equity interest), warrants or options to acquire an equity interest in such Person.

 

The “Closing Sale Price” of a security on any date means the closing sale price per share (or if no closing sale price is reported, the average of the closing bid and ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices) on such date as reported on the over-the-counter “Pink Sheets” market or, if the security is listed on a national securities exchange, the principal national securities exchange on which the security is traded. In the absence of such a quotation, the Closing Sale Price of the security will be an amount determined in good faith by the Board to be the fair market value of such security, and such determination shall be conclusive.

 

“Company” has the meaning set forth in the introduction to this Warrant Certificate, and its successors and assigns.

 

“Company Common Stock” has the meaning set forth in the introduction to this Warrant Certificate.

 

“DOJ” has the meaning set forth in Section 5.03.

 

“Exercise Price” has the meaning set forth in the introduction to this Warrant Certificate.

 

“Expiration Date” means the tenth anniversary of the Issuance Date.

 

“Expiration Time” has the meaning set forth in Section 2.01(a)(v).

 

“FTC” has the meaning set forth in Section 5.03.

 

“Holder” means the initial Holder of this Warrant Certificate and any permitted assignee or transferee thereof, in such Person’s capacity as a holder of Warrants.

 

“HSR Act” has the meaning set forth in Section 5.03.

 

“including” means “including, without limitation.”

 

 

“Initial Public Offering” means, in the event of a Spin-off, the first time securities of the same class or type as the securities being distributed in the Spin-off are bona fide offered to the public for cash.

 

“Investment Agreement” has the meaning set forth in the introduction to this Warrant Certificate.

 

“Issuance Date” means June 6, 2024.

 

“Market Value” means, with respect to any date of determination, the average Closing Sale Price of the Company Common Stock for a five consecutive Trading Day period preceding the earlier of (a) the day preceding the date of determination and (b) the day before the “ex date” with respect to the issuance or distribution requiring such computation; provided that, solely for purposes of Section 2.01(a)(iv)(B), the Market Value means the average of the daily Closing Sale Price of the Company Common Stock for the first 10 consecutive Trading Days after the effective date of the Spin-off (provided, further, that if an Initial Public Offering of the securities being distributed in the Spin-off is to be effected simultaneously with the Spin-off, the Market Value of the Company Common Stock means the Closing Sale Price of the Company Common Stock on the Trading Day on which the Initial Public Offering price of the securities being distributed in the Spin-off is determined). For purposes of this definition, the term “ex date,” when used with respect to any issuance or distribution, means the first date on which the Company Common Stock trades, regular way, on the over-the-counter “Pink Sheets” market or, if the Company Common Stock is listed on a national securities exchange, the principal national securities exchange on which the Company Common Stock is traded at that time, without the right to receive the issuance or distribution.

 

“Officer” means the Chairman of the Board, President, Chief Executive Officer, any Vice President, the Chief Financial Officer, the Chief Accounting Officer, the Treasurer, any Assistant Treasurer, the Controller, any Assistant Controller, the Secretary or any Assistant Secretary of the Company.

 

“Officer’s Certificate” means a certificate signed by two Officers.

 

“Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable to the Company or the Transfer Agent. The counsel may be an employee of or counsel to the Company or the Transfer Agent.

 

“Person” means any natural person, corporation, limited liability company, partnership, joint venture, trust, business association, governmental entity or other entity.

 

“Preferred Stock” has the meaning set forth in the Investment Agreement.

 

“Purchased Shares” has the meaning set forth in Section 2.01(a)(v).

 

“Sale” has the meaning set forth in Section 1.05(a).

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Spin-off” means a dividend or other distribution of shares of Capital Stock of any class or series, or similar equity interests, of or relating to a Subsidiary or other business unit of the Company.

 

 

“Spin-off Market Value” means (a) in the case of securities to be distributed to the holders of the Common Stock in connection with a Spin-off that is not effected simultaneously with an Initial Public Offering of the securities being distributed in the Spin-off and where such securities are listed or quoted (or will be listed or quoted upon consummation of the Spin-off) on a U.S. national securities exchange, the average of the Closing Sale Price of those securities over the first 10 consecutive Trading Days after the effective date of the Spin-off, (b) in the case of securities being distributed in any Spin-off that is effected simultaneously with an Initial Public Offering, the Initial Public Offering price and (c) in the case of securities being distributed in any Spin-off not involving any Initial Public Offering of such securities and where such securities are not and will not be listed or quoted on a U.S. national securities exchange, the fair market value (on a per share basis) of such securities (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution).

 

“Subsidiary” of any Person means any other Person (a) more than 50% of whose outstanding shares or securities representing the right to vote for the election of directors or other managing authority of such other Person are, now or hereafter, owned or controlled, directly or indirectly, by such first Person, but such other Person shall be deemed to be a Subsidiary only so long as such ownership or control exists, or (b) which does not have outstanding shares or securities with such right to vote, as may be the case in a partnership, joint venture or unincorporated association, but more than 50% of whose ownership interest representing the right to make the decisions for such other Person is, now or hereafter, owned or controlled, directly or indirectly, by such first Person, but such other Person shall be deemed to be a Subsidiary only so long as such ownership or control exists.

 

“Trading Day” means a day during which trading in securities generally occurs on the over-the-counter “Pink Sheets” market or, if the Company Common Stock is listed on a national securities exchange, the principal national securities exchange on which the Company Common Stock is traded.

 

“Transaction” has the meaning set forth in Section 2.02.

 

“Transfer Agent” means Pacific Stock Transfer Company unless and until a successor is selected by the Company, and then such successor.

 

“Triggering Event” means a specified event the occurrence of which entitles the holders of rights, options or warrants to exercise such rights, options or warrants.

 

“Warrants” has the meaning set forth in the introduction to this Warrant Certificate.

 

	QXO, INC.
	By
		Name:	Mark Meller
		Title:	Chief Executive Officer

 

 

ANNEX I

 

EXERCISE SUBSCRIPTION FORM

 

(To be executed only upon exercise of Warrant)

 

To:

QXO, Inc. (the “Company”)

 

The undersigned irrevocably exercises the Warrants represented by the Warrant Certificate for the purchase of one share (subject to adjustment in accordance with the Warrant Certificate) of Company Common Stock, par value $0.00001 per share, for each such Warrant.

 

The undersigned:

 

☐ herewith makes payment of $_______ (such payment being by bank wire transfer in immediately available funds), all at the Exercise Price and on the terms and conditions specified in the Warrant Certificate.

 

☐ hereby elects the cancellation of such number of shares of Company Common Stock as is necessary, in accordance with the formula set forth in Section 1.04(d) of the Warrant Certificate, to exercise this Warrant with respect to the number of shares of Company Common Stock purchasable pursuant to the cashless exercise procedure set forth in Section 1.04(d) of the Warrant Certificate.

 

The undersigned surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the shares of Company Common Stock deliverable upon the exercise of such Warrants be registered in the name and delivered at the address specified below.

 

Date:
	(Signature of Owner)*
	(Street Address)
	(City)	(State)	(Zip Code)

 

Securities to be issued to:

 

Please insert social security or identifying number:

 

Name:

 

Street Address:

 

City, State and Zip Code:

 

*	The signature must correspond with the name as written upon the face of the Warrant Certificate in every particular, without alteration or any change whatsoever.

 

 

 

Exhibit 4.4

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT AND THE SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO A REGISTRATION STATEMENT RELATING THERETO IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.

 

WARRANTS TO PURCHASE COMMON STOCK OF
QXO, INC.

 

No. [●]

Certificate for [●] Warrants

 

This Warrant Certificate (“Warrant Certificate”) certifies that [INSERT NAME OF HOLDER], or registered assigns, is the registered holder of the number of Warrants set forth above. Each warrant represented hereby (a “Warrant”) entitles the holder thereof (the “Holder”), subject to the provisions contained herein, to purchase from QXO, Inc., a Delaware corporation (the “Company”), one share of the Company’s common stock, par value $0.00001 per share (“Company Common Stock”), subject to adjustment upon the occurrence of certain events specified herein, at the exercise price of $4.566 per share (the “Exercise Price”), subject to adjustment upon the occurrence of certain events specified herein.

 

This Warrant Certificate is issued under and in accordance with the Amended and Restated Investment Agreement, dated as of April 14, 2024 (the “Investment Agreement”), by and among Jacobs Private Equity II, LLC, the other Investors party thereto and the Company, which amends and restates in its entirety that certain Investment Agreement, dated as of December 3, 2023, by and among the Company and the Investors, and is subject to the terms and provisions contained in the Investment Agreement. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Investment Agreement.

 

ARTICLE I

 

Exercise Price; Exercise of Warrants and Expiration of Warrants

 

SECTION 1.01 Exercise Price. This Warrant Certificate shall entitle the Holder hereof, subject to the provisions of this Warrant Certificate, to purchase one share of Company Common Stock for each Warrant represented hereby, at the Exercise Price, in each case subject to all adjustments made on or prior to the date of exercise thereof as herein provided.

 

SECTION 1.02 Exercise of Warrants. The Warrants shall be exercisable in whole or in part from time to time on any Business Day beginning on the Issuance Date and ending on the Expiration Date in the manner provided for herein.

 

SECTION 1.03 Expiration of Warrants. Any unexercised Warrants shall expire and the rights of the Holder of such Warrants to purchase Company Common Stock shall terminate at the close of business on the Expiration Date.

 

 

SECTION 1.04 Method of Exercise; Payment of Exercise Price. (a) In order to exercise a Warrant, the Holder hereof must (i) surrender this Warrant Certificate to the Company, with the Exercise Subscription Form attached hereto as Annex I duly completed and executed, and (ii) unless the cashless exercise procedure specified in Section 1.04(d) below is specified in the applicable Exercise Subscription Form, pay in full the Exercise Price then in effect for the shares of Company Common Stock as to which this Warrant Certificate is submitted for exercise in the manner provided in paragraph (b) of this Section 1.04.

 

(b) Simultaneously with the exercise of each Warrant, payment in full of the Exercise Price shall be delivered to the Company, unless the cashless exercise procedure specified in Section 1.04(d) below is specified in the applicable Exercise Subscription Form. Such payment (if applicable) shall be made in cash, by bank wire transfer in immediately available funds to an account designated by the Company.

 

(c) If fewer than all the Warrants represented by this Warrant Certificate are surrendered, this Warrant Certificate shall be surrendered and a new Warrant Certificate of the same tenor and for the number of Warrants that were not surrendered shall promptly be executed and delivered to the Person or Persons as may be directed in writing by the Holder (subject to the terms hereof), and the Company shall register any new Warrant Certificate in the name of such Person or Persons. Any new Warrant Certificate shall be executed on behalf of the Company by its President, Chief Executive Officer, Chief Financial Officer or Secretary, either manually or by facsimile signature printed thereon. In case any Officer of the Company whose signature shall have been placed upon any Warrant Certificate shall cease to be such Officer of the Company before issue and delivery thereof, such Warrant Certificate may, nevertheless, be issued and delivered with the same force and effect as though such person had not ceased to be such Officer of the Company.

 

(d) Notwithstanding anything contained herein to the contrary, each Warrant may be exercised, in whole or in part, at any time or times on or after the Issuance Date and on or before the Expiration Date at the election of the Holder (in such Holder’s sole discretion) by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of shares of Company Common Stock equal to the quotient obtained by dividing ((A-B) * (X)) by (A), where:

 

(A) = the Closing Sale Price of a share of Company Common Stock on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Exercise Subscription Form;

 

(B) = the Exercise Price, as adjusted hereunder; and

 

(X) = the number of shares of Company Common Stock that would be issuable upon exercise of such Warrant in accordance with the terms of this Warrant Certificate if such exercise were by means of a cash exercise rather than a cashless exercise.

 

 

(e) Upon surrender of this Warrant Certificate in accordance with the foregoing provisions, the Company shall instruct the Transfer Agent to transfer to the Holder appropriate evidence of ownership of any shares of Company Common Stock or other securities or property (including cash) to which the Holder is entitled, registered or otherwise placed in, or payable to the order of, such name or names as may be directed in writing by the Holder (subject to the terms hereof), and shall deliver such evidence of ownership and any other securities or property (including cash) to the Person or Persons entitled to receive the same, together with an amount in cash in lieu of any fraction of a share as provided in Section 2.03. Upon payment of the Exercise Price therefor (or in accordance with the cashless exercise procedure specified in Section 1.04(d)), the Holder (or its designee) shall be deemed to own and have all of the rights associated with any Company Common Stock or other securities or property (including cash) to which it is entitled pursuant to this Warrant Certificate upon the surrender of this Warrant Certificate in accordance with the terms of this Warrant Certificate.

 

SECTION 1.05 Compliance with the Securities Act. (a) No Warrants or shares of Company Common Stock issued upon exercise thereof may be sold, transferred or otherwise disposed of (any such sale, transfer or other disposition, a “Sale”), except in compliance with the registration requirements of the Securities Act and any other applicable securities laws or an exemption from registration under the Securities Act and any other applicable securities laws, or in a transaction not subject to such laws. The Warrants and the shares of Company Common Stock issuable upon exercise of the Warrants will have the benefit of certain registration rights under the Securities Act pursuant to a Registration Rights Agreement entered into by the Company on the Issuance Date.

 

(b) Shares of Company Common Stock issued upon exercise of Warrants under a Warrant Certificate while such Warrant Certificate bears the legend set forth on the first page of this Warrant Certificate as of the Issuance Date shall, subject to Section 6.04, be in global form and bear the following legend:

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO A REGISTRATION STATEMENT RELATING THERETO IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.

 

ARTICLE II

 

Adjustments; Changes upon Certain Other Transactions

 

SECTION 2.01 Anti-dilution Adjustments. (a) The number of shares issuable upon exercise of the Warrants and the Exercise Price shall be subject to the following adjustments from time to time:

 

(i) Stock Dividends. In case the Company shall pay or make a dividend or other distribution on the Company Common Stock in Company Common Stock, the number of shares of Company Common Stock issuable upon exercise of each Warrant, as in effect at the opening of business on the day following the date fixed for the determination of stockholders of the Company entitled to receive such dividend or distribution, shall be adjusted so that the Holder shall thereafter be entitled to receive the number of shares of Company Common Stock that the Holder would have owned or have been entitled to receive after the happening of the dividend or other distribution, had such Warrant been exercised immediately prior to the date fixed for such determination; and, in the event of any such adjustment, the Exercise Price, as in effect at the opening of business on the day following the date fixed for the determination of stockholders of the Company entitled to receive such dividend or other distribution, shall be adjusted by multiplying such Exercise Price by a fraction of which the numerator shall be the number of shares of Company Common Stock outstanding at the close of business on the date fixed for such determination and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution. Such adjustments shall become effective immediately after the opening of business on the day following the date fixed for such determination.

 

 

(ii) Stock Purchase Rights. In case the Company shall issue to all holders of Company Common Stock options, warrants or other rights entitling them to subscribe for or purchase shares of Company Common Stock for a period expiring within 60 days from the date of issuance of such options, warrants or other rights at a price per share of Company Common Stock less than the Market Value on the date fixed for the determination of stockholders of the Company entitled to receive such options, warrants or other rights (other than pursuant to a dividend reinvestment, share purchase or similar plan), the number of shares of Company Common Stock issuable upon the exercise of each Warrant shall be adjusted by multiplying the number of shares of Company Common Stock issuable upon exercise of each Warrant, as in effect at the opening of business on the day following the date fixed for such determination, by a fraction, the numerator of which shall be the number of shares of Company Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Company Common Stock so offered for subscription or purchase, either directly or indirectly, and the denominator of which shall be the number of shares of Company Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Company Common Stock which the aggregate consideration expected to be received by the Company upon the exercise, conversion or exchange of such options, warrants or other rights (as determined in good faith by the Board, whose determination shall be conclusive and described in a Board Resolution) would purchase at such Market Value; and, in the event of any such adjustment, the Exercise Price in effect at the opening of business on the day following the date fixed for such determination shall be adjusted by multiplying such Exercise Price by a fraction, the numerator of which shall be the number of shares of Company Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Company Common Stock which the aggregate consideration expected to be received by the Company upon the exercise, conversion or exchange of such options, warrants or other rights (as determined in good faith by the Board, whose determination shall be conclusive and described in a Board Resolution) would purchase at such Market Value and the denominator of which shall be the number of shares of Company Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Company Common Stock so offered for subscription or purchase, either directly or indirectly. Such adjustments shall become effective immediately after the opening of business on the day following the date fixed for such determination; provided, however, that no such adjustments shall be made if the Holder would be entitled to receive such options, warrants or other rights upon exercise at any time of the Warrants; provided, further, however, that if any of the foregoing options, warrants or other rights are only exercisable upon the occurrence of a Triggering Event, then no such adjustments shall be made until such Triggering Event occurs or, if earlier, the applicable date of exercise.

 

(iii) Stock Splits, Reverse Splits and Combinations. In case outstanding shares of Company Common Stock shall be subdivided, split or reclassified into a greater number of shares of Company Common Stock, then the number of shares of Company Common Stock issuable upon exercise of each Warrant in effect at the opening of business on the day following the date upon which such subdivision, split or reclassification becomes effective shall be adjusted so that the Holder shall thereafter be entitled to receive the number of shares of Company Common Stock that the Holder would have owned or would have been entitled to receive had such Warrant been exercised immediately prior to such subdivision, split or reclassification becoming effective; and, in the event of any such adjustment, the Exercise Price in effect at the opening of business on the day following the date upon which such subdivision, split or reclassification becomes effective shall be proportionately reduced. Conversely, in case outstanding shares of Company Common Stock shall be combined or reclassified into a smaller number of shares of Company Common Stock, then the number of shares of Company Common Stock issuable upon exercise of each Warrant in effect at the opening of business on the day following the date upon which such combination or reclassification becomes effective shall be adjusted so that the Holder shall thereafter be entitled to receive the number of shares of Company Common Stock that the Holder would have owned or would have been entitled to receive had such Warrant been exercised immediately prior to such combination or reclassification becoming effective; and, in the event of any such adjustment, the Exercise Price in effect at the opening of business on the day following the date upon which such combination or reclassification becomes effective shall be proportionately increased. Such adjustments shall become effective immediately after the opening of business on the day following the date upon which such subdivision, split, reclassification or combination becomes effective.

 

 

(iv) Debt, Asset or Security Distributions. (A) In case the Company shall, by dividend or otherwise, distribute to all holders of Company Common Stock evidences of its indebtedness, assets or securities (but excluding any dividend or distribution of options, warrants or other rights referred to in paragraph (ii) of this Section 2.01(a), any dividend or distribution paid exclusively in cash, any dividend or distribution of shares of Capital Stock of any class or series, or similar equity interests, of or relating to a Subsidiary or other business unit in the case of a Spin-off referred to in the next subparagraph, or any dividend or distribution referred to in paragraph (i) of this Section 2.01(a)), then the number of shares of Company Common Stock issuable upon the exercise of each Warrant immediately prior to the close of business on the record date fixed for the determination of stockholders of the Company entitled to receive such distribution shall be increased to a number determined by multiplying the number of shares of Company Common Stock issuable upon the exercise of such Warrant immediately prior to the date fixed for such determination by a fraction, the numerator of which shall be the Market Value on the date fixed for such determination plus the fair market value (as determined in good faith by the Board, whose determination shall be conclusive and described in a Board Resolution) of the portion of the assets or evidences of indebtedness so distributed applicable to one share of Company Common Stock and the denominator of which shall be the Market Value on the date fixed for such determination; and, in the event of any such adjustment, the Exercise Price shall be reduced by multiplying the Exercise Price in effect immediately prior to the close of business on the date fixed for the determination of stockholders of the Company entitled to receive such distribution by a fraction, the numerator of which shall be the Market Value on the date fixed for such determination and the denominator of which shall be such Market Value plus the fair market value (as determined in good faith by the Board, whose determination shall be conclusive and described in a Board Resolution) of the portion of the assets, securities or evidences of indebtedness so distributed applicable to one share of Company Common Stock. Such adjustments shall become effective immediately prior to the opening of business on the day following the date fixed for the determination of stockholders of the Company entitled to receive such distribution. In any case in which this subparagraph (iv)(A) is applicable, subparagraph (iv)(B) of this Section 2.01(a)(iv) shall not be applicable.

 

(B) In the case of a Spin-off, the number of shares of Company Common Stock issuable upon the exercise of each Warrant immediately prior to the close of business on the record date fixed for determination of stockholders of the Company entitled to receive such distribution shall be increased to a number determined by multiplying the number of shares of Company Common Stock issuable upon the exercise of such Warrant immediately before the close of business on such date by a fraction, the numerator of which shall be the Market Value plus the Spin-off Market Value of the portion of those shares of Capital Stock or similar equity interests so distributed applicable to one share of Company Common Stock, and the denominator of which shall be the Market Value; and, in the event of any such adjustment, the Exercise Price in effect immediately prior to the close of business on the date fixed for determination of stockholders of the Company entitled to receive such distribution shall be reduced by multiplying the Exercise Price by a fraction, the numerator of which shall be the Market Value and the denominator of which shall be the Market Value plus the Spin-off Market Value of the portion of those shares of Capital Stock or similar equity interests so distributed applicable to one share of Company Common Stock. Any adjustments under this subparagraph (iv)(B) will occur on the date that is the earlier of (1) the close of business on the tenth Trading Day from, and including, the effective date of the Spin-off and (2) the date of the Initial Public Offering (if any) of the securities being distributed in the Spin-off, if that Initial Public Offering is effected simultaneously with the Spin-off.

 

 

(v) Tender Offers. In the case that a tender or exchange offer made by the Company or any Subsidiary of the Company for all or any portion of the Company Common Stock shall expire and such tender or exchange offer (as amended through the expiration thereof) shall require the payment to stockholders of the Company (based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of Purchased Shares) of aggregate consideration having a fair market value (as determined in good faith by the Board, whose determination shall be conclusive and described in a Board Resolution) per share of Company Common Stock that exceeds the Closing Sale Price of the Company Common Stock on the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer, then, immediately prior to the opening of business on the day after the date of the last time (the “Expiration Time”) tenders or exchanges could have been made pursuant to such tender or exchange offer (as amended through the expiration thereof), the number of shares of Company Common Stock issuable upon the exercise of each Warrant immediately prior to the close of business on the date of the Expiration Time shall be increased to a number determined by multiplying the number of shares of Company Common Stock issuable upon exercise of each Warrant immediately prior to the close of business on the date of the Expiration Time by a fraction (A) the numerator of which shall be equal to (1) the product of (I) the Market Value on the date of the Expiration Time and (II) the number of shares of Company Common Stock outstanding (including any tendered or exchanged shares) on the date of the Expiration Time less the number of all shares validly tendered or exchanged, not withdrawn and accepted for payment on the date of the Expiration Time (such validly tendered or exchanged shares, up to any such maximum, being referred to as the “Purchased Shares”) plus (2) the amount of cash plus the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders of the Company pursuant to the tender or exchange offer (assuming the acceptance, up to any maximum specified in the terms of the tender or exchange offer, of Purchased Shares), and (B) the denominator of which shall be equal to the product of (1) the Market Value on the date of the Expiration Time and (2) the number of shares of Company Common Stock outstanding (including any tendered or exchanged shares) on the date of the Expiration Time; and, in the event of any such adjustment, the Exercise Price shall be reduced by multiplying the Exercise Price immediately prior to the close of business on the date of the Expiration Time by a fraction (A) the numerator of which shall be equal to the product of (1) the Market Value on the date of the Expiration Time and (2) the number of shares of Company Common Stock outstanding (including any tendered or exchanged shares) on the date of the Expiration Time, and (B) the denominator of which shall be equal to (1) the product of (I) the Market Value on the date of the Expiration Time and (II) the number of shares of Company Common Stock outstanding (including any tendered or exchanged shares) on the date of the Expiration Time less the number of Purchased Shares plus (2) the amount of cash plus the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders of the Company pursuant to the tender or exchange offer (assuming the acceptance, up to any maximum specified in the terms of the tender or exchange offer, of Purchased Shares).

 

 

(b) Calculation of Adjustments. Notwithstanding anything herein to the contrary, no adjustment under this Section 2.01 need be made to the number of shares issuable upon exercise of a Warrant or the Exercise Price unless such adjustment would require an increase or decrease of at least 1.0% of the number of shares issuable upon exercise of the Warrants or the Exercise Price immediately prior to the making of such adjustment. Any lesser adjustment shall be carried forward and shall be made at the time of and together with the next subsequent adjustment, if any, which, together with any adjustment or adjustments so carried forward, shall result in an increase or decrease of at least 1.0% of the number of shares issuable upon exercise of a Warrant or the Exercise Price immediately prior to the making of such adjustment; provided that any such adjustment of less than 1.0% that has not been made shall be made upon any exercise of the Warrants. No adjustment to the Exercise Price under this Section 2.01 shall be made if such adjustment will result in an Exercise Price that is less than the par value of the Company Common Stock. All adjustments to the number of shares issuable upon exercise of the Warrants or the Exercise Price shall be calculated to the nearest 1/10,000th of a share of Company Common Stock (or if there is not a nearest 1/10,000th of a share to the next lower 1/10,000th of a share) or the nearest $0.0001 (or if there is not a nearest $0.0001 to the next lower $0.0001), as the case may be. For the avoidance of doubt, if an event occurs that would trigger an adjustment pursuant to this Section 2.01 under more than one subsection hereof, such event, to the extent fully taken into account in a single adjustment, shall not result in multiple adjustments hereunder; provided, however, that if more than one subsection of this Section 2.01 is applicable to a single event, the subsection shall be applied that produces the largest adjustment.

 

(c) Stockholder Rights Plans. Upon exercise of the Warrants, to the extent that the Holder receives Company Common Stock, the Holder shall receive, in addition to the shares of Company Common Stock and any cash for fractional shares in accordance with Section 2.03, if any, the rights issued under any future stockholder rights plan the Company may establish whether or not such rights are separated from the Company Common Stock prior to exercise. A distribution of rights pursuant to any stockholder rights plan will not result in an adjustment to the number of shares issuable upon exercise of the Warrants or the Exercise Price pursuant to Section 2.01(a)(ii) or Section 2.01(a)(iv), provided that the Company has provided for the Holder to receive such rights upon exercise; provided, further, that the Holders shall not be permitted to receive such rights to the extent that any of the Holders or their respective Affiliates is the “Acquiring Person” under such stockholder rights plan.

 

(d) Reversal of Adjustment. If the Company shall take a record of the holders of Company Common Stock for the purpose of entitling them to receive a dividend or other distribution, and shall thereafter (and before the dividend or distribution has been paid or delivered to stockholders) legally abandon its plan to pay or deliver such dividend or distribution, then thereafter no adjustment in the number of shares issuable upon exercise of the Warrants or the Exercise Price then in effect shall be required by reason of the taking of such record.

 

(e) Exceptions to Adjustment. Notwithstanding the foregoing, the applicable number of shares issuable upon exercise of the Warrants and the Exercise Price shall not be adjusted:

 

(i) upon the issuance of any shares of Company Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Company’s securities and the investment of additional optional amounts in shares of Company Common Stock under any such plan;

 

(ii) upon the issuance of any shares of Company Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of its Subsidiaries;

 

(iii) upon the issuance of any shares of Company Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of the Issuance Date;

 

 

(iv) in connection with (A) the issuance of the Warrants or the Preferred Stock to the Holders or their Affiliates pursuant to the terms of the Investment Agreement, (B) the issuance of shares of Common Stock to the Holders upon the exercise of the Warrants or the conversion of the Preferred Stock, or (C) any other transactions contemplated by and consummated in accordance with the Investment Agreement (including the Cash Dividend (as defined in the Investment Agreement) and the reverse stock split of the Common Stock that became effective prior to the Issuance Date (the “Reverse Stock Split”));

 

(v) for a change in the par value of the Company Common Stock; or

 

(vi) for accrued and unpaid dividends on the Preferred Stock.

 

SECTION 2.02 Recapitalizations, Reclassifications and Changes in the Company’s Stock. In the event of any reclassification of outstanding shares of Company Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value and other than the Reverse Stock Split), or any consolidation or merger of the Company with or into another Person or any merger of another Person with or into the Company (other than a consolidation or merger in which the Company is the resulting or surviving Person and that does not result in any reclassification or change of outstanding Company Common Stock), or any sale or other disposition to another Person of all or substantially all of the assets of the Company (computed on a consolidated basis) (any of the foregoing, a “Transaction”), upon exercise of the Warrants, the Holder will be entitled to receive the kind and amount of securities (of the Company or another issuer), cash and other property receivable upon such Transaction by a holder of the number of shares of Company Common Stock issuable upon exercise of the Warrants immediately prior to such Transaction, after giving effect to any adjustment event or, in the event holders of Company Common Stock have the opportunity to elect the form of consideration to be received in any Transaction, the weighted average of the forms and amounts of consideration received by the holders of Company Common Stock, and, prior to or at the effective time of such Transaction, the Company or the successor or purchasing person, as the case may be, shall (and the Company shall cause such successor or purchasing person to) execute with the Holder an amendment to this Agreement providing for such change in the rights to exercise the Warrants. In the event that at any time, as a result of an adjustment made pursuant to this Warrant Certificate, the Holder shall become entitled upon exercise to any securities other than, or in addition to, shares of Company Common Stock, thereafter the number or amount of such other securities so receivable upon exercise and the Exercise Price therefor shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Company Common Stock set forth in this Warrant Certificate.

 

SECTION 2.03 Fractional Shares. No fractional shares of Company Common Stock shall be issued to the Holder upon exercise of any Warrant. In lieu of any fraction of a share of Company Common Stock that would otherwise be issuable upon exercise of the aggregate number of Warrants exercised by the Holder, the Holder shall have the right to receive an amount in cash (computed to the nearest cent) equal to the same fraction of the Closing Sale Price of a share of Company Common Stock on the Trading Day next preceding the date of exercise.

 

SECTION 2.04 Notice of Adjustment. Whenever the number of shares of Company Common Stock or other stock or property issuable upon the exercise of each Warrant or the Exercise Price is adjusted, as herein provided, the Company shall (a) compute such adjustment in accordance with this Article II and prepare and transmit to the Transfer Agent an Officer’s Certificate setting forth the adjustment, the method of calculation thereof in reasonable detail and the facts requiring such adjustment and upon which such adjustment is based and (b) as soon as practicable following the occurrence of an event that requires an adjustment pursuant to this Article II (or if the Company is not aware of such occurrence, as soon as practicable after becoming so aware), the Company or, at the request and expense of the Company, the Transfer Agent shall provide a written notice to the holders of Warrants (including the Holder) of the occurrence of such event and a statement setting forth in reasonable detail the method by which the adjustment was determined and setting forth the adjusted amount.

 

 

ARTICLE III

 

Warrant Transfer Books

 

SECTION 3.01 Warrant Transfer Books. (a) The Company shall keep at its principal place of business a register in which the Company shall provide for the registration of Warrant Certificates and of any exchanges of Warrant Certificates as herein provided.

 

(b) At the option of the Holder, Warrant Certificates may be exchanged at such office and upon payment of the charges hereinafter provided. Whenever any Warrant Certificates are so surrendered for exchange, the Company shall execute and deliver the Warrant Certificates that the Holder is entitled to receive.

 

(c) All Warrant Certificates issued upon any registration of transfer or exchange of Warrant Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits, as the Warrant Certificates surrendered for such registration of transfer or exchange.

 

(d) Every Warrant Certificate surrendered for registration of exchange shall (if so required by the Company) be duly endorsed, or be accompanied by a written instrument of transfer in form reasonably satisfactory to the Company, duly executed by the Holder or his attorney duly authorized in writing.

 

(e) No service charge shall be payable by the Holder for any registration of transfer or exchange of this Warrant Certificate, and the Company shall pay any taxes or other governmental charges that may be imposed in connection with any registration of exchange of Warrant Certificates.

 

(f) This Warrant Certificate when duly endorsed in blank shall be deemed negotiable and when this Warrant Certificate shall have been so endorsed, the Holder hereof may be treated by the Company and all other Persons dealing therewith as the absolute owner hereof for any purpose and as the Person entitled to exercise the rights represented hereby.

 

ARTICLE IV

 

Voting

 

SECTION 4.01 No Voting Rights. Prior to the exercise of the Warrants, the Holder, in its capacity as such, shall not be entitled to any rights of a stockholder of the Company, including the right to vote or to consent with respect to any matter.

 

 

ARTICLE V

 

Covenants

 

SECTION 5.01 Reservation of Company Common Stock for Issuance on Exercise of Warrants. The Company covenants that it will at all times reserve and keep available, free from preemptive rights and solely for the purpose of issue upon exercise of the Warrants as herein provided, out of its authorized but unissued Company Common Stock, such number of shares of Company Common Stock as shall then be issuable upon the exercise of all Warrants issuable hereunder and all other Warrant Certificates. The Company covenants that all shares of Company Common Stock issuable upon exercise of the Warrants shall, upon such issue, be duly and validly issued and fully paid and non-assessable, free from preemptive rights and free from all taxes, liens, charges and security interests with respect to the issuance thereof.

 

SECTION 5.02 Notice of Dividends. At any time when the Company declares any dividend or other distribution on the Company Common Stock, it shall give notice to the holders of all the then outstanding Warrants (including the Holder) of any such declaration not less than 15 days prior to the related record date for such dividend or distribution.

 

SECTION 5.03 HSR Act Compliance. If the Holder determines that a notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the “HSR Act”), is required in connection with the exercise of the Warrants represented by this Warrant Certificate, the Company shall reasonably cooperate with the Holder by (a) promptly effecting all necessary notifications and other filings under the HSR Act that are required to be made by the Company and (b) responding as promptly as reasonably practicable to all inquiries or requests received from the United States Federal Trade Commission (the “FTC”), the Department of Justice (the “DOJ”) or any other governmental authority in connection with such notifications and other filings. For the avoidance of doubt, nothing in this Section 5.03 shall require that the Company or any of its Subsidiaries commit to any divestiture, license or hold separate or similar arrangement with respect to the business, assets or properties of the Company or any of its Subsidiaries. Any such notifications and responses by the Company will be in full compliance with the requirements of the HSR Act. The Company shall, to the extent legally permissible, keep the Holder reasonably apprised of the status of any communications with, and any inquiries or requests for additional information from, the FTC, the DOJ or such other governmental authority. The Company shall pay the filing fees in connection with the above filings, and shall otherwise each bear its costs and expenses in connection with the preparation of such filings and responses to inquires or requests.

 

SECTION 5.04 Certain Other Events. If any event occurs as to which the provisions of Article II are not strictly applicable or, if strictly applicable, would not fairly protect the rights of the holders of the Warrants in accordance with the essential intent and principles of such provisions, then the Board shall make such adjustments in the application of such provisions, in accordance with such essential intent and principles, as shall be reasonably necessary, in the good faith judgment of the Board, to protect such purchase rights as aforesaid; provided that no adjustments shall be made pursuant to this Section 5.04 if such adjustment would adversely affect the Holder.

