EXHIBIT 10.1
AMENDED AND RESTATED STANDSTILL AGREEMENT
This AMENDED AND RESTATED STANDSTILL AGREEMENT dated as of July 31, 2005,
among Solidus Company (formerly known as Solidus, LLC), a Tennessee general
partnership ("Solidus"), and X. Xxxxxxxxx'x Corporation, a Tennessee corporation
(the "Company").
Solidus owns 1,747,846 shares of Common Stock, $.05 par value, of the
Company (the "Common Stock"), and Solidus and the Company have been bound by a
Stock Purchase and Standstill Agreement dated as of March 22, 1999, which
provided for the purchase by Solidus of shares of Common Stock and imposed
certain restrictions on Solidus' ability to transfer shares of Common Stock and
other activities, which restrictions were to expire on March 22, 2006. The Stock
Purchase and Standstill Agreement was amended by a First Amendment to Stock
Purchase and Standstill Agreement dated as of August 11, 2003 ("First
Amendment"). This Standstill Agreement amends and restates the Stock Purchase
and Standstill Agreement, which is hereby terminated.
NOW, THEREFORE, in consideration of the promises herein made and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I. STANDSTILL AGREEMENT
For purposes of this Article: "Solidus" means Solidus Company, a Tennessee
general partnership, its affiliates, its subsidiaries, and other corporations,
entities and persons under its direct or indirect control or under common
control or acting on its behalf or in concert with it (including, but not
limited to, Solidus Partners, L.P.), except as to Section 1.1(A)(4), which shall
bind only Solidus, Solidus Partners, L.P., any successor investment
partnerships, and persons receiving partnership distributions from such
entities; and "Voting Securities" means Common Stock and any other securities of
the Company entitled to vote generally for the election of directors.
1.1. Solidus covenants and agrees as follows:
(A) Until December 1, 2009 (or at the end of any Extension if the
Company does not then pay the Minimum Dividend required to effect an
additional Extension), Solidus will not, without the prior consent of the
Company's Board of Directors specifically expressed in a resolution
adopted by a majority of the directors of the Company who are not
employees, directors or designees of Solidus:
(1) acquire, directly or indirectly, by purchase or otherwise,
any Voting Securities, if after such acquisition Solidus would hold
beneficially or of record in the aggregate more than 33.0% of the
Voting Securities then outstanding;
(2) solicit proxies with respect to Voting Securities under
any circumstances; provided however, that this prohibition shall not
apply to a solicitation made by the Company's Board of Directors if
an affiliate or designee of Solidus is a member of the Company's
Board of Directors;
(3) deposit any Voting Securities in a voting trust or any
similar arrangement; or
(4) sell, transfer or otherwise dispose of any Voting
Securities, except:
(a) to the Company or to any person, corporation, entity or group
approved by the Company;
(b) to any affiliate, subsidiary or entity under the direct or
indirect control of, or under common control with, Solidus; or
(c) pursuant to the provisions of Section 1.5 below.
(B) The restrictions set forth in Paragraph (A) (1) and (A) (2)
hereof shall terminate if:
(1) At any time, any corporation, entity, person or group
(other than the Company) makes a tender or exchange offer to holders
of Voting Securities which, if successful, would result in such
person holding in excess of 10% of the outstanding Voting
Securities. For purposes of this Paragraph (B) (1) a tender or
exchange offer shall be deemed to have been made when (but not
before) offering documents are first published, sent or given to
holders of Voting Securities.
(2) At any time, any corporation, entity, person or group
other than Solidus files:
(a) A notice under Section 7A of the Xxxxxxx Act relating to the
intention to acquire more than 15% of the outstanding Voting Securities,
or
(b) a Schedule 13D under the Securities Exchange Act of 1934 (the
"Exchange Act") relating to the acquisition of more than 10% of the
outstanding Voting Securities.
(3) At any time the Company proposes, authorizes or adopts a
merger, consolidation, sale of all or substantially all its assets
or other transaction or series of transactions pursuant to which
shareholders of the
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Company would receive for their shares securities of one or more
entities or cash or property or some combination thereof; provided,
however, that this subparagraph (3) shall not apply to a plan of
complete liquidation adopted by the shareholders of the Company.
