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______________________________________________________
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
of
DOMINICK'S SUPERMARKETS, INC.
Dated as of
November 1, 1996
______________________________________________________
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS............................................................. 2
Section 1.1 Definitions................................................. 2
ARTICLE II RESTRICTIONS ON TRANSFERS............................................... 9
Section 2.1 Transfers in Accordance with this Agreement................. 9
Section 2.2 Agreement to be Bound....................................... 9
Section 2.3 Legend...................................................... 10
Section 2.4 [Intentionally Omitted]..................................... 10
Section 2.5 Transfer of Pecuniary Interests............................. 10
Section 2.6 Tag-Along Rights............................................ 11
Section 2.7 Rights to Compel Sale....................................... 13
Section 2.8 Offering Memorandum......................................... 16
Section 2.9 Deliveries at Closing; Method of Payment of Purchase Price.. 16
ARTICLE III SCOPE OF BUSINESS OF THE COMPANY........................................ 16
Section 3.1 Scope of Business........................................... 16
Section 3.2 Business Opportunities...................................... 17
ARTICLE IV ADDITIONAL RIGHTS AND OBLIGATIONS OF
INVESTORS AND THE COMPANY............................................... 17
Section 4.1 Management Fees............................................. 17
Section 4.2 Investment Banking Services................................. 17
Section 4.3 Access to Information; Confidentiality...................... 17
Section 4.4 Furnishing of Information................................... 18
Section 4.5 Regulatory Problems, Etc.................................... 19
ARTICLE V CORPORATE GOVERNANCE AND VOTING......................................... 19
Section 5.1 Boards of Directors......................................... 19
Section 5.2 Action by the Board of Directors............................ 23
Section 5.3 Charter Documents........................................... 23
Section 5.4 Appointment of Representative............................... 23
Section 5.5 Board Visitation Rights..................................... 23
ARTICLE VI TERMINATION............................................................. 24
Section 6.1 Termination................................................. 24
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ARTICLE VII MISCELLANEOUS................................... 24
Section 7.1 No Inconsistent Agreements................ 24
Section 7.2 No Other Affiliate Stockholders........... 25
Section 7.3 Recapitalization, Exchanges, Etc.......... 25
Section 7.4 Successors and Assigns.................... 25
Section 7.5 No Waivers; Amendments.................... 25
Section 7.6 Notices................................... 26
Section 7.7 Inspection................................ 27
Section 7.8 Governing Law............................. 27
Section 7.9 Section Headings.......................... 27
Section 7.10 Entire Agreement.......................... 27
Section 7.11 Severability.............................. 28
Section 7.12 Counterparts.............................. 28
Section 7.13 Required Approvals........................ 28
Section 7.14 Consistency............................... 28
Section 7.15 Public Disclosure......................... 28
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AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Agreement") dated as of
November 1, 1996, by and among (i) each of the purchasers listed on the
signature pages attached hereto (together with their Permitted Transferees
(defined below), the "Purchasers"), (ii) each of the investors listed on the
signature pages attached hereto, (iii) The Yucaipa Companies, a California
general partnership, Yucaipa Blackhawk Partners, L.P., a California limited
partnership, Yucaipa Chicago Partners, L.P., a California limited partnership,
Yucaipa Dominick's Partners, L.P., a California limited partnership and Xxxxxx
X. Xxxxxx (collectively, the "Yucaipa Affiliates"), (iv) Dominick's
Supermarkets, Inc., a Delaware corporation (the "Company"), (v) Dominick's
Finer Foods, Inc., a Delaware corporation and wholly owned subsidiary of the
Company ("Dominick's"), and (vi) each other Person (defined below) who becomes
a party to this Agreement in accordance with the terms hereof.
W I T N E S S E T H:
WHEREAS, the parties hereto have entered into that certain Stockholders
Agreement dated as of March 22, 1995 (the "Stockholders Agreement"), and desire
to amend and restate such Stockholders Agreement in conjunction with the
Qualified IPO (as defined in the Stockholders Agreement) of the Company being
consummated on the date hereof;
WHEREAS, this Agreement shall become effective (the "Effective Date") on
the date of, and simultaneously with, the closing under the Underwriting
Agreement, dated as of October 29, 1996, among the Company, the stockholders of
the Company named therein, Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation,
Xxxxxx Xxxxxxx & Co. Incorporated, BT Securities Corporation and Chase
Securities, Inc., as the representatives of the several underwriters named
therein (the "Underwriting Agreement");
WHEREAS, on the Effective Date immediately after giving effect to the
transactions contemplated by the Underwriting Agreement (i) the authorized
capital stock of the Company will consist of 50,000,000 shares of voting common
stock, $.01 par value (the "Common Stock"), 10,000,000 shares of non-voting
common stock, $.01 par value, of which 8,500,000 shares will be designated as
Class B Common Stock (the "Class B Common Stock"), and 4,000,000 shares of
preferred stock, $.01 par value (the "Preferred Stock") of which 40,000 shares
have been designated as 15% Redeemable Exchangeable Cumulative Preferred Stock,
Series A, $.01 par value (the "Redeemable Preferred Stock"), and (ii) the
issued and outstanding capital stock of the Company will consist of 16,080,073
shares of Common Stock, 5,278,962 shares of Class B Common Stock and 40,000
shares of Redeemable Preferred Stock, with 996,835 shares of Common Stock
reserved for issuance upon the exercise of certain outstanding stock options,
1,000,000 shares reserved for issuance pursuant to the Company's 1996 Equity
Participation Plan and 3,874,492 shares of Common Stock reserved for issuance
upon the exercise of the Yucaipa Warrant (defined below);
WHEREAS, on the Effective Date after giving effect to the transactions
contemplated by the Underwriting Agreement (i) each Yucaipa Affiliate shall
beneficially own the number of shares of Common Stock set forth under its name
on the signature pages attached hereto, and the Yucaipa Affiliates shall
collectively beneficially own 2,934,909 shares of Common Stock, (ii) each
Purchaser shall beneficially own the number and kind of Shares (defined below)
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set forth under its name on the signature pages attached hereto, and the
Purchasers shall collectively beneficially own 3,511,540 shares of Common Stock
and 4,158,349 shares of Class B Common Stock; and (iii) Xxxx L.L.C. shall
beneficially own 40,000 shares of Redeemable Preferred Stock (which the Company
has agreed to repurchase on January 2, 1997); and
WHEREAS, the parties hereto desire to restrict the sale, assignment,
transfer, encumbrance or other disposition of the Shares, including both issued
and outstanding Shares as well as Shares that may be issued or otherwise
acquired hereafter, to provide for certain rights and obligations in respect of
the Shares and the Company as hereinafter provided.
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement, the following terms
have the following meanings:
"Acquisition Date" shall mean March 22, 1995 (after giving effect to the
Company's acquisition of Dominick's on such date).
"Additional Shares" shall have the meaning set forth in Section 2.6(c).
"Affiliate," as applied to any specified Person, shall mean any other
Person directly or indirect controlling or controlled by or under direct or
indirect common control with such specified Person and, in the case of a Person
who is an individual, shall include (i) members of such specified Person's
immediate family (as defined in Instruction 2 of Item 404(a) of Regulation S-K
under the Securities Act) and (ii) trusts, the trustee and all beneficiaries of
which are such specified Person or members of such Person's immediate family as
determined in accordance with the foregoing clause (i). Notwithstanding, the
foregoing, the Purchasers and their respective Affiliates shall not be deemed
Affiliates of the Company.
"Affiliate Transaction" shall mean (i) any sale, lease, transfer or other
disposition by the Company or its Subsidiaries of any of their respective
properties or assets to, (ii) any purchase of property or assets by the Company
or its Subsidiaries from, (iii) any investment by the Company or its
Subsidiaries in, (iv) any agreement by the Company or its Subsidiaries with or
for the benefit of, or (v) any other transaction between the Company or its
Subsidiaries and, an Affiliate of the Company or of any Subsidiary of the
Company.
"Apollo" shall mean Apollo Investment Fund, L.P. and any of its Permitted
Transferees to which Apollo has Transferred Shares.
"Apollo Nominees" shall have the meaning set forth in Section 5.1(a).
"Appraisal Notice" shall have the meaning set forth in Section 2.7(c)(i).
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"Appraisal Request" shall mean a written request for an appraisal pursuant
to Section 2.7(i) sent by Other Purchasers holding a least 65% of the Shares
then held by the Other Purchasers to Yucaipa and Apollo on or prior to the
fifth business day following delivery of the Compelled Sale Notice, which
request shall identify five proposed Appraisers that are independent from the
Company, the stockholders of the Company or any of their respective Affiliates;
provided, that the right to deliver an Appraisal Request shall terminate on the
first date on which the Other Purchasers beneficially own fewer than 50% of the
Shares held by the Other Purchasers on the Acquisition Date.
"Appraised Value" shall mean, with respect to any Compelled Sale, the per
Share value of the Company immediately prior to such Compelled Sale (without
giving effect thereto or to the rights of Apollo contained in Section
2.7(c)(ii) hereof), as determined in good faith by the Appraiser.
"Appraiser" shall mean a nationally recognized investment bank, appraisal
firm or other Person with experience in valuing businesses chosen pursuant to
Section 2.7(i).
"beneficial owner" of a security shall mean any person who, directly or
indirectly, through any contract, arrangement, understanding, relationship, or
otherwise has (i) the power to vote, or to direct the voting of, such security
and (ii) the power to dispose, or to direct the disposition of, such security.
"Beneficially own" shall have a correlative meaning. Ownership of the Yucaipa
Warrant shall not constitute beneficial ownership of the Shares issuable upon
the exercise thereof.
"Board of Directors" shall mean the Board of Directors of the Company.
"Business Day" shall mean each day other than Saturdays, Sundays and days
when commercial banks are authorized to be closed for business in New York, New
York.
"Business Opportunity" shall have the meaning set forth in Section 3.2.