 

 

ARTICLE VI

 

Miscellaneous

 

SECTION 6.01 Tax Matters. The Company shall pay all transfer, stamp, documentary, issue and other similar taxes due with respect to the issuance or delivery of the Warrants or shares of Company Common Stock or other securities or property upon exercise of the Warrants.

 

SECTION 6.02 Surrender of Warrant Certificate. This Warrant Certificate, if surrendered for exercise or purchase, shall be promptly canceled by the Company and shall not be reissued by the Company. The Company shall destroy such canceled Warrant Certificate.

 

SECTION 6.03 Mutilated, Destroyed, Lost or Stolen Warrant Certificate. (a) If (i) this Warrant Certificate is mutilated and surrendered to the Company or (ii) the Company receives evidence to its satisfaction of the destruction, loss or theft of this Warrant Certificate, and there is delivered to the Company such appropriate affidavit of loss, applicable processing fee and indemnity as may be reasonably required by the Company to save it harmless, then, in the absence of notice to the Company that this Warrant Certificate has been acquired by a bona fide purchaser, the Company shall execute and deliver, in exchange for this Warrant Certificate if mutilated or in lieu of this Warrant Certificate if destroyed, lost or stolen, a new Warrant Certificate of like tenor and for a like aggregate number of Warrants.

 

(b) Upon the issuance of any new Warrant Certificate under this Section 6.03, the Company shall pay any taxes or other governmental charges that may be imposed in relation thereto and other expenses in connection therewith.

 

(c) Every new Warrant Certificate executed and delivered pursuant to this Section 6.03 in lieu of any destroyed, lost or stolen Warrant Certificate shall constitute an original contractual obligation of the Company, whether or not the destroyed, lost or stolen Warrant Certificate shall be at any time enforceable by anyone.

 

(d) The provisions of this Section 6.03 are exclusive and shall preclude (to the extent lawful) all other rights or remedies with respect to the replacement of a mutilated, destroyed, lost or stolen Warrant Certificate.

 

SECTION 6.04 Removal of Legends. (a) In the event (i) the transfer of the Warrants or the shares of Company Common Stock issued upon exercise of the Warrants is registered under the Securities Act or (ii) there is delivered to the Company such satisfactory evidence, which may include an Opinion of Counsel licensed to practice law in the State of New York, as may be reasonably required by the Company, that such Warrants or shares are not “restricted securities” within the meaning of Rule 144 under the Securities Act, the Company shall, or shall direct the Transfer Agent to, and the Transfer Agent shall, upon surrender by the Holder of this Warrant Certificate or certificates evidencing such shares of Company Common Stock, as applicable, to the Company or the Transfer Agent, exchange such certificates for certificates without the legend set forth on the first page of this Warrant Certificate as of the Issuance Date or referred to in Section 1.05(b), as applicable.

 

 

(b) In order to effect a Sale of Warrants or shares of Company Common Stock issued upon exercise of the Warrants (other than pursuant to an effective registration statement under the Securities Act), the Holder shall (i) give written notice to the Company of its intention to effect such Sale, which notice shall describe the manner and circumstances of the proposed transaction in reasonable detail and shall include a certification by the Holder to the effect that such proposed Sale may be effected without registration under the Securities Act or under applicable state securities laws, and (ii) provide such additional certifications of the Holder or its transferee or Opinions of Counsel (which shall be reasonably satisfactory to the Company) as the Company may reasonably request solely in order to confirm the availability of the applicable exemption from the registration requirements of applicable securities laws.

 

SECTION 6.05 Notices. All notices referred to herein shall be in writing and, unless otherwise specified herein, all notices hereunder shall be deemed to have been given upon the earlier of receipt thereof or three (3) Business Days after the mailing thereof if sent by registered or certified mail with postage prepaid, or by private courier service addressed: (i) if to the Company, to its office at Five American Lane, Greenwich, CT 06831 (Attention: Chief Executive Officer), (ii) if to any Holder, to such Holder at the address of such Holder as listed in the stock record books of the Company (which may include the records of the Transfer Agent) or (iii) to such other address as the Company or any such Holder, as the case may be, shall have designated by notice similarly given.

 

SECTION 6.06 Applicable Law. This Warrant Certificate and each Warrant represented hereby and all rights arising hereunder shall be construed in accordance with the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.

 

SECTION 6.07 Persons Benefiting. This Warrant Certificate shall be binding upon and inure to the benefit of the Company and its successors, assigns, beneficiaries, executors and administrators, and the Holder from time to time of the Warrants represented hereby. Except as otherwise expressly provided herein, nothing in this Warrant Certificate is intended or shall be construed to confer upon any Person, other than the Company and the Holder from time to time of the Warrants represented hereby, any right, remedy or claim under or by reason of this Warrant Certificate or any part hereof.

 

SECTION 6.08 Supplements or Amendments. This Warrant Certificate may not be supplemented or amended without the written approval of both the Holder and the Company.

 

SECTION 6.09 Headings. The descriptive headings of the several Articles and Sections of this Warrant Certificate are inserted for convenience and shall not control or affect the meaning or construction of any of the provisions hereof.

 

SECTION 6.10 Copies of Agreements. Copies of the Investment Agreement and the Registration Rights Agreement referred to herein are on file at the principal place of business of the Company and may be obtained by writing to the Company at the address set forth in Section 6.05.

 

 

ARTICLE VII

 

Definitions.

 

As used in this Warrant Certificate, the following terms shall have the following meanings:

 

“Affiliate” means a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified.

 

“Board” means the board of directors of the Company.

 

“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board and to be in full force and effect on the date of such certification, and delivered to the Transfer Agent.

 

“Business Day” means any day other than a Saturday or Sunday or any other day on which banks in the City of New York are authorized or required by law or executive order to close.

 

“Capital Stock” of any Person means any and all shares, interests, participations or other equivalents however designated of corporate stock or other equity participations, including partnership interests, whether general or limited, of such Person and any rights (other than debt securities convertible or exchangeable into an equity interest), warrants or options to acquire an equity interest in such Person.

 

The “Closing Sale Price” of a security on any date means the closing sale price per share (or if no closing sale price is reported, the average of the closing bid and ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices) on such date as reported on the over-the-counter “Pink Sheets” market or, if the security is listed on a national securities exchange, the principal national securities exchange on which the security is traded. In the absence of such a quotation, the Closing Sale Price of the security will be an amount determined in good faith by the Board to be the fair market value of such security, and such determination shall be conclusive.

 

“Company” has the meaning set forth in the introduction to this Warrant Certificate, and its successors and assigns.

 

“Company Common Stock” has the meaning set forth in the introduction to this Warrant Certificate.

 

“DOJ” has the meaning set forth in Section 5.03.

 

“Exercise Price” has the meaning set forth in the introduction to this Warrant Certificate.

 

“Expiration Date” means the tenth anniversary of the Issuance Date.

 

“Expiration Time” has the meaning set forth in Section 2.01(a)(v).

 

“FTC” has the meaning set forth in Section 5.03.

 

“Holder” means the initial Holder of this Warrant Certificate and any permitted assignee or transferee thereof, in such Person’s capacity as a holder of Warrants.

 

“HSR Act” has the meaning set forth in Section 5.03.

 

“including” means “including, without limitation.”

 

 

“Initial Public Offering” means, in the event of a Spin-off, the first time securities of the same class or type as the securities being distributed in the Spin-off are bona fide offered to the public for cash.

 

“Investment Agreement” has the meaning set forth in the introduction to this Warrant Certificate.

 

“Issuance Date” means June 6, 2024.

 

“Market Value” means, with respect to any date of determination, the average Closing Sale Price of the Company Common Stock for a five consecutive Trading Day period preceding the earlier of (a) the day preceding the date of determination and (b) the day before the “ex date” with respect to the issuance or distribution requiring such computation; provided that, solely for purposes of Section 2.01(a)(iv)(B), the Market Value means the average of the daily Closing Sale Price of the Company Common Stock for the first 10 consecutive Trading Days after the effective date of the Spin-off (provided, further, that if an Initial Public Offering of the securities being distributed in the Spin-off is to be effected simultaneously with the Spin-off, the Market Value of the Company Common Stock means the Closing Sale Price of the Company Common Stock on the Trading Day on which the Initial Public Offering price of the securities being distributed in the Spin-off is determined). For purposes of this definition, the term “ex date,” when used with respect to any issuance or distribution, means the first date on which the Company Common Stock trades, regular way, on the over-the-counter “Pink Sheets” market or, if the Company Common Stock is listed on a national securities exchange, the principal national securities exchange on which the Company Common Stock is traded at that time, without the right to receive the issuance or distribution.

 

“Officer” means the Chairman of the Board, President, Chief Executive Officer, any Vice President, the Chief Financial Officer, the Chief Accounting Officer, the Treasurer, any Assistant Treasurer, the Controller, any Assistant Controller, the Secretary or any Assistant Secretary of the Company.

 

“Officer’s Certificate” means a certificate signed by two Officers.

 

“Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable to the Company or the Transfer Agent. The counsel may be an employee of or counsel to the Company or the Transfer Agent.

 

“Person” means any natural person, corporation, limited liability company, partnership, joint venture, trust, business association, governmental entity or other entity.

 

“Preferred Stock” has the meaning set forth in the Investment Agreement.

 

“Purchased Shares” has the meaning set forth in Section 2.01(a)(v).

 

“Sale” has the meaning set forth in Section 1.05(a).

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Spin-off” means a dividend or other distribution of shares of Capital Stock of any class or series, or similar equity interests, of or relating to a Subsidiary or other business unit of the Company.

 

 

“Spin-off Market Value” means (a) in the case of securities to be distributed to the holders of the Common Stock in connection with a Spin-off that is not effected simultaneously with an Initial Public Offering of the securities being distributed in the Spin-off and where such securities are listed or quoted (or will be listed or quoted upon consummation of the Spin-off) on a U.S. national securities exchange, the average of the Closing Sale Price of those securities over the first 10 consecutive Trading Days after the effective date of the Spin-off, (b) in the case of securities being distributed in any Spin-off that is effected simultaneously with an Initial Public Offering, the Initial Public Offering price and (c) in the case of securities being distributed in any Spin-off not involving any Initial Public Offering of such securities and where such securities are not and will not be listed or quoted on a U.S. national securities exchange, the fair market value (on a per share basis) of such securities (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution).

 

“Subsidiary” of any Person means any other Person (a) more than 50% of whose outstanding shares or securities representing the right to vote for the election of directors or other managing authority of such other Person are, now or hereafter, owned or controlled, directly or indirectly, by such first Person, but such other Person shall be deemed to be a Subsidiary only so long as such ownership or control exists, or (b) which does not have outstanding shares or securities with such right to vote, as may be the case in a partnership, joint venture or unincorporated association, but more than 50% of whose ownership interest representing the right to make the decisions for such other Person is, now or hereafter, owned or controlled, directly or indirectly, by such first Person, but such other Person shall be deemed to be a Subsidiary only so long as such ownership or control exists.

 

“Trading Day” means a day during which trading in securities generally occurs on the over-the-counter “Pink Sheets” market or, if the Company Common Stock is listed on a national securities exchange, the principal national securities exchange on which the Company Common Stock is traded.

 

“Transaction” has the meaning set forth in Section 2.02.

 

“Transfer Agent” means Pacific Stock Transfer Company unless and until a successor is selected by the Company, and then such successor.

 

“Triggering Event” means a specified event the occurrence of which entitles the holders of rights, options or warrants to exercise such rights, options or warrants.

 

“Warrants” has the meaning set forth in the introduction to this Warrant Certificate.

 

	QXO, INC.
	By
		Name:	Mark Meller
		Title:	Chief Executive Officer

 

 

ANNEX I

 

EXERCISE SUBSCRIPTION FORM

 

(To be executed only upon exercise of Warrant)

 

To:	QXO, Inc. (the “Company”)

 

The undersigned irrevocably exercises the Warrants represented by the Warrant Certificate for the purchase of one share (subject to adjustment in accordance with the Warrant Certificate) of Company Common Stock, par value $0.00001 per share, for each such Warrant.

 

The undersigned:

 

☐ herewith makes payment of $_______ (such payment being by bank wire transfer in immediately available funds), all at the Exercise Price and on the terms and conditions specified in the Warrant Certificate.

 

☐ hereby elects the cancellation of such number of shares of Company Common Stock as is necessary, in accordance with the formula set forth in Section 1.04(d) of the Warrant Certificate, to exercise this Warrant with respect to the number of shares of Company Common Stock purchasable pursuant to the cashless exercise procedure set forth in Section 1.04(d) of the Warrant Certificate.

 

The undersigned surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the shares of Company Common Stock deliverable upon the exercise of such Warrants be registered in the name and delivered at the address specified below.

 

Date:

 

	(Signature of Owner)*
	(Street Address)
	(City)                  (State)                  (Zip Code)

 

Securities to be issued to:

 

Please insert social security or identifying number:

 

Name:

 

Street Address:

 

City, State and Zip Code:

 

*

The signature must correspond with the name as written upon the face of the Warrant Certificate in every particular, without alteration or any change whatsoever.

 

Exhibit 10.1

 

EXECUTION VERSION

 

 

STOCKHOLDERS AGREEMENT

 

among

 

JACOBS PRIVATE EQUITY II, LLC,

 

THE INITIAL OTHER INVESTORS,

 

and

 

QXO, INC.

 

Dated as of June 6, 2024

 

 

 

TABLE OF CONTENTS

 

	Page
Section 1.   Definitions	1
Section 2.   Voting Agreement	5
Section 3.   Lock-Up	5
Section 4.   Representations and Warranties of the Investors	6
Section 5.   Representations and Warranties of the Initial Other Investors	7
Section 6.   Miscellaneous	7

 

 

STOCKHOLDERS AGREEMENT

 

This Stockholders Agreement (as the same may be amended from time to time in accordance with its terms, this “Agreement”) is entered into as of June 6, 2024, by and among Jacobs Private Equity II, LLC, a Delaware limited liability company (the “Principal Investor”), each of the other Investors listed on Schedule I hereto (collectively, the “Initial Other Investors” and, together with the Principal Investor, the “Investors”) and QXO, Inc., a Delaware corporation (the “Company”).

 

RECITALS

 

WHEREAS, the Principal Investor (on behalf of itself and on behalf of each of the other Investors) entered into that certain Amended and Restated Investment Agreement, dated as of April 14, 2024 (as may be amended from time to time, the “Investment Agreement”), by and among the Company, and the Investors, which amends and restates in its entirety that certain Investment Agreement, dated as of December 3, 2023, by and among the Company and the Investors, pursuant to which each Investor purchased, and the Company issued and sold to each Investor, (a) that number of shares of Preferred Stock and (b) Warrants representing the right to purchase the number of shares of the Company’s common stock, par value $0.00001 per share (the “Company Common Stock”), in each case set forth opposite such Investor’s name in Schedule I to the Investment Agreement (the Preferred Stock and the Warrants, together with any shares of Company Common Stock issuable upon conversion of the Preferred Stock or exercise of the Warrants, collectively, the “Securities”);

 

WHEREAS, concurrently with and in connection with the closing (the “Closing”) of the transactions contemplated by the Investment Agreement, the Investors desire to enter into this Agreement, effective upon the date hereof, to agree upon the respective rights and obligations after the Closing with respect to the securities of the Company now or hereafter issued and outstanding and held by the parties to this Agreement (including the Securities) and certain matters with respect to their investment in the Company; and

 

WHEREAS, prior to the Closing, the Board of Directors of the Company approved this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants, representations, warranties and agreements contained herein, and other good and valid consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties to this Agreement hereby agree as follows:

 

Section 1. Definitions.

 

(a) As used in this Agreement, the following terms shall have the following meanings:

 

“Affiliate” means, when used with respect to any specified Person, a Person that directly or indirectly, including through one or more intermediaries, controls, is controlled by, or is under common control with such specified Person. As used herein, “control” (including, with correlative meanings, “controlled by” and “under common control by”), when used with respect to any such specified Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment, undertaking or otherwise. Notwithstanding anything to the contrary set forth herein, none of the Initial Other Investors shall be an Affiliate of the Principal Investor, nor shall the Principal Investor be an Affiliate of any Initial Other Investor, in each case solely by virtue of this Agreement.

 

 

“Agreement” has the meaning set forth in the Preamble.

 

“Beneficial Ownership” by a Person of any securities or other equity interests includes record and/or beneficial ownership of such securities or other equity interests, and includes ownership of such securities or other equity interests by any Person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares (i) voting power which includes the power to vote, or to direct the voting of, such security or other equity interests; and/or (ii) investment power which includes the power to dispose, or to direct the disposition, of such security or other equity interests; and shall otherwise be interpreted in accordance with the term “beneficial ownership” as defined in Rule 13d-3 adopted by the SEC under the Exchange Act; provided that (A) for purposes of determining Beneficial Ownership, a Person shall be deemed to be the Beneficial Owner of any securities or other equity interests which may be acquired by such Person pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise (irrespective of whether the right to acquire such securities or other equity interests is exercisable immediately or only after the passage of time, including the passage of time in excess of sixty (60) days, the satisfaction of any conditions, the occurrence of any event or any combination of the foregoing) and (B) solely for purposes of this Agreement, notwithstanding anything to the contrary set forth herein, none of the Initial Other Investors shall be deemed to have Beneficial Ownership of securities or other equity interests owned by the Principal Investor or by any other Initial Other Investor, nor shall the Principal Investor be deemed to have Beneficial Ownership of securities or other equity interests owned by any of the Initial Other Investors, in each case, solely by virtue of this Agreement. “Beneficially Own,” “Beneficially Owned” and “Beneficially Owning” shall have a correlative meaning.

 

“Capital Stock” means, with respect to any Person at any time, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of capital stock, partnership interests (whether general or limited) or equivalent ownership interests in or issued by such Person.

 

“Closing” has the meaning set forth in the Investment Agreement.

 

“Closing Date” has the meaning set forth in the Investment Agreement.

 

“Company Common Stock” has the meaning set forth in the Recitals.

 

“Company” has the meaning set forth in the Preamble.

 

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Governmental Entity” means any federal, state or local, domestic or foreign, government or any court, administrative agency or commission or other governmental, quasi-governmental or regulatory authority or agency, domestic or foreign.

 

“Group” shall have the meaning assigned to it in Section 13(d)(3) of the Exchange Act; provided, that solely for purposes of this Agreement, notwithstanding anything to the contrary set forth herein, none of the Initial Other Investors nor the Principal Investor, or any of their respective Affiliates shall be deemed to be a member of a Group with each other or each other’s Affiliates, in each case solely by virtue of this Agreement.

 

“Initial Other Investors” has the meaning set forth in the Preamble.

 

“Investment Agreement” has the meaning set forth in the Recitals.

 

“Investors” has the meaning set forth in the Preamble.

 

“Laws” means any federal, state, local or municipal, domestic or foreign, or other statute, law, code, ordinance, act, rule or regulation of any Governmental Entity, and any Orders.

 

“Lock-Up Period” means the period beginning on the Closing Date and ending on the date that is the fifth (5th) anniversary of the Closing Date.

 

“Order” means any orders, decisions, judgments, writs, injunctions, or decrees issued by any court, agency or other Governmental Entity.

 

“Permitted Transferee” means any Person to whom an Initial Other Investor is expressly permitted to Transfer Securities prior to the expiration of the Lock-Up Period pursuant to Section 3(b), in each case that becomes a party to and fully subject to and bound by this Agreement to the same extent as the transferring party by executing and delivering a joinder agreement to this Agreement in the form attached hereto as Exhibit A.

 

“Person” means any natural person, corporation, limited liability company, partnership, joint venture, trust, business association, Governmental Entity or other entity.

 

“Preferred Stock” has the meaning set forth in the Investment Agreement.

 

“SEC” means the United States Securities and Exchange Commission.

 

“Securities” has the meaning set forth in the Recitals.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

 

“Stockholder Meeting” means each annual or special meeting of stockholders of the Company, or any action by written consent of the Company’s stockholders in lieu thereof, and any adjournment, postponement, rescheduling, continuation or meeting held in lieu thereof.

 

“Termination Date” has the meaning set forth in Section 6(m).

 

“Transfer” means any direct or indirect (including voluntary or involuntary) sale, disposition, conveyance, hypothecation, mortgage, encumbrance, gift, pledge, assignment, attachment or other transfer (including the creation of any derivative or synthetic interest, including a participation or other similar interest), whether by merger, testamentary disposition, pursuant to a judicial process, operation of law or otherwise, and including the entry into a definitive agreement with respect to any of the foregoing. “Transfer” shall also include, with respect to any Person that is a corporation, partnership, limited liability company or other legal entity whose primary assets are Securities, any event that causes such Person to cease to be controlled by the Person controlling such Person prior to such event.

 

“Voting Securities” means, at any time, shares of any class of Capital Stock or other securities of the Company, including shares of the Company Common Stock and shares of the Preferred Stock, which are entitled to vote generally in the election of directors of the Company.

 

“Warrants” has the meaning set forth in the Investment Agreement.

 

(b) In addition to the above definitions, unless the context requires otherwise:

 

(i) the headings contained in this Agreement or in any Schedule or Exhibit hereto and in the table of contents to this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement;

 

(ii) any capitalized terms used in any Schedule or Exhibit but not otherwise defined therein shall have the meaning as defined in this Agreement;

 

(iii) when a reference is made in this Agreement to an Article, Section, Subsection or Schedule or Exhibit, such reference shall be to a Section or Article of, or a Schedule or an Exhibit to, this Agreement unless otherwise indicated;

 

(iv) for all purposes hereof, the terms “include,” “includes” and “including” shall be deemed followed by the words “without limitation”;

 

(v) the words “hereof,” “hereto,” “hereby,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement;

 

(vi) the term “or” is not exclusive;

 

(vii) the word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase does not mean simply “if”;

 

 

(viii) the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms;

 

(ix) any agreement or instrument defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement or instrument as from time to time amended, modified or supplemented;

 

(x) “business day” means any day except a Saturday, a Sunday or other day on which the SEC or banks in the City of New York are authorized or required by Law to be closed;

 

(xi) references to a person are also to its permitted successors and assigns; and

 

(xii) when calculating the period of time between which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded.

 

(c) The parties hereto have participated jointly in the negotiation and drafting of this Agreement, and in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party hereto by virtue of the authorship of any provision of this Agreement.

 

Section 2. Voting Agreement. Each Initial Other Investor, individually and not jointly, agrees with the Company (and only with the Company) that:

 

(a) such Initial Other Investor shall (i) appear in person or by proxy at any Stockholder Meeting and (ii) vote, or cause to be voted, or execute written consents with respect to, as applicable, all Voting Securities that it Beneficially Owns (A) in favor of the election of each candidate designated or nominated for election by the Principal Investor, (B) in favor of removal of each Person designated for removal by the Principal Investor and (C) except with respect to matters that would adversely affect such Initial Other Investor in a manner disproportionate to any other Investor, in accordance with the Principal Investor’s written direction with respect to any other matter presented at such Stockholder Meeting; and

 

(b) such Initial Other Investor shall take all other necessary or desirable actions within its control to effectuate the provisions of this Section 2.

 

Section 3. Lock-Up.

 

(a) Subject to Section 3(b) and Section 3(c), except with the prior written consent of the Company, each Initial Other Investor, individually and not jointly, hereby acknowledges and agrees with the Company (and only with the Company) that it shall not, and shall cause its Affiliates not to, Transfer all or any portion of the Securities Beneficially Owned by such Person until the end of the Lock-Up Period.

 

 

(b) Notwithstanding the provisions set forth in Section 3(a), each Initial Other Investor or its respective Permitted Transferees may Transfer the Securities it Beneficially Owns during the Lock-Up Period (i) to Affiliates of such Initial Other Investor; (ii) in the case of an individual, to a member of such individual’s immediate family; (iii) in connection with a pledge to a financial institution pursuant to a bona fide financing, including the enforcement of any such pledge by a financial institution; or (iv) to any Person approved in writing by the Company; provided that, in the case of clauses (i) through (iv), no Initial Other Investor or its respective Permitted Transferee shall Transfer any Securities Beneficially Owned by it or them to any Permitted Transferee unless such Permitted Transferee becomes a party to and fully subject to and bound by this Agreement, to the same extent as the transferring party, by executing and delivering a joinder agreement to this Agreement in the form attached hereto as Exhibit A.

 

(c) Notwithstanding the provisions set forth in Section 3(a), (i) nothing in Section 3(a) shall apply to forfeitures of any Warrants pursuant to a “net” or “cashless” exercise thereof and (ii) if the Principal Investor Transfers (other than to an Affiliate) all or any portion of the Principal Investor’s Securities, then the restrictions set forth in Section 3(a) shall not apply solely with respect to the percentage of Securities Beneficially Owned by each such Initial Other Investor equal to (A) the amount of shares of Securities Transferred by the Principal Investor (other than to an Affiliate) divided by (B) the amount of shares of Securities Beneficially Owned by the Principal Investor as of the Closing Date. For illustrative purposes, if the Principal Investor Transfers five percent (5%) of the Securities that the Principal Investor Beneficially Owned as of the Closing Date, then notwithstanding anything to the contrary in Section 3(a), each Initial Other Investor may Transfer up to five percent (5%) of the Securities that such Initial Other Investor Beneficially Owned as of the Closing Date.

 

(d) The right of each Initial Other Investor or any of its respective Affiliates to Transfer Securities Beneficially Owned by such Person is subject to the restrictions set forth in this Section 3, and no Transfer by such Initial Other Investor or any of its Affiliates of Securities Beneficially Owned by such Person may be effected except in compliance with this Section 3. Any attempted Transfer in violation of this Agreement shall be of no effect and be null and void ab initio, regardless of whether the purported transferee has any actual or constructive knowledge of the Transfer restrictions set forth in this Agreement.

 

(e) Any additional Securities of which any Initial Other Investor acquires Beneficial Ownership following the date hereof shall be subject to the restrictions and commitments contained in this Agreement as fully as if such Securities, as applicable, were Beneficially Owned by such Person as of the date hereof.

 

Section 4. Representations and Warranties of the Investors. Each Investor (and, in the case of an Initial Other Investor, its Permitted Transferees as of the date of the joinder agreement pursuant to which such Permitted Transferee became a party to this Agreement) hereby represents, warrants and covenants to the other Investors and the Company as follows:

 

(a) If such Investor is an entity, such Investor is duly organized and validly formed under the Laws of the jurisdiction of its organization.

 

(b) Such Investor has the right, power and authority (or capacity in the case of individuals) to execute and deliver this Agreement and to perform its obligations under this Agreement.

 

 

(c) The execution and delivery by such Investor of this Agreement and the performance by it of its obligations under this Agreement have been duly authorized by all necessary corporate or other analogous action on its part and does not require any corporate or other action by such Investor, other than those which have been obtained prior to the date hereof and are in full force and effect.

 

(d) This Agreement has been duly executed and delivered by such Investor and, assuming the due authorization, execution and delivery by the other Investors, constitutes a legal, valid and binding obligation of it, enforceable against such Investor in accordance with its terms, subject to bankruptcy, insolvency and other Laws of general applicability relating to or affecting creditors’ rights and to general principles of equity.

 

(e) The execution and delivery by such Investor of this Agreement and the performance by such Investor of its obligations under this Agreement do not and will not conflict with, result in a breach of or violate any provision of, or require the consent or approval of any Person (except for any such consents or approvals which have been obtained), or require any filing, under applicable Law, any trust instrument, organizational document, or any contract or agreement to which it is a party.

 

Section 5. Representations and Warranties of the Initial Other Investors. Each Initial Other Investor (and its Permitted Transferees as of the date of the joinder agreement pursuant to which such Permitted Transferee became a party to this Agreement) hereby represents, warrants and covenants to the Principal Investor and the Company that other than this Agreement, there are no voting trusts, stockholder agreements, proxies or other agreements in effect pursuant to which such Initial Other Investor has a contractual obligation with respect to the voting or Transfer of any Securities or which are otherwise inconsistent with or conflict with any provision of this Agreement.

 

Section 6. Miscellaneous.

 

(a) Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent by email or sent, postage prepaid, by registered, certified or express mail or reputable overnight courier service and shall be deemed given when so delivered by hand or sent by email, or if mailed, three (3) days after mailing (one (1) business day in the case of express mail or overnight courier service), as follows (or at such other address for a party as shall be specified by notice given in accordance with this Section 6(a)):

 

If to the Principal Investor:

 

Jacobs Private Equity II, LLC
Five American Lane
Greenwich, CT 06831

Email:

[Intentionally omitted]

Attention:

Austin Landow

 

 

With a copy (which shall not constitute notice):

 

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, NY 10019

	Email:	AOEmmerich@wlrk.com
		VSapezhnikov@wlrk.com

	Attention:	Adam O. Emmerich
		Viktor Sapezhnikov

 

If to the Company:

 

QXO, Inc.
Five American Lane
Greenwich, CT 06831

	Email:	[Intentionally omitted]
	Attention:	Chris Signorello

 

With a copy (which shall not constitute notice):

 

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, NY 10019

	Email:	AOEmmerich@wlrk.com
		VSapezhnikov@wlrk.com
	Attention:	Adam O. Emmerich
		Viktor Sapezhnikov

 

If to any of the Initial Other Investors:

 

The address or email address of such Initial Other Investor as it appears on the signature page of such Initial Other Investor hereto.

 

If to any Permitted Transferee, to such address as is designated by such Permitted Transferee in such Permitted Transferee’s joinder to this Agreement.

 

(b) Counterparts. This Agreement may be executed in one or more counterparts (including by any electronic signature complying with the U.S. ESIGN Act of 2000, e.g., www.docusign.com), all of which shall be considered one and the same agreement and shall become effective when one or more such counterparts have been signed by each of the parties and delivered to the other parties.

 

(c) Entire Agreement; No Third-Party Beneficiaries. This Agreement, together with the Investment Agreement, constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement, and is not intended to confer upon any person other than the parties hereto (and their respective successors and assigns) any rights (legal, equitable or otherwise) or remedies, whether as third party beneficiaries or otherwise.

 

 

(d) Governing Law. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, regardless of the Laws that might otherwise govern under applicable principles of conflicts of Laws thereof.

 

(e) Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by, the parties hereto and their respective successors and assigns.

 

(f) Amendment; Waiver. This Agreement may not be amended or otherwise modified, except by an instrument in writing signed on behalf of (i) the Principal Investor, (ii) the Company, and(iii) the Initial Other Investors. By an instrument in writing, the Principal Investor, the Company, or any of Initial Other Investors may waive compliance by the other parties (but solely with respect to such Initial Other Investor) with any term or provision of this Agreement that the other parties were or are obligated to comply with or perform; provided that the Company shall not waive compliance by the other parties with, or otherwise fail to enforce, any term or provision of this Agreement, in each case without the prior written consent of the Principal Investor. Such waiver or failure to insist on strict compliance with such term or provision shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure of compliance. The waiver by any party hereto of a breach of any term or provision of this Agreement shall not be construed as a waiver of any subsequent breach. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

 

(g) Consent to Jurisdiction; Service of Process; Venue. Each of the parties hereto irrevocably and unconditionally submits to the exclusive jurisdiction of the Delaware Court of Chancery (and if the Delaware Court of Chancery shall be unavailable, any Delaware State court and the Federal court of the United States of America sitting in the State of Delaware) for the purposes of any suit, action or other proceeding arising out of this Agreement (and agrees that no such action, suit or proceeding relating to this Agreement shall be brought by it or any of its Subsidiaries except in such courts). Each of the parties further agrees that, to the fullest extent permitted by applicable Law, service of any process, summons, notice or document by U.S. registered mail to such person’s respective address set forth above shall be effective service of process for any action, suit or proceeding in the State of Delaware with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence. Each of the parties hereto irrevocably and unconditionally waives (and agrees not to plead or claim), any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement (and if the Delaware Court of Chancery shall be unavailable, in any Delaware State court or the Federal court of the United States of America sitting in the State of Delaware) or that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

 

 

(h) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS Section 6(h).

 

(i) Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached and that money damages are an inadequate remedy for an actual or threatened breach of this Agreement because of the difficulty of ascertaining the amount of damage that will be suffered by the non-breaching party in the event that this Agreement is breached. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in the Delaware Court of Chancery (and if the Delaware Court of Chancery shall be unavailable, in any Delaware State court or the Federal court of the United States of America sitting in the State of Delaware), this being in addition to any other remedy to which they are entitled at Law or in equity. Each of the parties agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief, without proof of actual damages, on the basis that (i) any party has an adequate remedy at law or (ii) an award of specific performance is not an appropriate remedy for any reason at law or equity. Each party further agrees that no other party or any other Person shall be required to obtain, furnish, secure or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 6(i), and each Party irrevocably waives any right it may have to require the obtaining, furnishing, securing or posting of any such bond or similar instrument.

 

(j) Severability. If any provision of this Agreement or the application of any such provision to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision hereof and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

 

(k) Inconsistent Agreements. No Initial Other Investor shall enter into any agreement or side letter with, or grant any proxy to, any other Person (whether or not such proxy, agreements or side letters are with other Investors, holders of Shares that are not parties to this Agreement or otherwise) that conflicts with the provisions of this Agreement or which would obligate such Person to breach any provision of this Agreement.

 

(l) Further Assurances. Each party to this Agreement shall cooperate and take such action as may be reasonably requested by another party to this Agreement in order to carry out the provisions and purposes of this Agreement and the transactions contemplated hereby.

 

(m) Term and Termination. This Agreement will be effective as of the date hereof and shall terminate on the earlier of (i) the dissolution or liquidation of the Company or (ii) upon the written election of the Principal Investor specifically terminating this Agreement (such date of termination, the “Termination Date”). This Agreement shall automatically terminate with respect to each Initial Other Investor on such date as such Initial Other Investor ceases to Beneficially Own any Securities and Voting Securities, so long as such Initial Other Investor has complied with the provisions hereof.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written.

 

	JACOBS PRIVATE EQUITY II, LLC
	By:	/s/ Brad Jacobs
		Name:	Brad Jacobs
		Title:	Managing Member
	QXO, INC.
	By:	/s/ Chris Signorello
		Name:	Chris Signorello
		Title:	Chief Legal Officer
	INITIAL OTHER INVESTORS:
	[Other Investors’ signature pages on file with the Company.]

  

[Signature Page to Stockholders Agreement]

 

 

SCHEDULE I

 

INITIAL OTHER INVESTORS

 

[Intentionally omitted; on file with the Company.]