(4) During any period of two consecutive years, individuals
who at the beginning of any such two-year period constituted the
Board of Directors of the Company cease to constitute at least a
majority thereof. However, if the election, or nomination for
election by the Company's shareholders, of a director of the Company
first elected during such period was approved by a vote of at least
two-thirds of the directors of the Company then still in office who
were directors of the Company at the beginning of such period, then
such new director will be treated as if he were an individual who
served at the beginning of the two-year period for purposes of the
determination made in the preceding sentence.
1.2. The Company covenants and agrees as follows:
(A) The Company will not interpose any objection or take any legal
action as a plaintiff in connection with the acquisition by Solidus of up
to 33.0% of the Voting Securities.
(B) The Company agrees to give Solidus prompt notice of the receipt
of (i) any written notice from any corporation, entity, person or group
couched in such terms as to put the Company reasonably on notice of the
likelihood that such corporation, entity, person or group will seek to
acquire more than 10% of the outstanding Voting Securities, (ii) any
notice under Section 7A of the Xxxxxxx Act and (iii) any Schedule 13D
under the Exchange Act.
1.3. Solidus agrees to the placement on the certificate(s) representing
any Voting Securities owned by Solidus of the following legend:
"The shares represented by this certificate or any certificate
issued in exchange therefor are subject to restrictions on sale or
transfer as set forth in a certain agreement dated July 31, 2005,
between the holder hereof and X. Xxxxxxxxx'x Corporation."
1.4. It is agreed that each party shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to specifically enforce
the terms and provisions thereof in any action instituted in any court of the
United States or any state thereof having subject matter jurisdiction, in
addition to any other remedy to which such party may be entitled, at law or in
equity.
1.5. Commencing December 1, 2006, notwithstanding the restrictions in
Article I, Solidus shall be permitted to transfer or sell up to 100,000 shares
of Common Stock and its affiliate, Solidus, L.P., shall be permitted to sell up
to 6,000 shares of
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Common Stock at any time during each year during the term hereof (measured from
December 1 to November 30 of the next year), without restriction (other than
restrictions imposed by law or regulation). If less than the foregoing numbers
of shares are sold or transferred pursuant to this Section 1.5 during the
12-month period from December 1 to November 30 of any year, those additional
shares may be sold during the term of this Agreement. The foregoing share
amounts shall be adjusted proportionately in the event of an Adjustment
Transaction. The Company shall then determine the appropriate adjustment and
notify Solidus thereof.
1.6. In addition, the parties agree that the provisions of Section
1.1(A)(4) will not apply to a pledge by Solidus pursuant to its Loan Agreement
between Solidus and AmSouth Bank, N.A. (the "Bank") dated August 11, 2003 (the
"Credit Agreement") to the extent described below and the following provisions
shall bind the Company, Solidus and the Bank:
(A) The provisions of Section 1.1(A)(4) of this agreement will not
apply to any pledge of the Securities (consisting of 1,747,846 shares of
the Common Stock) by Solidus in order to secure the payment and
performance of the obligations of Solidus under the terms of the Credit
Agreement, provided that, if Solidus defaults on its obligations under the
Credit Agreement:
(1) The Bank shall first sell the collateral described on
Schedule A hereto (the "Other Collateral") to satisfy the payment
and performance of Solidus's obligations under the Credit Agreement.
(2) If the proceeds from the sale of the Other Collateral do
not satisfy the payment and performance of Solidus's obligations to
the Bank under the Credit Agreement, the Bank shall give the Company
written notice setting forth the amount of the Securities to be sold
and the price at which the Bank proposes to sell the Securities (the
"Notice"). The Company shall have the exclusive right during the
first 30 days following receipt of such Notice to elect to purchase
all or any portion of the Securities proposed to be sold at the
price specified. If the Company does not exercise its right to
purchase any portion of the Securities described in the Notice, the
Bank may sell such portion of the Securities described in the Notice
on terms no more favorable than the terms stated in the Notice. If
the Bank does not exercise its right to sell the Securities within
50 days after the expiration of the Company's 30 day period, the
Bank may not thereafter sell the Securities without again complying
with the provisions of Paragraph A.
(3) If Solidus sells any of the Other Collateral, the proceeds
from the sale of the Other Collateral shall be used to permanently
reduce amounts outstanding under the Credit Agreement and amounts
available for borrowing under the Credit Agreement on a dollar for
dollar basis.