"Capitalized Lease Obligation," as applied to any Person, means
obligations under any lease of any property (whether real, personal or mixed)
by that Person as lessee, that, in conformity with GAAP, is accounted for as a
capital lease on the balance sheet of that Person, and the amount of
Indebtedness represented by such obligations shall be the capitalized amount of
such obligations, determined in accordance with GAAP.
"Charter Documents" shall mean the Certificate of Incorporation and Bylaws
of the Company, each as amended or restated, attached hereto as Exhibits A and
B, respectively.
"Class B Common Stock" shall have the meaning set forth in the recitals.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Stock" shall have the meaning set forth in the recitals.
"Compelled Sale" shall have the meaning set forth in Section 2.7(a).
"Company" shall have the meaning set forth in the preamble.
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"Compelled Sale Acceptance" shall have the meaning set forth in Section
2.7(c).
"Compelled Sale Agreement" shall have the meaning set forth in Section
2.7(c).
"Compelled Sale Closing" shall have the meaning set forth in Section
2.7(a).
"Compelled Sale Date" shall have the meaning set forth in Section 2.7(b).
"Compelled Sale Notice" shall have the meaning set forth in Section
2.7(b).
"Compelled Sale Transaction Date" shall have the meaning set forth in
Section 2.7(c).
"Control," when used with respect to any Person, means the power to direct
the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Controlling Stockholders" shall mean the Yucaipa Affiliates and any of
their Permitted Transferees to which any Yucaipa Affiliate or any other
Controlling Stockholder has Transferred Shares.
"Credit Agreement" shall mean the Credit Agreement, dated as of the date
hereof, among Dominick's, the Company, the guarantors named therein, and the
lenders, arrangers, administrative agent and syndication agent named therein.
"Disqualified Indebtedness" shall have the meaning set forth in Section
2.7(h).
"Dominick's" shall have the meaning set forth in the preamble.
"Dominick's Board" shall mean the board of directors of Dominick's.
"Dominick's Stock Purchase Agreement" means the Stock Purchase Agreement,
dated January 17, 1995, by and among the Company, DFF Acquisition Sub, Inc.,
Xxxx, L.L.C., Xxxx Family L.L.C. and Xxxx Developments, L.L.C.
"EBITDA" shall mean with respect to any Person for any period, the net
income (or loss) of such Person and its subsidiaries on a consolidated basis
for such period, determined in accordance with GAAP, excluding (to the extent
included therein), without duplication, (i) all net extraordinary gains (or
losses), (ii) total interest expense of such Person and its subsidiaries on a
consolidated basis with respect to outstanding indebtedness of such Person and
its subsidiaries, including without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under interest rate swap, cap, collar or
similar agreements, (iii) provisions for taxes based on income, (iv) total
depreciation expense, (v) total amortization expense, (vi) LIFO provision, and
(vii) other non-cash items reducing net income and other non-cash items
increasing net income, all of the foregoing as determined on a consolidated
basis for such Person and its subsidiaries in accordance with GAAP; provided,
that EBITDA of the Company for any period shall be calculated to give pro forma
effect to all acquisitions and divestitures during such period as if such
acquisitions and divestitures had
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occurred on the first day of such period, such calculations to be made in
accordance with GAAP and Rule 11-02 of Regulation S-X of the Commission.
"Effective Date" shall have the meaning set forth in the recitals.
"Employee Plans" shall mean the Company's 1995 Stock Option Plan, under
which 966,835 shares of Common Stock are reserved for issuance upon exercise of
options granted thereunder, the Company's 1996 Equity Participation Plan, under
which 1,000,000 shares of Common Stock are reserved for issuance, and any
employee or similar plans set forth in Schedule 3.23 to the Dominick's Stock
Purchase Agreement or approved by a majority of the Board of Directors then in
office.
"Enterprise Value" with respect to any proposed Compelled Sale, shall mean
(without duplication) the sum of (a) the aggregate value of the fully diluted
common equity of the Company, based on the price per Share proposed to be paid
in such Compelled Sale, net of the exercise, exchange or conversion price, if
any, with respect to any security exercisable or exchangeable for or
convertible into Common Stock of the Company, plus (b) the aggregate principal
amount of all Indebtedness of the Company and its consolidated Subsidiaries and
the aggregate liquidation preference of all preferred stock of the Company
(other than preferred stock included in clause (a) above), in each case as
reflected on the most recent balance sheet of the Company and its consolidated
subsidiaries that was (or was required to be) provided pursuant to Section 4.4
hereof on or prior to the date of the Compelled Sale Notice, less (c) all cash
and cash equivalents of the Company and its consolidated Subsidiaries as
reflected on such balance sheet.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exchange Agreement" means the Stock Exchange Agreement, dated as of March
22, 1995, by and between the Company and Apollo.
"GAAP" shall mean generally accepted accounting principles, consistently
applied.
"Indebtedness" shall mean with respect to any Person, without duplication,
all liabilities of such Person (a) for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to
a portion thereof), (b) evidenced by bonds, notes, debentures or similar
instruments or representing the balance deferred and unpaid of the purchase
price of any property (other than any such balance that represents an account
payable or any other monetary obligation to a trade creditor (whether or not an
Affiliate)), or (c) for the payment of money relating to a Capitalized Lease
Obligation.
"Independent Nominator" shall mean (a) Apollo until Apollo ceases to
beneficially own at least 1,463,795 Shares (25% of the Shares beneficially
owned by Apollo on the Acquisition Date) and (b) thereafter, Yucaipa.
"Investor Nominees" shall have the meaning set forth in Section 5.1 (a).
"Investors" shall mean each of the parties to the Agreement (other than
the Company and Controlling Stockholders), together with such party's Permitted
Transferees, including (without limitation) any Person who shall become a party
to or agree to be bound by the
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terms of this Agreement after the date hereof. For purposes of determining the
number of Shares held by any Investor, such Investor shall be deemed to hold
all Shares held by such Investor's Permitted Transferees.
"MD&A" shall mean a management's discussion and analysis of the Company's
financial condition and results of operation comparable to the discussion that
is required to be included in periodic reports filed under the Exchange Act.
"Management Agreement" shall mean that certain Management Agreement, dated
as of the date hereof, by and among the Company, Dominick's and Yucaipa,
attached hereto as Exhibit D.
"Notices" shall have the meaning set forth in Section 7.6.
"Other Investors" shall mean the Investors other than the Purchasers.
"Other Purchasers" shall mean the Purchasers other than Apollo.
"Other Nominees" shall have the meaning set forth in Section 5.1(a).
"pecuniary interest" in any security shall mean the opportunity, directly
or indirectly, to profit or share in any profit derived from a transaction in
such security, and shall include securities owned by an individual's spouse or
issue or any trust solely for the benefit of such individual, spouse or issue.
"Permitted Transferee" shall mean:
(a) in the case of any Purchaser (i) any officer, director or partner of,
or Person controlling, such Purchaser or any other Purchaser, or (ii) any other
Person that is (x) an Affiliate of the general partner(s), investment
manager(s) or investment advisor(s) of such Purchaser on the date hereof, (y)
an Affiliate of such Purchaser or a Permitted Transferee of such Purchaser or
(z) an investment fund, investment account or investment entity whose
investment manager, investment advisor or general partner thereof is such
Purchaser or a Permitted Transferee of such Purchaser, in each case in a bona
fide distribution or other transaction not intended to avoid the provisions of
this Agreement;
(b) in the case of any Controlling Stockholder, (i) any Person that is
controlled by Xxxxxx X. Xxxxxx, (ii) upon a bona fide liquidation of, or a bona
fide withdrawal from, such Controlling Stockholder, in each case, not intended
to avoid the provisions of this Agreement, the shareholders, partners or
principals, as the case may be, of such Controlling Stockholder, (iii) upon a
bona fide reduction (not intended to avoid the provisions of this Agreement) in
such Controlling Stockholder's interest in another Controlling Stockholder (a
"Specified Person"), and a corresponding increase in a Yucaipa Individual's
interest in such Specified Person, such Yucaipa Individual; provided, that
immediately after such Transfer, Xxxxxx X. Xxxxxx continues to control such
Specified Person, or (iv) if such Controlling Stockholder is an individual, (x)
any spouse or issue of such individual, or any trust solely for the benefit of
such individual, spouse or issue, and (y) upon such individual's death, any
Person to whom Shares are transferred in accordance with the laws of the
descent and/or testamentary distribution; and
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(c) in the case of any Other Investor, (i) any Subsidiary of such Other
Investor, (ii) any Person of which such Other Investor is a Subsidiary, (iii)
any Subsidiary of a Person described in the foregoing clause (ii), or (iv) if
such Other Investor is an individual, (x) any spouse or issue of such Other
Investor or any trust for the benefit of such individual, spouse or issue, and
(y) upon such Other Investor's death, any Person to whom Shares are transferred
in accordance with the laws of descent and/or testamentary distribution.
"Person" shall mean an individual or a corporation, partnership, limited
liability company, trust, or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Preferred Stock" shall have the meaning set forth in the recitals.
"Proposed Purchaser" shall mean a Person or group of Persons to which any
Controlling Stockholder proposes to Transfer Shares in accordance with Section
2.6.
"Public Offering" shall mean any bona fide underwritten public
distribution of equity securities of the Company pursuant to an effective
registration statement under the Securities Act.
"Purchasers" shall have the meaning set forth in the preamble.
"Redeemable Preferred Stock" shall have the meaning set forth in the
recitals.
"Registration Rights Agreements" shall mean (i) that certain Registration
Rights Agreement, dated as of March 22, 1995, by and among the Company, the
Purchasers and the other parties thereto and (ii) that certain Registration
Rights Agreement, dated as of the date hereof, by and among the Company,
certain Yucaipa Affiliates and the other parties thereto.
"Regulatory Problem" shall have the meaning set forth in Section 4.5.
"Remaining Holders" shall have the meaning set forth in Section 2.7(a).