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT A

 

FORM OF JOINDER

 

The undersigned is executing and delivering this Joinder Agreement pursuant to that certain Stockholders Agreement, dated as of June 6, 2024 (as amended, restated, supplemented or otherwise modified in accordance with the terms thereof, the “Stockholders Agreement”), by and among Jacobs Private Equity II, LLC, a Delaware limited liability company, QXO, Inc., a Delaware corporation, and certain other parties named therein, and any Permitted Transferee that becomes a party to the Stockholders Agreement in accordance with the terms thereof. Capitalized terms used but not defined in this Joinder Agreement shall have the respective meanings ascribed to such terms in the Stockholders Agreement.

 

By executing and delivering this Joinder Agreement to the Stockholders Agreement, the undersigned hereby adopts and approves the Stockholders Agreement and agrees, effective commencing on the date hereof and as a condition to the undersigned’s becoming an Initial Other Investor, to become a party to, and to be bound by and comply with the provisions of, the Stockholders Agreement applicable to the Initial Other Investor, in the same manner as if the undersigned were an original signatory to the Stockholders Agreement as an Initial Other Investor.

 

The undersigned hereby represents and warrants that, pursuant to this Joinder Agreement and the Stockholders Agreement, it is a Permitted Transferee of [Insert Name of the Transferring Initial Other Investor].

 

The undersigned acknowledges and agrees that the provisions of the Stockholders Agreement are incorporated herein by reference, mutatis mutandis.

 

[Remainder of page intentionally left blank]

 

 

Accordingly, the undersigned have executed and delivered this Joinder Agreement as of the ___ day of ___________, ____.

 

	TRANSFEREE
	Name:
	Notice Information
	Address:
	Email:

 

[Signature Page to Joinder Agreement]

 

 

AGREED AND ACCEPTED
as of the ____ day of _______________, _______.

 

JACOBS PRIVATE EQUITY II, LLC
By:
	Name:	Brad Jacobs
	Title:	Managing Member
QXO, INC.
By:
	Name:	Chris Signorello
	Title:	Chief Legal Officer
[TRANSFEROR]
By:
Name:
Title:

 

 

 

 

Exhibit 10.2

 

EXECUTION VERSION

 

 

REGISTRATION RIGHTS AGREEMENT

 

among

 

QXO, INC.,

 

JACOBS PRIVATE EQUITY II, LLC

 

AND

 

THE OTHER HOLDERS PARTY HERETO

 

DATED June 6, 2024

 

 

 

TABLE OF CONTENTS

 

		Page
Article I Definitions		1
Section 1.1	Definitions	1
Article II Demand and Shelf Registration		5
Section 2.1	Right to Demand; Demand Notices	5
Section 2.2	Shelf Registration	6
Section 2.3	Deferral or Suspension of Registration	9
Section 2.4	Effective Registration Statement	10
Section 2.5	Selection of Underwriters; Cutback	10
Section 2.6	Lock-up	11
Section 2.7	Participation in Underwritten Offering; Information by Holder	12
Section 2.8	Registration Expenses	12
Article III Piggyback Registration		13
Section 3.1	Notices	13
Section 3.2	Underwriter’s Cutback	14
Section 3.3	Company Control	15
Section 3.4	Selection of Underwriters	15
Section 3.5	Withdrawal of Registration	15
Article IV Registration Procedures		15
Section 4.1	Registration Procedures	15
Article V Indemnification		20
Section 5.1	Indemnification by the Company	20
Section 5.2	Indemnification by Selling Investors	20
Section 5.3	Conduct of Indemnification Proceedings	21
Section 5.4	Settlement Offers	21
Section 5.5	Other Indemnification	22
Section 5.6	Contribution	22
Article VI Exchange Act Compliance		22
Section 6.1	Exchange Act Compliance	22
Article VII Transfer and Termination of Registration Rights		23
Section 7.1	Transfers of Registration Rights	23
Section 7.2	Termination of Registration Rights	23
Article VIII Miscellaneous		23
Section 8.1	Severability	23
Section 8.2	Governing Law; Jurisdiction; Waiver of Jury Trial	23
Section 8.3	Other Registration Rights	24
Section 8.4	Successors and Assigns	24
Section 8.5	Notices	24
Section 8.6	Headings	25
Section 8.7	Additional Parties	25
Section 8.8	Adjustments	25
Section 8.9	Entire Agreement	25
Section 8.10	Counterparts; Facsimile or .pdf Signature	25
Section 8.11	Amendment	26
Section 8.12	Extensions; Waivers	26
Section 8.13	Further Assurances	26
Section 8.14	No Third-Party Beneficiaries	26
Section 8.15	Opt-Out Requests	26
Section 8.16	Interpretation; Construction	27
Section 8.17	Changes in Common Stock	27

 

 

THIS REGISTRATION RIGHTS AGREEMENT, dated as of June 6, 2024 (this “Agreement”), is entered into by and among QXO, INC., a Delaware corporation (together with any successor entity thereto, the “Company”), JACOBS PRIVATE EQUITY II, LLC, a Delaware limited liability company (the “Principal Investor”) and each of the other Holders (as defined below) that are parties hereto from time to time.

 

WHEREAS, this Agreement is entered into in connection with that certain Amended and Restated Investment Agreement, dated as of April 14, 2024 (the “Investment Agreement”), by and among the Principal Investor, each of the other Holders party thereto and the Company, pursuant to which the execution and delivery of this Agreement is a condition to the closing of the transactions contemplated thereby.

 

NOW, THEREFORE, in consideration of the promises and of the mutual consents and obligations hereinafter set forth, the parties hereby agree as follows:

 

Article I

Definitions

 

Section 1.1 Definitions. As used herein, the following terms shall have the following respective meanings:

 

“Agreement” shall have the meaning ascribed to it in the introductory paragraph.

 

“Automatic Shelf Registration Statement” shall mean an “automatic shelf registration statement” as defined in Rule 405 (or successor rule) promulgated under the Securities Act.

 

“beneficially owned”, “beneficial ownership” and similar phrases have the same meanings as such terms have under Rule 13d-3 (or any successor rule then in effect) under the Exchange Act, except that in calculating the beneficial ownership of any Holder, such Holder shall be deemed to have beneficial ownership of all securities that such Holder has the right to acquire, whether such right is currently exercisable or is exercisable upon the occurrence of a subsequent event.

 

“Board of Directors” shall mean the Board of Directors of the Company.

 

“Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banks in New York, New York are authorized or obligated by law or executive order to close.

 

“Commission” shall mean the Securities and Exchange Commission or any other Federal agency at the time administering the Securities Act.

 

“Common Stock” shall mean, collectively, the Company’s common stock, par value $0.00001 per share, any additional security paid, issued or distributed in respect of any such shares by way of a dividend, stock split or distribution, or in connection with a combination of shares, and any security into which such Common Stock or additional securities shall have been converted or exchanged in connection with a recapitalization, reorganization, reclassification, merger, consolidation, exchange, distribution or otherwise.

 

 

“Demand Notice” shall have the meaning ascribed to it in Section 2.1(b).

 

“Demand Registration” shall have the meaning ascribed to it in Section 2.1(a).

 

“Demand Registration Statement” shall have the meaning ascribed to it in Section 2.1(c).

 

“Demand Rights” shall have the meaning ascribed to it in Section 2.1(a).

 

“Determination Date” shall have the meaning ascribed to it in Section 2.2(e).

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“FINRA” shall mean the Financial Industry Regulatory Authority or any successor regulatory authority.

 

“Holders” shall mean the holders of Registrable Securities who are parties hereto (including, for the avoidance of doubt, Transferees of such Holders that acquire Registrable Securities in accordance with Section 7.1).

 

“Information” shall have the meaning ascribed to it in Section 4.1(h).

 

“Initial Notice” shall have the meaning ascribed to it in Section 3.1.

 

“Inspectors” shall have the meaning ascribed to it in Section 4.1(i).

 

“Lock-up Period” shall have the meaning ascribed to it in Section 2.6.

 

“Long-Form Registration Statement” shall mean a registration statement on Form S-1 or any similar long-form registration statement, as it may be amended from time to time, or any similar successor form.

 

“Majority Holder” shall mean any Holder or group of Holders holding Registrable Securities constituting, in the aggregate, no less than a majority of the total number of Registrable Securities.

 

“Marketed Underwritten Shelf Take-Down” shall have the meaning ascribed to it in Section 2.2(c)(ii).

 

“Non-Marketed Shelf Take-Down” shall have the meaning ascribed to it in Section 2.2(d).

 

“Opt-Out Request” shall have the meaning ascribed to it in Section 8.15.

 

“Person” shall be construed broadly and shall include, without limitation, an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

 

“Piggyback Notice” shall have the meaning ascribed to it in Section 3.1(a).

 

 

“Piggyback Registration” shall mean any registration pursuant to Section 3.1(a).

 

“Preferred Stock” means the convertible perpetual preferred stock, par value $0.001 per share, of the Company, issued pursuant to the Investment Agreement.

 

“Prospectus” shall mean the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the securities covered by such Registration Statement and, in each case, by all other amendments and supplements to such prospectus, including post-effective amendments and, in each case, all material incorporated by reference in such prospectus.

 

“Records” shall have the meaning ascribed to it in Section 4.1(i).

 

“Registrable Securities” shall mean, with respect to any Holder, at any time, the Shares, shares of Preferred Stock or Warrants held or beneficially owned by such Holder at such time or which such Holder has the right to acquire pursuant to the exercise of any option, warrant or right or the conversion or exchange of any convertible or exchangeable security held by such Holder at such time (including, for the avoidance of doubt, Shares issuable upon the conversion of the Preferred Stock or exercise of the Warrants), regardless of whether then exercisable, convertible or exchangeable; provided, however, that as to any Registrable Securities, such securities shall cease to be Registrable Securities (i) upon the sale thereof pursuant to an effective registration statement, (ii) upon the sale thereof pursuant to Rule 144 or Rule 145 under the Securities Act, (iii) when such securities are eligible for sale pursuant to Rule 144 under the Securities Act (or any successor provision) without compliance with the manner of sale, volume and other limitations under such rule, (iv) when such securities cease to be outstanding or (v) if such securities shall have been otherwise Transferred and new certificates or book-entries for them not bearing a legend restricting transfer shall have been delivered by the Company and such securities may be publicly resold without registration under the Securities Act.

 

“Registration Statement” shall mean any Registration Statement of the Company which covers the Registrable Securities, including any preliminary Prospectus and the Prospectus, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits thereto and all material incorporated by reference in such Registration Statement.

 

“Restricted Shelf Take-Down” shall have the meaning ascribed to it in Section 2.2(c)(iii).

 

“Rule 144” shall mean Rule 144 under the Securities Act (or successor rule).

 

“Scheduled Black-Out Period” means, with respect to any fiscal quarter, the period from and including the day that is fourteen days prior to the end of such fiscal quarter to and including the later of (a) the day that is two days after the day on which the Company publicly releases its earnings for such fiscal quarter and (b) the day on which the executive officers and directors of the Company are no longer prohibited by Company policies applicable with respect to such quarterly earnings period from buying or selling equity securities of the Company.

 

“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

 

“Selling Investors” shall mean the Holders selling Registrable Securities pursuant to a Registration Statement under this Agreement.

 

“Selling Investors’ Counsel” shall have the meaning set forth in Section 4.1(b).

 

“Shares” shall mean shares of Common Stock and shall also include any security of the Company issued in respect of or in exchange for such securities of the Company, whether by way of dividend or other distribution, split, recapitalization, merger, rollup transaction, consolidation or reorganization.

 

“Shelf Holder” shall have the meaning ascribed to it in Section 2.2(b).

 

“Shelf Registration” shall have the meaning ascribed to it in Section 2.2(a).

 

“Shelf Registration Statement” shall have the meaning ascribed to it in Section 2.2(a).

 

“Shelf Take-Down” shall have the meaning ascribed to it in Section 2.2(b).

 

“Short-Form Registration Statement” shall mean a registration statement on Form S-3 or any similar short-form registration statement, as it may be amended from time to time, or any similar successor form.

 

“Transfer” shall mean any direct or indirect sale, assignment, transfer, conveyance, gift, bequest by will or under intestacy laws, pledge, hypothecation or other encumbrance, or any other disposition, of the stated security (or any interest therein or right thereto, including the issuance of any total return swap or other derivative whose economic value is primarily based upon the value of the stated security) or of all or part of the voting power (other than the granting of a revocable proxy) associated with the stated security (or any interest therein) whatsoever, or any other transfer of beneficial ownership of the stated security, with or without consideration and whether voluntarily or involuntarily (including by operation of law).

 

“Transferee” shall mean a Person acquiring Registrable Securities pursuant to a Transfer.

 

“Underwritten Offering” shall mean a sale, on the Company’s or any Holder’s behalf, of Shares by the Company or a Holder to an underwriter for reoffering to the public.

 

“Underwritten Shelf Take-Down” shall have the meaning ascribed to it in Section 2.2(c).

 

“Underwritten Shelf Take-Down Notice” shall have the meaning ascribed to it in Section 2.2(c).

 

“Warrants” means the warrants to purchase Company Common Stock, issued pursuant to the Investment Agreement.

 

“Well-Known Seasoned Issuer” shall mean a “well-known seasoned issuer” as defined in Rule 405 (or successor rule) promulgated under the Securities Act.

 

 

Article II

Demand and Shelf Registration

 

Section 2.1 Right to Demand; Demand Notices.

 

(a) Holders’ Demand for Registration. Subject to the provisions of this Article II, at any time and from time to time, the Majority Holder shall have the right to request in writing, up to a maximum of ten (10) times, that the Company register the sale under the Securities Act of all or part of the Registrable Securities beneficially owned by such Majority Holder (a “Demand Registration”).

 

(b) Demand Notices. All requests made pursuant to this Section 2.1 shall be made by providing written notice to the Company (each such written notice, a “Demand Notice”), which notice shall (i) specify the aggregate number or amount and class or classes of Registrable Securities proposed to be registered by the Majority Holder providing such Demand Notice and (ii) state the intended methods of disposition in the offering (including whether or not such offering shall be an Underwritten Offering).

 

(c) Demand Filing. Subject to Section 2.3, promptly (but in any event within five (5) Business Days) after receipt of any Demand Notice, the Company shall give written notice of the Demand Notice to all other Holders of Registrable Securities and otherwise comply with Section 3.1. Subject to Section 2.3, the Company shall use reasonable best efforts to file the registration statement in respect of a Demand Notice as promptly as reasonably practicable and, in any event, within 30 days, in the case of a Short-Form Registration Statement, and within 45 days, in the case of a Long-Form Registration Statement, in each case, after receiving a Demand Notice (such Registration Statement, a “Demand Registration Statement”), and shall use reasonable best efforts to cause the same to be declared effective by the Commission as promptly as reasonably practicable after such filing.

 

(d) Demand Registration Form. Registrations under this Section 2.1 shall be on such appropriate registration form of the Commission that the Company is eligible to use (i) as reasonably requested by the Majority Holder and (ii) as shall permit the disposition of the Registrable Securities in accordance with the intended method or methods of disposition specified in the Demand Notice.

 

(e) Demand Withdrawal. The Majority Holder requesting a Demand Registration may withdraw all or any portion of its Registrable Securities from a Demand Registration by providing written notice to the Company at least five (5) Business Days prior to the earliest of (i) effectiveness of the applicable Registration Statement, (ii) the filing of any Registration Statement relating to such Demand Registration that includes a pricing range or (iii) the commencement of a roadshow relating to the Registration Statement for such Demand Registration. No Demand Registration shall be counted for purposes of determining the number of Demand Registrations to which the Majority Holder is entitled pursuant to Section 2.1(a) if (A) the Majority Holder withdraws all of its Registrable Securities from such Demand Registration or (B) the Majority Holder is not able to register at least 75% of the Registrable Securities requested by the Majority Holder to be included in such Demand Registration.

 

 

Section 2.2 Shelf Registration.

 

(a) Filing. Notwithstanding anything contained in this Agreement to the contrary, (i) from and after such time as the Company shall have qualified for the use of a Short-Form Registration Statement, upon the written request by the Majority Holder, (A) subject to Section 2.3, promptly (but in any event within five (5) Business Days) after receipt of any such written request, the Company shall give written notice to all other Holders of Registrable Securities and otherwise comply with Section 3.1 and (B) the Company shall use its reasonable best efforts to file as promptly as reasonably practicable and in any event within 30 days with the Commission a Registration Statement, which may be an Automatic Shelf Registration Statement (a “Shelf Registration Statement”), to register the sale of all or a portion of the Registrable Securities then outstanding on a delayed or continuous basis in accordance with Rule 415 under the Securities Act (a “Shelf Registration”) and (ii) the Company shall use its reasonable best efforts to cause to be declared effective the Shelf Registration Statement as promptly as reasonably practicable after such filing. In no event shall the Company be required to file, and maintain effectiveness of, more than one Shelf Registration Statement at any one time pursuant to this Section 2.2. For the avoidance of doubt, no request for the filing of a Shelf Registration Statement pursuant to this Section 2.2(a) shall count as a Demand Registration for purposes of Section 2.1(a). The Majority Holder may request the inclusion of its Registrable Securities in an existing Shelf Registration Statement at any time or from time to time, and the Company shall add such Registrable Securities to the Shelf Registration Statement as promptly as reasonably practicable.

 

(b) Shelf Take-Downs. Any Holder whose Registrable Securities are included in an effective Shelf Registration Statement (a “Shelf Holder”) may initiate an offering or sale of all or part of such Registrable Securities (a “Shelf Take-Down”), in which case the provisions of this Section 2.2 shall apply. Notwithstanding the foregoing:

 

(i) any such Shelf Holder may initiate an unlimited number of Non-Marketed Shelf Take-Downs pursuant to Section 2.2(d) below;

 

(ii) the Majority Holder may initiate an unlimited number of Underwritten Shelf Take-Downs (including any block trade or bought deal) pursuant to Section 2.2(c) below; provided, that (A) the Company shall not be required to effect an Underwritten Shelf Takedown during any Scheduled Black-Out Period and (B) if the Company has previously effected an Underwritten Shelf Take-Down pursuant to this Section 2.2, the Company shall not be required to effect an additional Underwritten Shelf Take-Down pursuant to this Section 2.2 until a period of 75 days, in the case of a Marketed Underwritten Shelf Takedown, or 30 days, in the case of a Restricted Shelf Take-Down, in each case, shall have elapsed from the date of such prior Shelf Take-Down that was an Underwritten Offering.

 

 

(c) Underwritten Shelf Take-Downs.

 

(i) Subject to Section 2.2(b), if the Majority Holder so elects in a written request delivered to the Company (an “Underwritten Shelf Take-Down Notice”), a Shelf Take-Down may be in the form of an Underwritten Offering (an “Underwritten Shelf Take-Down”) and, if necessary, the Company shall use its reasonable best efforts to file and effect an amendment or supplement to its Shelf Registration Statement for such purpose as promptly as reasonably practicable. The Majority Holder shall indicate in such Underwritten Shelf Take-Down Notice the number or amount of Registrable Securities of such Holder to be included in such Underwritten Shelf Take-Down and whether it intends for such Underwritten Shelf Take-Down to involve a customary “road show” (including an “electronic road show”) or other marketing effort by the underwriters (a “Marketed Underwritten Shelf Take-Down”).

 

(ii) Upon delivery of an Underwritten Shelf Take-Down Notice with respect to a Marketed Underwritten Shelf-Take Down, the Company shall promptly, but in no event more than ten (10) days prior to the expected date of such Marketed Underwritten Shelf Take-Down, deliver a written notice of such Marketed Underwritten Shelf Take-Down to all other Holders with Registrable Securities under such Shelf Registration Statement and, subject to Section 2.5(b) and Section 2.7, the Company shall include in such Marketed Underwritten Shelf Take-Down all such Registrable Securities of such Holders that are registered on such Shelf Registration Statement for which the Company has received written requests, which requests must specify the aggregate number of such Registrable Securities of such Holder to be offered and sold pursuant to such Marketed Underwritten Shelf Take-Down, for inclusion therein at least three (3) Business Days prior to the expected date of such Marketed Underwritten Shelf Take-Down.

 

(iii) Upon delivery of an Underwritten Shelf Take-Down Notice with respect to an offering that is not a Marketed Underwritten Shelf Take-Down, including an underwritten block trade or bought deal (a “Restricted Shelf Take-Down”), at the option and written direction of the initiating Majority Holder in its sole discretion, the Company shall provide written notice of such Restricted Shelf Take-Down to all other Holders with Registrable Securities under such Shelf Registration Statement as far in advance of the commencement of such Restricted Shelf Take-Down as shall be reasonably practicable in light of the circumstances applicable to such Restricted Shelf Take-Down and specify (A) the total number or amount of Registrable Securities expected to be offered and sold in such Restricted Shelf Take-Down, (B) the expected plan of distribution of such Restricted Shelf Take-Down and (C) the action or actions required (including the timing thereof) in connection with such Restricted Shelf Take-Down with respect to the other Holders if any such Holder elects to participate in such Restricted Shelf Take-Down and, subject to Section 2.5(b) and Section 2.7, the Company shall include in such Restricted Shelf Take-Down all such Registrable Securities of such Holders that are registered on such Shelf Registration Statement for which the Company has received written requests, which requests must specify the aggregate number of such Registrable Securities of such Holder to be offered and sold pursuant to such Restricted Shelf Take-Down within the time period specified by the initiating Majority Holder.

 

(iv)   Notwithstanding the delivery of any Underwritten Shelf Take-Down Notice, all determinations as to whether to complete any Underwritten Shelf Take-Down and as to the timing, manner, price and other terms of any Underwritten Shelf Take-Down shall be at the discretion of the Majority Holder initiating the Underwritten Shelf Take-Down.

 

 

(d) Non-Marketed Shelf Take-Downs. If a Shelf Holder desires to effect a Shelf Take-Down that does not constitute an Underwritten Shelf Take-Down (a “Non-Marketed Shelf Take-Down”), but requires an amendment or supplement to the Shelf Registration Statement to effect such Non-Marketed Shelf Take-Down, such Shelf Holder shall so indicate in a written request delivered to the Company no later than three (3) Business Days prior to the expected date of such Non-Marketed Shelf Take-Down (or such shorter period as the Company may agree), which request shall include (i) the aggregate number or amount and class or classes of Registrable Securities expected to be offered and sold in such Non-Marketed Shelf Take-Down, (ii) the expected plan of distribution of such Non-Marketed Shelf Take-Down and (iii) the action or actions required (including the timing thereof) in connection with such Non-Marketed Shelf Take-Down, and, if necessary, the Company shall use its reasonable best efforts to file and effect an amendment or supplement to its Shelf Registration Statement for such purpose as promptly as reasonably practicable. If a Non-Marketed Shelf Take-Down does not require an amendment or supplement to the Shelf Registration Statement, then no such notice shall be required.

 

(e) Filing for Well-Known Seasoned Issuer. The Company agrees that if any Holder beneficially owns any Registrable Securities three years after the filing of a Shelf Registration Statement that is an Automatic Shelf Registration Statement in compliance with Section 2.2(a), the Company shall file and cause to remain effective a new Automatic Shelf Registration Statement that registers the sale of any Registrable Securities that remain outstanding at such time. The Company shall give written notice of filing such Registration Statement to all of the Holders as promptly as reasonably practicable thereafter. At any time after the filing of an Automatic Shelf Registration Statement by the Company, if the Company is no longer a Well-Known Seasoned Issuer (the “Determination Date”), within ten (10) Business Days after such Determination Date, the Company shall (A) give written notice thereof to all of the Holders and (B) to the extent the Company continues to qualify for the use of Form S-3 promulgated under the Securities Act or any successor form thereto, the Company shall file, if necessary, a Short-Form Registration Statement (or a post-effective amendment converting the Automatic Shelf Registration Statement to a Short-Form Registration Statement) covering all of the Registrable Securities, and the Company shall use its reasonable best efforts to have such Short-Form Registration Statement declared effective as promptly as reasonably practicable after the date the Automatic Shelf Registration Statement is no longer useable by the Holders to sell their Registrable Securities.

 

(f) Continued Effectiveness. The Company shall use its reasonable best efforts to keep the Shelf Registration Statement filed pursuant to Section 2.2(a) or Section 2.2(e) hereof, as applicable, continuously effective under the Securities Act in order to permit the Prospectus forming a part thereof to be usable by a Shelf Holder until the earlier of (i) the date as of which all Registrable Securities registered by such Shelf Registration Statement have been sold and (ii) such shorter period as the Majority Holder may reasonably determine.

 

(g) Subsequent Holders. If a Person entitled to the benefits of this Agreement becomes a Holder after a Shelf Registration Statement becomes effective under the Securities Act, the Company shall, as promptly as reasonably practicable following delivery of written notice to the Company of such Person becoming a Holder and requesting for its name to be included as a selling securityholder in the prospectus related to the Shelf Registration Statement:

 

(i) if required and permitted by applicable law, file with the Commission a supplement to the related prospectus or a post-effective amendment to the Shelf Registration Statement so that such Holder is named as a selling securityholder in the Shelf Registration Statement and the related prospectus in such a manner as to permit such Holder to deliver a prospectus to purchasers of the Registrable Securities in accordance with applicable law; provided, however, that the Company shall not be required to file more than one post-effective amendment or a supplement to the related prospectus for such purpose in any 30-day period;

 

 

(ii) if, pursuant to Section 2.2(g)(i), the Company shall have filed a post-effective amendment to the Shelf Registration Statement that is not automatically effective, use reasonable best efforts to cause such post-effective amendment to become effective under the Securities Act as promptly as reasonably practicable; and

 

(iii) notify such Holder as promptly as reasonably practicable after the effectiveness under the Securities Act of any post-effective amendment filed pursuant to Section 2.2(g)(i).

 

Section 2.3 Deferral or Suspension of Registration. If (a) the Company receives a Demand Notice, a request to file a Shelf Registration Statement, or a written request from a Shelf Holder for a Shelf Take-Down and the Board of Directors, in its good faith judgment, determines that it would be materially adverse to the Company for such Registration Statement to be filed or declared effective on or before the date such filing or effectiveness would otherwise be required hereunder, or for such Registration Statement or prospectus included therein to be used to sell Shares or for such Shelf Take-Down to be effected, because such action would: (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) based on the advice of the Company’s outside counsel, require disclosure of material non-public information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or the Exchange Act, or (b) the Company is subject to any of its customary suspension or blackout periods, for all or part of the period of such blackout period, or upon issuance by the Commission of a stop order suspending the effectiveness of any Registration Statement or the initiation of proceedings with respect to such Registration Statement under Section 8(d) or 8(e) of the Securities Act, then the Company shall have the right to defer such filing (but not the preparation), initial effectiveness or continued use of a Registration Statement and the prospectus included therein, subject to the limitations set forth in this Section 2.3. If the Company shall so postpone the filing or initial effectiveness of a Registration Statement with respect to a Demand Notice and if the Majority Holder within 30 days after receipt of the notice of postponement advises the Company in writing that it has determined to withdraw such Demand Notice, then such Demand Registration shall be deemed to be withdrawn and shall not be deemed to be an exercise of one of the Demand Rights to which such Majority Holder is entitled under Section 2.1. Unless consented to in writing by the Majority Holder, the Company shall not use the deferral or suspension rights provided under this Section 2.3 (x) more than three times in any 12-month period or (y) for any period exceeding 45 consecutive days or periods exceeding 90 days in the aggregate in any 12-month period (provided that such limitations in (x) and (y) shall not apply for Scheduled Black-Out Periods). In the event of any deferral or suspension pursuant to this Section 2.3, the Company shall (i) use its reasonable best efforts to keep the Majority Holder that had initiated a Demand Registration, if applicable, apprised of the estimated length of the anticipated delay; and (ii) notify the Majority Holder or Shelf Holders, as applicable, promptly upon termination of the deferral or suspension. After the expiration of the deferral or suspension period and without any further request from the Majority Holder or Shelf Holders, as applicable, to the extent such Majority Holder has not withdrawn the Demand Notice, if applicable, the Company shall as promptly as reasonably practicable prepare and file a Registration Statement or post-effective amendment or supplement to the applicable Registration Statement or document, or file any other required document, as applicable, so that, as thereafter delivered to purchasers of the Registrable Securities included therein, the prospectus will not include a material misstatement or omission and will be effective and useable for the sale of Registrable Securities.

 

 

Section 2.4 Effective Registration Statement. A registration requested pursuant to this Article II shall not be deemed to have been effected:

 

(a) unless a registration statement with respect thereto has been declared effective by the Commission and remains effective in compliance with the provisions of the Securities Act and the laws of any U.S. state or other jurisdiction applicable to the disposition of Registrable Securities covered by such registration statement for not less than 180 days (or such shorter period as will terminate when all of such Registrable Securities shall have been disposed of in accordance with such registration statement) or, if such registration statement relates to an underwritten offering, such longer period as, in the opinion of counsel for the Company, a prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer;

 

(b) if, after it becomes effective, such registration is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental authority or court for any reason other than a violation of applicable law solely by any Selling Investor and has not thereafter become effective; or

 

(c) if, in the case of an Underwritten Offering, the conditions to closing specified in an underwriting agreement applicable to the Company are not satisfied or waived other than by reason of any breach or failure by any Selling Investor.

 

Section 2.5 Selection of Underwriters; Cutback.

 

(a) Selection of Underwriters. If the Majority Holder intends to offer and sell the Registrable Securities covered by its request under this Article II by means of an Underwritten Offering, such Holder shall select the managing underwriter or underwriters to administer such offering, subject to the Company’s consent, which shall not be unreasonably withheld, conditioned or delayed.

 

 

(b) Underwriter’s Cutback. Notwithstanding any other provision of this Article II or Section 3.1, if the managing underwriter or underwriters of an Underwritten Offering in connection with a Demand Registration or a Shelf Take-Down advise the Company in their good faith opinion that the inclusion of all such Registrable Securities proposed to be included in such Underwritten Offering would be reasonably likely to interfere with the successful marketing, including, but not limited to, the pricing, timing or distribution, of the Registrable Securities to be offered thereby or in such Underwritten Offering, and no Holder has delivered a Piggyback Notice with respect to such Underwritten Offering, then the number of Shares proposed to be included in such Registration Statement or Underwritten Offering shall be allocated among the Company, the Selling Investors and all other Persons selling Shares in such Underwritten Offering in the following order:

 

(i) first, the Registrable Securities of the class or classes proposed to be registered held by the Majority Holder that initiated such Demand Registration, Shelf Registration or Underwritten Offering and the Registrable Securities of the same class or classes held by other Holders requested to be included in such Underwritten Offering (pro rata among the respective Holders of such Registrable Securities in proportion, as nearly as practicable, to the amounts of Registrable Securities requested to be included in such Underwritten Offering);

 

(ii) second, all other securities of the same class or classes requested to be included in such Underwritten Offering other than Shares to be sold by the Company; and

 

(iii) third, the Shares of the same class or classes to be sold by the Company.

 

No Registrable Securities excluded from an underwriting by reason of the underwriter’s marketing limitation shall be included in the Underwritten Offering. If the underwriter has not limited the number of Registrable Securities to be underwritten, the Company may include securities for its own account (or for the account of any other Persons) in such registration if the underwriter so agrees and if the number of Registrable Securities would not thereby be limited.

 

Section 2.6 Lock-up. If requested by the managing underwriters in connection with any Underwritten Offering, each Holder shall execute, and agree to be bound by, customary lock-up agreements providing that such Holder shall not, directly or indirectly, effect any Transfer (including sales pursuant to Rule 144) of any such Shares without prior written consent from the underwriters managing such Underwritten Offering during a period beginning on the date of launch of such Underwritten Offering and ending 90 days from and including the date of pricing or such shorter period as reasonably requested by the underwriters managing such Underwritten Offering (the “Lock-Up Period”); provided that (i) the foregoing shall not apply to any Shares that are offered for sale as part of such Underwritten Offering, (ii) such Lock-Up Period shall be no longer than and on substantially the same terms as the lock-up period applicable to the Company and the executive officers and directors of the Company and (C) any discretionary waiver or termination of this lockup provision by such underwriters with respect to any Holder shall apply to other Holders as well, pro rata based upon the number of Registrable Securities subject to such obligation; and provided, further that the foregoing lockup provision shall not apply to any Holder that, together with its affiliates, beneficially owns less than one percent (1%) of the outstanding Common Stock on an as-converted and as-exercised basis and is not a current director or executive officer of the Company.

 

 

Section 2.7 Participation in Underwritten Offering; Information by Holder. No Holder may participate in an Underwritten Offering hereunder unless such Holder (a) agrees to sell such Holder’s Shares on the basis provided in any underwriting arrangements, and in accordance with the terms and provisions of this Agreement, including any lock-up arrangements, and (b) completes and executes all questionnaires, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements. In addition, the Holders shall furnish to the Company such information regarding such Holder or Holders and the distribution proposed by such Holders, as applicable, as the Company may reasonably request in writing and as shall be required in connection with any registration, qualification or compliance referred to in this Article II. Nothing in this Section 2.7 shall be construed to create any additional rights regarding the registration of Shares in any Person otherwise than as set forth herein.

 

Section 2.8 Registration Expenses. All expenses incident to the Company’s performance of or compliance with this Agreement, including without limitation (i) all registration and filing fees, and any other fees and expenses associated with filings required to be made with any stock exchange, the Commission and FINRA (including, if applicable, the fees and expenses of any “qualified independent underwriter” and its counsel as may be required by the rules and regulations of FINRA), (ii) all fees and expenses of compliance with state securities or blue sky laws (including fees and disbursements of counsel for the underwriters or Selling Investors in connection with blue sky qualifications of the Shares and determination of their eligibility for investment under the laws of such jurisdictions as the managing underwriters or the Majority Holder may designate), (iii) all printing and related messenger and delivery expenses (including expenses of printing certificates for the Shares in a form eligible for deposit with The Depository Trust Company and of printing prospectuses, all fees and disbursements of counsel for the Company and of all independent certified public accountants of the Company and its Subsidiaries (including the expenses of any special audit and “cold comfort” letters required by or incident to such performance)), (iv) all fees and expenses incurred in connection with the listing of the Shares on any securities exchange and all rating agency fees, (v) all reasonable and documented fees and expenses of the Selling Investors’ Counsel, (vi) all fees and documented out-of-pocket disbursements of underwriters customarily paid by the issuer or sellers of securities, including liability insurance if the Company so desires or if the underwriters so require and expenses of any special experts retained in connection with the requested registration (excluding underwriting discounts and commissions and transfer taxes, if any, and fees and disbursements of counsel to underwriters (other than such fees and disbursements incurred in connection with any registration or qualification of Shares under the securities or blue sky laws of any state)) and (vii) Securities Act liability insurance or similar insurance if the Company or the underwriters so require in accordance with then-customary underwriting practice, will be borne by the Company, regardless of whether the Registration Statement becomes effective (or such offering is completed) and whether or not all or any portion of the Registrable Securities originally requested to be included in such registration are ultimately included in such registration; provided, however, that (x) any underwriting discounts, commissions or fees in connection with the sale of the Registrable Securities will be borne by the Holders pro rata on the basis of the number of Shares so registered and sold, (y) transfer taxes with respect to the sale of Registrable Securities will be borne by the Holder of such Registrable Securities and (z) the fees and expenses of any other counsel, accountants or other persons retained or employed by any Holder will be borne by such Holder.