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ARTICLE II. STANDSTILL EXTENSION
2.1. Solidus and the Company agree that the agreements of Solidus and the
Company in Article I hereof will be in full force and effect until January 15,
2006 and will be extended either (a) each calendar quarter from the 15th day of
the first month of each calendar quarter (that is the end of the latest
Extension), expiring at the close of business on the 15th day of the first month
of the next calendar quarter (a "Quarterly Extension"), or (b) for four (4)
calendar quarters from the 15th day of the month, expiring at the close of
business on the first anniversary of such date (an "Annual Extension"), up to
December 1, 2009 (each, an "Extension") at the sole election of the Company, so
long as the Company declares and pays minimum cash dividends on the Common Stock
of the Company as described in Section 2.2 hereof.
2.2. The minimum cash dividend to effect an Extension ("Minimum Dividend")
shall be either of the following, at the sole election of the Company from time
to time:
(a) a dividend of $0.025 per share of Common Stock each quarter,
paid by the 15th day of the first month of a calendar quarter, in order to
effect a Quarterly Extension; or
(b) an aggregate dividend of $0.10 per share of Common Stock each
twelve-month period, paid in one or more installments, by the end of the
latest Extension in order to effect an Annual Extension;
in either case, declared and paid to all holders of the Common Stock on a per
share basis as of a record date or dates established by the Company's Board of
Directors. Payment by the Company to a paying agent by the required date shall
satisfy the requirements hereof, even if shareholders have not received their
per share payment by such date. For example, the first Minimum Dividend shall be
paid by January 15, 2006 (or the next business day thereafter) in order to
effect an Extension to April 15, 2006 if the Company elects a Quarterly
Extension or to January 15, 2007, if the Company elects an Annual Extension. In
the event that the 15th day of the month which is the last day of an Extension
falls on a Saturday, Sunday, or holiday, the dividend may be paid as required on
the following business day in order to effect an additional Extension.
If, during the term of this Agreement, the number of shares of Common
Stock outstanding increases or decreases by way of a stock split, reverse stock
split, stock dividend, reorganization or exchange of shares of the Company or
other similar corporate transaction that results in a proportionate increase or
decrease in the number of outstanding shares (an "Adjustment Transaction"), then
the Minimum Dividend shall be adjusted proportionately such that the aggregate
Minimum Dividend payable by the Company shall be the same aggregate dollar
amount if calculated immediately prior to such transaction as after the increase
or decrease, and the per share amount of the Minimum Dividend shall be adjusted
proportionately. For example, if the Company issues a stock dividend of one
share of Common Stock for each share outstanding, which
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results in the number of outstanding shares being multiplied by 2.0, then the
Minimum Dividend shall be divided by 2.0, resulting in an adjusted Minimum
Dividend of $0.0125 per quarter and $0.05 per twelve month period, which shall
thereafter apply.
2.3. The Company shall have no obligation to pay the Minimum Dividend, but
if the Company does not pay the Minimum Dividend by the required date to effect
an Extension, this Agreement shall terminate at the end of the latest Extension.
ARTICLE III. GENERAL
3.1. This Agreement may not be assigned by any party hereto, but shall be
binding on permitted transferees of the shares pursuant to Section 1.1(A)(4)(b)
hereof to the same extent as Solidus.
3.2. This Agreement may be executed in counterparts and each such
counterpart shall be deemed to be an original instrument.
3.3. This Agreement, including the exhibits and other documents referred
to herein or delivered pursuant hereto, contains the entire understanding of the
parties with respect to its subject matter. This Agreement supersedes all prior
agreements and understandings between the parties with respect to its subject
matter.
3.4. This Agreement shall be governed by and construed in accordance with
the laws of the State of Tennessee.
3.5. This Agreement shall inure to the benefit of Solidus and the Company,
and no benefit hereunder shall be enforceable by any person or entity other than
the parties hereto.
SOLIDUS COMPANY
By: /s/ E. Xxxxxx Xxxxxx
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E. Xxxxxx Xxxxxx, Managing Partner
X. XXXXXXXXX'X CORPORATION
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
Its: Chairman, President and
Chief Executive Officer
AMSOUTH BANK, N.A.
By: /s/ X. Xxx Blank
--------------------------------------
Name: X. Xxx Blank
Its: Senior Vice President
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SCHEDULE A
OTHER COLLATERAL
4,700 shares Altria Group Inc. common stock
750 shares Berkshire Xxxxxxxx XX B
130,368 shares Bright Horizons Family Solutions, Inc. common stock
350 shares Daily Journal Corporation common stock
122,666.40 shares Healthgate Data Corp. common stock