"Requisite Holders" on any date shall mean the Other Purchasers that own
at least 65% of the Shares beneficially owned by the Other Purchasers on such
date.
"ROFO Acceptance" shall have the meaning set forth in Section 5.1(g).
"ROFO Closing Date" shall have the meaning set forth in Section 5.1(g).
"ROFO Notice" shall have the meaning set forth in Section 5.1(g).
"ROFO Shares" shall have the meaning set forth in Section 5.1(g).
"RPHC" shall mean any Person, if an interest in such Person is treated as
a "United States real property interest" within the meaning of section 897 of
the Internal Revenue Code of 1986, as amended.
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"Rule 144 Open Market Transaction" shall mean any bona fide public sale of
Shares in an open market transaction under Rule 144 of the Securities Act (or
any successor rule) if such sale is in compliance with the requirements of
paragraphs (c), (d), (e), (f) and (g) of such Rule (notwithstanding the
provisions of paragraph (k) of such Rule).
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"Shares" shall mean, collectively, the Common Stock and the Class B Common
Stock. Whenever this Agreement refers to a number or percentage of Shares,
such number or percentage shall be calculated as if each of the Shares had been
exchanged or converted into shares of Common Stock immediately prior to such
calculation regardless of the existence of any restrictions on such exchange or
conversion.
"Stock Purchase Agreement" shall mean the stock purchase agreement, dated
as of March 22, 1995, among the Company, Yucaipa and the Purchasers.
"Subsidiary" shall mean, with respect to any Person, (a) a corporation a
majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by a Subsidiary of such Person, or by such Person and one or
more Subsidiaries of such Person, (b) a partnership in which such Person or a
Subsidiary, of such Person is, at the date of determination, a general partner
of such partnership, or (c) any other Person (other than a corporation) in
which such Person, a Subsidiary of such Person or such Person and one or more
Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has (i) at least a majority ownership interest or (ii)
the power to elect or direct the election of the directors or other governing
body of such Person.
"Tag-Along Notice" shall have the meaning set forth in Section 2.6(c).
"Tag-Along Sale" shall mean a bona fide Transfer of a Controlling
Stockholder's pecuniary interest in any Shares (except in accordance with
Section 2.7), including, without limitation, (a) by means of such Controlling
Stockholder's Transfer of an interest in any Person owning such Shares or (b) a
Transfer of a pecuniary interest in any Shares by such Controlling
Stockholder's spouse or issue, or by any trust solely for the benefit of such
Controlling Stockholder's spouse or issue.
"Tag-Along Stockholder" shall have the meaning set forth in Section
2.6(a).
"Third Party" shall mean any prospective purchaser of Shares (that is not
an Affiliate or Permitted Transferee of the transferor or of any Yucaipa
Affiliate) in an arm's length purchase from such transferor.
"Transfer" shall mean (i) when used as a noun: any direct or indirect
transfer, sale, assignment, pledge, hypothecation, encumbrance or other
disposition and (ii) when used as a verb: to directly or indirectly transfer,
sell, assign, pledge, hypothecate, encumber, or otherwise dispose of.
"Transferee" shall mean any Person to whom Shares have been Transferred in
compliance with the terms of this Agreement.
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"Transfer Allotment" of any Tag-Along Stockholder with respect to any
Tag-Along Sale shall mean the product of (i) the total number of Shares
proposed to be Transferred in such Tag-Along Sale multiplied by (ii) a
fraction, the numerator of which is the total number of Shares owned by such
Tag-Along Stockholder as of the close of business on the second day immediately
preceding the mailing date of the Transfer Notice and the denominator of which
is the total number of Shares then owned by the Controlling Stockholders, the
Investors, and all other stockholders of the Company having tag-along or other
contractual rights to participate in the proposed Transfer.
"Transfer Date" shall have the meaning set forth in Section 2.6(b).
"Transfer Notice" shall have the meaning set forth in Section 2.6(b).
"Yucaipa" shall mean The Yucaipa Companies, a California general
partnership, until a successor controlled by Xxxxxx X. Xxxxxx replaces such
Person, and thereafter means such successor; provided that the rights set forth
in Section 5.1 of this Agreement as belonging to Yucaipa initially shall be
exercisable personally by Yucaipa Management L.L.C., a California limited
liability company, or Xxxxxx X. Xxxxxx and neither The Yucaipa Companies nor
any other Yucaipa Affiliate shall have any right or interest in the exercise of
such rights; provided further that Xxxxxx X. Xxxxxx may assign such rights to
any successor controlled by him, and for purposes of Section 5.1, "Yucaipa"
thereafter shall mean such successor so long as it remains controlled by Xxxxxx
X. Xxxxxx.
"Yucaipa Affiliate" shall have the meaning set forth in the preamble.
"Yucaipa Individual" shall mean (a) a full-time employee of a Yucaipa
Affiliate or the Company or (b) a partner of a Yucaipa Affiliate who devotes
substantially all of his business efforts to such Yucaipa Affiliate.
"Yucaipa Nominees" shall have the meaning set forth in Section 5.1(a).
"Yucaipa Warrant" shall mean the warrant to purchase up to 3,874,492
shares of Common Stock issued by the Company to Yucaipa on March 22, 1995, as
amended.
ARTICLE II
RESTRICTIONS ON TRANSFERS
SECTION 2.1 TRANSFERS IN ACCORDANCE WITH THIS AGREEMENT. Any attempt to
Transfer, or purported Transfer of, any Shares in violation of the terms of
this Agreement shall be null and void and neither the Company nor any transfer
agent shall register upon its books any such Transfer. A copy of this
Agreement shall be filed with the Secretary of the Company and kept with the
records of the Company.
SECTION 2.2 AGREEMENT TO BE BOUND. No party hereto shall Transfer any
Shares (other than Transfers to the Company, Transfers constituting a bona fide
public distribution pursuant to (i) the registration rights included in the
Registration Rights Agreements, (ii) any shelf registration pursuant to Rule
415 under the Securities Act or any Public Offering or (iii) Rule 144 Open
Market Transactions, or Transfers constituting a bona fide pledge to a
broker-dealer or other institutional lender), unless (x) the certificates
representing such Shares issued to the Transferee
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bear the legend provided in Section 2.3, if required by such Section, and (y)
the Transferee (if not already a party hereto) has executed and delivered to
each other party hereto, as a condition precedent to such Transfer, an
instrument or instruments, reasonably satisfactory to such parties, confirming
that the Transferee agrees to be bound by the terms of this Agreement in the
same manner as such Transferee's transferor, except as otherwise specifically
provided in this Agreement.
SECTION 2.3 LEGEND. Each Investor and Controlling Stockholder hereby
agrees that each outstanding certificate representing Shares issued to any of
them, or any certificate issued in exchange for or upon conversion of any
similarly legended certificate, shall, unless sold in a transaction exempted
from the operation of Section 2.2 above, bear a legend reading substantially as
follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS, AND
MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE. THE HOLDER OF THESE SHARES MAY BE REQUIRED TO DELIVER TO THE
COMPANY, IF THE COMPANY SO REQUESTS, AN OPINION OF COUNSEL (REASONABLY
SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY) TO THE EFFECT THAT AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (OR QUALIFICATION UNDER
STATE SECURITIES LAWS) IS AVAILABLE WITH RESPECT TO ANY TRANSFER OF THESE
SHARES THAT HAS NOT BEEN SO REGISTERED (OR QUALIFIED).
THE SHARES REPRESENTED BY THIS CERTIFICATE ALSO ARE SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AND OBLIGATIONS, TO WHICH ANY TRANSFEREE AGREES BY HIS
ACCEPTANCE HEREOF, AS SET FORTH IN THE AMENDED AND RESTATED STOCKHOLDERS
AGREEMENT, DATED AS OF NOVEMBER 1, 1996, COPIES OF WHICH MAY BE OBTAINED FROM
THE COMPANY. NO TRANSFER OF SUCH SHARES WILL BE MADE ON THE BOOKS OF THE
COMPANY UNLESS ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH
AGREEMENT AND BY AN AGREEMENT OF THE TRANSFEREE TO BE BOUND BY THE RESTRICTIONS
SET FORTH IN THE STOCKHOLDERS AGREEMENT.
SECTION 2.4 [INTENTIONALLY LEFT BLANK].
SECTION 2.5 TRANSFER OF PECUNIARY INTERESTS. Prior to a Transfer of a
pecuniary interest in any Shares by Xxxxxx X. Xxxxxx or any Controlling
Stockholder controlled by Xxxxxx X. Xxxxxx to a Permitted Transferee
(including, without limitation, by means of a Transfer of an interest in any
Person owning Shares) Xxxxxx X. Xxxxxx shall provide each of the Purchasers
with a written notice specifying the number of Shares in which a pecuniary
interest is being Transferred.
Without the prior written consent of (a) the holders of a majority of
the Shares held by the Purchasers and (b) at least two unrelated Purchasers,
neither Xxxxxx X. Xxxxxx nor any Controlling Stockholder controlled by Xxxxxx
X. Xxxxxx shall Transfer a pecuniary interest in any Shares to a Permitted
Transferee (including, without limitation, by means of a Transfer of an
interest in any Person owning Shares), if immediately after giving effect to
such Transfer Xxxxxx X. Xxxxxx would have a pecuniary interest in a number of
Shares less than (i) 85% of the number
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of Shares in which Xxxxxx X. Xxxxxx had a pecuniary interest on the Acquisition
Date minus (ii) any Shares as to which Xxxxxx X. Xxxxxx had a pecuniary
interest on the Acquisition Date that are Transferred in a Tag-Along Sale
exempt from the provisions of Section 6.2 pursuant to Section 2.6(e)(v).
The provisions of this Section 2.5 shall not apply to any Transfer to (x)
any spouse or issue of Xxxxxx X. Xxxxxx, or any trust solely for the benefit of
Xxxxxx X. Xxxxxx or any such spouse or issue, and (y) upon Xxxxxx X. Xxxxxx'x
death, any Person to whom Shares are transferred in accordance with the laws of
descent and/or testamentary distribution.