 

 

Article III

Piggyback Registration

 

Section 3.1 Notices.

 

(a) If the Company at any time proposes for any reason to register the sale of a class or classes of Shares under the Securities Act (other than a registration on Form S-4 or Form S-8, or any successor of either such form, or a registration relating solely to the offer and sale to the Company’s directors or employees pursuant to any employee stock plan or other employee benefit plan or arrangement) whether or not Shares are to be sold by the Company or otherwise, and whether or not in connection with any Demand Registration pursuant to Section 2.1, any Shelf Registration pursuant to Section 2.2 or any other agreement (such registration, a “Piggyback Registration”), the Company shall give to each Holder holding Shares of the same class or classes proposed to be registered (or convertible at the Holder’s option into such class or classes) eligible to participate in such Piggyback Registration written notice of its intention to so register the Shares at least ten (10) Business Days (or such shorter period as reasonably practical) prior to the expected date of filing of such Registration Statement or amendment thereto in which the Company first intends to identify the selling stockholders and the number of Registrable Securities to be sold (each such notice, an “Initial Notice”). The Company shall, subject to the provisions of Section 3.2 and Section 3.3 below, include in such Piggyback Registration on the same terms and conditions as the securities otherwise being sold, all Registrable Securities of the same class or classes as the Shares proposed to be registered (or convertible at the Holder’s option into such class or classes) with respect to which the Company has received written requests from Holders for inclusion therein within the time period specified by the Company in the applicable Initial Notice, which time period shall be not less than five (5) Business Days after sending the applicable Initial Notice (each such written request, a “Piggyback Notice”), which Piggyback Notice shall specify the number of Shares proposed to be included in the Piggyback Registration.

 

(b) If a Holder does not deliver a Piggyback Notice within the period specified in Section 3.1(a), such Holder shall be deemed to have irrevocably waived any and all rights under this Article III with respect to such registration (but not with respect to future registrations in accordance with this Article III). For the avoidance of doubt, no Piggyback Registration shall count towards the number of Demand Registrations that the Majority Holder is entitled to make pursuant to Section 2.1.

 

(c) No registration effected under this Section 3.1 shall relieve the Company of its obligation to effect any registration upon request under Section 2.1 or Section 2.2 hereof, and no registration effected pursuant to this Section 3.1 shall be deemed to have been effected pursuant to Section 2.1 or Section 2.2 hereof. The Initial Notice, the Piggyback Notice and the contents thereof shall be kept confidential until the public filing of the Registration Statement.

 

 

Section 3.2 Underwriter’s Cutback. If the managing underwriter of an Underwritten Offering (including an offering pursuant to Section 2.1 or Section 2.2) that includes a Piggyback Registration advises the Company that it is the managing underwriter’s good faith opinion that the inclusion of all such Registrable Securities proposed to be included in the Registration Statement for such Underwritten Offering would be reasonably likely to interfere with the successful marketing, including, but not limited to, the pricing, timing or distribution, of the Registrable Securities to be offered thereby, then the number of Shares proposed to be included in such Underwritten Offering shall be allocated among the Company, the Selling Investors and all other Persons selling Shares in such Underwritten Offering in the following order:

 

(a) If the Piggyback Registration referred to in Section 3.1 is initiated as an underwritten primary registration on behalf of the Company, then, with respect to each class proposed to be registered:

 

(i) first, the Shares held by the Company of the class or classes proposed to be registered that the Company proposes to sell, as applicable;

 

(ii) second, all Registrable Securities of the same class or classes held by Holders requested to be included in such Piggyback Registration (pro rata among the respective Holders of such Registrable Securities in proportion, as nearly as practicable, to the amounts of Registrable Securities requested to be included in such registration by each such Holder at the time of such Piggyback Registration); and

 

(iii) third, all other securities of the same class or classes requested to be included in such Piggyback Registration.

 

(b) if the Piggyback Registration referred to in Section 3.1 is an underwritten secondary registration on behalf of any Holder, then, with respect to each class proposed to be registered:

 

(i) first, the Registrable Securities of the class or classes proposed to be registered held by such Holder and the Registrable Securities of the same class or classes held by other Holders requested to be included in such Piggyback Registration (pro rata among the respective Holders of such Registrable Securities in proportion, as nearly as practicable, to the amounts of Registrable Securities requested to be included in such registration by each such Holder at the time of such Piggyback Registration);

 

(ii) second, all other securities of the same class or classes requested to be included in such Piggyback Registration other than Shares to be sold by the Company; and

 

(iii) third, the Shares of the same class or classes to be sold by the Company.

 

(c) if the Piggyback Registration referred to in Section 3.1 is an underwritten secondary registration on behalf of any holder of Common Stock other than a Holder, then, with respect to each class proposed to be registered:

 

(i) first, the Registrable Securities of the class or classes proposed to be registered held by such holder;

 

 

(ii) second, the Registrable Securities of the same class or classes (or convertible at the Holder’s option into such class or classes) held by Holders requested to be included in such Piggyback Registration (pro rata among the respective Holders of such Registrable Securities in proportion, as nearly as practicable, to the amounts of Registrable Securities requested to be included in such registration by each such Holder at the time of such Piggyback Registration);

 

(iii) third, all other securities of the same class or classes (or convertible at the holder’s option into such class or classes) requested to be included in such Piggyback Registration other than Shares to be sold by the Company; and

 

(iv)   fourth, the Shares of the same class or classes to be sold by the Company.

 

Section 3.3 Company Control. Except for a Registration Statement being filed in connection with the exercise of a Demand Right or a Shelf Registration, the Company may decline to file a Registration Statement after an Initial Notice has been given or after receipt by the Company of a Piggyback Notice, and the Company may withdraw a Registration Statement after filing and after such Initial Notice or Piggyback Notice, but prior to the effectiveness of the Registration Statement, provided that (i) the Company shall promptly notify the Selling Investors in writing of any such action and (ii) nothing in this Section 3.3 shall prejudice the right of any Demand Holder to immediately request that such registration be effected as a registration under Section 2.1 or Section 2.2 to the extent permitted thereunder.

 

Section 3.4 Selection of Underwriters. If the Company intends to offer and sell Shares by means of an Underwritten Offering (other than an offering pursuant to Section 2.1 or Section 2.2), the Company shall select the managing underwriter or underwriters to administer such Underwritten Offering, which managing underwriter or underwriters shall be firms of nationally recognized standing.

 

Section 3.5 Withdrawal of Registration. Any Holder shall have the right to withdraw all or a part of its Piggyback Notice by giving written notice to the Company of such withdrawal at least five (5) Business Days prior to the earliest of (i) effectiveness of the applicable Registration Statement, (ii) the filing of any Registration Statement relating to such Piggyback Registration that includes a price range or (iii) commencement of a roadshow relating to the Registration Statement for such Piggyback Registration.

 

Article IV

Registration Procedures

 

Section 4.1 Registration Procedures. If and whenever the Company is under an obligation pursuant to the provisions of this Agreement to effect (or use its reasonable best efforts to effect) the registration of any Registrable Securities, the Company shall, as expeditiously as practicable:

 

(a) in the case of Registrable Securities, use its reasonable best efforts to cause a Registration Statement that registers such Registrable Securities to become and remain effective for a period of 180 days or, if earlier, until all of such Registrable Securities covered thereby have been disposed of; provided, that, in the case of any registration of Registrable Securities on a Shelf Registration Statement which are intended to be offered on a continuous or delayed basis, such 180-day period shall be extended, if necessary, to keep the registration statement continuously effective, supplemented and amended to the extent necessary to ensure that it is available for sales of such Registrable Securities, and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, until the earlier of when (i) the Holders have sold all of such Registrable Securities, (ii) all of such Registrable Securities have become eligible for immediate sale pursuant to Rule 144 under the Securities Act by the Holder thereof without restriction by the manner of sale, volume and other limitations under such rule and (iii) in the case of an Automatic Shelf Registration Statement, such Automatic Shelf Registration Statement has been effective for three years (provided that the Company’s obligations hereunder shall be renewed with respect to such Registrable Securities upon the filing of a new Automatic Shelf Registration Statement pursuant to Section 2.2(e));

 

 

(b) furnish to each Selling Investor, at least ten (10) Business Days before filing a Registration Statement, or such shorter period as reasonably practical, copies of such Registration Statement or any amendments or supplements thereto, which documents shall be subject to the review, comment and approval by one lead counsel (and any reasonably necessary local counsel) selected by the Majority Holder, which counsel (who may also be counsel to the Company), in each case, shall represent all Selling Investors as a group (the “Selling Investors’ Counsel”) (it being understood that such ten (10) Business Day period need not apply to successive drafts of the same document proposed to be filed so long as such successive drafts are supplied to the Selling Investors’ Counsel in advance of the proposed filing by a period of time that is customary and reasonable under the circumstances);

 

(c) furnish to each Selling Investor and each underwriter, if any, such number of copies of final conformed versions of the applicable registration statement and of each amendment and supplement thereto (in each case including all exhibits and any documents incorporated by reference) reasonably requested by such Selling Investor or underwriter in writing;

 

(d) in the case of Registrable Securities, prepare and file with the Commission such amendments, including post-effective amendments, and supplements to such Registration Statement and the applicable prospectus or prospectus supplement, including any free writing prospectus as defined in Rule 405 under the Securities Act, used in connection therewith as may be (i) reasonably requested by any Holder (to the extent such request relates to information relating to such Holder), or (ii) necessary to keep such Registration Statement effective for at least the period specified in Section 4.1(a) and to comply with the provisions of this Agreement and the Securities Act with respect to the sale or other disposition of such Registrable Securities, and furnish to each Selling Investor and to the managing underwriter(s), if any, within a reasonable period of time prior to the filing thereof a copy of any amendment or supplement to such registration statement or prospectus; provided, however, that, with respect to each free writing prospectus or other materials to be delivered to purchasers at the time of sale of the Registrable Securities, the Company shall (i) ensure that no Registrable Securities are sold “by means of” (as defined in Rule 159A(b) under the Securities Act) such free writing prospectus or other materials without the prior written consent of the sellers of the Registrable Securities, which free writing prospectus or other materials shall be subject to the review of counsel to such sellers and (ii) make all required filings of all free writing prospectuses or other materials with the Commission as are required;

 

(e) notify in writing each Holder promptly (i) of the receipt by the Company of any notification with respect to any comments by the Commission with respect to such Registration Statement or any amendment or supplement thereto or any request by the Commission for the amending or supplementing thereof or for additional information with respect thereto, (ii) of the receipt by the Company of any notification with respect to the issuance by the Commission of any stop order suspending the effectiveness of such Registration Statement or any amendment or supplement thereto or the initiation or threatening of any proceeding for that purpose and (iii) of the receipt by the Company of any notification with respect to the suspension of the qualification of such Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purposes and, in any such case as promptly as reasonably practicable thereafter, prepare and file an amendment or supplement to such registration statement or prospectus which will correct such statement or omission or effect such compliance;

 

 

(f) use its reasonable best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as the Holders reasonably request and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holders to consummate their disposition in such jurisdictions; provided, however, that the Company will not be required to qualify generally to do business, subject itself to general taxation or consent to general service of process in any jurisdiction where it would not otherwise be required to do so but for this Section 4.1(f);

 

(g) furnish to each Selling Investor such number of copies of a summary prospectus or other prospectus, including a preliminary prospectus and any other prospectus filed under Rule 424 under the Securities Act, in conformity with the requirements of the Securities Act, and such other documents as such Selling Investors or any underwriter may reasonably request in writing;

 

(h) notify on a timely basis each Holder of such Registrable Securities at any time when a prospectus relating to such Registrable Securities is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and, at the request of such Holder, as promptly as reasonably practicable prepare and furnish to such Holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the offeree of such securities, such prospectus shall not include 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 not misleading in light of the circumstances then existing;

 

(i) make available for inspection by the Majority Holder, the Selling Investors’ Counsel or any underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other agent retained by the Majority Holder or underwriter (collectively, the “Inspectors”), all pertinent financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”), as shall be necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information (together with the Records, the “Information”) requested by any such Inspector in connection with such Registration Statement and request that the independent public accountants who have certified the Company’s financial statements make themselves available, at reasonable times and for reasonable periods, to discuss the business of the Company. Any of the Information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, shall not be disclosed by the Inspectors unless (i) the disclosure of such Information is necessary to avoid or correct a misstatement or omission in the Registration Statement, (ii) the release of such Information is requested or required pursuant to a subpoena, order from a court of competent jurisdiction or other interrogatory by a governmental entity or similar process; (iii) such Information has been made generally available to the public; or (iv) such information is or becomes available to such Inspector on a non-confidential basis other than through the breach of an obligation of confidentiality (contractual or otherwise). The Holder(s) of Registrable Securities agree that they will, upon learning that disclosure of such Information is sought in a court of competent jurisdiction or by another governmental entity, give notice to the Company and allow the Company, at the Company’s expense, to undertake appropriate action to prevent disclosure of the Information deemed confidential;

 

 

(j) in the case of an Underwritten Offering, deliver to the underwriters of such Underwritten Offering a “comfort” letter in customary form and at customary times and covering matters of the type customarily covered by such comfort letters from its independent certified public accountants;

 

(k) in the case of an Underwritten Offering, deliver to the underwriters of such Underwritten Offering a written and signed legal opinion or opinions in customary form from its outside or in-house legal counsel dated the closing date of the Underwritten Offering;

 

(l) provide a transfer agent and registrar (which may be the same entity and which may be the Company) for such Registrable Securities and deliver to such transfer agent and registrar such customary forms, legal opinions from its outside or in-house legal counsel, agreements and other documentation as such transfer agent and/or registrar so request;

 

(m)   issue to any underwriter to which any Selling Investors may sell Registrable Securities in such offering certificates evidencing such Registrable Securities;

 

(n) upon the request of any Holder of the Registrable Securities included in such registration, use reasonable best efforts to cause such Registrable Securities to be listed on any national securities exchange on which any Shares are listed or, if the Shares are not listed on a national securities exchange, use its reasonable best efforts to qualify such Registrable Securities for inclusion on such national securities exchange as the Company shall designate;

 

(o) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission and make available to its security holders, as promptly as reasonably practicable, earnings statements (which need not be audited) covering a period of 12 months beginning within three months after the effective date of the Registration Statement, which earnings statements shall satisfy the provisions of Section 11(a) of the Securities Act;

 

 

(p) notify the Holders and the lead underwriter or underwriters, if any, and (if requested) confirm such advice in writing, as promptly as reasonably practicable after notice thereof is received by the Company when the applicable registration statement or any amendment thereto has been filed or becomes effective and when the applicable prospectus or any amendment or supplement thereto has been filed;

 

(q) use its reasonable best efforts to prevent the entry of, and use its reasonable best efforts to obtain as promptly as reasonably practicable the withdrawal of, any stop order with respect to the applicable registration statement or other order suspending the use of any preliminary or final prospectus;

 

(r) 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 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;

 

(s) cooperate with each 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;

 

(t) provide a CUSIP number or numbers for all such shares, in each case not later than the effective date of the applicable registration statement;

 

(u) to the extent reasonably requested by the lead or managing underwriters in connection with an Underwritten Offering (including an Underwritten Offering pursuant to Section 2.1 or Section 2.2), send appropriate officers of the Company to attend any “road shows” scheduled in connection with any such Underwritten Offering, with all out of pocket costs and expenses incurred by the Company or such officers in connection with such attendance to be paid by the Company;

 

(v) enter into such agreements (including an underwriting agreement in customary form) and take such other actions as the Selling Investor or Selling Investors, as the case may be, owning at least a majority of the Registrable Securities covered by any applicable registration statement shall reasonably request in order to expedite or facilitate the disposition of such Registrable Securities, including customary indemnification and contribution to the effect and to the extent provided in Article V hereof; and

 

(w) subject to all the other provisions of this Agreement, use its reasonable best efforts to take all other steps necessary to effect the registration, marketing and sale of such Registrable Securities contemplated hereby.

 

 

Article V

Indemnification

 

Section 5.1 Indemnification by the Company. The Company agrees to indemnify and hold harmless, to the full extent permitted by law, each Selling Investor, its affiliates and their respective officers, directors, managers, partners, members and representatives, and each of their respective successors and assigns, against any losses, claims, damages, liabilities and expenses caused by any violation by the Company of the Securities Act or the Exchange Act applicable to the Company and relating to action or inaction required of the Company in connection with the registration contemplated by a Registration Statement or any untrue or alleged untrue statement of a material fact contained in any Registration Statement, prospectus, or preliminary prospectus or any amendment thereof or supplement thereto, or any other disclosure document (including reports and other documents filed under the Exchange Act and any document incorporated by reference therein) or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same was made in reliance on and in conformity with any information furnished in writing to the Company by such Selling Investor expressly for use therein; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Registration Statement, prospectus, or preliminary prospectus or any amendment thereof or supplement thereto in reliance upon and in conformity with information furnished to the Company in writing by the Person asserting such loss, claim, damage, liability or expense specifically for use therein. The Company will also indemnify underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, their officers and directors and each Person who controls such Persons to the same extent as provided above with respect to the indemnification of the Selling Investor, if requested.

 

Section 5.2 Indemnification by Selling Investors. Each Selling Investor agrees to indemnify and hold harmless, to the full extent permitted by law, the Company, the Company’s controlled affiliates and their respective directors, managers, partners, members and representatives, and each of their respective successors and assigns, and each Person who controls the Company against any losses, claims, damages or liabilities and expenses caused by any untrue or alleged untrue statement of a material fact contained in any Registration Statement, prospectus, or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue statement or omission was made in reliance on and in conformity with any information furnished in writing by such Selling Investor to the Company expressly for inclusion in such Registration Statement and has not been corrected in a subsequent writing prior to or concurrently with the sale of the Registrable Securities to the Person asserting such loss, claim, damage, liability or expense; provided that the obligation to indemnify shall be several, not joint and several, for each Selling Investor and in no event shall the liability of any Selling Investor hereunder be greater in amount than the dollar amount of the net proceeds received by such Selling Investor upon the sale of the Registrable Securities giving rise to such indemnification obligation.

 

 

Section 5.3 Conduct of Indemnification Proceedings. Any Person entitled to indemnification hereunder will (i) give prompt (but in any event within 30 days after such Person has actual knowledge of the facts constituting the basis for indemnification) written notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided, however, that any delay or failure to so notify the indemnifying party shall relieve the indemnifying party of its obligations hereunder only to the extent, if at all, that it is prejudiced by reason of such delay or failure. Any Person entitled to indemnification hereunder shall have the right to select and employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such Person unless (a) the indemnifying party has agreed in writing to pay such fees or expenses, (b) the indemnifying party shall have failed to assume the defense of such claim within a reasonable time after receipt of notice of such claim from the Person entitled to indemnification hereunder and employ counsel reasonably satisfactory to such Person, (c) the indemnified party has reasonably concluded, based on the advice of counsel, that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party or (d) in the reasonable judgment of any such Person, based upon advice of counsel, a conflict of interest may exist between such Person and the indemnifying party with respect to such claims (in which case, if such Person notifies the indemnifying party in writing that such Person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such Person). If such defense is not assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld, conditioned or delayed). No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action or claim in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes (i) an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action, (ii) does not include a statement as to or an admission of fault, culpability or failure to act by or on behalf of any indemnified party and (iii) does not commit any indemnified party to take, or hold back from taking, any action. No indemnified party shall, without the written consent of the indemnifying party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder, and no indemnifying party shall be liable for any settlement or compromise of, or consent to the entry of judgment with respect to, any such action or claim effected without its consent, in each case which consent shall not be unreasonably withheld.

 

Section 5.4 Settlement Offers. Whenever the indemnified party or the indemnifying party receives a firm offer to settle a claim for which indemnification is sought hereunder, it shall promptly notify the other of such offer. If the indemnifying party refuses to accept such offer within 20 Business Days after receipt of such offer (or of notice thereof), such claim shall continue to be contested and, if such claim is within the scope of the indemnifying party’s indemnity contained herein, the indemnified party shall be indemnified pursuant to the terms hereof. An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim in any one jurisdiction, unless in the written opinion of counsel to the indemnified party, reasonably satisfactory to the indemnifying party, use of one counsel would be expected to give rise to a conflict of interest between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the fees and expenses of one additional counsel.

 

 

Section 5.5 Other Indemnification. Indemnification similar to that specified in this Article V (with appropriate modifications) shall be given by the Company and each Selling Investor with respect to any required registration or other qualification of Registrable Securities under Federal or state law or regulation of governmental authority other than the Securities Act.

 

Section 5.6 Contribution. If for any reason the indemnification provided for in Section 5.1 or Section 5.2 is unavailable to an indemnified party or insufficient to hold it harmless as contemplated by Section 5.1 and Section 5.2, then (i) the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as shall be appropriate to reflect the relative benefits received by the Company, on the one hand, and such prospective sellers, on the other hand, from their sale of the Registrable Securities, provided that, no Selling Investor shall be required to contribute in an amount greater than the dollar amount of the net proceeds received by such Selling Investor with respect to the sale of the Registrable Securities giving rise to such indemnification obligation. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities, or expenses (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or, except as provided in Section 5.3, defending any such action or claim. 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. The Holders’ obligations in this Section 5.6 to contribute shall be several in proportion to the amount of Registrable Securities registered by them and not joint.

 

Article VI

Exchange Act Compliance

 

Section 6.1 Exchange Act Compliance. So long as the Company (a) has registered a class of securities under Section 12 or Section 15 of the Exchange Act and (b) files reports under Section 13 of the Exchange Act, then the Company shall take all actions reasonably necessary to enable Holders to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act, as such rule may be amended from time to time or any similar rules or regulations adopted by the Commission, including, without limiting the generality of the foregoing, (i) making and keeping public information available, as those terms are understood and defined in Rule 144 promulgated under the Securities Act, (ii) using reasonable best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Exchange Act and (iii) at the request of any Holder if such Holder proposes to sell securities in compliance with Rule 144, forthwith furnish to such Holder, as applicable, a written statement of compliance with the reporting requirements of the Commission as set forth in Rule 144 and make available to such Holder such information as will enable the Holder to make sales pursuant to Rule 144.

 

 

Article VII

Transfer and Termination of Registration Rights

 

Section 7.1 Transfers of Registration Rights. Any rights to cause the Company to register securities granted to a Holder under this Agreement and obligations under this Agreement may be transferred or assigned to any Person only in connection with a Transfer of Registrable Securities; provided, however, that (a) such transfer must be effected in accordance with applicable securities laws, (b) prior written notice of such assignment of rights is given to the Company, (c) unless the transferor Holder beneficially owns, together with its affiliates, a majority of the total number of Registrable Securities, such Transferee is an affiliate of the transferor Holder or a pledgee who acquires and holds Registrable Securities upon foreclosure of the underlying obligation and (d) such Transferee agrees in writing to be bound by, and subject to, this Agreement as a “Holder” pursuant to a written instrument in form and substance reasonably acceptable to the Company.

 

Section 7.2 Termination of Registration Rights. Upon a Holder ceasing to beneficially own any Registrable Securities, the rights and obligations hereunder shall cease to apply to such Holder, except under Article V hereof in respect of offerings in which such Holder participated or registrations in which Registrable Securities held by such Holder were included.

 

Article VIII

Miscellaneous

 

Section 8.1 Severability. If any provision of this Agreement is adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

 

Section 8.2 Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement and any action of any kind or any nature (whether at law or in equity, based in contract or in tort or otherwise) that is any way related to this Agreement or any of the transactions related hereto shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed in that state without regard to the conflict of laws rules thereof. Each party to this Agreement (i) consents to submit to the exclusive jurisdiction of the Court of Chancery of the State of Delaware and any state appellate court therefrom located in the State of Delaware (or, only if the Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court sitting in Wilmington, Delaware), (ii) waives any objection to the laying of venue of any action related to the transactions contemplated by this Agreement brought in such court, (iii) waives and agrees not to plead or claim in any such court that any such action brought in any such court has been brought in an inconvenient forum and (iv) agrees that service of process or of any other papers upon such party by registered mail at the address to which notices are required to be sent to such party under Section 8.5 shall be deemed good, proper and effective service upon such party. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION PROCEEDING, CLAIM OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

 

Section 8.3 Other Registration Rights. If the Company shall at any time hereafter provide to any holder of any securities of the Company rights with respect to the registration of such securities under the Securities Act, such rights shall not be prior in right (including rights that would reduce the number of securities a Holder may include in any Demand Registration, Shelf Registration or Piggyback Registration), inconsistent with or adversely affect any of the rights provided to the holders of Registrable Securities in, or conflict (in a manner that adversely affects holders of Registrable Securities) with any other provisions included in, this Agreement.

 

Section 8.4 Successors and Assigns. Except as provided in Section 7.1, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation of law or otherwise, by any of the parties hereto without the prior written consent of the other parties hereto; provided, that if the Company consolidates or merges with or into any Person and the Common Stock or any other Registrable Securities are, in whole or in part, converted into or exchanged for securities of a different issuer, and any Holder would, upon completion of such merger or consolidation, hold Registrable Securities of such issuer, then as a condition to such transaction the Company will cause such issuer to assume all of the Company’s rights and obligations under this Agreement in a written instrument delivered to the Holders.

 

Section 8.5 Notices. All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if delivered in writing in person, by electronic mail or facsimile or sent by nationally-recognized overnight courier or first class registered or certified mail, return receipt requested, postage prepaid, addressed to such party at the address set forth below or at such other address as may hereafter be designated in writing by such party to the other parties. All such notices, requests, consents and other communications shall be delivered as follows:

 

(a) if to the Company to:

 

QXO, Inc.

Five American Lane
Greenwich, CT 06831
Attention: Chris Signorello, Chief Legal Officer
Email: [Intentionally omitted]

 

(b) if to the Principal Investor:

 

Jacobs Private Equity II, LLC
Five American Lane
Greenwich, CT 06831
Attention: Austin Landow
Email: [Intentionally omitted]

 

 

with a copy, in each case, (which shall not constitute notice) to:

 

Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Adam O. Emmerich, Viktor Sapezhnikov
Email: AOEmmerich@wlrk.com; VSapezhnikov@wlrk.com

 

(c) If to another Holder, to the address set forth under such Holder’s name in Schedule I attached hereto.

 

All such notices, requests, consents and other communications shall be deemed to have been received (i) in the case of personal delivery or delivery by facsimile or electronic mail, on the date of such delivery, (ii) in the case of dispatch by nationally recognized overnight courier, on the next Business Day following such dispatch and (iii) in the case of mailing, on the fifth (5^th) Business Day after the posting thereof.

 

Section 8.6 Headings. The headings contained in this Agreement are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Agreement.

 

Section 8.7 Additional Parties. Additional parties to this Agreement shall only include each Holder (a) who has complied with Section 7.1, or (b) who (i) is bound by and subject to the terms of this Agreement, and (ii) has adopted this Agreement with the same force and effect as if it were originally a party hereto.

 

Section 8.8 Adjustments. If, and as often as, there are any changes in the Shares or securities convertible into or exchangeable into or exercisable for Shares as a result of any reclassification, recapitalization, stock split (including a reverse stock split) or subdivision or combination, exchange or readjustment of shares, or any stock dividend or stock distribution, merger or other similar transaction affecting such Shares or such securities, appropriate adjustment shall be made in the provisions of this Agreement, as may be required, so that the rights, privileges, duties and obligations hereunder shall continue with respect to such Shares or such securities as so changed.

 

Section 8.9 Entire Agreement. This Agreement and the other writings referred to herein constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such subject matter.

 

Section 8.10 Counterparts; Facsimile or .pdf Signature. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original instrument, but all of which together shall constitute one and the same document. This Agreement may be executed by facsimile or.pdf signature and a facsimile or.pdf signature shall constitute an original for all purposes.

 

 

Section 8.11 Amendment. Other than with respect to amendments to Schedule I attached hereto, which may be amended by the Company from time to time to reflect the Holders at such time, this Agreement may not be amended, modified or supplemented without the written consent of the Majority Holder; provided, however, that, with respect to a particular Holder or group of Holders, any such amendment, supplement, modification or waiver that (a) would materially and adversely affect such Holder or group of Holders in any respect or (b) would disproportionately benefit any other Holder or group of Holders or confer any benefit on any other Holder or group of Holders to which such Holder of group of Holders would not be entitled, shall not be effective against such Holder or group of Holders unless approved in writing by such Holder or the Holders of a majority of the Registrable Securities held by such group of Holders, as the case may be.

 

Section 8.12 Extensions; Waivers. Any party may, for itself only, (a) extend the time for the performance of any of the obligations of any other party under this Agreement, (b) waive any inaccuracies in the representations and warranties of any other party contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions for the benefit of such party contained herein. Any extension or waiver pursuant to this Section 8.12 will be valid only if set forth in a writing signed by the party to be bound thereby. No waiver by any party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising because of any prior or subsequent such occurrence. Neither the failure nor any delay on the part of any party to exercise any right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise of the same or of any other right or remedy.

 

Section 8.13 Further Assurances. Each of the parties hereto shall execute all such further instruments and documents and take all such further action as the Company may reasonably require in order to effectuate the terms and purposes of this Agreement.

 

Section 8.14 No Third-Party Beneficiaries. Except pursuant to Article V, this Agreement shall not confer any rights or remedies upon any Person other than the parties hereto and their respective successors and permitted assigns and other Persons expressly named herein.

 

Section 8.15 Opt-Out Requests. Subject to Section 2.6, each Holder shall have the right, at any time and from time to time (including after receiving information regarding any potential public offering), to elect to not receive any notice that the Company or any other Holders otherwise are required to deliver pursuant to this Agreement (except any notice pursuant to Section 2.3 with regard to such Holder’s Registrable Securities or any other notice as required by law, rule or regulation) by delivering to the Company a written statement signed by such Holder that it does not want to receive any such notices hereunder (an “Opt-Out Request”), in which case, and notwithstanding anything to the contrary in this Agreement, the Company and other Holders shall not be required to, and shall not, deliver any such notice or other related information required to be provided to Holders hereunder to the extent that the Company or such other Holders reasonably expect such notice or information would result in a Holder acquiring material non-public information within the meaning of Regulation FD promulgated under the Exchange Act. An Opt-Out Request may state a date on which it expires or, if no such date is specified, shall remain in effect indefinitely. A Holder that has previously given the Company an Opt-Out Request may revoke such request in writing at any time, and there shall be no limit on the ability of a Holder to issue and revoke subsequent Opt-Out Requests; provided, that each Holder shall use reasonable best efforts to minimize the administrative burden on the Company arising in connection with any such Opt-Out Requests. Notwithstanding the foregoing, this shall not prohibit any communications or notices to employees, officers and directors or agents of the Company, or notices or communications pursuant to any other agreements.

 

 

Section 8.16 Interpretation; Construction. This Agreement has been freely and fairly negotiated among the parties. If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party because of the authorship of any provision of this Agreement. Any reference to any law will be deemed to refer to such law as amended and all rules and regulations promulgated thereunder, unless the context requires otherwise. The words “include,” “includes,” and “including” will be deemed to be followed by “without limitation.” Pronouns in masculine, feminine, and neuter genders will be construed to include any other gender, and words in the singular form will be construed to include the plural and vice versa, unless the context otherwise requires. The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder” and words of similar import refer to this Agreement as a whole, including the schedules, exhibits and annexes, as the same may from time to time be amended, modified or supplemented, and not to any particular subdivision unless expressly so limited. All references to sections, schedules, annexes and exhibits mean the sections of this Agreement and the schedules, annexes and exhibits attached to this Agreement, except where otherwise stated. The parties intend that each representation, warranty, and covenant contained herein will have independent significance. If any party has breached any covenant contained herein in any respect, the fact that there exists another covenant relating to the same subject matter (regardless of the relative levels of specificity) that the party has not breached will not detract from or mitigate the party’s breach of the first covenant.

 

Section 8.17 Changes in Common Stock. If, and as often as, there are any changes in Common Stock by way of by way of a dividend, distribution, stock split or combination, reclassification, recapitalization, exchange or readjustment, whether in a merger, consolidation, conversion or similar transaction, or by any other means, appropriate adjustment shall be made in the provisions of this Agreement, as may be required, so that the rights, privileges, duties and obligations hereunder shall continue with respect to Common Stock as so changed.

 

* * * *

 

 

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

 

	THE COMPANY:
	QXO, INC.
	By:	/s/ Chris Signorello
		Name:	Chris Signorello
		Title:	Chief Legal Officer

 

[Signature Page to Registration Rights Agreement]

 

 

	INVESTOR REPRESENTATIVE:
	JACOBS PRIVATE EQUITY II, LLC
	By:	/s/ Brad Jacobs
		Name:	Brad Jacobs
		Title:	Managing Member

 

[Signature Page to Registration Rights Agreement]

 

 

	HOLDER:
	[Holders' signature pages on file with the Company.]

 

[Signature Page to Registration Rights Agreement]

 

 

SCHEDULE I

 

 

 

[Intentionally omitted; on file with the Company]

 

 

 

 

 

 

 

 

 

Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”), dated as of June 5, 2024, by and between SilverSun Technologies, Inc. (to be renamed QXO, Inc.) (together with its successors and assigns, the “Company”), and Brad Jacobs (“Employee”), and the Company and Employee together shall be referred to as the “Parties”.

 

WHEREAS, pursuant to the Amended and Restated Investment Agreement among Jacobs Private Equity II, LLC (“JPE”), the Company, and certain other parties, dated as of April 14, 2024 (the “Investment Agreement”), JPE will acquire voting control of the Company, and the parties to the Investment Agreement desire for the Company to employ Employee following the transactions contemplated by the Investment Agreement and Employee desires to accept such employment with the Company, subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein and for other good and valuable consideration, Employee and the Company agree as follows:

 

1. Effective Date; Term. This Agreement shall become effective as of, and contingent upon, the Closing (as defined in the Investment Agreement). The term of Employee’s employment hereunder (the “Term”) shall begin on the Closing Date (as defined in the Investment Agreement) and end on the fifth anniversary of the Closing Date. Notwithstanding the foregoing, the Term may be earlier terminated by either party in accordance with the terms of Section 5 of this Agreement, and the Term shall automatically expire on the last day of the Term (the “Expiration Date”) without notice required by any party to the other.

 

2. Employment Duties. During the Term, Employee shall serve as Chief Executive Officer of the Company. In addition, effective as of the first day of the Term, Employee shall be appointed as a member and Chairman of the Board of Directors of the Company (the “Board”). Excluding any periods of paid time-off or approved sick leave to which Employee is entitled, Employee shall devote such portion of his working time, energy and attention to the extent necessary to perform his duties and responsibilities as Chief Executive Officer hereunder and shall faithfully and diligently endeavor to promote the business and best interests of the Company. In connection with Employee’s role as Chief Executive Officer, Employee shall perform such duties as are customarily performed by an individual in Employee’s position at a public company and as assigned from time to time by the Board, and Employee shall report directly to the Board. Employee shall not be restricted from performing services or activities for another company, business or organization so long as any such services or activities do not unreasonably interfere with the performance of his duties and responsibilities to the Company and do not compete with the business of the Company, subject to the following sentence. Nothing in this Agreement shall prevent the Employee from (a) managing his personal investments, (b) participating in civic and professional affairs and organizations and conferences, (c) performing services or activities for non-profit organizations and/or business associations, (d) performing non-competitive services or activities that do not require a material amount of Employee’s working time, energy and attention, or (e) continuing to perform services in connection with his role as an officer, director or principal of any entity or non-profit organization as of the date hereof to the extent disclosed to the Company. The Company agrees that the activities described in the prior sentence are permitted for purposes of this Section 2. For any other outside activities, Employee shall receive written permission from the Board prior to performing such services or activities, which shall not be unreasonably withheld as determined in good faith.

 

 

3. Compensation. (a) Base Salary. During the Term, the Company shall pay Employee, pursuant to the Company’s normal and customary payroll procedures but not less frequently than monthly, a base salary at an initial rate per annum of $750,000 (the “Base Salary”), provided that the Base Salary shall increase on January 1 of each calendar year commencing during the Term in accordance with the following table if and to the extent that the annualized revenue run rate as of December 31 of the immediately preceding calendar year falls within the corresponding band set forth below. In no event will the Base Salary be decreased without Employee’s consent, whether as a result of a change in annualized revenue run rate or otherwise.

 

Annualized Revenue Run Rate Band		Base Salary
$1 Billion to $5 Billion		$	950,000
$5 Billion to $10 Billion		$	1,150,000
$10 Billion to $20 Billion		$	1,250,000
$20 Billion to $30 Billion		$	1,500,000
Greater than $30 Billion		$	1,700,000

 

(b) Annual Bonus. As additional compensation, Employee shall have the opportunity to earn a performance-based bonus (the “Annual Bonus”) for each year that ends during the Term of Employee’s employment (commencing with the Company’s fiscal year 2024) with a target amount (the target amount in effect at any time, the “Target Bonus”) that will initially be 100% of Base Salary but will increase on January 1 of each calendar year commencing during the Term in accordance with the following table if and to the extent that the annualized revenue run rate as of December 31 of the immediately preceding calendar year falls within the corresponding band set forth below. In no event will the target Annual Bonus be decreased without Employee’s consent, whether as a result of a change in annualized revenue run rate or otherwise.

 

Annualized Revenue Run Rate Band		Target Bonus Percentage		Target Bonus Amount
$1 Billion to $5 Billion		135% of Base Salary		$	1,282,500
$5 Billion to $10 Billion		150% of Base Salary		$	1,725,000
$10 Billion to $20 Billion		165% of Base Salary		$	2,062,500
$20 Billion to $30 Billion		200% of Base Salary		$	3,000,000
Greater than $30 Billion		200% of Base Salary		$	3,400,000

 

The actual amount of Annual Bonus earned for a fiscal year, if any, shall be based upon achievement of company and/or individual performance goals as determined by the Compensation and Talent Committee of the Board (the “Committee”). Except as otherwise provided by this agreement, payment of the earned Annual Bonus (if any) will be subject to Employee’s continued employment through the payment date, which shall be not later than March 15 immediately following the fiscal year to which the Annual Bonus relates. Employee’s Annual Bonus opportunity for the Company’s fiscal year 2024 will not be prorated based on Employee’s start date.

 

 

(c) Benefits. During the Term, Employee shall be eligible to participate in the benefit plans and programs of the Company that are generally available to other members of the Company’s senior executive team, subject to the terms and conditions of such plans and programs and applicable Company policies.

 

(d) Business Expenses. The Company shall provide Employee a Company-owned wireless smartphone and Company-owned laptop computer during the Term and shall pay or reimburse Employee for all reasonable and necessary business expenses incurred in the performance of his duties to the Company during the Term upon the presentation of appropriate statements of such expenses.

 

4. Initial Equity Awards. Following the Closing Date, on a date selected by the Committee that is no later than 120 days following the Closing Date (the “Grant Date”) and subject to Employee’s continued employment through the Grant Date, the Company shall grant Employee an award of performance-based restricted stock units (the “PSUs”) pursuant to an award agreement substantially in the form attached as Exhibit A hereto, and an award of time-based restricted stock units (the “RSUs”) pursuant to an award agreement substantially in the form attached as Exhibit B hereto. The Company intends that PSUs and RSUs will represent Employee’s equity grants for the Term, based on current business planning and compensation practices.

 

5. Termination. Employee’s employment hereunder shall be terminated upon the earliest to occur of any one of the following events (in which case the Term shall terminate as of the applicable Date of Termination):

 

(a) Expiration of Term. Unless sooner terminated, Employee’s employment under the terms of this Agreement shall terminate automatically in accordance with Section 1 of this Agreement on the Expiration Date and shall continue on an at-will basis, unless otherwise agreed by the parties in writing.

 

(b) Death. Employee’s employment hereunder shall terminate upon his death.

 

 

(c) Cause. The Company may terminate Employee’s employment hereunder for Cause by written notice, following an affirmative vote of at least 3/4 of the members of the Board following the process described below. For purposes of this Agreement, the term “Cause” shall mean (i) Employee’s willful material failure to perform Employee’s duties or refusal to follow any lawful directive of the Board, provided however, that if the Parties agree that Employee transitions to a role other than CEO, his duties would be based on his then-existing role; (ii) Employee’s abuse of or dependency on alcohol or drugs (illicit or otherwise) that materially and adversely affects Employee’s performance of duties for the Company or an affiliate which results in material demonstrable financial or economic harm to the Company; (iii) Employee’s commission of any material fraud, embezzlement or theft or any deliberate misappropriation of money or other assets of the Company or an affiliate which results in material demonstrable financial or economic harm to the Company; (iv) Employee’s material breach of any fiduciary duties of the Company or any affiliate, which results in material demonstrable financial or economic hard to the Company; (v) Employee’s willful material failure to cooperate in good faith with a governmental or internal investigation of the Company or an affiliate or any of its directors, managers, officers or employees which results in material demonstrable financial or economic harm to the Company; (vi) Employee’s material failure to follow Company policies, including the Company’s code of conduct and/or code of business ethics, as may be in effect from time to time which results in material demonstrable financial or economic harm to the Company; or (vii) Employee’s conviction of, or plea of nolo contendere to, a felony or any serious crime; provided that (A) in cases where a cure is possible, Employee shall first be provided with notice and a 45-day cure period, (B) Employee shall have the ability to be represented by counsel of his choosing and such counsel shall be included in all relevant communications, Board meetings and proceedings, and (C) Employee’s performance of services or activities that are described in the last sentence of Section 2 shall not give constructive grounds for a termination for “Cause”. No act, or failure to act, on the part of Employee shall be considered “willful” unless it is done, or omitted to be done, by Employee in bad faith or without reasonable belief that the Employee’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the duly informed advice of outside or inside counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Employee in good faith and in the best interests of the Company. The cessation of employment of the Employee shall not be deemed to be for Cause unless and until there shall have been delivered to Employee a copy of a resolution duly adopted by the affirmative vote of not less than 3/4ths of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to Employee, and Employee is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, Employee is guilty of the conduct described above, and specifying the particulars thereof in detail.

 

(d) Without Cause. The Company may terminate Employee’s employment hereunder without Cause by written notice at any time.

 

(e) Good Reason. Employee may terminate his employment hereunder for Good Reason in accordance with the terms of this Section 5(e). For purposes of this Agreement, “Good Reason” shall mean, without first obtaining Employee’s written consent: (i) the Company materially breaches the terms of this Agreement; (ii) removal of Employee as a member of the Board other than by reason of (A) Employee’s voluntary departure, (B) action by the Board as a result of the occurrence of Cause or (C) Employee’s Disability; or (iii) during the two-year period following a Change of Control: (A) the Company requires that Employee be based in a location that is more than 35 miles from the location of Employee’s employment immediately prior to a Change of Control or (B) Employee not reporting directly and exclusively to the board of directors of a publicly-traded company that is the direct or indirect parent of the Company (or of any successor or entity that acquires substantially all the business and assets of the Company); provided that, the Company shall first be provided a 30-day cure period, following receipt of written notice setting forth in reasonable detail the specific event, circumstance or conduct of the Company that constitutes Good Reason, to cease, and to cure, any event, circumstance or conduct specified in such written notice, if curable; provided further, that such notice shall be provided to the Company within 45 days of the occurrence of the event, circumstance or conduct constituting Good Reason. If, at the end of the cure period, the event, circumstance or conduct that constitutes Good Reason has not been remedied, Employee will be entitled to terminate employment for Good Reason during the 90-day period that follows the end of the cure period. If Employee does not terminate employment during such 90-day period, Employee will not be permitted to terminate employment for Good Reason as a result of such event, circumstance or conduct.

 

 

(f) Resignation. Employee may terminate his employment hereunder at any time upon at least 30 days’ advance written notice to the Company.

 

(g) Disability. Employee’s employment hereunder shall terminate in the event of Employee’s Disability. For purposes of this Agreement, “Disability” shall mean the inability of Employee, due to illness, accident or any other physical or mental incapacity, to perform Employee’s duties for the Company for an aggregate of 180 days within any period of 12 consecutive months, which disability is confirmed by a board-certified physician mutually selected by the Company and Employee, and the determination of such physician shall be binding upon Employee and the Company.

 

(h) “Date of Termination” shall mean: (i) the scheduled expiration of the Term in the event of termination of Employee’s employment pursuant to Section 5(a) of this Agreement; (ii) the date of Employee’s death in the event of termination of Employee’s employment pursuant to Section 5(b) of this Agreement; (iii) the date of the Company’s delivery of a notice of termination to Employee or such later date as specified in such notice in the event of termination by the Company pursuant to Section 5(c) or 5(d) of this Agreement; (iv) the date specified in accordance with Section 5(e) in the event of Employee’s resignation for Good Reason; (v) the 30th day following delivery of Employee’s notice to the Company of his resignation in accordance with Section 5(f) (or such earlier date as selected by the Company); and (vi) the date of a determination of Employee’s Disability in the event of a termination of Employee’s employment pursuant to Section 5(g) of this Agreement.

 

6. Termination Payments.

 

(a) General. Except as otherwise set forth in this Section 6, following any termination of Employee’s employment hereunder, the obligations of the Company to pay or provide Employee with compensation and benefits under Section 3 of this Agreement shall cease, and the Company shall have no further obligations to provide compensation or benefits to Employee hereunder except for payment of (i) any unpaid Base Salary accrued through the Date of Termination; (ii) to the extent required by law, any unused vacation accrued through the Date of Termination; (iii) any vested accrued benefits or compensation due under the Company’s plans and arrangements; and (iv) any unpaid or unreimbursed obligations and expenses under Section 3(d) of this Agreement accrued or incurred through the Date of Termination (collectively items 6(a)(i) through 6(a)(iv) above, the “Accrued Benefits”). The payments referred to in Sections 6(a)(i) and 6(a)(ii) of this Agreement shall be paid within 30 days following the Date of Termination, subject to compliance with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”). The payments referred to in Section 6(a)(iii) and 6(a)(iv) of this Agreement shall be paid at the times such amounts would otherwise be paid had Employee’s services hereunder not terminated. The payments and benefits to be provided to Employee under Sections 6(c) and 6(d) of this Agreement, if any, shall in all events be subject to the satisfaction of the conditions of Section 6(e) of this Agreement.

 

 

(b) Automatic Expiration of the Term, Resignation, Cause, Death, or Disability. If Employee’s employment is terminated pursuant to Section 5(a), 5(b), 5(c), 5(f) or 5(g) of this Agreement, the Company shall have no obligation to Employee other than with respect to the Accrued Benefits, except as provided under the equity awards and/or to the extent Employee is continuing to provide services as an advisor, Board member or consultant. All equity-based or other long-term incentive compensation awards then outstanding will be treated in accordance with the relevant terms of the applicable award agreement (with any applicable performance goals treated as set forth in the applicable award agreement and payment timing determined in accordance with the applicable award agreement).

 

(c) Without Cause or for Certain Good Reason Events. In the event that, either prior to a Change of Control or more than two years following a Change of Control, the Company terminates Employee’s employment hereunder without Cause or Employee resigns solely pursuant to either clause (i) or clause (ii) of Good Reason, Employee shall be entitled to the following payments and benefits, subject to Section 6(e) in the case of clauses (ii) through (v):

 

(i) the Accrued Benefits;

 

(ii) solely in the case of termination of Employee’s employment by the Company without Cause, a cash payment (the “Severance Payment”) equal to twelve (12) months of Base Salary, as in effect on the Date of Termination (without regard to any reduction thereto that would provide a basis for Employee to resign for Good Reason);

 

(iii) a lump sum cash payment equal to the amount of any Annual Bonus relating to a performance period prior to the Date of Termination that is unpaid as of the Date of Termination (the amount of which shall be determined by the Committee in accordance with the terms of this Agreement) (the “Earned Bonus”);

 

(iv) solely in the case of termination of Employee’s employment by the Company without Cause, a lump sum payment payable in cash equal to the product of (A) the Target Bonus, as in effect on the Date of Termination (without regard to any reduction thereto that would provide a basis for Employee to resign for Good Reason) and (B) a fraction, the numerator of which is the number of days in the fiscal year in which the Date of Termination occurs from the first day of such fiscal year to and including the Date of Termination, and the denominator of which is the total number of days in such fiscal year (the “Prorated Bonus”);

 

 

(v) at the option of the Company, either (A) for twelve (12) months from the Date of Termination (the “Benefit Continuation Period”), healthcare benefit coverage to Employee (and Employee’s dependents who were covered by healthcare benefit coverage (including medical and dental) pursuant to a plan sponsored by the Company or an affiliate as of immediately prior to the Date of Termination, if any (the “eligible dependents”)), with the requirement for Employee (or the eligible dependents) to pay a monthly premium at the active employee rate for such healthcare benefit coverage as if Employee had continued employment with the Company during the Benefit Continuation Period, conditioned upon Employee making a timely election to receive COBRA coverage provided to former employees under Section 4980B of the Code and continuing such coverage during the Benefit Continuation Period so long as it is available or (B) a lump sum cash payment equal to the amount of the employer contribution, based on the rates and coverage elections in effect at the Date of Termination, that would have been provided towards healthcare benefit coverage for Employee and Employee’s eligible dependents during the Benefit Continuation Period had Employee remained employed with the Company or as relevant affiliate during such period (the “Healthcare Benefit”); and

 

(vi) vesting of equity-based or other long-term incentive compensation awards then outstanding in accordance with the relevant terms of the applicable award agreement (with any applicable performance goals treated as set forth in the applicable award agreement and payment timing determined in accordance with the applicable award agreement).

 

(d) Without Cause or for Good Reason Following a Change of Control. In the event that, upon or within two years following a Change of Control, the Company terminates Employee’s employment hereunder without Cause or Employee resigns for Good Reason, Employee shall be entitled to the following payments and benefits, subject to Section 6(e) in the case of clauses (ii) through (v):

 

(i) the Accrued Benefits;

 

(ii) a cash payment (the “CIC Severance Payment”) equal to 2.99 times the sum of (A) the Base Salary as in effect on the Date of Termination (without regard to any reduction thereto that would provide a basis for Employee to resign for Good Reason) and (B) the Target Bonus as in effect on the Date of Termination (without regard to any reduction thereto that would provide a basis for Employee to resign for Good Reason);

 

(iii) the Prorated Bonus;

 

(iv) the Earned Bonus;

 

(v) the Healthcare Benefit (provided that the Benefit Continuation Period shall be twenty-four (24) months from the Date of Termination); and

 

(vi) vesting of all equity-based or other long-term incentive compensation awards then outstanding in accordance with the relevant terms of the applicable award agreement (with any applicable performance goals treated as set forth in the applicable award agreement and payment timing determined in accordance with the applicable award agreement).

 

 

(e) Release Requirement; Payment Timing. The payments and benefits provided under Sections 6(c) and 6(d) of this Agreement (other than the Accrued Benefits and other than in the event of termination by reason of Employee’s death or Disability) are subject to and conditioned upon (i) Employee having signed a waiver and general release agreement in a form satisfactory to the Company, which form shall, in the case of a termination on or following a Change of Control, be a form approved by the Committee prior to the Change of Control that shall not be modified on or after the Change of Control without Employee’s prior written consent, and such waiver and general release having become effective and irrevocable within 70 days after the Date of Termination (collectively, the “Release Requirement”) and (ii) Employee’s compliance with Sections 7 and 8 of this Agreement. The Severance Payment if any, payable hereunder shall be paid in substantially equal installments over the twelve-month period, following the Date of Termination, consistent with the Company’s payroll practices, with the first installment to be paid no later than the second regularly scheduled payroll date after the Release Requirement is satisfied and with any installments that would otherwise have been paid prior to such date accumulated and paid together with such first installment. The CIC Severance Payment, if any, payable hereunder shall be paid in one lump sum within five business days following the satisfaction of the Release Requirement. The Prorated Bonus and any other lump cash payment due under this Section 6 (and subject to the Release Requirement), other than the Accrued Benefits, will generally be paid at the same time as the first installment of the Severance Payment or at the same time as the CIC Severance Payment, as applicable. With respect to any payment or benefit payable pursuant to Section 6 that constitutes nonqualified deferred compensation within the meaning of Section 409A of the Code, if the applicable Change of Control does not constitute an event described in Section 409A(a)(2)(v) of the Code and the regulations thereunder, then solely to the extent necessary to avoid the application of additional taxes and penalties on such payment or benefit under Section 409A of the Code, such payment or benefit shall be paid or provided on the same schedule that would have applied to such payment or benefit absent the occurrence of a Change of Control.

 

(f) Section 280G. In the event that any payments, distributions, benefits or entitlements of any type payable to Employee (“Payments”) (i) constitute “parachute payments” within the meaning of Section 280G of the Code and (ii) but for this paragraph would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Employee’s Payment shall be reduced to such lesser amount (the “Reduced Amount”) that would result in no portion of such Payments being subject to the Excise Tax; provided that the Payments shall not be so reduced if the Company determines, based on the advice of a nationally recognized accounting firm selected by the Company prior to a Change of Control (the “Accountants”), that without such reduction Employee would be entitled to receive and retain, on a net after tax basis (including, without limitation, any excise taxes payable under Section 4999 of the Code), an amount that is greater than the amount, on a net after tax basis, that Employee would be entitled to retain upon receipt of the Reduced Amount. Unless the Company and Employee otherwise agree in writing, any determination required under this Section 6(g) shall be made in writing in good faith by the Accountants. The reduction of the Payments shall be made in the order determined by the Committee, provided that such reduction will be made in a manner that that is intended to comply with Section 409A to the extent applicable. For purposes of making the calculations required by this Section 6(f), the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code, and other applicable legal authority. The Company and Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably require in order to make a determination under this Section 6(f), and the Company shall bear the cost of all fees the Accountants charge in connection with any calculations contemplated by this Section 6(f).

 

 

(g) Mitigation; Offset. The amount of the Severance Payment shall be offset and reduced (but not below zero) by the full amount of the Non-Compete Payments to which Employee is entitled under this Agreement. In addition, the Board may determine that (i) any part of the remaining portion of the Severance Payment (after application of the offset contemplated by the immediately preceding sentence) and/or (ii) solely if the Date of Termination does not occur within the two-year period following a Change of Control, any Non-Compete Payments to which Employee is entitled under this Agreement, shall be reduced (but not below zero) by the amount of any income that Employee earns from any other work, whether as an employee or as an independent contractor, during the one year period commencing on the Date of Termination. Except as expressly provided in this Section 6(g) or otherwise hereunder, the Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense, or other claim, right or action that the Company may have against the Employee or others. In no event shall the Employee be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Employee under any of the provisions of this Agreement.

 

7. Non-Solicitation.

 

(a) During Employee’s employment with the Company and during the Restricted Period (as defined below), Employee agrees not to solicit for hiring, or help any other person or party to solicit for hiring, (i) any employee of the Company or any of its subsidiaries or controlled affiliates (the “Company Entities”) or (ii) any person who at any time during the twelve (12) months prior to such solicitation was an employee of a Company Entity. “Restricted Period” means the period of two years following termination of Employee’s employment for any reason and, for the avoidance of doubt, regardless of whether such termination occurs during the Term or after expiration of the Term.

 

(b) During Employee’s employment with the Company and during the Restricted Period, Employee hereby agrees not to, directly or indirectly, (i) discontinue or reduce the extent of the relationship between the Company Entities and the individuals, partnerships, corporations, professional associations or other business organizations that have a business relationship with any Company Entity and about which business relationship Employee was aware (collectively, “Associated Third Parties”), or to obtain or seek products or services the same as or similar to those offered by the Company Entities from any source not affiliated with the Company Entities; and (ii) solicit, assist in the solicitation of, or accept any business from any Associated Third Parties in relation to a product or service that competes with the products and/or services offered by the Company Entities.

 

8. Confidentiality; Non-Compete; Non-Disclosure; Non-Disparagement; Cooperation. As used in this Section 8, the term “Company” shall include all Company Entities, unless the context otherwise requires.

 

 

(a) Confidentiality. Employee agrees to use “Confidential Information” (as defined below) only for the benefit of the Company. Employee agrees that, other than as required to perform Employee’s duties for the Company, Employee will not at any time use, disclose, download or copy Confidential Information (including but not limited to personal email or storage media) or assist any other person or entity to do so. Notwithstanding anything in this Agreement to the contrary, nothing contained herein is intended to, or shall be interpreted in a manner that does, prohibit, limit or restrict Employee from exercising any legally protected whistleblower rights (including pursuant to Rule 21F under the Securities Exchange Act of 1934, as amended). “Confidential Information” means all information, written, digital (whether generated or stored on magnetic, digital, photographic or other media) or oral, not generally known to the public and from which the Company derives a commercial or competitive advantage, or which is proprietary to the Company, concerning the Company’s business, operations, products, services, customer information, merger and acquisition targets and strategies, pricing strategies, operating processes, business methods and procedures, information technology and information-gathering techniques and methods, business plans, financial affairs and all other accumulated data, listings or similar recorded matter useful in the businesses of the Company, including by way of illustration and not limitation:

 

●

information about the business, affairs or operation of the Company developed by Employee or which is furnished or made available to Employee by the Company during Employee’s employment;

 

●

information about the business, operations and assets of companies considered for acquisition, merger, sale, disposition, or similar transaction by the Company, and information concerning the Company’s evaluation and analysis thereof;

 

●

operating instructions, training manuals, procedures and similar information;

 

●

information about customers, vendors and others with whom the Company does business (e.g., customer or vendor lists, pricing, contracts and activity records);

 

●

information regarding the skills and compensation of employees or contractors of the Company;

 

●

information about sales and marketing (e.g., plans and strategies);

 

●

information about any other third parties the Company has a business relationship with or to whom we owe a duty of confidentiality; and

 

●

all notes, observations, data, analyses, compilations, forecasts, studies or other documents prepared by Employee that contain or reflect any Confidential Information.

 

However, the Company expressly acknowledges and agrees that the term “Confidential Information” excludes information that: (i) is in the public domain or otherwise generally known to the trade; (ii) is disclosed to third parties without restriction other than by reason of Employee’s breach of Employee’s confidentiality obligations under this Agreement; (iii) Employee learns of after the termination of Employee’s employment from any other party not then under an obligation of confidentiality to Employee; or (iv) comprises contact information that is readily ascertainable from sources other than the Company.

 

 

(b) Non-Competition.

 

(i) Duration and Geographic Scope. During the Term and during the one-year period immediately following Employee’s termination of employment for any reason, whether during or following the Term (the “Non-Compete Period”), Employee is not allowed to compete with the Company in the “Restricted Territory” (geographic area) described below.

 

(ii) Employee’s Non-Compete Covenant. Employee agrees that Employee will not, during Employee’s employment and during the Non-Compete Period, within the Restricted Territory, directly or indirectly (whether or not for compensation) become employed by, engage in business with, serve as an agent or consultant to, become an employee, partner, member, principal, stockholder or other owner (other than a holder of less than 1% of the outstanding voting shares of any publicly held company) of any Competing Business. For purposes of this Agreement, “Competing Business” shall mean any individual, corporation, limited liability company, partnership, unincorporated organization, trust, joint venture or other entity that (A) engages or is planning to engage in any business or businesses in which the Company Entities are actively engaged during Employee’s employment, including, but not limited to, any line of business involved in building and construction products distribution (collectively, the “Business”) or (ii) engages in mergers and acquisition activities related to the Business, including, without limitation, researching, analyzing and evaluating companies for investment in or acquisition of, for itself or clients. Such “Competing Business” definition shall include, but shall not be limited to, each of the following private equity firms and affiliates, including, without limitation, their portfolio companies: American Securities, LLC; Bain Capital; Blackstone; Clayton, Dubilier & Rice, LLC; Court Square Capital Partners; CVC; KKR; Leonard Green & Partners; and Platinum Equity (such firms, the “Financial Investment Firms”), as well as each of the following building and construction products distribution companies and their affiliates: Builders FirstSource; Core & Main; Ferguson; Home Depot; Lowe's; and Watsco; provided, however, that nothing in this Agreement shall prevent Employee from receiving capital from, or co-investing with, the Financial Investment Firms; and provided, further, that the Employee’s roles permitted pursuant to Section 2(e)are permitted, notwithstanding the provisions of this Section 8.

 

(iii) Restricted Territory. Employee agrees that the “Restricted Territory” means any State of the United States and any other country in which the Company or any Company Entity does business, or in which the Company or any Company Entity has actively planned to engage in business, in each case, during Employee’s employment.

 

(iv) Non-Compete Payments Upon Termination without Cause. If the Company terminates Employee’s employment without Cause, then the Company will make “Non-Compete Payments” to Employee in an amount calculated as set forth in subsection (vi) below.

 

(v) Termination of the Restricted Period. The Company has the right, at its discretion, to waive Employee’s Non-Compete Covenant and/or terminate or reduce the Non-Compete Period, whether in whole or in part. Upon providing Employee notice to that effect, no Non-Compete Payments will be due with respect to any period subject to this waiver or reduction.

 

 

(vi) Amount and Timing of Non-Compete Payments During the Restricted Period. If the Company terminates Employee’s employment without Cause and does not elect to waive Employee’s Non-Compete Covenant or to terminate or reduce Employee’s Non-Compete Period, the Company will pay Employee each month during the Restricted Period an amount equal to the monthly amount of Employee’s Base Salary at the time of Employee’s Date of Termination in accordance with the Company’s payroll procedures on the Company’s normal payroll dates. In the event the Company waives or reduces the Non-Compete Period, the Company will make a payment equal to Employee’s monthly Base Salary for the duration of the revised Non-Compete Period. (For example, if the Company reduces the Non-Compete Period to three (3) months, the Company will pay Employee’s monthly Base Salary for three (3) months in accordance with the Company’s normal payroll procedures during that period.).

 

(vii) Additional Non-Compete Payments and Extension of Restricted Period. The Company has the right, at its discretion, to extend the Non-Compete Period for up to three additional sequential periods of one year each (each, an “Extended Non-Compete Period”), with the first such period commencing immediately following the end of the Non-Compete Period. If the Company elects to extend the Non-Compete Period, Employee agrees that, during each Extended Non-Compete Period, Employee shall be bound by the restrictions set forth in Section 8(b) in the same manner applicable during the Non-Compete Period. If the Company exercises this option to extend the Non-Compete Period, the Company will pay Employee “Additional Non-Compete Payments” consisting of, for each month of the relevant extension period, an amount equal to the monthly amount of Employee’s Base Salary as of the Date of Termination in accordance with the Company’s payroll procedures on its normal payroll dates.

 

(1)

If the Company elects to extend the Non-Compete Period or any Extended Non-Compete Period, it will notify Employee in writing of such fact not later than the ninetieth (90th) day prior to the commencement of the applicable Extended Non-Compete Period.

 

(2)

The Company may terminate or reduce the duration of any Extended Non-Compete Period. Upon providing Employee notice to that effect, no Additional Non-Compete Payments will be due with respect to any period subject to this reduction.

 

(3)

By signing this Agreement, Employee agrees to accept and abide by the Company's elections.

 

(viii) Consequences of Employee’s Breach of Non-Compete Covenant. The Company reserves the right use any remedies available to the Company in law or in equity to enforce its rights under this Agreement, including the covenants included in Sections 7 and 8. Employee agrees that if Employee breaches Employee’s obligations under this Section 8(b), Employee will repay the Company all the Non-Compete Payments that the Company has paid to Employee.

 

(ix) Conditions to Non-Compete Payments. Any Non-Compete Payments are subject to Employee’s satisfaction of the Release Requirement. Payment of the Non-Compete Payments, if due, will be made on the same schedule that would have applied to the Severance Payment, as described above.

 

 

(c) Competitive Opportunity. If, at any time during the Term, Employee (i) acquires knowledge of a potential investment, investment opportunity or business venture which may be an appropriate investment by the Company, or in which the Company would otherwise reasonably be expected to have an interest (a “Competitive Opportunity”) or (ii) otherwise is then exploiting any Competitive Opportunity, Employee shall promptly bring such Competitive Opportunity to the Company. In such event, Employee shall not have the right to hold any such Competitive Opportunity for his (and his agents’, employees’ or affiliates’) own account and benefit or to recommend, assign or otherwise transfer or deal in such Competitive Opportunity with persons other than the Company.

 

(d) Return of Company Property. All documents, data, recordings, or other property, including, without limitation, smartphones, computers and other business equipment, whether tangible or intangible, including all information stored in electronic form, obtained or prepared by or for Employee and utilized by Employee in the course of his employment with the Company shall remain the exclusive property of the Company and Employee shall return all copies of such property upon any termination of his employment and as otherwise requested by the Company during the Term. Notwithstanding the foregoing, Employee may retain his contacts lists (including investor lists), calendars, LinkedIn account (and related information), personal files and files needed to prepare and file his personal tax returns along with other documentation which does not constitute Confidential Information. Employee further agrees not to alter, delete or destroy any Company property, documents, records, data contained in any location, including but not limited to any information contained on any Company-provided computer or electronic device. Such devices shall not be wiped, scrubbed, or reset to original factory condition prior to surrender.

 

(e) Non-Disparagement. Employee hereby agrees not to defame or disparage any of the Company Entities or any of their respective officers, directors, members, partners or employees (collectively, the “Company Parties”), and to cooperate with the Company upon reasonable request, in refuting any defamatory or disparaging remarks by any third party made in respect of any of the Company Parties. The Company will instruct its directors and executive officers not to defame or disparage Employee, and the directors and executive officers will acknowledge and agree that they will comply with such instructions; provided however that any noncompliance of a director or executive officer shall not constitute a breach or violation of the Company’s obligations hereunder or otherwise subject the Company to any liability. The Company will not make any public statements, including in press releases and Company statements during meetings with investors and employees, that defame or disparage Employee.

 

(f) Cooperation. During the Term and thereafter (including, without limitation, following the Date of Termination), Employee shall, upon reasonable notice and without the necessity of any Company Entity obtaining a subpoena or court order, provide Employee’s reasonable cooperation in connection with any suit, action or proceeding (or any appeal from any suit, action or proceeding), and any investigation and/or defense of any claims asserted against any Company Entity that relates to events occurring during Employee’s employment with any Company Entity as to which Employee may have relevant information (including furnishing relevant information and materials to the relevant Company Entity or its designee and/or providing testimony at depositions and at trial), provided that the Company shall reimburse Employee for expenses reasonably incurred in connection with any such cooperation occurring after the termination of Employee’s employment and provided that any such cooperation occurring after the Date of Termination shall be scheduled to the extent reasonably practicable so as not to unreasonably interfere with Employee’s business or personal affairs.

 

 

9. Notification of Subsequent Employer. Employee hereby agrees that, prior to accepting employment with any other person during any period during which Employee remains subject to any of the covenants set forth in Section 7, 8(b) or 8(c) of this Agreement, Employee shall provide such prospective employer with written notice of such provisions of this Agreement, with a copy of such notice delivered simultaneously to the Company.

 

10. Injunctive Relief. Employee and the Company agree that Employee will occupy a high-level and unique position of trust and confidence with the Company Entities and will have access to their Confidential Information, and that the Company would likely suffer significant harm to its protectable Confidential Information and business goodwill from Employee’s breach of any of the covenants set forth in Sections 7 and 8. Employee acknowledges that it is impossible to measure in money the damages that will accrue to the Company Parties in the event that Employee breaches any of the restrictive covenants provided in Sections 7 and 8 of this Agreement. In the event that Employee breaches any such restrictive covenant, the Company Parties shall be entitled to an injunction restraining Employee from violating such restrictive covenant (without posting any bond). If any of the Company Parties shall institute any action or proceeding to enforce any such restrictive covenant, Employee hereby waives the claim or defense that such Company Party has an adequate remedy at law and agrees not to assert in any such action or proceeding the claim or defense that there is an adequate remedy at law. The foregoing shall not prejudice the Company’s right to require Employee to account for and pay over to the Company, and Employee hereby agrees to account for and pay over, the compensation, profits, monies, accruals or other benefits derived or received by Employee as a result of any transaction constituting a breach of any of the restrictive covenants provided in Sections 7 and 8 of this Agreement or to seek any other relief to which it may be entitled. If the Company brings a legal action to enforce Sections 7 and 8 of this Agreement or obtain monetary damages for breach of Section 7 and 8 of this Agreement, the Company shall have the right to recover attorneys’ fees and costs it incurs as a result of any action brought in good faith.

 

11. Miscellaneous. (a) Notices. Any notice or other communication required or permitted under this Agreement shall be effective only if it is in writing and shall be deemed to be given when delivered personally, or four days after it is mailed by registered or certified mail, postage prepaid, return receipt requested or one day after it is sent by overnight courier service via UPS or FedEx and, in each case, addressed as follows (or if it is sent through any other method agreed upon by the parties):

 

If to the Company, to:

 

QXO, Inc.
Five American Lane

Greenwich, CT 06831

 

 

Attention: Chief Legal Officer

 

If to Employee:

 

During the Term, to his principal residence as listed in the records of the Company

 

or to such other address as any party may designate by notice to the other.