SECTION 2.6 TAG-ALONG RIGHTS. (a) Each Controlling Stockholder who
proposes to effect a Tag-Along Sale shall afford each of the Investors (each, a
"Tag-Along Stockholder") the opportunity to participate therein in accordance
with this Section 2.6.
Each Controlling Stockholder represents to the Investors that it has not
entered into any agreement providing for any rights inconsistent with the
rights provided to the Investors in this Section 2.6 and that it has not
otherwise directly or indirectly granted any such rights. No Controlling
Stockholder shall enter into any agreement providing for, or otherwise directly
or indirectly grant, any tag-along or other contractual rights (other than
customary registration rights) to participate, directly or indirectly, in any
Tag-Along Sale without the prior unanimous written approval of the Investor
Nominees and, so long as the Other Purchasers, in the aggregate, beneficially
own at least 33% of the Shares beneficially owned by the Other Purchasers on
the Acquisition Date, the Requisite Holders.
(b) With respect to each Tag-Along Sale, each Tag-Along Stockholder shall
have the right to Transfer, at the same price and upon identical terms and
conditions as such proposed Transfer (except as set forth below), the number of
Shares owned by such Tag-Along Stockholder equal to such Tag-Along
Stockholder's Transfer Allotment; provided, however, that (i) a Tag-Along
Stockholder may Transfer Shares of a different kind than those transferred by a
Controlling Stockholder pursuant to a Tag-Along Sale; and (ii) in the event of
a Tag-Along Sale pursuant to a Transfer by a Controlling Stockholder of an
interest in a Person that directly or indirectly owns Shares, the price and
other terms and conditions of such Tag-Along Sale applicable to each Tag-Along
Stockholder and the Shares to be sold by such Tag-Along Stockholder, shall as
closely approximate those of the proposed Transfer as is reasonably
practicable.
At the time any Tag-Along Sale is proposed, the Controlling
Stockholders shall give written notice to each Tag-Along Stockholder of its
right to sell Shares hereunder (the "Transfer Notice"), which notice shall
identify the Proposed Purchaser and state the number of Shares proposed to be
Transferred, the proposed offering price (including the form and terms of any
non-cash consideration to be received in connection therewith), the proposed
date of any such Transfer (the "Transfer Date") and any other material terms
and conditions of the proposed Transfer. The Transfer Notice shall also
contain a complete and correct copy of any offer to, or agreement with, the
Controlling Stockholders by the Proposed Purchaser to purchase such Shares.
The Controlling Stockholders shall use their best efforts to deliver the
Transfer Notice at least 30 days prior to the Transfer Date and in no event
shall the Controlling Stockholders provide such Transfer Notice later than 21
days prior to the Transfer Date.
(c) Each Tag-Along Stockholder that wishes to participate in the Tag-Along
Sale shall provide written notice (or oral notice confirmed in writing) (the
"Tag-Along Notice")
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to the Controlling Stockholders no less than 7 days prior to the Transfer Date.
The Tag-Along Notice shall set forth the number and kind of Shares that such
Tag-Along Stockholder elects to include in the Transfer, which shall not exceed
such Tag-Along Stockholder's Transfer Allotment; provided that the failure of a
Tag-Along Stockholder to correctly specify a number or kind of Shares not
exceeding its Transfer Allotment shall not affect the rights such Tag-Along
Stockholder may otherwise have under this Section 2.6 (and any specified Shares
in excess of such Tag-Along Stockholder's Transfer Allotment shall be treated
as Additional Shares). The Tag-Along Notice shall also specify the aggregate
number and kind of additional Shares owned of record by such Tag-Along
Stockholder as of the close of business on the second day immediately preceding
the date on which the Tag-Along Notice is given by such Tag-Along Stockholder,
if any, which such Tag-Along Stockholder desires also to include in the
Transfer ("Additional Shares") in the event there is any under-subscription for
the entire amount of all Tag-Along Stockholders' Transfer Allotments. In the
event there is an under-subscription by the Tag-Along Stockholders for any
portion of the aggregate Tag-Along Stockholders' Transfer Allotments, the
Controlling Stockholders shall apportion the unsubscribed Tag-Along
Stockholders' Transfer Allotments to Tag-Along Stockholders whose Tag-Along
Notices specified an amount of Additional Shares, which apportionment shall be
on a pro rata basis among such Tag-Along Stockholders in accordance with the
number of Additional Shares specified by all such Tag-Along Stockholders in
their Tag-Along Notices. The Tag-Along Notices given by the Tag-Along
Stockholders shall constitute their binding agreements to sell such Shares on
the terms and conditions applicable to the Transfer.
If a Tag-Along Notice is not received by the Controlling Stockholders from
a Tag-Along Stockholder prior to the 7-day period specified above, the
Controlling Stockholders shall have the right to sell or otherwise Transfer the
number of Shares specified in the Transfer Notice to the Proposed Purchaser
specified in the Transfer Notice without any participation by such Tag-Along
Stockholder (subject to the right of other Tag-Along Stockholders to sell
Additional Shares in the event of an under-subscription by Tag-Along
Stockholders, as described above), but only on terms and conditions with
respect to the consideration paid by the Proposed Purchaser no more favorable
(and other material terms and conditions which a reasonable investor would
consider significant to the decision to include Shares in the Transfer no more
favorable in any material respect) to the Controlling Stockholders than as
stated in the Transfer Notice to the Tag-Along Stockholders, and only if such
Transfer occurs on a date within 45 Business Days of the Transfer Date.
(d) No Tag-Along Stockholder shall be required to make any representations
and warranties to any Person in connection with such Tag-Along Sale except as
to (i) good title and the absence of liens with respect to such Tag-Along
Stockholder's Shares, (ii) the corporate or other existence of such Tag-Along
Stockholder and (iii) the authority for and the validity and binding effect of,
and the absence of any conflicts under the charter documents and material
agreements of such Tag-Along Stockholder as to, any agreements entered into by
such Tag-Along Stockholder in connection with such Transfer. No Tag-Along
Stockholder shall be required to provide any indemnities in connection with
such Tag-Along Sale except for a breach of such representations and warranties.
(e) The provisions of this Section 2.6 shall not apply to any Transfers
(i) by a Controlling Stockholder to a Permitted Transferee of such Controlling
Stockholder (provided that such Permitted Transferee has agreed to be bound by
this Agreement as contemplated by Section 2.9 hereof), (ii) pursuant to a
Public Offering, (iii) pursuant to a Rule 144 Open Market Transaction of which
each of the Investor Nominees and each Purchaser who beneficially owns at
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least 731,897 Shares, has been provided at least two Business Days prior
written notice, (iv) on or after March 22, 1996, by Xxxxxx X. Xxxxxx or
Controlling Stockholders controlled by Xxxxxx X. Xxxxxx; provided, that the
aggregate number of Shares transferred pursuant to this clause (iv) by all such
Persons does not exceed 73,365 (2.5% of the number of Shares beneficially owned
by the Yucaipa Affiliates on the Acquisition Date), (v) of limited partnership
interests in Yucaipa Dominick's Partners, L.P. by Xxxxxx X. Xxxxxx as of the
Acquisition Date and representing an indirect pecuniary interest in not more
than 178,583 Shares, (vi) of limited partnership interests in Crescent Shared
Opportunity Fund II, L.P., or (vii) constituting a bona fide pledge to a
broker-dealer or other institutional lender.
SECTION 2.7 RIGHTS TO COMPEL SALE. (a) If at any time the Controlling
Stockholders shall enter into a written agreement with a Third Party to acquire
solely for cash all, but not less than all, of the issued and outstanding
Shares in a bona fide transaction (a "Compelled Sale Agreement"), the
Controlling Stockholders shall have the right, subject to the terms and
conditions set forth below, to require each of the Investors (the "Remaining
Holders") to sell all, but not less then all, of the Shares held by each such
Remaining Holder (a "Compelled Sale"). Subject to the terms and conditions set
forth below, the Remaining Holders shall (and hereby agree to) sell such Shares
on the same terms and conditions and for the same per Share consideration as
the Controlling Stockholders sell their Shares.
As soon as is reasonably practicable after the commencement of material
discussions regarding a proposed sale of the Company (whether through a merger,
sale of stock or assets or otherwise), business combination, or similar
transaction, the Controlling Stockholders shall provide each of the Investor
Nominees with notice thereof, which shall include reasonable details with
respect thereto. The Controlling Stockholders shall provide each of the
Investor Nominees with prompt notice of all material developments in such
discussions.
(b) Within two Business Days following execution of any Compelled Sale
Agreement, the Controlling Stockholders shall provide each Remaining Holder
with written notice thereof (the "Compelled Sale Notice"). The Compelled Sale
Notice shall attach a copy of the Compelled Sale Agreement and shall set forth:
(i) the name and address of the Third Party; (ii) the amount of consideration
to be paid per Share and the terms and conditions of payment offered by the
Third Party; and (iii) all other material terms of such Compelled Sale,
including the proposed date of the Compelled Sale (the "Compelled Sale Date"),
which shall be not less than 20 days following the delivery of the Compelled
Sale Notice, and the outside termination date of the Compelled Sale Agreement
(the "Compelled Sale Termination Date"), which shall be not more than 150 days
following the delivery of the Compelled Sale Notice.
(c) The provisions of this Section 2.7(c) shall only apply if the
aggregate consideration to be paid for all outstanding Shares in such Compelled
Sale implies an Enterprise Value on the date of delivery of the Compelled Sale
Notice of less than the product of (x) 6.5 times (y) EBITDA of the Company for
the latest four fiscal quarters of the Company for which information was (or
was required to be) provided to Investors pursuant to Section 4.4 hereof.