 

(b) Legal Expenses. The Company shall reimburse the Employee for the reasonable and documented legal fees incurred by the Employee in connection with the negotiation, drafting and execution of this Agreement (including the exhibits), up to a maximum amount of $40,000.

 

(c) Entire Agreement. This Agreement shall constitute the entire agreement and understanding among the parties hereto with respect to Employee’s employment hereunder and supersedes and is in full substitution for any and all prior understandings or agreements (whether written or oral) with respect to Employee’s employment. The Company does not make and has not made, and Employee does not rely and has not relied on any statement, omission, representation or warranty, written or oral, of any kind or nature whatsoever, regarding the Company or the compensation contemplated by this Agreement, including, without limitation, its or their present, future, prospective or potential value, worth, prospects, performance, soundness, profit or loss potential, or any other matter or thing whatsoever relating to whether Employee should purchase or accept any compensation contemplated by this Agreement and/or the consideration therefor.

 

(d) Amendment; No Waiver. Except as expressly set forth otherwise in this Agreement (including, without limitation, pursuant to Section 11(n) of this Agreement), this Agreement may be amended only by an instrument in writing signed by the parties, and the application of any provision hereof may be waived only by an instrument in writing that specifically identifies the provision whose application is being waived and that is signed by the party against whom or which enforcement of such waiver is sought. The failure of any party at any time to insist upon strict adherence to any provision hereof shall in no way affect the full right to insist upon strict adherence at any time thereafter, nor shall the waiver by any party of a breach of any provision hereof be taken or held to be a waiver of any succeeding breach of such provision or a waiver of the provision itself or a waiver of any other provision of this Agreement. No failure or delay by either party in exercising any right or power hereunder will operate as a waiver thereof, nor will any single or partial exercise of any such right or power, or any abandonment of any steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. Termination of this Agreement shall not relieve any party of liability for any breach of this Agreement occurring prior to such termination.

 

(e) No Construction Against Drafter. The parties acknowledge and agree that each party has reviewed and negotiated the terms and provisions of this Agreement and has had the opportunity to contribute to its revision. Accordingly, any rule of construction to the effect that ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement.

 

 

(f) Clawbacks. Employee hereby acknowledges and agrees that, notwithstanding any provision of this Agreement to the contrary, Employee will be subject to any compensation recovery policy maintained by the Company as in effect from time to time, including, but not limited to, any legally mandated policy.

 

(g) Employee Representations and Acknowledgements. Employee represents, warrants and covenants that as of the date that the Company and Employee have executed this Agreement as set forth on the signature page hereto: (i) he has the full right, authority and capacity to enter into this Agreement; (ii) he is ready, willing and able to perform his obligations hereunder and, to his knowledge, no reason exists that would prevent him from performing his obligations hereunder; (iii) he is not bound by any agreement that conflicts with or prevents or restricts the full performance of his duties and obligations to the Company hereunder during or after the Term; and (iv) the execution and delivery of this Agreement shall not result in any breach or violation of, or a default under, any existing obligation, commitment or agreement to which Employee is subject. Employee and the Company acknowledge and agree that nothing in this Agreement shall (x) entitle Employee to any compensation or other interest in respect of any activity of JPE (or any other prospective company or business or entity that Employee may provide services to) other than with respect to the Company, (y) restrict or prohibit the Company, Employee or any of his affiliates from having business interests and engaging in business activities in addition to those relating to the Company, or (z) restrict the investments which the Company, Employee or JPE or any of his or its affiliates may make, regardless of whether such investment opportunity or investment may be deemed to be a Competitive Opportunity. Employee acknowledges that he has carefully read this Agreement and has given careful consideration to the restraints imposed upon Employee by this Agreement, and is in full accord as to the necessity of such restraints for the reasonable and proper protection of the Confidential Information, business strategies, employee and customer relationships and goodwill of the Company Entities now existing or to be developed in the future. Employee expressly acknowledges and agrees that each and every restraint imposed by this Agreement is reasonable with respect to subject matter, industry scope, time period and geographic area. Employee agrees to comply with each of the covenants contained in Sections 7 and 8 of this Agreement in accordance with their terms, and Employee shall not, and hereby agrees to waive and release any right or claim to, challenge the reasonableness, validity or enforceability of any of the covenants contained in Section 7 or 8 of this Agreement. Employee further acknowledges that although Employee’s compliance with the covenants contained in Sections 7 and 8 of this Agreement may prevent Employee from earning a livelihood in a business similar to the business of the Company Entities, Employee’s experience and capabilities are such that Employee has other opportunities to earn a livelihood and adequate means of support for Employee and Employee’s dependents. Employee acknowledges that the Company has advised him that it is in his best interest to consult with an attorney prior to executing this Agreement.

 

(h) Survival. Employee’s obligations under Sections 7 and 8 of this Agreement shall remain in full force and effect for the entire period provided therein notwithstanding any termination of employment or other expiration of the Term or termination of this Agreement. The terms and conditions of Sections 6, 7, 8, 9, 10 and 11 of this Agreement shall survive the Term and termination of Employee’s employment.

 

 

(i) Assignment. This Agreement is binding on and is for the benefit of the parties hereto and their respective successors, assigns, heirs, executors, administrators and other legal representatives. This Agreement is personal to Employee; and neither this Agreement nor any right or obligation hereunder may be assigned by Employee without the prior written consent of the Company (or except by will or the laws of descent and distribution), and any purported assignment in violation of this Section 11(i) shall be void.

 

(j) Severability. If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of this Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable. If any term or provision of this Agreement is invalid, illegal or incapable of being enforced by any applicable law or public policy, all other conditions and provisions of this Agreement shall nonetheless remain in full force and effect so long as the economic and legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse; provided, however, that in the event of a final, non-reviewable, non-appealable determination that any provision of Section 7 or 8 of this Agreement (whether in whole or in part) is void or constitutes an unreasonable restriction against Employee, such provision shall not be rendered void but shall be deemed to be modified to the minimum extent necessary to make such provision enforceable for the longest duration and the greatest scope as may constitute a reasonable restriction under the circumstances. Subject to the foregoing, 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 a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

 

(k) Tax Withholding. The Company may withhold from any amounts payable to Employee hereunder all federal, state, city, foreign or other taxes that the Company may reasonably determine are required to be withheld pursuant to any applicable law or regulation (it being understood that Employee shall be responsible for payment of all taxes in respect of the payments and benefits provided herein).

 

(l) Cooperation Regarding Additional Documents. Employee expressly agrees that he shall execute such other documents as reasonably requested by the Company to effect the terms of this Agreement and the issuance of the RSUs and PSUs as contemplated hereunder in compliance with applicable law.

 

(m) Governing Law; Arbitration; Consent to Jurisdiction; Waiver of Jury Trial.

 

(i) This Agreement shall be governed by and construed in accordance with its express terms, and otherwise in accordance with the laws of the State of Delaware without reference to its principles of conflicts of law.

 

 

(ii) Any claim initiated by Employee arising out of or relating to this Agreement, or the breach thereof, or Employee’s employment, or the termination thereof, may be resolved by binding arbitration before a single arbitrator in the State of Delaware administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

 

(iii) Except to the extent that the Company seeks injunctive relief pursuant to Section 10 of this Agreement, any claim initiated by the Company arising out of or relating to this Agreement, or the breach thereof, or Employee’s employment, or the termination thereof, shall, at the election of the Company be resolved in accordance with Section 11(m)(ii) or (v) of this Agreement.

 

(iv) At Employee’s option, he may choose to litigate any claim initiated by Employee arising out of or relating to this Agreement, or the breach thereof, through a court proceeding in accordance with Section 11(m)(v) or in binding arbitration pursuant to Section 11(m)(ii) of this Agreement.

 

(v) Employee hereby irrevocably submits to the jurisdiction of any state or federal court located in the State of Delaware; provided, however, that nothing herein shall preclude the Company from bringing any suit, action or proceeding in any other court for the purposes of enforcing the provisions of this Section 11(m) or enforcing any judgment or award obtained by the Company. Employee agrees that, to the fullest extent permitted by applicable law, a final and non-appealable judgment in any suit, action or proceeding brought in any applicable court described in this Section 11(m)(v) shall be conclusive and binding upon Employee and may be enforced in any other jurisdiction. EMPLOYEE EXPRESSLY AND KNOWINGLY WAIVES ANY RIGHT TO A JURY TRIAL IN THE EVENT THAT ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE BREACH HEREOF, OR EMPLOYEE’S EMPLOYMENT, OR THE TERMINATION THEREOF, IS LITIGATED OR HEARD IN ANY COURT.

 

(vi) Solely during the two-year period commencing on a Change of Control, the Company agrees to pay as incurred (within 10 business days following the Company’s receipt of an invoice from the Employee), to the full extent permitted by law, all legal fees and expenses that the Employee may reasonably incur as a result of any contest by the Company, the Employee or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest (regardless of the outcome) by the Employee about the amount of any payment pursuant to this Agreement), plus, in each case, interest on any delayed payment to which the Employee is ultimately determined to be entitled at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code based on the rate in effect for the month in which such legal fees and expenses were incurred.

 

(n) Section 409A.

 

(i) It is intended that the provisions of this Agreement comply with Section 409A, and all provisions of this Agreement shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.

 

 

(ii) Neither Employee nor any of his creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A) payable under this Agreement or under any other plan, policy, arrangement or agreement of or with the Company or any of its affiliates (this Agreement and such other plans, policies, arrangements and agreements, the “Company Plans”) to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A, any deferred compensation (within the meaning of Section 409A) payable to Employee or for Employee’s benefit under any Company Plan may not be reduced by, or offset against, any amount owed by Employee to the Company or any of its affiliates.

 

(iii) If, at the time of Employee’s separation from service (within the meaning of Section 409A), (i) Employee shall be a specified employee (using the identification methodology selected by the Company from time to time) and (ii) the Company shall make a good faith determination that an amount payable under a Company Plan constitutes deferred compensation (within the meaning of Section 409A) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A, then the Company (or its affiliate, as applicable) shall not pay such amount on the otherwise scheduled payment date but shall instead accumulate such amount and pay it on the first business day after such six-month period. To the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A, Employee shall not be considered to have terminated employment with the Company for purposes of this Agreement and no payment shall be due to Employee under this Agreement until Employee would be considered to have incurred a “separation from service” from the Company within the meaning of Section 409A.

 

(iv) Notwithstanding any provision of this Agreement or any Company Plan to the contrary, in light of the uncertainty with respect to the proper application of Section 409A, the Company reserves the right to make amendments to any Company Plan as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A. In any case, Employee is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on Employee or for Employee’s account in connection with any Company Plan (including any taxes and penalties under Section 409A), and neither the Company nor any affiliate shall have any obligation to indemnify or otherwise hold Employee harmless from any or all of such taxes or penalties.

 

(v) For purposes of Section 409A, each payment hereunder will be deemed to be a separate payment as permitted under Treasury Regulation Section 1.409A-2(b)(2)(iii).

 

(vi) Except as specifically permitted by Section 409A, any benefits and reimbursements provided to Employee under this Agreement during any calendar year shall not affect any benefits and reimbursements to be provided to Employee under this Agreement in any other calendar year, and the right to such benefits and reimbursements cannot be liquidated or exchanged for any other benefit. Furthermore, reimbursement payments shall be made to Employee as soon as practicable following the date that the applicable expense is incurred, but in no event later than the last day of the calendar year following the calendar year in which the underlying expense is incurred.

 

 

(o) Section 105(h). Notwithstanding any provision of this Agreement to the contrary, to the extent necessary to satisfy Section 105(h) of the Code, the Company will be permitted to alter the manner in which medical benefits are provided to Employee following termination of Employee’s employment, provided that the after-tax cost to Employee of such benefits shall not be greater than the cost applicable to similarly situated executives of the Company who have not terminated employment.

 

(p) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. Signatures delivered by facsimile or electronic means (including by “pdf”) shall be deemed effective for all purposes.

 

(q) Headings. The headings in this Agreement are inserted for convenience of reference only and shall not be a part of or control or affect the meaning of any provision hereof.

 

[Signature page follows.]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

	SILVERSUN TECHNOLOGIES, INC.
	by:
		/s/ Mark Meller
		Mark Meller
		Chief Executive Officer
		/s/ Brad Jacobs
		Brad Jacobs

 

 

EXHIBIT A

 

FORM OF PSU AWARD AGREEMENT

 

 

PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT UNDER THE QXO, INC. 2024 OMNIBUS INCENTIVE COMPENSATION PLAN, dated as of [DATE] (the “Grant Date”) between QXO, INC., a Delaware corporation (the “Company” or “QXO”), and Brad Jacobs.

 

This Performance-Based Restricted Stock Unit Award Agreement (this “Award Agreement”) sets forth the terms and conditions of an award of performance-based restricted stock units (this “Award” and each such unit, a “PSU”) with respect to a target number of Shares (the “Target PSUs”) equal to 7,117,828, which Award is subject to the terms and conditions specified herein and is granted to you under the QXO, Inc. 2024 Omnibus Incentive Compensation Plan (the “Plan”). This Award provides you with the opportunity to earn Shares, subject to the terms of this Award Agreement.

 

You must affirmatively acknowledge and accept this Award Agreement within 120 days following the Grant Date. A failure to acknowledge and accept this Award Agreement within such 120 day period may result in forfeiture of this Award, effective as of the 121st day following the Grant Date.

 

THIS AWARD IS SUBJECT TO ALL TERMS AND CONDITIONS OF THE PLAN INCLUDING THE PLAN RULES AND THIS AWARD AGREEMENT, INCLUDING THE DISPUTE RESOLUTION PROVISIONS SET FORTH IN SECTION 9 OF THIS AWARD AGREEMENT. BY ACCEPTING THIS AWARD, YOU SHALL HAVE CONFIRMED YOUR ACCEPTANCE OF THE TERMS AND CONDITIONS OF THIS AWARD AGREEMENT.

 

Section 1. The Plan. This Award is made pursuant to the Plan, all the terms of which are hereby incorporated in this Award Agreement. In the event of any conflict between the terms of the Plan and the terms of this Award Agreement, the terms of the Plan shall govern.

 

Section 2. Definitions. Capitalized terms used in this Award Agreement that are not defined in this Award Agreement have the meanings as used or defined in the Plan. As used in this Award Agreement, the following terms have the meanings set forth below:

 

“Annual Reset PSUs” means 50% of the Target PSUs. The Annual Reset PSUs are divided into four tranches (each, an “Annual Tranche”) with each Annual Tranche consisting of 25% of the total number of Annual Reset PSUs.

 

“Business Day” means a day that is not a Saturday, a Sunday or a day on which banking institutions are legally permitted to be closed in the City of New York.

 

“Cause” has the meaning given to such term in the Plan; provided that if, at the applicable time, you are party to an Employment Agreement or you are a participant in the Severance Plan, then Cause has the meaning given to such term in the Employment Agreement or the Severance Plan, as applicable

 

“Cliff PSUs” means the 50% of the Target PSUs that are not Annual Reset PSUs. The Cliff PSUs are treated together as a single tranche (the “Cliff Tranche”).

 

 

“Determination Date” means the date following the completion of a Performance Period on which the Committee certifies the level of achievement of the Performance Goal, which shall be no later than 45 days following the end of the applicable Performance Period (including any truncated Performance Period applicable by operation of Section 3(b)(ii)). After the occurrence of a Change of Control, the Determination Date shall refer to the last day of the applicable Performance Period.

 

“Disability” has the meaning given to such term in the Company’s (or as, relevant, any Affiliate’s) long-term disability plan applicable to you; provided that if, at the applicable time, you are party to an Employment Agreement or you are a participant in the Severance Plan, then Disability has the meaning given to such term in the Employment Agreement or the Severance Plan, as applicable.

 

“Earned PSUs” means the number of PSUs subject to an Annual Tranche or subject to the Cliff Tranche that are earned based on the actual level of achievement of the applicable Performance Goal, as certified by the Committee on the Determination Date, or that are otherwise earned in accordance with this Award Agreement. The number of Earned PSUs may range from 0% to 225% of the number of Target PSUs.

 

“Employment Agreement” means any individual employment agreement between you and the Company or any of its Subsidiaries, as in effect from time to time.

 

“Good Reason” if, at the applicable time, you are party to an Employment Agreement or a participant in the Severance Plan, has the meaning given to such term in your Employment Agreement or the Severance Plan, as applicable. If, at the applicable time, you are not party to an Employment Agreement and you are not a participant in the Severance Plan, then the term Good Reason shall not apply to you.

 

“Performance Goal” means each market-based performance goal applicable to each Annual Tranche or the Cliff PSUs as set forth in Exhibit A.

 

“Performance Period” means for the first Annual Tranche, the period commencing on the Grant Date and ending on December 31, 2025; for each of the remaining Annual Tranches, the period commencing on January 1 and ending on December 31 of each of the 2026, 2027, and 2028 calendar years, respectively; and for the Cliff Tranche, the period commencing on the Grant Date and ending on December 31, 2028, which may be truncated by a Change of Control.

 

“Per Tranche Target PSUs” means with respect to each Annual Tranche and with respect to the Cliff Tranche, the portion of the Target PSUs that is subject to such tranche.

 

“Section 409A” means Section 409A of the Code, and the regulations and other interpretive guidance promulgated thereunder, as in effect from time to time.

 

“Severance Plan” means the QXO, Inc. Severance Plan, as in effect from time to time.

 

 

Section 3. Vesting and Settlement.

 

(a) Regularly Scheduled Vesting. Except as otherwise provided in this Award Agreement, the Earned PSUs (if any) relating to each Annual Tranche or to the Cliff Tranche, as applicable, determined based on the actual level of achievement of the Performance Goal relating to the applicable Performance Period as certified by the Committee, shall vest on the applicable Determination Date for such Performance Period contingent upon your continued service to the Company or an Affiliate (in an employee or non-employee capacity) through such Determination Date. Except as otherwise provided in this Award Agreement, no PSUs shall be earned and payable with respect to the Award unless the Committee has certified the actual level of achievement of the Performance Goal with respect to the applicable Performance Period for a relevant portion of the Award. The Committee shall have sole discretion to determine the actual level of achievement of the Performance Goal.

 

(b) Termination of Service. Notwithstanding anything to the contrary in this Award Agreement or the Plan but subject to Section 3(c) and subject to any more favorable provisions regarding treatment on termination of service set forth in your Employment Agreement, if applicable, all unvested PSUs will be forfeited upon your termination of service for any reason prior to the corresponding Determination Date, except that:

 

(i) Death. If, by reason of your death, your service terminates while PSUs remain outstanding, you will vest in full in the Target PSUs that remain outstanding at the time of your termination of service, except that (A) if your service terminates after the end of a Performance Period but prior to the Determination Date for such Performance Period, then rather than vesting in the Target PSUs associated with such Performance Period, you shall also vest as of such Determination Date in the Earned PSUs for the Annual Tranche (and, if applicable, the Cliff Tranche) relating to such completed Performance Period and (B) if your termination of service occurs after a Change of Control, then rather than vesting in the Target PSUs, you will instead vest in full in the number of Earned PSUs (computed in accordance with Section 3(c)) that remain outstanding at the time of your termination of service.

 

(ii) Disability, Involuntary Not for Cause Termination or Resignation for Good Reason (other than During a CIC Period). Except as otherwise provided by Section 3(b)(iii) below with respect to the CIC Period (as defined below), if your service terminates by reason of your Disability, your involuntary termination by the Company without Cause or your resignation for Good Reason, your outstanding and unvested PSUs will be treated as follows:

 

(A) the outstanding and unvested Annual Tranche that relates to the Performance Period in which the termination of service occurs and the immediately following Performance Period will immediately vest, in each case, with respect to the greater of (I) the Per Tranche Target PSUs subject to such Annual Tranche and (II) the Earned PSUs subject to such Annual Tranche (determined by applying the actual level of performance achievement, as a percentage of target, certified by the Committee with respect to the last Performance Period ending prior to the date of termination of service); provided that if the termination of service occurs during the first Performance Period, then the Per Tranche Target PSUs with respect to each such Annual Tranche shall vest without reference to actual performance;

 

 

(B) you will immediately vest in a prorated portion of the Cliff Tranche, with such prorated portion equal to the product of (I) the greater of (x) the Per Tranche Target PSUs subject to the Cliff Tranche and (y) the Earned PSUs subject to the Cliff Tranche (determined by truncating the applicable Performance Period so that it ends on the date of termination of service) and (II) a fraction (which shall not be greater than one), the numerator of which is the number of days between the first day of the applicable Performance Period and the second anniversary of the date of termination of service and the denominator of which is the total number of days in the applicable Performance Period; and

 

(C) if your termination of service occurs after the end of a Performance Period and prior to the corresponding Determination Date, you will vest, as of the corresponding Determination Date, in the Earned PSUs relating to such Performance Period; and

 

(D) all remaining outstanding unvested PSUs that do not vest pursuant to the immediately preceding clauses (A) through (C) shall be forfeited.

 

If your termination of employment due to your Disability, involuntary termination by the Company without Cause or your resignation for Good Reason occurs after a CIC Period, then for purposes of applying the foregoing provisions of this Section 3(b)(ii), the number of PSUs eligible to vest pursuant to any Annual Tranche or the Cliff Tranche will in all cases be equal to the total number of Earned PSUs (computed in accordance with Section 3(c)) that correspond to such Annual Tranche or the Cliff Tranche and any contrary language in this Section 3(b)(ii) shall not apply.

 

(iii) Disability, Involuntary Not for Cause Termination, or Resignation for Good Reason during a CIC Period. If, during the two-year period commencing on a Change of Control (the “CIC Period”), your service terminates by reason of your Disability, your employment or service is involuntarily terminated by the Company without Cause or you resign for Good Reason, then all Earned PSUs (computed in accordance with Section 3(c)) that remain outstanding at the time of your termination of employment or service will immediately vest.

 

(c) Change of Control. In the event of a Change of Control, the number of Earned PSUs will be calculated and determined by the Committee immediately prior to the Change of Control in accordance with clauses (i), (ii), (iii) and (iv) below. Such Earned PSUs shall remain outstanding and shall vest subject to your continued service through the applicable Determination Date, except as otherwise provided in Section 3(b):

 

(i) if the Change of Control occurs within 45 days after the completion of a Performance Period for an Annual Tranche (and, if applicable, for the Cliff Tranche), the Earned PSUs for the applicable Annual Tranche (and, if applicable, for the Cliff Tranche) will be determined by the Committee prior to the Change of Control based on actual performance results for the applicable Performance Period;

 

 

(ii) for the Performance Period corresponding to an Annual Tranche in which the Change of Control occurs, the Earned PSUs for such Annual Tranche shall be equal to the greater of (A) 100% of the Per Tranche Annual PSUs for such Annual Tranche and (B) the number of PSUs that would be earned pursuant to such Annual Tranche assuming that such Performance Period terminated on the second to last Business Day prior to the Change of Control and using the value of the Change of Control consideration paid in respect of each outstanding Share (as determined by the Committee) to determine the Ending Price for the Shares;

 

(iii) for each Performance Period corresponding to an Annual Tranche that has not commenced as of the date of the Change of Control, the Earned PSUs for such Annual Tranche shall be equal to the greater of (A) 100% of the Per Tranche Annual PSUs for such Annual Tranche and (B) the number of PSUs that would be earned pursuant to such Annual Tranche based on the CIC Cumulative Percentage (as defined in Exhibit A); and

 

(iv) if the Change of Control occurs during the Performance Period for the Cliff Tranche, the number of Earned PSUs for the Cliff Tranche shall be equal to the greater of (A) 100% of the Per Tranche Target PSUs for the Cliff Tranche and (B) number of PSUs that would be earned pursuant to the Cliff Tranche based on the CIC Cumulative Percentage.

 

(d) Any PSUs that do not become Earned PSUs by operation of clauses (i)-(iv) shall be permanently forfeited upon the date of the Change of Control for no consideration. If the Earned PSUs as determined pursuant to clauses (i)-(iv) are not replaced in compliance with Section 8(b) of the Plan, then such Earned PSUs shall vest immediately upon the completion of the Change of Control as described in Section 8(e) of the Plan.

 

(e) Settlement of Award. If Earned PSUs vest pursuant to the foregoing provisions of this Section 3, then as soon as practicable following the date on which such Earned PSUs become vested and no later than 30 days thereafter, the Company shall deliver to you or your legal representative one Share for each Earned PSU that has become vested.

 

Section 4. No Rights as a Stockholder. You shall not have any rights or privileges of a stockholder with respect to the PSUs subject to this Award Agreement unless and until Shares are actually issued in settlement of this Award.

 

Section 5. Non-Transferability of PSUs. Unless otherwise provided by the Committee in its discretion, PSUs may not be sold, assigned, alienated, transferred, pledged, attached or otherwise encumbered except as provided in Section 9(a) of the Plan. Any purported sale, assignment, alienation, transfer, pledge, attachment or other encumbrance of PSUs in violation of the provisions of this Section 5 and Section 9(a) of the Plan shall be void.

 

 

Section 6. Withholding: Consents.

 

(a) Withholding. The delivery of Shares pursuant to Section 3 of this Award Agreement is conditioned on satisfaction of any applicable withholding taxes in accordance with this Section 6(a) and Section 9(d) of the Plan. No later than the date as of which an amount first becomes includible in your gross income for Federal, state, local or foreign income tax purposes with respect to any PSUs, you shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any Federal, state, local and foreign taxes that are required by applicable laws and regulations to be withheld with respect to such amount. In the event that there is withholding tax liability in connection with the settlement of the PSUs, unless otherwise determined by the Committee such withholding tax liability shall be satisfied by the Company withholding from the number of Shares you would be entitled to receive upon settlement of the PSUs, a number of Shares having a Fair Market Value (which shall either have the meaning set forth in the Plan or shall have such other meaning as determined by the Company in accordance with applicable withholding requirements) equal to such withholding tax liability.

 

(b) Consents. Your rights in respect of the PSUs are conditioned on the receipt to the full satisfaction of the Committee of any required consents that the Committee may determine to be necessary or advisable (including your consent to the Company’s supplying to any third-party recordkeeper of the Plan such personal information as the Committee deems advisable to administer the Plan).

 

Section 7. Successors and Assigns of the Company. The terms and conditions of this Award Agreement shall be binding upon and shall inure to the benefit of the Company and its successors and assigns.

 

Section 8. Committee Discretion. The Committee shall have full and plenary discretion with respect to any actions to be taken or determinations to be made in connection with this Award Agreement, and its determinations shall be final, binding and conclusive.

 

Section 9. Arbitration and Consent to Jurisdiction. The provisions of the Confidential Information Protection Agreement between you and the Company relating to arbitration and consent to jurisdiction shall apply to this Award Agreement as if set forth herein, mutatis mutandis. Notwithstanding the foregoing, at your option, you may choose to either litigate in a judicial proceeding or arbitration, in a venue of your choice, to which the Company has a connection. If you are not party to a Confidential Information Protection Agreement with the Company, then any claims you wish to make arising out of or relating to this Agreement will be resolved, at your option, either by a judicial proceeding, or by binding arbitration before a single arbitrator in the State of Delaware, or at another location as mutually agreed upon by the parties, administered by the American Arbitration Association (“AAA”) in accordance with its Employment Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. This provision does not apply to claims that, under law, may not be subject to a pre-dispute arbitration agreement. Notwithstanding anything to the contrary under the Rules of the AAA or the general grant of authority to the arbitrator contained herein, the arbitrator shall have no jurisdiction or authority to compel any class or collective claim, to consolidate different arbitration proceedings or to join any other party to any arbitration between you and the Company. The arbitrator shall, for all such claims you wish to file, have the exclusive authority to determine the applicability, interpretation and enforceability of this Agreement, but shall have no jurisdiction or authority to compel any class or collective claim or to join any other party to an arbitration between you and the Company.

 

 

Section 10.  Notice. Except as otherwise provided, the Company may give you notice at your last known principal residence listed on the Company’s records. You, in turn, may give the Company notice to QXO, Inc., Five American Lane, Greenwich, CT 06831, Attention: Chief Legal Officer. Either you or the Company may provide another address for notice by written notice to the other. Notice is deemed given as follows: (a) when delivered personally; (b) four (4) days after it is mailed by registered or certified mail, postage prepaid, return receipt requested or (c) one (1) day after it is sent by overnight courier service via UPS or FedEx.

 

Section 11.  Governing Law. The validity, construction and effect of this Award Agreement in all respects shall be determined in accordance with the laws of the State of Delaware, without giving effect to the conflict of law principles thereof.

 

Section 12.  Headings and Construction. Headings are given to the Sections and subsections of this Award Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Award Agreement or any provision thereof. Whenever the words “include,” “includes” or “including” are used in this Award Agreement, they shall be deemed to be followed by the words “but not limited to.” The term “or” is not exclusive.

 

Section 13.  Amendment of this Award Agreement. The Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate this Award Agreement prospectively or retroactively; provided, however, that, except as set forth in Section 14(c) of this Award Agreement, any such waiver, amendment, alteration, suspension, discontinuance, cancelation or termination that would materially and adversely impair your rights under this Award Agreement shall not to that extent be effective without your consent (it being understood, notwithstanding the foregoing proviso, that this Award Agreement and the PSUs shall be subject to the provisions of Section 7(c) of the Plan).

 

Section 14.  Section 409A.

 

(a) It is intended that the provisions of this Award Agreement comply with Section 409A or an applicable exemption thereunder, and all provisions of this Award Agreement shall be construed and interpreted in a manner consistent with such intention.

 

(b) If, at the time of your separation from service (within the meaning of Section 409A), (i) you are a specified employee (within the meaning of Section 409A and using the identification methodology selected by the Company from time to time) and (ii) the Company shall make a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A, then the Company shall not pay such amount on the otherwise scheduled payment date but shall instead pay it, without interest (except as otherwise provided in your Employment Agreement), on the first Business Day after such six-month period. For purposes of Section 409A, each payment hereunder will be deemed to be a separate payment as permitted under Treasury Regulations Section 1.409A-2(b)(2)(iii).

 

 

(c) Notwithstanding any provision of this Award Agreement to the contrary, in light of the uncertainty with respect to the proper application of Section 409A, the Company reserves the right to make amendments to this Award Agreement as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A. In any case, you shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on you or for your account in connection with this Award Agreement (including any taxes and penalties under Section 409A), and neither the Company nor any of its Affiliates shall have any obligation to indemnify or otherwise hold you harmless from any or all of such taxes or penalties.

 

Section 15.  Counterparts. This Award Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. You and the Company hereby acknowledge and agree that signatures delivered by facsimile or electronic means (including by “pdf”) shall be deemed effective for all purposes.

 

Section 16.  Lock-Up. All Shares received on settlement of the Award (net of applicable tax withholding) shall be subject to a lock-up from the date hereof until December 31, 2029 on sales, offers, pledges, contracts to sell, grants of any option, right or warrant to purchase, or other transfers or dispositions, whether directly or indirectly; provided, however, that such lock-up may be waived in the sole discretion of the Committee and shall not apply after a Change of Control or after your death.

 

Section 17.  Securities Trade Monitoring Policy. Unless otherwise elected by the Committee, you are required to maintain a securities brokerage account with the Company’s preferred broker in order to receive any Shares issuable under this Award, in accordance with the Company’s securities trade monitoring policy (the “Trade Monitoring Policy”). Any Shares issued to you pursuant to this Award Agreement shall be deposited in your account with the Company’s preferred broker in accordance with the terms set forth herein. You hereby acknowledge that you have reviewed, and agree to comply with, the terms of the Trade Monitoring Policy, and that this Award, and the value of any Shares issued pursuant to this Award Agreement, shall be subject to forfeiture or recoupment by the Company, as applicable, in the event of your noncompliance with the Trade Monitoring Policy, as it may be in effect from time to time.

 

Section 18.  Recoupment of Award. You acknowledge and agree that in accordance with Section 9(n) of the Plan, the Company may recoup all or any portion of this Award in accordance with any compensation recovery policy maintained by the Company, as in effect from time to time, including any such policy mandated by applicable law or Applicable Exchange rules. This Section 18 and Section 9(n) of the Plan shall not be the Company's exclusive remedy with respect to such matters.

 

Section 19.  Imposition of Other Requirements. The Company reserves the right to impose other requirements on your participation in the Plan, on this Award and on any Shares acquired upon settlement of this Award, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

 

[Signature Page Follows.]

 

 

IN WITNESS WHEREOF, the parties have duly executed this Award Agreement as of the date first written above.

 

	QXO, Inc.
	by
		Name:	Josephine Berisha
		Title:	Chief Human Resources Officer

 

	BRad Jacobs

 

 

Exhibit A

Performance Goals

 

(1)

Performance Goals.

 

(a)

The performance criteria for the Performance Goals shall be relative TSR, with the Company’s TSR being compared to the TSR of the Index. The Performance Goal for each Performance Period is set forth below in this Section 1. The level of achievement of each Performance Goal shall be measured over each Performance Period as described below. The Committee reserves the right in its discretion to adjust or augment any or all Performance Goals, including without limitation the performance criteria for any Performance Goals, based on changes in economic circumstances or government-related mandates that impact the Company’s business, changes in the competitive market, or other factors that materially change the relevance of the metric in the Performance Period.

 

(b)

The calculation of the number of Earned PSUs for each Annual Tranche and for the Cliff Tranche shall equal the percentage of the applicable Per Tranche Target PSUs that corresponds to the level of achievement of the Company’s relative TSR compared to the Index during the applicable Performance Period as set forth in the table below. For purposes of applying the matrix set forth in the table below, the Company’s TSR for the applicable Performance Period will be compared to the TSR ranking of each company in the Index during the applicable Performance Period with each company in the Index ranked based on its TSR during the applicable Performance Period in the order of lowest to highest TSR. For each Performance Period, any PSUs that do not become Earned PSUs by application of this Section 1 or, in the case of a Change of Control, by application of Section 3(c) of the Award Agreement, shall be permanently forfeited for no consideration.

 

Percentile Position vs. S&P 500 Index Companies		Units Earned as a Percentage of Target*
Below 55th Percentile		0%
55th Percentile		100%
65th Percentile		150%
75th Percentile		175%
80th Percentile		200%
90th Percentile		225%

 

	*	Linear interpolation shall be applied between levels above 55th percentile.
		No PSUs will be earned for performance below the 55th percentile.

 

 

(2)

Certain Definitions.

 

(a)

“Beginning Price” shall mean the average of the closing prices of Shares or the common shares of each company in the Index, as applicable, during the thirty (30) consecutive trading days beginning on and including the first day of the Performance Period, provided that the Beginning Price of the Shares for the Cliff Tranche and for the Performance Period for the first Annual Tranche shall be the closing price of the Shares on the Grant Date.