(i) If the Other Purchasers holding at least 65% of the Shares then
held by the Other Purchasers deliver an Appraisal Request, Apollo and
Yucaipa shall choose an Appraiser from the list of proposed Appraisers
contained in the Appraisal Request, and notify such Other Purchasers of
such choice on or prior to the fifth Business Day following delivery of
the Appraisal Request. Such Other Purchasers shall retain such
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Appraiser and cause the Appraiser to calculate an Appraised Value as
promptly as practicable (but in any event prior to the 20th Business Day
following selection of the Appraiser) and to provide written notice
thereof to the Controlling Stockholders and the Purchasers (the
"Appraisal Notice").
If the per Share consideration to be paid in such Compelled Sale is
less than the Appraised Value, then (A) the Controlling Stockholders
shall pay all fees and expenses of the Appraiser arising in connection
with the calculation of the Appraised Value and (B) no Purchaser shall be
required to sell its Shares in the Compelled Sale. Otherwise, the Other
Purchasers shall pay all fees and expenses of the Appraiser arising in
connection with the calculation of the Appraised Value and shall be
required to sell their Shares in the Compelled Sale subject to the terms
and conditions of this Section 2.7.
(ii) If (A) an Appraisal Request is not delivered on or prior to the
fifth Business Day following delivery of the Compelled Sale Notice or the
per Share consideration to be paid in such Compelled Sale is not less
than the Appraised Value and (B) Apollo delivers to Yucaipa a written
notice (a "Compelled Sale Acceptance") within 15 days following the
delivery of the Compelled Sale Notice (or, if an Appraisal Request was
delivered, within 15 days following delivery of the Appraisal Notice),
which Compelled Sale Acceptance sets forth the binding commitment of
Apollo (or its designee) to purchase all of the issued and outstanding
Shares at the price per Share and on all of the other terms and subject
to all of the conditions set forth in the Compelled Sale Agreement and
the other terms and conditions set forth herein (including, without
limitation, the condition that Apollo (or its designee) obtains
financing, within the time periods set forth below, on terms and
conditions satisfactory to Apollo (or such designee)), then the
Controlling Stockholders and such Remaining Holders shall, and the
Controlling Stockholders shall cause the other participating stockholders
to, sell, and Apollo (or its designee) shall purchase, such Shares on the
terms and subject to the conditions set forth therein as if Apollo (or
its designee) is (and for purposes of this Section 2.7 will be deemed to
be) the Third Party, and the Compelled Sale Date is (and for purposes of
this Section 2.7 will be deemed to be) the later of (1) 60 days following
the delivery of the Compelled Sale Notice or the Appraisal Notice, as the
case may be, (2) if on the date of the Compelled Sale Notice, the Company
and its Subsidiaries have, in the aggregate, greater than $100 million of
outstanding Disqualified Indebtedness, 90 days following the delivery of
the Compelled Sale Notice or the Appraisal Notice, as the case may be,
and (3) the Compelled Sale Date specified in the Compelled Sale Notice;
provided, that (A) the right of Apollo (or its designee) to purchase
Shares pursuant to this Section 2.7(c) shall terminate if (x) it has not
satisfied or waived its financing contingencies on or prior to the date
all financing contingencies contained in the Compelled Sale Agreement
were required to be so satisfied or waived (or, if later, on or prior to
the date set forth in clause (1) or (2) above, as applicable) or (y) such
purchase has not been consummated on or prior to the Compelled Sale
Termination Date (or, if later, the date set forth in clause (1) or (2)
above, as applicable) and (B) subject to its ability to obtain financing
on satisfactory terms and conditions within the time periods set forth
above, the obligation of Apollo (or its designee) to purchase Shares
shall terminate only in accordance with the terms of the Compelled Sale
Agreement (or similar agreement by which Apollo (or such designee) has
become bound).
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(d) Notwithstanding anything contained in this Agreement to the contrary
in connection with a Transfer (which otherwise complies with the terms of this
Agreement) of at least 66 2/3% of the Shares held by Apollo on the Acquisition
Date to a single Transferee (whether by a single transaction or a series of
transactions) Apollo may, by written notice to the Company, assign all of its
rights under this Section 2.7 to such Transferee including, without limitation,
the right to purchase all of the issued and outstanding Shares under Section
2.7(c).
(e) Subject to the satisfaction or waiver of the terms and conditions of
the Compelled Sale Agreement (other than any condition relating to the delivery
of Shares by the Remaining Holders), the Compelled Sale shall occur at a
closing (the "Compelled Sale Closing") on the Compelled Sale Date during normal
business hours at a time and place reasonable designated by the Controlling
Stockholders and the Third Party; provided, that if the Compelled Sale Closing
has not occurred on or prior to the Compelled Sale Termination Date, the
Remaining Holders will be released from their obligations under this Section
2.7, unless and until the Controlling Stockholders deliver a new Compelled Sale
Notice in compliance with this Section 2.7.
(f) If any Person fails to deliver certificates representing its Shares as
required by this Section 2.7 and the Compelled Sale in question is consummated,
then such Person (i) shall not be entitled to the consideration it is to
receive under this Section 2.7 until it cures such failure (provided, that
after curing such failure it shall be so entitled to such consideration without
interest), (ii) shall for all purposes be deemed no longer to be a stockholder
of the Company and have no voting rights with respect to such Shares, (iii)
shall not be entitled to any dividends or other distributions with respect to
the Shares held by it, (iv) shall have no other rights or privileges granted to
stockholders under this or any other agreement and (v) in the event of
liquidation of the Company, shall have rights subordinate to the rights of any
equity holder with respect to any consideration it would have received if it
had complied with this Section 2.7, if any, until it cures such failure
(provided, that after curing such failure it shall be so entitled to such
consideration without interest). If any party so fails to deliver such
certificates as so required it shall execute, acknowledge and deliver all such
further agreements and take all such further actions as may be necessary or
desirable to give effect to the provisions of this Section 2.7(f).
(g) No Remaining Holder shall be required to make any representations and
warranties to any Person in connection with such Transfer except as to (i) good
title and the absence of liens with respect to such Remaining Holder's Shares,
(ii) the corporate or other existence of such Remaining Holder and (iii) the
authority for and the validity and binding effect of, and the absence of any
conflicts under the charter documents and material agreements of such Remaining
Holder as to, any agreements entered into by such Remaining Holder in
connection with such Transfer. The Remaining Holders shall not be required to
provide any indemnities in connection with such Transfer except for a breach of
a such representations and warranties.
(h) The Company shall, and shall cause its Subsidiaries to, use their
respective best efforts to ensure that the terms of all Indebtedness and
preferred stock created, incurred, assumed or guaranteed by the Company or any
of its Subsidiaries after the Effective Date (and all agreements and
instruments relating thereto) do not (directly or indirectly) prohibit, or
provide for a default, right to accelerate, acceleration, put, mandatory
redemption, repurchase or repayment, or similar event, directly or indirectly,
due to, upon, in anticipation of, or following, Apollo's exercise of its rights
pursuant to this Section 2.7 or any other transaction pursuant to which Apollo
obtains or may obtain control of the Company. Any Indebtedness or preferred
stock (including,
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without limitation, the Redeemable Preferred Stock) containing any of such
terms is referred to herein as "Disqualified Indebtedness."
SECTION 2.8 OFFERING MEMORANDUM. The Company shall cooperate with the
Investors and make available on a timely basis such information as the
Investors may reasonably request (to the extent that such information can be
provided without unreasonable expense or disruption of the Company's affairs)
to facilitate (i) Transfer of 5% or more of the issued and outstanding Shares
to a Third Party or (ii) in the case of Apollo, the financing of a Compelled
Sale, including, in the case of (A) any Transfer of 5% or more of the issued
and outstanding Shares not registered pursuant to the Securities Act or (B) in
the case of Apollo, the financing of a Compelled Sale, (x) at any time the
Company is not filing periodic reports under the Exchange Act, prompt
preparation of an offering memorandum relating to the Shares, the financing (if
applicable) and the Company and its Subsidiaries that contains such information
as is required by the Securities Act and other applicable laws to be provided
to "accredited investors" and such other information reasonably requested by
the Investors, and (y) making available to any proposed purchaser of such
Shares or proposed source of financing reasonable access to management of the
Company and its Subsidiaries.
The Company shall provide customary representations and warranties to the
selling Investors and any purchaser of such Shares or source of financing, as
the case may be, to the effect that the information contained in any such
offering memorandum that has been provided by the Company does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, and shall indemnify each of the
Investors, the purchaser or source of financing, as the case may be, and their
respective representatives and agents from and against any loss, claim, damage,
liability or expense incurred by any of them as a result of any breach of such
representation and warranty.
SECTION 2.9 DELIVERIES AT CLOSING; METHOD OF PAYMENT OF PURCHASE PRICE.
Each Tag-Along Stockholder, Controlling Stockholder and Remaining Holder, as
applicable, shall deliver to the Proposed Purchaser, Apollo or the Third Party,
as applicable, against delivery of the purchase price for the Shares being sold
by it, (i) certificates appropriately endorsed and representing the Shares
being sold, free and clear of any lien, claim or encumbrance, and (ii) such
other documents, including, without limitation, executed stock powers and
evidence of ownership and authority, as the purchasers may reasonably request.
The purchase price shall be paid by wire transfer of immediately available
funds to the bank account designated by each Tag-Along Stockholder, Controlling
Stockholder and Remaining Holder, or by certified check if the amount payable
to the recipient thereof is less than $1,000,000.
ARTICLE III
SCOPE OF BUSINESS OF THE COMPANY
SECTION 3.1 SCOPE OF BUSINESS. As of the Effective Date, the Company
legally and beneficially will own 100% of the outstanding shares of capital
stock of Dominick's. Dominick's and its Subsidiaries are engaged primarily in
the operation of conventional retail supermarkets, warehouse format
supermarkets and grocery warehouse facilities located principally in Illinois
and Indiana.