 

(b)

“CIC Cumulative Percentage” shall mean, with respect to a Change of Control, the PSUs earned for the applicable Annual Tranche or for the Cliff Tranche as a percentage of Per Tranche Target PSUs pursuant to the performance matrix set forth in Section 1 above, but assuming a Performance Period commencing on the Grant Date and concluding on the second to last Business Day prior to the Change of Control, and using (i) the closing price of the Shares on the Grant Date as the Beginning Price and (ii) the value of the Change of Control consideration paid in respect of each outstanding Share (as determined by the Committee) to determine the Ending Price for the Shares.

 

(c)

“Dividends Paid” shall mean all cash dividends paid by the applicable company with respect to an ex-dividend date that occurs during the Performance Period (whether or not the dividend payment date occurs during the Performance Period), which shall be deemed to have been reinvested in the underlying common shares and shall include cash dividends paid with respect to such reinvested dividends. As applied to the Index, Dividends Paid shall relate to dividends of the constituent companies and shall assume that they are reinvested in the constituent companies of the Index.

 

(d)

“Ending Price” shall mean the average of the closing prices of the Shares or the common shares of each company in the Index, as applicable, during the thirty (30) consecutive trading days leading up to and including the last day of the Performance Period. In determining the Ending Price for the Company or a company in the Index, the Committee shall make such adjustments as it deems appropriate to reflect stock splits, spin-offs, and similar transactions that occurred during the Performance Period for both the Company and the members of the Index.

 

(e)

“Index” shall mean the companies in the S&P 500 Index as of the beginning of the applicable Performance Period. For the avoidance of doubt, only those companies with a Beginning Price and Ending Price for the applicable Performance Period shall be included in the Index.

 

(f)

“TSR” shall mean, with respect to the applicable Performance Period, the quotient of (i) a company’s Ending Price minus the company’s Beginning Price plus the company’s Dividends Paid, divided by (ii) the company’s Beginning Price.

 

 

EXHIBIT B

 

FORM OF RSU AWARD AGREEMENT

 

 

RESTRICTED STOCK UNIT AWARD AGREEMENT UNDER THE QXO, INC. 2024 OMNIBUS INCENTIVE COMPENSATION PLAN, dated as of [DATE] (the “Grant Date”) between QXO, INC., a Delaware corporation (the “Company” or “QXO”), and Brad Jacobs.

 

This Restricted Stock Unit Award Agreement (this “Award Agreement”) sets forth the terms and conditions of an award of 3,832,676 restricted stock units (this “Award”) that are subject to the terms and conditions specified herein (each such restricted stock unit, an “RSU”) and that are granted to you under the QXO, Inc. 2024 Omnibus Incentive Compensation Plan (the “Plan”). This Award provides you with the opportunity to earn Shares, subject to the terms of this Award Agreement.

 

You must affirmatively acknowledge and accept this Award Agreement within 120 days following the Grant Date. A failure to acknowledge and accept this Award Agreement within such 120 day period may result in forfeiture of this Award, effective as of the 121st day following the Grant Date.

 

THIS AWARD IS SUBJECT TO ALL TERMS AND CONDITIONS OF THE PLAN INCLUDING THE PLAN RULES, AND THIS AWARD AGREEMENT, INCLUDING THE DISPUTE RESOLUTION PROVISIONS SET FORTH IN SECTION 9 OF THIS AWARD AGREEMENT. BY ACCEPTING THIS AWARD, YOU SHALL HAVE CONFIRMED YOUR ACCEPTANCE OF THE TERMS AND CONDITIONS OF THIS AWARD AGREEMENT.

 

SECTION 1. The Plan. This Award is made pursuant to the Plan, all the terms of which are hereby incorporated in this Award Agreement. In the event of any conflict between the terms of the Plan and the terms of this Award Agreement, the terms of the Plan shall govern.

 

SECTION 2. Definitions. Capitalized terms used in this Award Agreement that are not defined in this Award Agreement have the meanings as used or defined in the Plan. As used in this Award Agreement, the following terms have the meanings set forth below:

 

“Business Day” means a day that is not a Saturday, a Sunday or a day on which banking institutions are legally permitted to be closed in the City of New York.

 

“Cause” has the meaning given to such term in the Plan; provided that if, at the applicable time, you are party to an Employment Agreement or you are a participant in the Severance Plan, then Cause has the meaning given to such term in the Employment Agreement or the Severance Plan, as applicable.

 

“Disability” has the meaning given to such term in the Company’s (or as, relevant, any Affiliate’s) long-term disability plan applicable to you; provided that if, at the applicable time, you are party to an Employment Agreement or you are a participant in the Severance Plan, then Disability has the meaning given to such term in the Employment Agreement or the Severance Plan, as applicable.

 

“Employment Agreement” means any individual employment agreement between you and the Company or any of its Subsidiaries, as in effect from time to time.

 

 

“Good Reason” if, at the applicable time, you are party to an Employment Agreement or a participant in the Severance Plan, has the meaning given to such term in your Employment Agreement or the Severance Plan, as applicable. If, at the applicable time, you are not party to an Employment Agreement and you are not a participant in the Severance Plan, then the term Good Reason shall not apply to you.

 

“Scheduled Vesting Date” shall have the meaning given to such term in Section 3(a) of this Award Agreement.

 

“Section 409A” means Section 409A of the Code, and the regulations and other interpretive guidance promulgated thereunder, as in effect from time to time.

 

“Severance Plan” means the QXO, Inc. Severance Plan, as in effect from time to time.

 

SECTION 3. Vesting and Settlement.

 

(a) Regularly Scheduled Vesting. Except as otherwise provided in this Award Agreement, the RSUs will become vested in part on each of the five dates set forth below (each, a “Scheduled Vesting Date”), subject to your continued service with the Company or an Affiliate (in an employee or non-employee capacity) through the applicable Scheduled Vesting Date. The percentage of the total number of RSUs originally granted pursuant to the Award that will become vested on each Scheduled Vesting Date is as follows:

 

i. December 31, 2025: 15%;

 

ii. December 31, 2026: 17.5%;

 

iii. December 31, 2027: 17.5%;

 

iv. December 31, 2028: 25%; and

 

v. December 31, 2029: 25%.

 

(b) Termination of Service. Notwithstanding anything to the contrary in this Award Agreement or the Plan but subject to Section 3(c) and subject to any more favorable provisions regarding treatment on termination of service set forth in your Employment Agreement, if applicable, all unvested RSUs will be forfeited upon your termination of service for any reason prior to the last Scheduled Vesting Date, except that:

 

i. Death. If your service terminates by reason of your death, all outstanding and unvested RSUs shall immediately vest in full.

 

ii. Disability, Involuntary Not for Cause Termination or Resignation for Good Reason (other than During the Two-Year Period Immediately Following a Change of Control). If your service is terminated by reason of your Disability, your service is involuntarily terminated by the Company without Cause or you resign for Good Reason, (A) the outstanding and unvested RSUs that are scheduled to vest on each of the next two Scheduled Vesting Dates immediately following the date of your termination of service will immediately vest, and (B) the remainder of the outstanding unvested RSUs shall be forfeited.

 

 

(c) Change of Control. Upon a Change of Control that occurs prior to the last Scheduled Vesting Date, if you continue to provide services at the time of such Change of Control, then all outstanding and unvested RSUs (including any RSUs replaced with a Replacement Award in compliance with Section 8(b) of the Plan) shall remain outstanding and unvested, and shall continue to vest in accordance with the time-based vesting conditions set forth in Section 3(a). The treatment of the RSUs or Replaced Award on your termination of service shall be as set forth in Section 3(b), except that during the two years immediately following the date of a Change in Control, if your employment is terminated by reason of your death, Disability, by the Company without Cause, or due to your resignation for Good Reason, all outstanding and unvested RSUs (or the Replacement Award, to the extent outstanding and unvested, if applicable) shall immediately vest. Or, if such RSUs are not replaced in compliance with Section 8(b) of the Plan, all outstanding and unvested RSUs shall vest immediately upon the completion of the Change of Control.

 

(d) Settlement of Award. If RSUs vest pursuant to the foregoing provisions of this Section 3, then as soon as administratively practicable, and in any event within thirty (30) days after any RSUs become vested, the Company shall deliver to you or your legal representative one Share for each vested RSU.

 

SECTION 4. No Rights as a Stockholder. You shall not have any rights or privileges of a stockholder with respect to the RSUs subject to this Award Agreement unless and until Shares are actually issued in settlement of this Award.

 

SECTION 5. Non-Transferability of RSUs. Unless otherwise provided by the Committee in its discretion, RSUs may not be sold, assigned, alienated, transferred, pledged, attached or otherwise encumbered except as provided in Section 9(a) of the Plan. Any purported sale, assignment, alienation, transfer, pledge, attachment or other encumbrance of RSUs in violation of the provisions of this Section 5 and Section 9(a) of the Plan shall be void.

 

SECTION 6. Withholding; Consents.

 

(a) Withholding. The delivery of Shares pursuant to Section 3 of this Award Agreement is conditioned on satisfaction of any applicable withholding taxes in accordance with this Section 6(a) and Section 9(d) of the Plan. No later than the date as of which an amount first becomes includible in your gross income for Federal, state, local or foreign income tax purposes with respect to any RSUs, you shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any Federal, state, local and foreign taxes that are required by applicable laws and regulations to be withheld with respect to such amount. In the event that there is withholding tax liability in connection with the settlement of the RSUs, unless otherwise determined by the Committee, such withholding tax liability shall be satisfied by the Company withholding from the number of Shares you would be entitled to receive upon settlement of the RSUs a number of Shares having a Fair Market Value (which shall either have the meaning set forth in the Plan or shall have such other meaning as determined by the Company in accordance with applicable withholding requirements) equal to such withholding tax liability.

 

 

(b) Consents. Your rights in respect of the RSUs are conditioned on the receipt to the full satisfaction of the Committee of any required consents that the Committee may determine to be necessary or advisable (including your consent to the Company’s supplying to any third-party recordkeeper of the Plan such personal information as the Committee deems advisable to administer the Plan).

 

SECTION 7. Successors and Assigns of the Company. The terms and conditions of this Award Agreement shall be binding upon, and shall inure to the benefit of, the Company and its successors and assigns.

 

SECTION 8. Committee Discretion. The Committee shall have full and plenary discretion with respect to any actions to be taken or determinations to be made in connection with this Award Agreement, and its determinations shall be final, binding and conclusive.

 

SECTION 9. Arbitration and Consent to Jurisdiction. The provisions of the Confidential Information Protection Agreement between you and the Company relating to arbitration and consent to jurisdiction shall apply to this Award Agreement as if set forth herein, mutatis mutandis. Notwithstanding the foregoing, at your option, you may choose to either litigate in a judicial proceeding or arbitration, in a venue of your choice, to which the Company has a connection. If you are not party to a Confidential Information Protection Agreement with the Company, then any claims you wish to make arising out of or relating to this Agreement will be resolved, at your option, either by a judicial proceeding, or by binding arbitration before a single arbitrator in the State of Delaware, or at another location as mutually agreed upon by the parties, administered by the American Arbitration Association (“AAA”) in accordance with its Employment Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. This provision does not apply to claims that, under law, may not be subject to a pre-dispute arbitration agreement. Notwithstanding anything to the contrary under the Rules of the AAA or the general grant of authority to the arbitrator contained herein, the arbitrator shall have no jurisdiction or authority to compel any class or collective claim, to consolidate different arbitration proceedings or to join any other party to any arbitration between you and the Company. The arbitrator shall, for all such claims you wish to file, have the exclusive authority to determine the applicability, interpretation and enforceability of this Agreement, but shall have no jurisdiction or authority to compel any class or collective claim or to join any other party to an arbitration between you and the Company.

 

SECTION 10.  Notice. Except as otherwise provided, the Company may give you notice at your last known principal residence listed on the Company’s records. You, in turn, may give the Company notice to QXO, Inc., Five American Lane, Greenwich, CT 06831, Attention: Chief Legal Officer. Either you or the Company may provide another address for notice by written notice to the other. Notice is deemed given as follows: (a) when delivered personally; (b) four (4) days after it is mailed by registered or certified mail, postage prepaid, return receipt requested or (b) one (1) day after it is sent by overnight courier service via UPS or FedEx.

 

 

SECTION 11.  Governing Law. The validity, construction and effect of this Award Agreement in all respects shall be determined in accordance with the laws of the State of Delaware, without giving effect to the conflict of law principles thereof.

 

SECTION 12.  Headings and Construction. Headings are given to the Sections and subsections of this Award Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Award Agreement or any provision thereof. Whenever the words “include,” “includes” or “including” are used in this Award Agreement, they shall be deemed to be followed by the words “but not limited to”. The term “or” is not exclusive.

 

SECTION 13.  Amendment of this Award Agreement. The Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate this Award Agreement prospectively or retroactively; provided, however, that, except as set forth in Section 14(c) of this Award Agreement, any such waiver, amendment, alteration, suspension, discontinuance, cancelation or termination that would materially and adversely impair your rights under this Award Agreement shall not to that extent be effective without your consent (it being understood, notwithstanding the foregoing proviso, that this Award Agreement and the RSUs shall be subject to the provisions of Section 7(c) of the Plan).

 

SECTION 14.  Section 409A.

 

(a) It is intended that the provisions of this Award Agreement comply with Section 409A or an applicable exemption thereunder, and all provisions of this Award Agreement shall be construed and interpreted in a manner consistent with such intention.

 

(b) If, at the time of your separation from service (within the meaning of Section 409A), (i) you are a specified employee (within the meaning of Section 409A and using the identification methodology selected by the Company from time to time) and (ii) the Company shall make a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A, then the Company shall not pay such amount on the otherwise scheduled payment date but shall instead pay it, without interest (except as otherwise provided in your Employment Agreement), on the first Business Day after such six-month period. For purposes of Section 409A, each payment hereunder will be deemed to be a separate payment as permitted under Treasury Regulations Section 1.409A-2(b)(2)(iii).

 

(c) Notwithstanding any provision of this Award Agreement to the contrary, in light of the uncertainty with respect to the proper application of Section 409A, the Company reserves the right to make amendments to this Award Agreement as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A. In any case, you shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on you or for your account in connection with this Award Agreement (including any taxes and penalties under Section 409A), and neither the Company nor any of its Affiliates shall have any obligation to indemnify or otherwise hold you harmless from any or all of such taxes or penalties.

 

 

SECTION 15.  Counterparts. This Award Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. You and the Company hereby acknowledge and agree that signatures delivered by facsimile or electronic means (including by “pdf”) shall be deemed effective for all purposes.

 

SECTION 16.  Lock-Up. All Shares received on settlement of the Award (net of applicable tax withholding) shall be subject to a lock-up from the date hereof until December 31, 2029 on sales, offers, pledges, contracts to sell, grants of any option, right or warrant to purchase, or other transfers or dispositions, whether directly or indirectly; provided, however, that such lock-up may be waived in the sole discretion of the Committee and shall not apply after a Change in Control or after your death.

 

SECTION 17.  Securities Trade Monitoring Policy. Unless otherwise elected by the Committee, you are required to maintain a securities brokerage account with the Company’s preferred broker in order to receive any Shares issuable under this Award, in accordance with the Company securities trade monitoring policy (the “Trade Monitoring Policy” ). Any Shares issued to you pursuant to this Award Agreement shall be deposited in your account with the Company’s preferred broker in accordance with the terms set forth herein. You hereby acknowledge that you have reviewed, and agree to comply with, the terms of the Trade Monitoring Policy, and that this Award, and the value of any Shares issued pursuant to this Award Agreement, shall be subject to forfeiture or recoupment by the Company, as applicable, in the event of your noncompliance with the Trade Monitoring Policy, as it may be in effect from time to time.

 

SECTION 18.  Recoupment of Award. You acknowledge and agree that in accordance with Section 9(n) of the Plan, the Company may recoup all or any portion of this Award in accordance with any compensation recovery policy maintained by the Company, as in effect from time to time, including any such policy mandated by applicable law or Applicable Exchange rules. This Section 18 and Section 9(n) of the Plan shall not be the Company’s exclusive remedy with respect to such matters.

 

SECTION 19.  Imposition of Other Requirements. The Company reserves the right to impose other requirements on your participation in the Plan, on this Award and on any Shares acquired upon settlement of this Award, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

 

[Signature Page Follows.]

 

 

IN WITNESS WHEREOF, the parties have duly executed this Award Agreement as of the date first written above.

 

	QXO, INC.
	By
		Name:	Josephine Berisha
		Title:	Chief Human Resources Officer

 

	BRAD JACOBS

 

 

B-8

Exhibit 10.4

 

 

 

QXO, Inc.

Chartered Aircraft Use Policy

 

Effective as of June 6, 2024

 

PURPOSE

 

This policy sets forth general guidelines by QXO, Inc. (the “Company”) for the use of private aircraft chartered or otherwise provided by the Company. Use of chartered aircraft can provide advantages in terms of time, security and productivity and can further the business interests of the Company. For purposes of this policy, “chartered aircraft” shall mean aircraft leased or chartered or otherwise provided by the Company, or another affiliate of the Company, for approved use by the officers and senior executives of the Company.

 

POLICY

 

1.	Business Use for CEO.

 

(a) The Chief Executive Officer will be permitted to use chartered aircraft for all travel with a business purpose.

 

(b) “Business purpose” means activity integrally and directly related to the performance of the role of a senior executive or other service provider, and is intended to be consistent with existing guidance from the Securities and Exchange Commission (“SEC”) with respect to the determination of perquisites.

 

Examples of travel for business purposes include, but are not limited to travel to attend meetings with current and potential investors, employees, customers, vendors, acquisition targets and financing sources; travel to attend conferences related to Company business or Company relationships, such as potential customers, clients, financing sources, acquisition targets; travel to attend the meetings with the Board of Directors and Committees of the Board of Directors of the Company; travel in connection with the Company’s strategic planning initiatives and meetings with advisors; and other travel that generally furthers the business purposes of the Company.

 

For the avoidance of doubt, (i) the definition of “business purpose” is intended to be consistent with the SEC guidance on the business usage of aircraft, as in effect from time to time, and (ii) the mere fact that a passenger also accomplishes a personal goal or receives a personal benefit shall not preclude the travel from being deemed for business purposes, provided the accomplishment of the personal goal or receipt of a personal benefit is incidental to the overall business-related purpose of the trip.

 

Business purpose shall not include commuting or travel between the residence of a senior executive or other service provider and that individual’s primary place of providing services.

 

2.	Business Use for Other Senior Executives. With the prior approval of the Chief Executive Officer, other senior executives of the Company will be permitted to use chartered aircraft for business purposes.

 

 

3.	Chief Executive Officer Guest Policy.

 

(a) If the Chief Executive Officer is travelling for business purposes, he will be permitted to include his spouse or guests on scheduled flights of chartered aircraft to the extent space is available and it does not materially increase the cost of the chartered aircraft.

 

(b) The taxable value of any such benefit to the Chief Executive Officer will be calculated in accordance with Standard Industry Fare Level (“SIFL”) rates as set forth in Rev. Rul. 2024-08 for 2024.

 

(c) The value of any such travel that would be reportable under SEC rules or taxable for the calendar year must be less than $250,000.

 

4.	Monitoring/Compliance.

 

(a) Internal Audit is responsible for monitoring and implementing this Chartered Aircraft Use Policy. Internal Audit shall develop and implement controls that provide for responsible use of chartered aircraft, considering expense management and legitimate business purposes, and shall retain appropriate records.

 

(b) In the event tax laws require that an amount be imputed as income to the Chief Executive Officer for personal use of chartered aircraft, the Company will determine the amount of imputed income for inclusion on the Chief Executive Officer’s Form W-2 under the SIFL rules as noted above, and the CEO may choose to reimburse that amount to avoid the imputed income or avoid disclosure as compensation under SEC rules.

 

5.	Committee Oversight.

 

(a) The Compensation and Talent Committee shall have the authority to interpret, administer and amend this policy.

 

(b) Any exceptions to this policy shall be approved by the Chair of the Compensation and Talent Committee and shall be reported to the Compensation and Talent Committee at its next regularly scheduled meeting.

 

 

 

Exhibit 14.1

 

 

 

 

 

 

 

 

 

 

 

 

Code of
Business Ethics

 

EFFECTIVE JUNE 6, 2024

 

 

 

 

 

 

 

 

 

 

 

Code of Business Ethics

 

A message from Brad Jacobs, CEO and chairman

 

At QXO, we’re committed to being the leader in the building products distribution industry. It’s our responsibility to set the standard for lawful and ethical business conduct within our industry and beyond. While we pride ourselves on our high-performance culture, it’s equally imperative that we conduct ourselves with integrity every day.

 

This culture of integrity assures our customers and stakeholders that when they work with QXO, they’re partnering with an organization dedicated to doing business the right way.

 

Please take the time to familiarize yourself with our Code of Business Ethics and related policies. These expectations apply consistently to all of us, regardless of position or level of authority. Treat this code as your compass: use it to guide your actions, understand the law, and navigate situations successfully. If you’re unsure of the right choice, always seek further guidance.

 

I have one more request: please report any suspected misconduct. You can do this without fear of retaliation by contacting your supervisor, human resources manager, the legal team, or by calling the ethics hotline.

 

Integrity is the foundation of QXO. We must always do what is right, speak up when necessary, and own our mistakes. It’s empowering to work at a company that exemplifies these standards at every level of the organization. As a result, our customers know they can count on QXO to be a trusted partner.

 

Thank you for adhering to the values we live by every day and for ensuring that our culture of integrity sets the industry standard.

 

/s/

Brad Jacobs

Chief Executive Officer and Chairman

QXO

 

 

TABLE OF CONTENTS

 

	Page
Our Commitment: Do Business the Right Way	4
Respect, Equal Opportunity, and Safety in the Workplace	5
Total Integrity in Business Dealings	7
A Good Citizen to Communities Worldwide	9
Protection of Company Assets	10
Conflicts of Interest	11
Gifts and Entertainment	12
Additional Resources: How to Ask Questions and Report Concerns	14
Index of Business Ethics Policies	15

 

 

 

Our Commitment:
Do Business the Right Way

 

Our mission is to deliver results. This requires us to perform to the highest standards of business conduct at all times. We will not compromise our values to meet commercial objectives. Our values are critical to our success.

 

Our Code of Business Ethics (“Code”) is a blueprint of the company’s business standards. All QXO employees, officers and directors must comply with the Code, as must other parties acting on QXO’s behalf, to the extent it is consistent with local law. These standards apply any time you are representing QXO or engaged in activities that could have an impact on QXO’s business or reputation. In addition to the Code, QXO has a number of supporting business ethics policies (available at ethics.qxo.com) that govern our conduct, and you must understand and comply with these policies as well.

 

Management’s Commitment

 

QXO’s management is committed to leading by example in ways that reflect our company values. This includes responding in a timely manner to employee concerns, addressing compliance risks, and providing reporting resources to ensure potential violations of company policy or law are identified and addressed.

 

Management—and the company overall— will not tolerate retaliation against anyone who has, in good faith, reported concerns or cooperated with ethics or compliance inquiries.

 

Resources Available to You

 

QXO’s Code and related policies are designed to help you resolve ethical and legal issues. If you are still unsure about an issue after referring to the Code and policies, ask yourself these four questions: Does it feel like the right thing to do? Does it comply with the law and company policy? Would I feel comfortable if others knew about it? Would I want to read about it online or see it in the news?

 

If you cannot answer “yes” to all of these questions, stop and seek guidance from your supervisor or the QXO Legal Department. Additional resources are available to you at the end of this document.

 

Consequences of a Violation

 

Failure to comply with the Code, company policies or applicable laws, rules or regulations may result in disciplinary action, up to and including termination. Some violations may also be subject to civil or criminal penalties.

 

Our Responsibilities

 

We all share a responsibility to:

 

●

Act with integrity in all of our business dealings, large and small.

 

●

Treat each other with dignity and respect.

 

●

Comply with all applicable policies, laws and regulations.

 

●

Uphold our commitment to QXO’s Code.

 

 

 

Respect, Equal Opportunity, and Safety in the Workplace

 

We are committed to a work environment where respect and diversity are valued, and safety is paramount. In addition, we comply with all laws that govern fair employment and labor practices.

 

Equal Employment Opportunity

 

QXO provides equal employment opportunities to all employees and applicants. We make employment decisions without regard to race, color, age, gender, religion, national origin, mental or physical disability, medical condition, family or medical leave status, marital status, sexual orientation, gender identity, or any other basis protected by law. This includes decisions related to hiring, placement, promotion, termination, discipline, leaves of absence, compensation, benefits, and training.

 

Zero Tolerance for Discrimination, Harassment and Retaliation

 

QXO does not tolerate harassment or discrimination on the basis of any protected category or class. You must not engage in any abusive, harassing, or offensive conduct, whether verbal, physical or visual.

 

If you experience or become aware of any conduct that makes you uncomfortable, you should contact your supervisor, your Human Resources representative, the QXO Legal Department or the QXO Ethics Hotline.

 

QXO also strictly prohibits retaliation against employees who raise concerns, report potential violations of laws or policies, or participate in legal or compliance investigations.

 

Workplace Safety

 

QXO is committed to maintaining a safe work environment. All work must be performed in accordance with health and safety regulations and company policies. Immediately alert your supervisor to hazardous conditions in the workplace, vehicle accidents, work-related injuries or illnesses, violations of company policy and all other safety issues.

 

Drugs and Alcohol

 

QXO maintains a drug-free and alcohol-free work environment. You may not use or possess alcohol on company premises, except at sponsored company functions with appropriate executive pre-approval. You may not use, possess or distribute illegal drugs, or abuse prescription drugs, while on company time or property.

 

Workplace Violence

 

QXO does not tolerate violence in any form. If you witness or experience violent or threatening behavior, report it to your supervisor, Human Resources representative or the QXO Legal Department. If someone is in immediate danger, contact law enforcement.

 

 

 

Total Integrity in Business Dealings

 

We are committed to maintaining the trust of customers and others in our marketplaces by acting with integrity, competing fairly, and protecting confidential information.

 

Honest and Accurate Information

 

QXO deals fairly and in good faith with our customers, suppliers, competitors, and employees. You may not take advantage of anyone through unfair business practices.

 

Third-Party Information

 

QXO does not tolerate the improper collection or use of confidential or proprietary information related to our markets, customers, competitors or any other third party. All such information must be collected through lawful means and must be properly safeguarded from unauthorized disclosure or use.

 

If you become aware of confidential or proprietary information about a competitor or other third party through a prior employer or other non-public source, you are not permitted to use the information in connection with QXO’s business or to disclose it to any company representative. You cannot bring the information onto QXO’s premises, including electronic systems used by QXO, or use it in any way in performing your duties or other company business.

 

Do not use the name, trademark or logo of another company without written permission from an authorized representative of that company. Do not reproduce, distribute, or alter copyrighted materials owned by others.

 

Antitrust and Fair Competition Laws

 

QXO complies with all antitrust and fair competition laws and does not tolerate anti-competitive activity. You cannot enter into any agreement or arrangement to limit competition or gain an improper advantage.

 

If you have marketing, sales, pricing or purchasing responsibilities, or if you have contact with competitors, it is particularly important for you to be aware of antitrust and fair competition considerations.

 

For more information about antitrust and fair competition requirements, consult QXO’s Antitrust and Fair Competition Policy.

 

Doing Business with the Government

 

QXO complies with all laws and regulations that govern dealings with federal, state, provincial, county, and local governments, including entities working on behalf of a government, or owned or controlled by a government.

 

If you are involved in seeking government contract work for QXO, it is particularly important for you to understand and observe all applicable rules. If you have questions or concerns regarding our government contract obligations, contact the QXO Legal Department.

 

There are specific rules that apply when QXO employees are interacting with government officials, as discussed in more detail in the QXO Anti-Corruption Policy. For example, no gifts or entertainment may ever be provided to government officials by QXO, as discussed in more detail in the Gifts and Entertainment section of this Code.

 

Government officials are broadly defined as any person, regardless of their rank or position, working for (1) a government agency or department, in any branch of government (i.e., executive, legislative, judicial, military or law enforcement) at the federal, state or local level, or (2) a government-owned or controlled entity or business, including entities such as state-owned air carriers, shippers or utility providers. This also includes any person or entity acting on behalf of a government or government-owned or controlled entity, a public international organization (e.g., the Red Cross, the United Nations or the World Bank), a political party or a candidate for political office.

 

Because determining who is and is not a government official is not always easy, you should consult the QXO Anti-Corruption Policy for additional details or contact the QXO Legal Department for any questions or concerns. 

 

 

Total Integrity in Business Dealings

 

When dealing with a government entity or official, you may not:

 

●

Seek or obtain confidential information about the government’s selection process or a competitor’s proposal;

 

●

Provide anything of value to a government employee including meals and entertainment;

 

●

Talk to a government employee about possible employment opportunities;

 

●

Make false or misleading statements about QXO’s services or capabilities.

 

●

Substitute goods or services; or

 

●

Use government property for any purpose other than the intended purpose.

 

Anti-Bribery and Anti-Corruption

 

QXO does not tolerate bribery or corruption in any form, directly or indirectly, whether doing business with a government entity, commercial enterprise or individual. You cannot make, authorize, offer, promise or accept bribes, kickbacks or gratuities; this includes indirect payments to third parties where there is reason to believe that even a portion of the payment will be offered to someone else for an improper purpose.

 

Fraudulent Activities

 

QXO does not tolerate fraudulent activities or fiscal misconduct in any form. In your dealings with or on behalf of QXO, you cannot make any representations that are intentionally, knowingly, or recklessly false. This includes but is not limited to forgery, unauthorized altercation, defalcation, misappropriation and other fiscal irregularities or improprieties involving property, documents, payroll records, financial records, supplies or the reporting or handling of money transactions; acceptance of a gift, favor or service that might reasonably tend to influence the discharge of your duties; theft, destruction or disappearance of records, furniture, equipment or other assets; misrepresentation of information on documents; authorizing or receiving payment for goods or services not performed; intentional inaccuracy in books and records; any apparent violation of federal, state or local laws related to dishonest activities or fraud; or any similar or related activity.

 

Protecting Privacy, Data Security and Personal Information

 

In the course of our business, we sometimes collect or have access to personal information relating to customers, employees, third-party business partners (such as vendors or suppliers) or other individuals. This information includes not only personal information such as names, addresses, and government ID numbers, but also includes any information that directly or indirectly identifies, describes or is capable of being associated with an individual or household. QXO respects and protects the privacy and security of the information that customers, employees and others entrust to us, and we expect our employees to do their part to protect that information. We are committed to using and protecting personal information in line with all applicable privacy and data security laws around the world, as well as QXO’s privacy and security policies. If you suspect or learn that any of QXO’s systems, data, content or personal information has been compromised, you must promptly report any such concerns as outlined in this Code.

 

Political Activities and Contributions

 

Political Activities by Employees

 

QXO values the right of our employees to participate in the political process. QXO employees are welcome to do so in a variety of ways, including by making personal contributions or by volunteering personal time to campaigns, organizations or initiatives.

 

The QXO Political Activity Policy requires employees to comply with all federal laws and related regulations regarding time spent during working hours in support of or opposition to federal candidates and committees. Employees may not use their position with the Company to coerce or pressure other employees to make contributions or to support or oppose any political candidates, elections or ballot initiatives.

 

Any political activity (including use of a QXO title or logo) that would suggest QXO’s support requires pre-approval by the QXO Legal Department.

 

Employees who wish to become a candidate for political office may not use their affiliation with QXO or their role as a feature of their political campaigns. Before beginning a campaign for political office, an employee should carefully consider and discuss with their manager and the QXO Legal Department the potential impact of such activity and subsequent government service in order to proactively identify any potential conflicts of interest.

 

 

Total Integrity in Business Dealings

 

Corporate Political Activity

 

Many jurisdictions prohibit corporations from contributing to candidates for office but permit other forms of political activity. QXO may engage in the political process where legal and appropriate under applicable law. Any such proposed participation must be reviewed by the QXO Legal Department to ensure adherence to all legal requirements and ethical standards and to ensure such activity is in the Company’s best interest.

 

Political Contributions

 

QXO employees may make political contributions with their own funds and in accordance with their own political preferences. QXO will not reimburse or otherwise compensate employees for their political contributions.

 

Employees may not directly or indirectly provide any company funds or assets to any political party or candidate without written authorization from the QXO Legal Department. Employees involved in government procurement activity may not make any private political contributions in connection with government procurement activity without written authorization from the QXO Legal Department. Employees may not make, or offer to make, any political contribution, even from personal funds, to obtain or retain business or any other improper advantage on behalf of QXO.

 

Compliance with Insider Trading Laws

 

In the course of your duties with the company, you may become aware of material non-public information about QXO or another company with which QXO does business. For example, you may hear or see undisclosed financial results or information regarding the company’s strategic plans. If you become aware of material non-public information, you cannot disclose this information or use it for personal benefit or for the benefit of someone else.

 

You cannot trade in QXO securities while in possession of material non-public information about QXO. You must follow these same principles with respect to information you learn about any other company, including companies with which QXO does business. You also cannot discuss material non-public information, including but not limited to unpublished financial results, with the press without approval from the QXO Legal Department. Violations of insider trading laws may result in extremely serious penalties including fines, imprisonment, disgorgement, civil penalties, and termination for cause.

 

There are further constraints on trading that apply to certain “Covered Individuals” under QXO’s Securities Trading Policy. If you have questions about this policy, contact QXO’s Chief Legal Officer.

 

 

 

A Good Citizen to Communities Worldwide

 

We are committed to maintaining a global standard of integrity in all countries where we operate. We believe in fair trade practices, in human rights, in sustainable business practices that mitigate potential damage to the environment and in doing business without corruption.

 

International Trade Compliance

 

As a global company, QXO is committed to complying with all laws and regulations governing international trade.

 

QXO does not permit the export or import of goods, services or data without appropriate authorization. When shipping under a government authorization, you must comply with all terms and conditions of the authorization, and you cannot divert shipments to a place or person not included in the authorization. To ensure that the company can comply with government reporting requirements relating to international trade, you must properly document all export and import transactions.

 

Unless you have received appropriate government authorization, you must not do business with, or for, any embargoed or sanctioned country, or any party subject to a debarment or economic sanctions. In addition, you must not participate in any boycotts not authorized by U.S. law, such as restrictive contract provisions aimed at limiting trade with Israel. If you become aware of any boycotts or other restrictive provisions, immediately contact the QXO Legal Department. It is your responsibility to know your customer and to ensure that you comply in these matters.

 

For more details, employees should review the QXO Trade Compliance Policy or contact the QXO Legal Department.

 

Human Rights

 

QXO is committed to conducting business in a manner that respects the human rights and dignity of all people. We do not tolerate any conduct that contributes to, encourages, or facilitates human trafficking, child labor, forced or compulsory labor, or any other human rights abuses.

 

Environmental Laws

 

QXO conducts its business in a manner that complies with all applicable environmental laws. This includes ensuring that all hazardous materials, waste or pollutants are properly labeled, stored, handled, transported, used, and disposed of. Environmental rules are often complex and vary by location. If you have any questions regarding environmental requirements, contact the QXO Legal Department.

 

 

 

Protection of Company Assets

 

We are committed to safeguarding the integrity of QXO’s assets, including the information we receive from or provide to shareholders, regulators, business partners and other third parties. We avoid conflicts of interest, and we do business on our merits.

 

Company Resources

 

It is your responsibility to ensure that company property, facilities, equipment, and information are used appropriately. In addition, non-tangible company resources such as the QXO name or your time while working for QXO should be used only in furtherance of QXO business.

 

If you have access to company telephones, computers, mobile devices, networks, Internet access, e-mail services or other electronic resources, you may use these resources only for legitimate business purposes. Incidental personal use is permitted so long as it does not interfere with your work, is not illegal, is not used for personal gain, and does not conflict with or violate the company’s interests or policies.

 

If you leave the company, you must return all company property and information, including documents, data, phones, computers, and other business equipment. You agree not to access or attempt to access any electronic device, system, database, server, portal or network of QXO after your employment ceases. You further agree not to tamper with, alter, delete or destroy any company property, documents, records or data contained in any location, including but not limited to any information contained on any company-provided computer or electronic device, system, database, server, portal or network, including but not limited to re-setting electronic devices to their default settings.

 

Confidential and Proprietary Information

 

QXO rigorously protects its confidential and proprietary information from unauthorized use or disclosure. This includes information about the company’s strategies and operations, business plans, employees, customers, suppliers, financial status, trade secrets or any other information unavailable to the public. You may not use confidential or proprietary information for any purpose other than the purpose for which you are entrusted with the information.

 

Your obligation to safeguard the company’s confidential and proprietary information continues to be in effect after your employment with the company ends. If you leave QXO, you may not use or disclose confidential or proprietary information that you obtained during the course of your employment.

 

If you raise questions or concerns about potentially illegal conduct, you will not be held criminally or civilly liable under U.S. federal or state trade secret law for disclosure of a trade secret in connection with your report, provided the disclosure is made in confidence to a federal, state or local government official or an attorney and it is made solely for the purpose of reporting or investigating a suspected violation of law, or the disclosure is made in a document filed in a proceeding where such filing is made under seal so that it is not made public. Further, if you pursue a lawsuit for retaliation by an employer for reporting a suspected violation of the law, you may disclose the trade secret to your attorney and use the trade secret information in the court proceeding if you file any document containing the trade secret under seal and do not disclose the trade secret except as permitted by court order.

 

Business Records

 

Each QXO employee is responsible for ensuring that business records of all types—including expense reports, invoices, time sheets, attendance records, contract documentation and other records—accurately represent QXO’s operations, business dealings and financial results. You must retain all business records in accordance with company policy and applicable legal requirements. You must not alter, falsify or otherwise tamper with any business record.

 

Public Reports

 

Our company’s senior financial officers must ensure that all financial information disclosed in public communications and in periodic reports with the U.S. Securities and Exchange Commission is complete, accurate, timely and understandable. Persons responsible for preparing such documents must ensure that all accounting records, and the reports produced from such records, fairly and accurately represent the transactions to which they relate. These records and reports must include reasonable detail and be supported by appropriate documentation. If you become aware of anything in the company’s accounting records or reports that is false or misleading, inform the QXO Legal Department immediately.

 

Contracting Authority and Delegations of Authority

 

Only certain employees of QXO are authorized to sign official company documents or commit the company to a contract or other transaction. If you do not have such authority, you may not bind the company to any obligations. If you are authorized to sign official company documents or commit the company to obligations, you must act within the limits of your authority and accurately document any contract that you sign on behalf of QXO. Before making any business or financial commitment on behalf of QXO, you must verify that you have the proper authority by referring to the company’s Delegation of Authority Policy. Certain locations or business units may have additional, more restrictive authority and approval requirements. When applicable, these more restrictive requirements must also be followed.

 

 

 

Conflicts of Interest

 

Potential Conflicts of Interest

 

QXO is committed to avoiding conflicts of interests or the appearance of a conflict of interest in our business dealings.

 

Conflicts of interest arise when your personal interests, or the interests of your friends or family members interfere with your ability to make impartial business decisions on behalf of the company. You must disclose all potential conflicts of interest to the QXO Legal Department so QXO can take appropriate measures to protect you and the company.

 

Some conflicts are clear and always prohibited, such as using your position at the company for improper personal gain. Other situations may be less obvious, such as having the company do business with a company owned by a friend or family member. If you are unsure about a potential conflict of interest, review the Conflicts of Interest Policy or contact the QXO Legal Department for advice. Below are some examples of common conflicts of interest.

 

Financial Interests in Competitors, Customers and Suppliers

 

As a QXO employee, you are not permitted to have a financial interest in a privately owned company that competes with QXO. You may own a small percentage (not to exceed 1%) of stock in a publicly traded company that is a competitor, supplier, or customer to QXO. Additional limitations and restrictions may be applied to the company’s senior officers.

 

Prohibited Engagement with Expert Network Firms

 

You are not permitted to provide information or services to “expert network firms.” These firms seek industry sources to arrange consultations with their clients, which can include private equity funds, hedge funds and other institutional investors who are considering investment in our industry. Expert network firms may seek to engage you as a consultant due to your knowledge of QXO or your knowledge of our industry overall. Your provision of such consulting services creates the risk that you use or disclose QXO’s confidential information or engage, or assist another party in engaging, in activities that are detrimental to or competitive with QXO.

 

Outside Employment and Other Activities

 

You must act in the best interests of the company. It is your responsibility to ensure that any non-QXO employment or other activities do not violate existing QXO commitments or relationships with a competitor, customer, supplier or other third party. Review the Conflicts of Interest Policy or contact the QXO Legal Department for more details about outside employment and other activities.

 

Business Relationships with Family and Friends

 

QXO makes all supplier-related decisions, including purchasing decisions, based solely on the supplier’s ability to meet QXO’s business needs. Personal relationships or friendships cannot be a factor in these decisions. Furthermore, you must disclose any proposed transaction involving the company and yourself, or the company and a member of your family, including any business owned by your family. Written approval by the QXO Legal Department is required before any such transaction can proceed.

 

Corporate Opportunities for Your Personal Benefit

 

In the course of your employment with QXO, you may learn about business opportunities in QXO’s industry or related to our business that you are interested in pursuing personally. You may not take personal advantage of these opportunities for yourself, and you may not communicate them to someone outside the company, unless you have disclosed these opportunities to the company and received permission to pursue them.

 

Romantic or Other Intimate Relationships

 

Conflicts of interest also include romantic or other intimate relationships between managers and members of their teams, which may result in the manager being personally biased, or appearing to be biased, when making employment decisions about the employee. Review the QXO Conflicts of Interest Policy or contact the QXO Legal Department for more details about intimate relationships in the workplace.

 

 

 

Gifts and Entertainment

 

Gifts and Entertainment

 

QXO wins and awards business based on merit. The company does not give or receive business gifts of products, services or entertainment in order to improperly influence business decisions.

 

Any gift or entertainment you give or receive must be legal under local law, provided openly, given infrequently, must be reasonable in value and not lavish, appropriate under the circumstances and incidental to a legitimate business transaction or relationship. You may not give or accept gifts or entertainment that could create or appear to create an improper influence on a business relationship or decision. Examples include meals, event tickets and golf outings. You are never permitted to request that a gift or entertainment be given to you.

 

You should never give a gift to or engage in entertainment with a government official. As defined above in the Anti-Bribery and Anti-Corruption section of this Code, this includes employees of state-owned entities such as a state-owned air carrier, shipper or utility provider. Gifts to and entertainment with government officials and entities are never permissible. Please consult the QXO Anti-Corruption Policy for additional guidance on interactions with government officials and contact the QXO Legal Department with any questions.

 

It may not always be clear whether a gift is appropriate. Some types of gifts are never allowed, such as cash or “cash equivalents” (for example, a gift card), gifts or entertainment of an offensive or explicit nature and gifts prohibited by law or contract.

 

Ask yourself:

 

If you are unsure whether the gift is appropriate, ask yourself if the gift is:

 

●

Reasonable, customary, of modest value, and infrequently given?

 

●

Intended to enhance a business relationship and not to improperly influence the recipient’s objectivity?

 

●

Unsolicited, with no obligation or expectation of reciprocation?

 

●

In good taste and not likely to embarrass the company or anyone else if disclosed publicly?

 

●

Being given to or received from a commercial party (not a government official)?

 

●

Allowed under the organizational policies of both QXO and the recipient or giver?

 

●

Publicly acceptable, meaning you would be comfortable having others, including your friends and family, know about the gift?

 

If the answer to any of these questions is “no,” you must contact the QXO Legal Department at ethics@qxo.com for approval before proceeding.

 

Mandatory Approval Process for Gifts and Entertainment

 

Approval Requirement for Gifts: You must obtain advance, written approval from the QXO Legal Department prior to giving or receiving any gift valued at $150 USD or more. Requests for approval are to be submitted to ethics@qxo.com. You must also comply with all other expense approval requirements. For example, your specific location or business unit may have additional, more restrictive approval requirements for gifts. If this is the case, the more restrictive requirements must be followed.

 

 

Gifts and Entertainment

 

Approval Requirement for Entertainment

 

Entertainment—such as meals, sporting events or other activities you attend with customers, vendors or other third parties—must be properly approved. You must obtain advance, written approval from the QXO Legal Department for entertainment given or received in the amount of $200 USD or more per person. Requests for approval are to be submitted to ethics@qxo.com.

 

If the entertainment involves funds intended for charity, such as golf outings or other types of sponsorships, you must obtain advance, written approval from the QXO Legal Department, regardless of the amount involved. See the Charitable Contributions and Sponsorships section below.

 

You must also comply with all other expense approval requirements. For example, your specific location or business unit may have additional, more restrictive approval requirements for entertainment. If this is the case, the more restrictive requirements must be followed.

 

All gifts and entertainment related expenses and approvals must be accurately recorded in the company’s books and records. If you give a gift or entertainment, you must document it in your expense report, including the value of the gift or entertainment, the parties involved (gift giver or receiver and entertainment recipient or participant), and a description of the legitimate business purpose for the gift or entertainment, along with evidence of written pre-approval (where required) and supporting receipts.

 

Charitable Donations and Sponsorships

 

All charitable contributions and sponsorships made by QXO—regardless of amount—must be approved in writing by both the Business Unit President and the QXO Legal Department.

 

Charitable Contributions

 

Charitable contributions are donations paid directly to charitable or civic organizations and not through a third party. Only donations made to bona fide, tax-exempt charitable organizations (such as 501(c)(3)-designated organizations in the United States) may be made. Charitable contributions must go to an organization, not to an individual, and should never be offered or given as an inducement to obtain or retain business. All such donations should be recorded as a charitable contribution, and evidence of the tax-exempt designation must be submitted to support the expense.

 

Sponsorships

 

These contributions may involve solicitations from customers or local community groups for the purpose of supporting charitable or civic organizations and involve interaction with customers (for example golf or sport outings, table sponsorship at a lunch or dinner event). As with charitable contributions, sponsorships should be provided to an organization, not an individual, and should never be offered or given as an inducement to obtain or retain business. These expenses should be recorded as “sponsorships” and not “charitable contributions.” For additional information and guidance, you should consult the QXO Anti-Corruption Policy and contact the QXO Legal Department with any questions.

 

 

 

Additional Resources:

 

How to Ask Questions and Report Concerns

 

You may use the channels below as often as necessary to uphold QXO’s business ethics standards.

 

How to Report Concerns

 

It is your responsibility to speak up and raise questions and concerns and to report any known or suspected conduct that violates this Code, company policies or the law. Employees who speak up are protected under applicable laws, as well as by QXO’s zero tolerance policy against harassment, discrimination, and retaliation. You should raise concerns promptly to your supervisor, your local Human Resources representative or to the QXO Legal Department.

 

The following avenues are also open to you:

 

Ethics Hotline 844-628-9762	The Ethics Hotline is a toll-free telephone service operated by an independent company. The Ethics Hotline allows you to anonymously report a concern. The Ethics Hotline is available 24 hours a day, seven days a week.
EthicsPoint Online qxo.ethicspoint.com	EthicsPoint is an online site operated by an independent company. EthicsPoint will allow you to anonymously report a concern.
Ethics Email ethics@qxo.com	If for any reason you are unable to connect using the Ethics Hotline and EthicsPoint Online, you can email the QXO Legal Department at ethics@qxo.com.

 

You may report concerns anonymously if you choose to do so; however, identifying yourself better enables the company to investigate your concerns and provide you with appropriate follow-up. All reports are handled as confidentially as possible.

 

After a Report Is Submitted

 

Each report is forwarded to an appropriate member of management, Human Resources or the QXO Legal Department for prompt review. QXO evaluates each report carefully to determine whether further investigation or action is necessary. Employees are required to cooperate fully with company investigations.

 

The company makes every effort to safeguard the confidentiality of each report, whether or not it is made anonymously; however, sometimes this is not possible due to legal responsibilities or the nature of the incident. Circumstances may prevent the company from sharing what actions it has taken in response to a report.

 

Please do not attempt to conduct your own individual investigation. Acting on your own may compromise the integrity of the company’s investigation. QXO will comply with all applicable laws, including data privacy laws, that apply to the reporting party and or the location of the reported incident.

 

 

 

Index of Business Ethics Policies

 

This Code is supported by the following QXO Business Ethics Policies:

 

●

Anti-Corruption

 

●

Antitrust and Fair Competition

 

●

Conflicts of Interest

 

●

Privacy

 

●

Trade Compliance

 

●

Securities Trading

 

●

Human Trafficking

 

●

Political Activity

 

If you would like copies of any of these policies, please visit ethics.qxo.com or contact ethics@qxo.com.

 

Additional requirements may apply to specific locations or business units. If you are working at a customer location, you must follow QXO’s policies and any additional, more restrictive policies required by the customer. Please contact the QXO Legal Department, your local Human Resources representative or refer to ethics.qxo.com for further information.

 

Any waiver of provisions in this Code for directors and executive officers may be granted only by the board of directors or a committee of the board.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.1

 

QXO Completes $1 Billion Equity Investment

 

Brad Jacobs Becomes Chairman and CEO of QXO

 

GREENWICH, Conn. — June 6, 2024 — QXO, Inc. (“QXO” or the “Company”), formerly known as SilverSun Technologies, Inc. (“SilverSun”), today completed the previously announced equity investment contemplated by the Amended and Restated Investment Agreement (the “Investment Agreement”), dated April 14, 2024, among SilverSun, Jacobs Private Equity II, LLC (“JPE”) and certain minority co-investors. Under the terms of the transaction, JPE and the co-investors invested an aggregate of $1 billion in cash in the Company, comprised of $900 million by JPE and $100 million by the co-investors, including Sequoia Heritage.

 

In connection with the closing of the equity investment, Brad Jacobs became QXO’s chairman and chief executive officer and will lead the Company in the $800 billion building products distribution industry.

 

Additionally, the Company changed its name from SilverSun Technologies, Inc. to QXO, Inc. and changed its ticker symbol on the NASDAQ Capital Market from SSNT to QXO.

 

Advisors

 

Goldman Sachs and Morgan Stanley are serving as financial advisors to JPE, and Wachtell, Lipton, Rosen & Katz and Paul, Weiss, Rifkind, Wharton & Garrison are serving as legal advisors to JPE.

 

The Benchmark Company, LLC is serving as financial advisor to SilverSun, and Lucosky Brookman LLP is serving as legal advisor to SilverSun.

 

About QXO, Inc.

 

QXO provides technology solutions, primarily to clients in the manufacturing, distribution and service sectors. The Company provides consulting and professional services, specialized programming, training and technical support, and develops proprietary software. As a value-added reseller of business application software, QXO offers solutions for accounting, financial reporting, enterprise resource planning, warehouse management systems, customer relationship management, business intelligence and other applications.

 

QXO plans to become a tech-forward leader in the $800 billion building products distribution industry. The Company is targeting tens of billions of dollars of annual revenue in the next decade through accretive acquisitions and organic growth. Visit QXO.com for more information.

 

Forward-Looking Statements

 

This communication contains forward-looking statements. Statements that are not historical facts, including statements about beliefs, expectations, targets or goals, are forward-looking statements. These statements are based on plans, estimates, expectations and/or goals at the time the statements are made, and readers should not place undue reliance on them. In some cases, readers can identify forward-looking statements by the use of forward-looking terms such as “may,” “will,” “should,” “expect,” “opportunity,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “target,” “goal,” or “continue,” or the negative of these terms or other comparable terms. Forward-looking statements involve inherent risks and uncertainties and readers are cautioned that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statements. Factors that could cause actual results to differ materially from those described herein include, among others:

 

●

risks associated with potential significant volatility and fluctuations in the market price of the Company’s common stock;

 

●

risks associated with the Company’s relatively low public float, which may result in its common stock experiencing significant price volatility;

 

 

●

risks associated with raising additional equity or debt capital from public or private markets to pursue the Company’s business plan following the closing of the equity investment, including in an amount that may significantly exceed the amount of the equity investment, and the effects that raising such capital may have on the Company and its business, including the risk of substantial dilution or that the Company’s common stock may experience a substantial decline in trading price;

 

●

the possibility that additional future financings may not be available to the Company on acceptable terms or at all;

 

●

the effect that the consummation of the equity investment and the other transactions contemplated by the Investment Agreement may have on the Company and its current or future business or on the price of the Company’s common stock;

 

●

the possibility that an active, liquid trading market for the Company’s common stock may not develop or, if developed, may not be sustained;

 

●

the possibility that the warrants and the preferred stock issued pursuant to the Investment Agreement may or may not be converted or exercised, and the economic impact on the Company and the holders of common stock of the Company that may result from either such exercise or conversion, including dilution, or the continuance of the preferred stock remaining outstanding, and the impact its terms, including its dividend, may have on the Company and the common stock of the Company;

 

●

uncertainties regarding the Company’s focus, strategic plans and other management actions;

 

●

the risk that the Company is or becomes highly dependent on the continued leadership of Brad Jacobs as chairman and chief executive officer and the possibility that the loss of Jacobs in these roles could have a material adverse effect on the Company’s business, financial condition and results of operations;

 

●

risks associated with becoming a “controlled company” following the closing of the equity investment, as defined under applicable stock exchange rules, including that Jacobs will be able to influence the Company’s management and affairs and all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions;

 

●

the risk that certain rules of the U.S. Securities and Exchange Commission (the “SEC”) may require that any registration statement the Company may file with the SEC be subject to SEC review and potential delay in its effectiveness, and that a registration statement must be filed and declared effective for any acquisition (including an all-cash acquisition), which would delay its consummation and could reduce the Company’s attractiveness as an acquirer for potential acquisition targets;

 

●

the possibility that the concentration of ownership by Jacobs may have the effect of delaying or preventing a change in control of the Company and might affect the market price of shares of the common stock of the Company;

 

●

the possibility that the Company’s status as a “controlled company” could cause the common stock of the Company to be less attractive to certain investors;

 

●

the risk that Jacobs’ past performance may not be representative of future results;

 

●

the risk that the Company is unable to retain world-class talent;

 

●

the risk that the failure to consummate any acquisition expeditiously, or at all, could have a material adverse effect on the Company’s business prospects, financial condition, results of operations or the price of the Company’s common stock;

 

 

●

risks that the Company may not be able to enter into agreements with acquisition targets on attractive terms, or at all, that agreed acquisitions may not be consummated, or, if consummated, that the anticipated benefits thereof may not be realized and that the Company encounter difficulties in integrating and operating such acquired companies, or that matters related to an acquired business (including operating results or liabilities or contingencies) may have a negative effect on the Company or its securities or ability to implement its business strategy, including that any such transaction may be dilutive or have other negative consequences to the Company and its value or the trading prices of its securities;

 

●

risks associated with cybersecurity and technology, including attempts by third parties to defeat the security measures of the Company and its business partners, and the loss of confidential information and other business disruptions;

 

●

the possibility that new investors in any future financing transactions could gain rights, preferences and privileges senior to those of the Company’s existing stockholders;

 

●

the possibility that building products distribution industry demand may soften or shift substantially due to cyclicality or seasonality or dependence on general economic conditions, including inflation or deflation, interest rates, consumer confidence, labor and supply shortages, weather and commodity prices;

 

●

the possibility that regional or global barriers to trade or a global trade war could increase the cost of products in the building products distribution industry, which could adversely impact the competitiveness of such products and the financial results of businesses in the industry;

 

●

risks associated with potential litigation related to the transactions contemplated by the Investment Agreement or related to any possible subsequent financing transactions or acquisitions or investments;

 

●

uncertainties regarding general economic, business, competitive, legal, regulatory, tax and geopolitical conditions; and

 

●

other factors, including those set forth in the Company’s filings with the SEC, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024, and subsequent Quarterly Reports on Form 10-Q.

 

Forward-looking statements herein speak only as of the date each statement is made. None of the Company, JPE nor any person undertakes any obligation to update any of these statements in light of new information or future events, except to the extent required by applicable law.

 

Media Contact

 

Joe Checkler

joe.checkler@qxo.com

+1-732-674-4871

www.qxo.com

 

 

-3-

 

Exhibit 99.2

  

QXO Announces Leadership Team and Board of Directors

 

GREENWICH, Conn. — June 6, 2024 — Brad Jacobs, chairman and chief executive officer of QXO, Inc. (Nasdaq: QXO), today announced the appointment of eight executives and six members of its board of directors, effective immediately. QXO entered the $800 billion building products distribution industry today when Jacobs led a $1 billion equity investment to completion. Ihsan Essaid was previously announced as QXO’s incoming chief financial officer.

 

Brad Jacobs said, “I’ve known these leaders for many years and have great confidence in their ability to grow QXO into a tech-forward leader in building products distribution. We have a world-class executive team pursuing shareholder value out of the gate!”

 

These eight leaders have extensive experience executing growth strategies at scale, including roles with three of Jacobs’ prior public companies:

 

●

Josephine Berisha, chief human resources officer—Berisha has more than two decades of senior HR experience with global companies, including human capital management, performance management, compensation and benefits, and workforce planning and analysis. She previously served as chief human resources officer for XPO, Inc. from 2020 to 2023, following three years as senior vice president, compensation, benefits and workforce analytics. Prior to XPO, during 18 years with Morgan Stanley, she held various HR leadership positions, including managing director, head of corporate compensation and executive pay design from 2013 to 2017.

 

●

Joe Checkler, senior vice president, communications—Checkler most recently served as vice president of communications for XPO, Inc., where he led the corporate and investor communications organization from 2018 to 2022. Prior to XPO, he was a media relations executive with Peppercomm Inc. from 2015 to 2018. He began his career with an 11-year tenure as a reporter for Dow Jones & Company, where he covered business and financial news for The Wall Street Journal.

 

●

Matt Fassler, chief strategy officer—Fassler was chief strategy officer of XPO, Inc. from 2018 through 2022 during the company’s strategic transformation in North America, and currently serves as a member of the board of directors of GXO Logistics, Inc., which was spun off from XPO. Previously, he spent more than 20 years at Goldman Sachs in global investment research as a managing director and business unit leader for the consumer sector from 2007 to 2018, and managing director, co-business unit leader for the retail sector from 2004 to 2007.

 

●

Austin Landow, executive vice president—Landow is managing director of Jacobs Private Equity, LLC with responsibility for leading strategic projects. He joined XPO, Inc. from 2019 to 2023, and was instrumental in helping the company spin off GXO Logistics, Inc. and RXO, Inc. Earlier in his career, he was responsible for real estate investing while with Stockbridge Capital Group, LLC, and worked in the distressed debt and private equity groups at Cerberus Capital Management.

 

●

Mark Manduca, chief investment officer—Manduca previously served as chief investment officer of GXO Logistics, Inc. from 2021 to 2023, with responsibility for managing relationships within the investment community. Prior to GXO, he held senior positions with leading investment banks, including Citigroup in London, where he was managing director in equity research from 2018 to 2021. Earlier, he led various sector-specific research teams for Bank of America Merrill Lynch.

 

●

Eduardo Pelleissone, chief transformation officer—Pelleissone most recently led operations in the Americas and Asia Pacific for GXO Logistics, Inc. from 2021 to 2024, after serving as chief transformation officer for GXO’s parent company, XPO, Inc. Prior to XPO, he was executive vice president of global operations and chief operating officer for five years with Kraft Heinz Co. Earlier, during more than nine years with rail logistics leader America Latina Logistica SA, he held roles as chief executive officer and chief operating officer.

 

 

●

Chris Signorello, chief legal officer—Signorello previously served in senior legal roles with XPO, Inc., most recently as deputy general counsel and chief compliance officer from 2021 to 2023. Prior to XPO, he was with industrial and consumer products leader Henkel Corporation for nearly a decade, where he was associate general counsel, among other leadership positions. Earlier, he spent nine years with the product liability and commercial litigation practice groups at Goodwin Procter LLP.

 

●

Sean Smith, chief accounting officer and deputy chief financial officer—Smith has more than two decades of senior financial experience across multiple industries. From 2019 to 2024, he served as corporate controller for Chewy, Inc., a leading e-commerce retailer of pet supplies and medications. Prior to Chewy, he held key finance positions with XPO, Inc. over more than three years, most recently as corporate controller. He began his career with KPMG LLP.

 

Six inaugural members of QXO’s board of directors have been selected:

 

●

Brad Jacobs, chairman—Jacobs founded and led five public companies prior to QXO: United Waste Systems, Inc., United Rentals, Inc., XPO, Inc., and XPO’s spin-offs, GXO Logistics, Inc. and RXO, Inc. He serves as executive chairman of XPO and as non-executive chairman of GXO and RXO. Jacobs is the managing partner of Jacobs Private Equity, LLC.

 

●

Jason Aiken—Aiken has led the technologies segment of General Dynamics since 2023. Over the course of his 22-year tenure with General Dynamics, he served as the company’s chief financial officer from 2014 to 2024, and earlier as chief financial officer of General Dynamics subsidiary Gulfstream Aerospace, among other senior positions.

 

●

Marlene Colucci—Colucci has served as chief executive officer of The Business Council in Washington, D.C. since 2013. Previously, she was executive vice president of public policy for the American Hotel & Lodging Association, and earlier held positions as special assistant to the President of the United States in the Office of Domestic Policy, deputy assistant secretary with the Department of Labor’s Office of Congressional and Intergovernmental Affairs, and senior counsel with Akin Gump Strauss Hauer & Feld LLP. She is vice chair of the board of directors of GXO Logistics, Inc.

 

●

Mario Harik—Harik has led XPO, Inc. as chief executive officer since November 2022 and serves on its board. He joined XPO in 2011 as chief information officer, and held additional roles as chief customer officer and president, North American less-than-truckload. His prior career included chief information officer with Oakleaf Waste Management, chief technology officer with Tallan, Inc., and co-founder of G3 Analyst.

 

●

Mary Kissel—Kissel is executive vice president and senior policy advisor with Stephens Inc. She joined Stephens in 2021, following her role as senior advisor to the U.S. Secretary of State. Earlier, during 14 years with The Wall Street Journal, she served on the editorial board in New York, and as editorial page editor for Asia Pacific in Hong Kong. She began her career at Goldman Sachs. Kissel is a member of the Council on Foreign Relations and a director of the American Australian Council. She is vice chair of the board of directors of RXO, Inc.

 

●

Allison Landry—Landry is a former senior transportation research analyst with Credit Suisse, covering the trucking, railroad, airfreight and logistics industries for more than 15 years. Previously, she was a financial analyst and senior accountant with OneBeacon Insurance Co. (now Intact Insurance Specialty Solutions). She serves as vice chair of the board of directors of XPO, Inc.

 

Further QXO leadership appointments, including chief technology officer, as well as potential additional board members, will be announced at a future date.

 

On June 6, 2024, Jacobs Private Equity II, LLC (JPE) and certain co-investors closed a $1 billion equity investment into SilverSun Technologies, Inc. JPE became SilverSun’s majority stockholder and the company began operating and pursuing acquisitions under the new name of QXO.

 

 

About QXO, Inc.

 

QXO provides technology solutions, primarily to clients in the manufacturing, distribution and service sectors. The company provides consulting and professional services, specialized programming, training and technical support, and develops proprietary software. As a value-added reseller of business application software, QXO offers solutions for accounting, financial reporting, enterprise resource planning, warehouse management systems, customer relationship management, business intelligence and other applications.

 

QXO plans to become a tech-forward leader in the $800 billion building products distribution industry. The company is targeting tens of billions of dollars of annual revenue in the next decade through accretive acquisitions and organic growth. Visit QXO.com for more information.

 

Forward-Looking Statements

 

This communication contains forward-looking statements. Statements that are not historical facts, including statements about beliefs, expectations, targets or goals, are forward-looking statements. These statements are based on plans, estimates, expectations and/or goals at the time the statements are made, and readers should not place undue reliance on them. In some cases, readers can identify forward-looking statements by the use of forward-looking terms such as “may,” “will,” “should,” “expect,” “opportunity,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “target,” “goal,” or “continue,” or the negative of these terms or other comparable terms. Forward-looking statements involve inherent risks and uncertainties and readers are cautioned that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statements. Factors that could cause actual results to differ materially from those described herein include, among others:

 

●

risks associated with potential significant volatility and fluctuations in the market price of the Company’s common stock;

 

●

risks associated with the Company’s relatively low public float, which may result in its common stock experiencing significant price volatility;

 

●

risks associated with raising additional equity or debt capital from public or private markets to pursue the Company’s business plan following the closing of the equity investment, including in an amount that may significantly exceed the amount of the equity investment, and the effects that raising such capital may have on the Company and its business, including the risk of substantial dilution or that the Company’s common stock may experience a substantial decline in trading price;

 

●

the possibility that additional future financings may not be available to the Company on acceptable terms or at all;

 

●

the effect that the consummation of the equity investment and the other transactions contemplated by the Investment Agreement may have on the Company and its current or future business or on the price of the Company’s common stock;

 

●

the possibility that an active, liquid trading market for the Company’s common stock may not develop or, if developed, may not be sustained;

 

●

the possibility that the warrants and the preferred stock issued pursuant to the Investment Agreement may or may not be converted or exercised, and the economic impact on the Company and the holders of common stock of the Company that may result from either such exercise or conversion, including dilution, or the continuance of the preferred stock remaining outstanding, and the impact its terms, including its dividend, may have on the Company and the common stock of the Company;

 

●

uncertainties regarding the Company’s focus, strategic plans and other management actions;

 

●

the risk that the Company is or becomes highly dependent on the continued leadership of Brad Jacobs as chairman and chief executive officer and the possibility that the loss of Jacobs in these roles could have a material adverse effect on the Company’s business, financial condition and results of operations;

 

●

risks associated with becoming a “controlled company” following the closing of the equity investment, as defined under applicable stock exchange rules, including that Jacobs will be able to influence the Company’s management and affairs and all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions;

 

 

●

the risk that certain rules of the U.S. Securities and Exchange Commission (the “SEC”) may require that any registration statement the Company may file with the SEC be subject to SEC review and potential delay in its effectiveness, and that a registration statement must be filed and declared effective for any acquisition (including an all-cash acquisition), which would delay its consummation and could reduce the Company’s attractiveness as an acquirer for potential acquisition targets;

 

●

the possibility that the concentration of ownership by Jacobs may have the effect of delaying or preventing a change in control of the Company and might affect the market price of shares of the common stock of the Company;

 

●

the possibility that the Company’s status as a “controlled company” could cause the common stock of the Company to be less attractive to certain investors;

 

●

the risk that Jacobs’ past performance may not be representative of future results;

 

●

the risk that the Company is unable to retain world-class talent;

 

●

the risk that the failure to consummate any acquisition expeditiously, or at all, could have a material adverse effect on the Company’s business prospects, financial condition, results of operations or the price of the Company’s common stock;

 

●

risks that the Company may not be able to enter into agreements with acquisition targets on attractive terms, or at all, that agreed acquisitions may not be consummated, or, if consummated, that the anticipated benefits thereof may not be realized and that the Company encounter difficulties in integrating and operating such acquired companies, or that matters related to an acquired business (including operating results or liabilities or contingencies) may have a negative effect on the Company or its securities or ability to implement its business strategy, including that any such transaction may be dilutive or have other negative consequences to the Company and its value or the trading prices of its securities;

 

●

risks associated with cybersecurity and technology, including attempts by third parties to defeat the security measures of the Company and its business partners, and the loss of confidential information and other business disruptions;

 

●

the possibility that new investors in any future financing transactions could gain rights, preferences and privileges senior to those of the Company’s existing stockholders;

 

●

the possibility that building products distribution industry demand may soften or shift substantially due to cyclicality or seasonality or dependence on general economic conditions, including inflation or deflation, interest rates, consumer confidence, labor and supply shortages, weather and commodity prices;

 

●

the possibility that regional or global barriers to trade or a global trade war could increase the cost of products in the building products distribution industry, which could adversely impact the competitiveness of such products and the financial results of businesses in the industry;

 

●

risks associated with potential litigation related to the transactions contemplated by the Investment Agreement or related to any possible subsequent financing transactions or acquisitions or investments;

 

●

uncertainties regarding general economic, business, competitive, legal, regulatory, tax and geopolitical conditions; and

 

●

other factors, including those set forth in the Company’s filings with the SEC, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024, and subsequent Quarterly Reports on Form 10-Q.

 

Forward-looking statements herein speak only as of the date each statement is made. None of the Company, JPE nor any person undertakes any obligation to update any of these statements in light of new information or future events, except to the extent required by applicable law.

 

Media Contact

 

Joe Checkler

joe.checkler@qxo.com

+1-732-674-4871

www.qxo.com

 

 

4

 

v3.24.1.1.u2

Cover	Jun. 06, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jun. 06, 2024
Current Fiscal Year End Date	--12-31
Entity File Number	000-50302
Entity Registrant Name	QXO, INC.
Entity Central Index Key	0001236275
Entity Tax Identification Number	16-1633636
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	Five American Lane
Entity Address, City or Town	Greenwich
Entity Address, State or Province	CT
Entity Address, Postal Zip Code	06831
City Area Code	888
Local Phone Number	998-6000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.00001 per share
Trading Symbol	QXO
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Information, Former Legal or Registered Name	SilverSun Technologies, Inc.

---