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SECTION 3.2 BUSINESS OPPORTUNITIES. None of Yucaipa, its partners nor any
Person controlled by any of them (other than the Company or its Subsidiaries)
shall, directly or indirectly, enter into, or agree or commit to enter into,
any material investment in or otherwise exploit any business opportunity
primarily related to the operation of conventional retail supermarkets,
warehouse format supermarkets and grocery warehouse facilities within the
States of Illinois, Indiana, Iowa or Wisconsin or in any other market in which
the Company or any of its Subsidiaries does business (other than an investment
in the shares of any public company representing less than 5% of such company's
fully diluted common equity) (a "Business Opportunity") except with the
approval of Apollo and the holders of a majority of the Shares held by the
Other Purchasers, so long as the Other Purchasers beneficially own at least 50%
of the Shares owned by the Other Purchasers as of the Acquisition Date.
ARTICLE IV
ADDITIONAL RIGHTS AND OBLIGATIONS OF
INVESTORS AND THE COMPANY
SECTION 4.1 MANAGEMENT FEES. Neither the Company nor any of its
Subsidiaries shall pay to Yucaipa or any of its Affiliates compensation for
providing services to the Company and its Subsidiaries (or reimbursement of
expenses in connection therewith) other than pursuant to (a) the Management
Agreement, (b) customary compensation and expense reimbursement arrangements
between the Company and Xxxxxx X. Xxxxx in his capacity as an officer or
employee of the Company, or (c) any similar agreement or arrangement approved
by a majority of the disinterested members of the Board of Directors with
respect to such agreement or arrangement.
SECTION 4.2 CONSULTING SERVICES. Neither the Company nor any of its
Subsidiaries may retain or employ Yucaipa or any of its Affiliates as a
financial advisor or consultant other than solely in accordance with the terms
of the Management Agreement or any similar agreement or arrangement approved by
the Board of Directors and a majority of the Investor Nominees.
SECTION 4.3 ACCESS TO INFORMATION; CONFIDENTIALITY. Upon the request of
any single Investor owning more than 10% of the outstanding Shares or of any
Purchaser, the Company shall afford such Person and its accountants, counsel
and other representatives reasonable access to all of the properties, books,
contracts, commitments and records (including, but not limited to, tax returns)
of the Company and its Subsidiaries that are reasonably requested. Such Person
will, and will cause its agents to, conduct any such investigations on
reasonable advance notice, during normal business hours, with reasonable
numbers of persons and in such a manner as not to interfere unreasonably with
the normal operations of the Company and its Subsidiaries.
Except as otherwise required by applicable law, neither the Company nor
any of its Subsidiaries shall be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice the
rights of any customer or other Person, would jeopardize the attorney-client
privilege of the Person in possession or control of such information, or would
contravene any law, rule, regulation, order, judgment, decree, fiduciary duty
or binding agreement entered into prior to the date hereof. The parties hereto
will make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply.
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The Investors shall, and shall use their best efforts to cause their
representatives to, keep confidential all such information to the same extent
such information is treated as confidential by the Company, and shall not
directly or indirectly use such information for any competitive or other
commercial purpose. The obligation to keep such information confidential shall
not apply to (i) any information that (x) was already in the investors'
possession prior to the disclosure thereof by the Company (other than through
disclosure by any other Person subject to a duty of confidentiality), (y) was
then generally known to the public, or (z) was disclosed to the investors by a
third party not bound by an obligation of confidentiality or (ii) disclosures
made as required by law or legal or regulatory process. If in the absence of a
protective order or the receipt of a waiver hereunder the investors are
nonetheless, in the opinion of their counsel, compelled to disclose information
concerning the Company to any tribunal or governmental body or agency or else
stand liable for contempt or suffer other censure or penalty, the Investors may
disclose such information to such tribunal or governmental body or agency
without liability hereunder.
SECTION 4.4 FURNISHING OF INFORMATION. (a) The Company shall deliver to
each Investor, as long as such Investor shall own any Shares:
(i) as promptly as practical, but in no event later than 60 days
after the close of each of its first three quarterly accounting periods
during any fiscal year of the Company, the consolidated balance sheet of
the Company as at the end of such quarterly period, and the related
consolidated statements of operations, stockholders' equity and cash
flows for such quarterly period, and for the elapsed portion of the
fiscal year ended with the last day of such quarterly period, and in each
case setting forth comparative figures for the related periods in the
prior fiscal year (if such comparative figures are available without
unreasonable expense), all of which shall be certified by the chief
financial officer of the Company, to have been prepared in accordance
with generally accepted accounting principles, subject to year-end audit
adjustments, together with an MD&A;
(ii) as promptly as practical, but in no event later than 105 days
after the close of each fiscal year of the Company, the consolidated
balance sheet of the Company as of the end of such fiscal year and the
related consolidated statements of operations, stockholders' equity and
cash flows for such fiscal year, in each case setting forth comparative
figures for the preceding fiscal year, and certified by independent
certified public accountants of recognized national standing, together
with an MD&A; and
(iii) all reports, if any, filed by the Company or any Subsidiary of
the Company with the Commission under the Exchange Act, as promptly as
practical, but in no event later than 15 days after filing any such
reports with the Commission.
(b) The provisions of Sections 4.4(a)(i) and (ii) above shall be deemed to
have been satisfied if the Company delivers the reports timely filed by the
Company with the Commission on Form 10-Q or 10-K, as applicable, for such
periods promptly, but in no event later than 15 days after filing any such Form
with the Commission.
(c) The Company shall deliver to Apollo and each Other Purchaser holding
not less than 1,397,925 Shares a copy of all notices, statements and
information sent to the Agent or the Lenders pursuant to Section 6.1 of the
Credit Agreement, but in no event later than 15 days after each such delivery
to the Agent or Lenders, as the case may be.
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SECTION 4.5 REGULATORY PROBLEMS, ETC. (a) Each Investor that has a
potential Regulatory Problem shall notify the Company of the existence thereof
and of the percentage amount of the Company's equity securities that would
cause it to have such Regulatory Problem. A Person shall be deemed to have a
"Regulatory Problem" when such Person and its Affiliates would own, control or
have the power over a greater number or percentage of securities of any kind
issued by the Company or any other Person than are permitted under any
requirement of any governmental authority.
(b) Before the Company or any of its Subsidiaries redeems, purchases or
otherwise acquires, directly or indirectly, or converts or takes any action
with respect to the voting rights of, any shares of any of its capital stock or
any securities convertible into or exchangeable for any shares of any class of
its capital stock, the Company shall give prompt written notice of such pending
action to any Investor that would, according to the terms of any such prior
notice, have a Regulatory Problem as a result of such action.
(c) Before the Company or any of its Subsidiaries directly or indirectly
takes any action that would result in the Company being treated as a RPHC, the
Company shall give prompt written notice to each Purchaser that has advised the
Company it desires to receive such notice.
(d) Upon the written request of any Investor so notified pursuant to
clauses (b) or (c), above, made within 10 days after its receipt thereof, the
Company shall (or shall cause its Subsidiaries to) defer taking such action for
such period (not to extend beyond 45 days after such investor's receipt of the
Company's original notice) as such Investor requests.
ARTICLE V
CORPORATE GOVERNANCE AND VOTING
SECTION 5.1 BOARDS OF DIRECTORS. (a) The Board of Directors and the
Dominick's Board shall each be composed of 11 members (or such lesser number of
members as actually shall have been designated by the parties hereto in
accordance with the provisions of this Section 5.1). Yucaipa shall be
entitled, but not required, to designate 6 members to each such board of
directors (collectively, the "Yucaipa Nominees"). Apollo (or any
representative thereof designated by Apollo) shall be entitled to designate two
members to each such board of directors (collectively, the "Apollo Nominees")
and the Independent Nominator shall be entitled to designate one member to each
such board of directors (the "Other Nominees" and, together with the Apollo
Nominees, the "Investor Nominees"). The remaining two members of each such
board of directors shall be selected by the Board of Directors and shall be
"independent directors" as required by the rules and regulations of the New
York Stock Exchange, Inc. (each, an "Independent Director").
On the Effective Date, the Board of Directors shall be divided into
three classes designated as "Class I", "Class II" and "Class III." Subject to
the provisions of this Section 5.1, Class I shall be comprised of two Yucaipa
Nominees and one Apollo Nominee; Class II shall be comprised of two Yucaipa
Nominees, one Apollo Nominee and one Independent Director; and Class III shall
be comprised of two Yucaipa Nominees, one Other Nominee and one Independent
Director. The terms of office of the respective classes of directors will be
as follows: Class I will expire at the annual meeting of stockholders to be
held in 1997; Class II will expire at the annual meeting of stockholders to be
held in 1998; and Class III will expire at the annual meeting of
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stockholders to be held in 1999. At each annual meeting of stockholders
beginning in 1997, the successors to directors whose terms will then expire
will be elected to serve for a three-year term (i.e., from the time of election
until the third annual meeting following such election).
If Yucaipa is the Independent Nominator, each Other Nominee shall be an
individual who has no other relationship with the Company, any stockholder of
the Company or any of their respective Affiliates and who is qualified by
reason of such individual's expertise in financial and investment matters (as
distinct from the operation of business concerns) to serve as a member of such
Board; provided, that any Other Purchaser that holds not less than 35% of the
Shares then held by the Other Purchasers may assert to Yucaipa that any
individual so appointed as an Other Nominee does not meet the qualifications
set forth in this sentence, and any dispute as to such matter shall be resolved
by arbitration upon terms reasonably acceptable to Yucaipa and the Requisite
Holders, and such individual shall continue to serve as an Other Nominee during
the pendency of such dispute.
(b) The Investors and the Controlling Stockholders shall vote all of the
Shares (other than shares of Class B Common Stock) owned or held of record by
them at all regular and special meetings of the stockholders of the Company
called or held for the purpose of filling positions on the Board of Directors,
and in each written consent executed in lieu of such a meeting of stockholders,
and each party hereto shall take all actions otherwise necessary, to ensure (to
the extent within the parties' collective control) the election to the Board of
Directors and the Dominick's Board of the Yucaipa Nominees and the Investor
Nominees.
(c) The Company, Dominick's, the Controlling Stockholders and the
Investors shall use their respective best efforts to call, or cause the
appropriate officers and directors of the Company or Dominick's, as applicable,
to call, a special meeting of stockholders of the Company or Dominick's, as
applicable, and to vote all of the Shares (other than shares of Class B Common
Stock) or shares of capital stock of Dominick's, as applicable, owned or held
of record by them for, or to take all actions by written consent in lieu of any
such meeting necessary to cause, the removal (with or without cause) of (A) any
Yucaipa Nominee if Yucaipa requests such director's removal in writing for any
reason, (B) any Apollo Nominee if Apollo requests such director's removal in
writing for any reason and (C) any Other Nominee if the Independent Nominator
requests such director's removal in writing for any reason. Yucaipa, Apollo
and the Independent Nominator, respectively, shall have the right to designate
a new nominee in the event any Yucaipa Nominee, Apollo Nominee or Other
Nominee, respectively, shall be so removed under this Section 5.1(c) or shall
vacate his directorship for any reason.
Except as provided in this Section 5.l(c), each party hereto agrees that
at any time that it is then entitled to vote for the election or removal of
directors, it will not vote in favor of the removal of any Yucaipa Nominee or
Investor Nominee unless (i) such removal shall be at the request of the party
who nominated such director pursuant to the provisions of Section 5.1(a) or
(ii) the right of the party who nominated such director to do so has terminated
in accordance with Section 5.1(f).
(d) The Company shall not, and shall not permit any of its Subsidiaries
to, without the consent of holders of a majority of the Shares (other than
shares of Class B Common Stock) held by Yucaipa, Apollo or the Independent
Nominator, as the case may be, take any action that under the Charter Documents
or this Agreement requires the approval of one or more Yucaipa Nominees, Apollo
Nominees or Other Nominee, as the case may be, if any of the Yucaipa Nominees,
Apollo
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Nominees or Other Nominee, as the case may be, approving such action are
Persons whose removal from the Board of Directors has been requested at or
prior to the time of such action by the party who nominated such director
pursuant to Section 5.1(a). Each party hereto shall use reasonable efforts to
prevent any action from being taken by the Board of Directors or the Dominick's
Board, as the case may be, during the pendency of any vacancy due to death,
resignation or removal of a director, unless the Person entitled to have a
person nominated by it elected to fill such vacancy shall have failed, for a
period of 10 days after notice of such vacancy, to nominate a replacement;
provided that the provisions of this Section 5.1(d) shall not apply in
circumstances in which action must be taken by the Board of Directors or the
Dominick's Board, as the case may be, to protect the best interests of the
Company or Dominick's, as the case may be. If such vacancy relates to an Other
Nominee, the Independent Nominator shall use its best efforts to nominate a
replacement Other Nominee during such 10-day period.
(e) As of the Effective Date, the Yucaipa Nominees shall be Xxxxxx X.
Xxxxxx, Xxxxx XxXxxxxxxx Xxxxx, Xxxxxxx X. Xxxxxx, Xxxxxx X. Xxxxx, Xxxxxx X.
Xxxxxxx and Xxxx X. Xxxxxx; the Apollo Nominees shall be Xxxxx X. Xxxxxx and
Xxxxx X. Xxxxxx; and the Other Nominee shall be Xxxxxx X. Xxxxxxx.
(f) (i) The right of Yucaipa to designate members to the Board of
Directors and the Dominick's Board under this Section 5.1 shall (A) be
decreased by three with respect to each Board (which, in the case of the Board
of Directors, shall mean one director in each of the three classes) if Xxxxxx
X. Xxxxxx ceases to beneficially own at least 978,298 Shares (33 1/3% of the
Shares beneficially owned by the Yucaipa Affiliates on the Acquisition Date)
and (B) shall terminate if Xxxxxx X. Xxxxxx ceases to beneficially own at least
733,727 Shares (25% of the Shares beneficially owned by the Yucaipa Affiliates
on the Acquisition Date); provided, that if the termination of Yucaipa's rights
pursuant to this Section 5.1(f) is due to the death of Xxxxxx X. Xxxxxx, such
termination will not become effective until 60 days after the date thereof.
(ii) The right of Apollo to designate members to the Board of
Directors and the Dominick's Board under this Section 5.1 shall (A) be
decreased by one with respect to each Board if Apollo ceases to
beneficially own at least 1,951,722 Shares (33 1/3% of the Shares
beneficially owned by Apollo on the Acquisition Date) and (B) shall
terminate if Apollo ceases to beneficially own at least 1,463,795 Shares
(25% of the Shares beneficially owned by Apollo on the Acquisition Date).
(iii) The right of the Independent Nominator to designate a member
to the Board of Directors and the Dominick's Board under this Section 5.1
shall terminate if the Other Purchasers cease to beneficially own at
least 1,949,278 Shares (33 1/3% of the Shares beneficially owned by the
Other Purchasers on the Acquisition Date).
(g) (i) Notwithstanding anything in this Agreement to the contrary, in
connection with a Transfer of at least 66 2/3% of the Shares held by Apollo on
the Acquisition Date to a single Transferee (other than any of the Yucaipa
Affiliates) whether by a single transaction or a series of transactions, Apollo
may, by written notice to the Company, assign all of its rights under this
Section 5.1 (other than any such rights it may have as an Independent
Nominator) to such Transferee and, without limiting the foregoing, such
Transferee's rights to designate directors under this Section 5.1 shall not be
reduced until such Transferee and its Permitted Transferees collectively cease
to beneficially own at least 33 1/3% or 25%, as the case may be, of the number
of Shares beneficially owned by Apollo on the Acquisition Date; provided, that
such directors shall
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not be deemed Investor Nominees unless Apollo has provided Yucaipa the
opportunity to purchase such Shares pursuant to clause (ii) below and such
Shares are transferred to a Transferee other than any of the Yucaipa
Affiliates.
(ii) Apollo may (but shall not be required to) provide Yucaipa with
written notice of its desire to effect a proposed Transfer of at least
66_% of the Shares beneficially owned by Apollo on the Acquisition Date
(the "ROFO Notice"), which notice shall set forth: (1) the proposed
price to be paid per Share; (2) the minimum number of Shares proposed to
be Transferred (the "ROFO Shares"); and (3) the names of up to five
proposed Transferees. If Apollo delivers a ROFO Notice and Yucaipa
delivers to Apollo, within 15 days following the delivery thereof, a
written acceptance setting forth the binding commitment (subject to the
receipt of all required governmental approvals and financing on terms and
conditions satisfactory to Yucaipa) of Yucaipa to purchase all (but not
less than all) of the ROFO Shares at the price per Share set forth in the
ROFO Notice (a "ROFO Acceptance"), then Apollo shall sell, and Yucaipa
shall purchase, all the ROFO Shares on a date no later than 90 days after
deliver of the ROFO Notice (the "ROFO Closing Date"). If Yucaipa timely
elects not to purchase the ROFO Shares, fails to deliver a ROFO
Acceptance within 15 days following delivery of the ROFO Notice, or fails
to purchase the ROFO Shares on or prior to the ROFO Closing Date (which
failure shall not relieve Yucaipa of its binding commitment, subject to
the receipt of all required governmental approvals and financing on terms
and conditions satisfactory to Yucaipa, to purchase such Shares), then in
connection with a Transfer by Apollo of a number of Shares not less than
the number of ROFO Shares to any one of the Transferees specified in the
ROFO Notice for a price per Share not less than that specified in the
ROFO Notice. Apollo may assign its rights to designate directors in
accordance with the terms of clause (i) above, and thereafter directors
designated by such Transferee under Section 5.1 shall be deemed Investor
Nominees; provided that, if Yucaipa has timely elected not to purchase
the ROFO Shares or failed to deliver a ROFO Acceptance within 15 days
following delivery of the ROFO Notice, such Transfer is consummated on or
before the later of (i) the 90th day following delivery of the ROFO
Notice and (ii) if Apollo and such Transferee have entered into a binding
agreement with respect to such Transfer on or prior to such 90th day, the
date on which all regulatory approvals with respect to such Transfer have
been obtained.
(h) (i) The Bylaws of each of the Company and Dominick's shall authorize
the establishment of an Executive Committee of the Board of Directors and the
Dominick's Board, and may authorize the establishment of other committees of
the Board of Directors or the Dominick's Board, as the case may be, comprised
in any case of such persons as a majority of the Board of Directors or the
Dominick's Board, as the case may be, shall approve, and having authority,
subject to applicable law, to take all actions that (A) are ancillary to or
arise in the normal course of the businesses of the Company or Dominick's, as
the case may be, (B) implement and are consistent with resolutions of the Board
of Directors or the Dominick's Board, as the case may be, or (C) in the case
of any Compensation Committee or Audit Committee, are customary for such
committee of a public company to perform. Any other delegations of authority
to the Executive Committee or any other committee of the Board of Directors or
the Dominick's Board, as the case may be, shall require the prior written
approval of a majority of the Investor Nominees. At least one of the Apollo
Nominees shall be entitled to be a member of any Audit Committee.
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(ii) Each committee of the Board of Directors or the Dominick's
Board, as the case may be, to which authority has been delegated, shall
keep complete and accurate minutes and records of all actions taken by
such committee, prepare such minutes and records in a timely fashion and
promptly distribute such minutes and records to each member of the Board
of Directors or the Dominick's Board, as the case may be.
SECTION 5.2 ACTION BY THE BOARD OF DIRECTORS. All decisions of the Board
of Directors shall require the affirmative vote of a majority of the directors
of the Company then in office, or a majority of the members of an Executive
Committee, or any other committee, of the Board of Directors, to the extent
such decisions may be lawfully delegated to an Executive Committee, or any
other committee, pursuant to Section 5.1(h).
SECTION 5.3 CHARTER DOCUMENTS. (a) Exhibits A and B set forth copies of
the Charter Documents, each in the form in which it is to be in effect on the
Effective Date.
(b) The Company covenants that it will act, and each Controlling
Stockholder and Investor agrees to use its best efforts to cause the Company to
act, in accordance with its Charter Documents in all material respects. Each
Controlling Stockholder and Investor shall vote all the Shares (other than
shares of Class B Common Stock) owned or held of record by it at any regular or
special meeting of stockholders of the Company or in any written consent
executed in lieu of such a meeting of stockholders, and shall take all action
necessary, to ensure (to the extent within the parties' collective control)
that (i) the Charter Documents of the Company do not, at any time, conflict
with the provisions of this Agreement, and (ii) unless an amendment is approved
by the Board of Directors, the Charter Documents of the Company continue to be
in effect in the form attached hereto as Exhibits A and B.
SECTION 5.4 APPOINTMENT OF REPRESENTATIVE. Until the termination of this
Agreement, each Other Investor shall and shall cause its Permitted Transferees
(jointly with the transferor, if it retains any Shares) to appoint one proxy to
vote all Shares owned by such Other Investor and its Permitted Transferees. If
requested by the Company, each of Apollo, the Yucaipa Affiliates and the
Controlling Stockholders shall designate one Person (which designated Person
may be changed from time to time by notice to the Company) to make, on their
respective behalf, any and all elections and designations and to give and
receive any and all notices required or permitted hereunder.
SECTION 5.5 BOARD VISITATION RIGHTS. The Company shall (a) provide
notice of each meeting of the Board of Directors and of the Dominick's Board
concurrently with, and in the same manner as, the notice of such meeting
provided to the members of such board (but not less than one Business Day prior
to such meeting) to (i) each Purchaser, as long as such Purchaser shall
beneficially own at least 698,962 Shares and (ii) each Investor owning more
than 10% of the outstanding Shares, (b) provide each such Person a copy of all
materials and written information provided to members of each such board and
any committee thereof in connection with any such meeting concurrently with the
distribution thereof to such members, and (c) permit a single representative of
each such Person to attend and observe each such board meeting (in person or
telephonically); provided, that (x) the Company may redact or withhold all or
any portion of such materials and/or (y) exclude any such representative from
all or any portion of any such meeting, if the members of such board or
committee reasonably determine in good faith that such redaction, withholding
or exclusion is required in order to preserve the attorney-client privilege
with respect to any matter before the Board of Directors or the Dominick's
Board, as the case may be.
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ARTICLE VI
TERMINATION
SECTION 6.1 TERMINATION. Except as otherwise provided herein with respect
to certain specific provisions, this Agreement shall terminate upon the earlier
to occur of:
(i) the mutual agreement of the parties hereto,
(ii) with respect to any party hereto other than the Company, such
party (or its Permitted Transferees) ceasing to own any Shares,
(iii) such time as less than 10% of the Shares continue to be
subject to the provisions of this Agreement, or
(iv) March 22, 2005.
If this Agreement has not otherwise terminated prior to March 22, 2003,
the Investors and the Controlling Stockholders shall undertake to renew
provisions of this Agreement relating to the voting of Shares for a successive
10-year period, or such shorter period as this Agreement is in effect.
Notwithstanding the foregoing, Section 4.3 shall survive to the later of March
22, 2005 or the termination of this Agreement.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 NO INCONSISTENT AGREEMENTS. Each party hereto hereby consents
to the termination of any other prior written or oral agreement or
understanding restricting, conditioning or limiting the ability of any party to
transfer or vote Shares and of any registration rights agreements entered into
pursuant to or in connection therewith, other than the Registration Rights
Agreements.
Each of the Company and the Controlling Stockholders represent and agree
that, as of the Effective Date, there is no (and from and after the Effective
Date they will not, and will cause their respective Subsidiaries and Affiliates
not to, enter into any) agreement with respect to any securities of the Company
or any of its Subsidiaries (and from and after the Effective Date neither the
Company nor any Controlling Stockholder shall take, or permit any of their
Subsidiaries or Affiliates to take, any action) that is inconsistent in any
material respect with the rights granted to the Investors in this Agreement.
Without limiting the foregoing, the Company represents that, (a) except
for (i) this Agreement, (ii) the Company's 1995 Stock Option Plan, (iii) the
Company's 1995 Management Equity Plan and those certain Management Stockholders
Agreements entered into thereunder, (iv) the Company's 1996 Equity
Participation Plan, and (v) the Registration Rights Agreements, there are no
other existing agreements relating to the voting or registration of any equity
securities of the Company or any of its Subsidiaries and (b) except for (i) the
agreements specified in clause (a), above, there are no other existing
agreements between the Company and any other holder of Shares relating to the
transfer of any equity securities of the Company or any of its Subsidiaries.
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SECTION 7.2 NO OTHER AFFILIATE STOCKHOLDERS. Each Yucaipa Affiliate
represents to the Investors that, as of the Acquisition Date, except for
2,934,909 shares of Common Stock owned collectively by the Yucaipa Affiliates,
the Yucaipa Warrant, limited partnership interests in Crescent Shared
Opportunity Fund II, L.P., and options to purchase 109,784 shares of Common
Stock owned collectively by Xxxxxx X. Xxxxx and Xxxxxx X. Xxxxxxxx, no Yucaipa
Affiliate or Affiliate of any Yucaipa Affiliate is the beneficial or record
owner of (or has any pecuniary interest in) any Shares or any rights, options
or warrants to purchase Shares or securities convertible into Shares.
SECTION 7.3 RECAPITALIZATION, EXCHANGES, ETC. If any capital stock or
other securities are issued in respect of, in exchange for, or in substitution
of, any Shares by reason of any reorganization, recapitalization,
reclassification, merger, consolidation, spin-off, partial or complete
liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the Shares or any other change in capital
structure of the Company, then appropriate adjustments shall be made with
respect to the relevant provisions of this Agreement so as to fairly and
equitably preserve, as far as practicable, the original rights and obligations
of the parties hereto under this Agreement and the terms "Common Stock, "Class
B Common Stock," and "Shares," each as used herein, shall be deemed to include
shares of such capital stock or other securities, as appropriate. Without
limiting the foregoing, whenever a particular number of Shares is specified
herein, such number shall be adjusted to reflect stock dividends, stock-splits,
combinations or other reclassifications of stock or any similar transactions.
SECTION 7.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto, and their respective
successors and permitted assigns; provided that (i) neither this Agreement nor
any rights or obligations hereunder may be transferred or assigned by the
Company (except by operation of law in any merger); (ii) neither this Agreement
nor any rights or obligations hereunder may be transferred or assigned by the
Controlling Stockholders or any Investor except to any Person to whom it has
Transferred Shares in compliance with this Agreement and who has become bound
by this Agreement pursuant to Section 2.2 hereof; and (iii) the rights of the
parties under Article V hereof may not be assigned to any Person except as
explicitly provided therein. If any party hereto shall acquire additional
Shares, such Shares shall, except as otherwise expressly provided herein, be
held subject to (and entitled to all the benefits of) all of the terms of this
Agreement.
SECTION 7.5 NO WAIVERS; AMENDMENTS. (a) 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. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
(b) This Agreement may not be amended or modified, nor may any provision
hereof be waived, other than by a written instrument signed by (x) Yucaipa, (y)
the holders of a majority of the Shares held by the Purchasers and (z) so long
as the Other Purchasers beneficially own at least 50% of the Shares
beneficially owned by them as of the Acquisition Date, at least two unrelated
Purchasers; provided, however, that
(i) so long as Apollo beneficially owns at least 25% of the Shares
beneficially owned by Apollo on the Acquisition Date, without the consent
of Apollo, no amendment,
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modification or waiver that adversely affects the rights or duties of
Apollo hereunder may be effected,
(ii) so long as Apollo beneficially owns at least 10% of the Shares
beneficially owned by Apollo on the Acquisition Date, without the consent
of Apollo, no amendment, modification or waiver of Section 2.7, 6.1 or
this Section 7.5 that adversely affects the rights or duties of Apollo
thereunder may be effected,
(iii) so long as any Other Purchaser beneficially owns at least 25%
of the Shares beneficially owned by it on the Acquisition Date and not
less than 698,962 Shares without the consent of such Other Purchaser, no
amendment, modification or waiver that adversely affects the rights or
duties of such Other Purchaser hereunder may be effected.
(iv) so long as the Investors, in the aggregate, beneficially own at
least 25% of the Shares beneficially owned by such Persons on the
Acquisition Date, without the consent of a majority of the Shares then
held by the Investors no amendment, modification or waiver that adversely
affects the rights or duties of the Investors hereunder may be effected,
and
(v) without the consent of each Investor adversely affected thereby,
no amendment, modification or waiver of Sections 4.5 or 7.15 may be
effected.
The parties hereto shall use their best efforts not to effect any
amendments to the Charter Documents that would circumvent the provisions of
this Section 7.5(b).
SECTION 7.6 NOTICES. All notices, demands, requests, consents or
approvals (collectively, "Notices") required or permitted to be given hereunder
or which are given with respect to this Agreement shall be in writing and shall
be personally delivered or mailed, registered or certified, return receipt
requested, postage prepaid (or by a substantially similar method), or delivered
by a reputable overnight courier service with charges prepaid, or transmitted
by hand delivery, telegram, telex or facsimile, addressed as set forth below,
or such other address (and with such other copy) as such party shall have
specified most recently by written notice. Notice shall be deemed given or
delivered on the date of service or transmission if personally served or
transmitted by telegram, telex or facsimile. Notice otherwise sent as provided
herein shall be deemed given or delivered on the third Business Day following
the date mailed or on the next Business Day following delivery of such notice
to a reputable overnight courier service.
To the Company, Dominick's or the Controlling Stockholders:
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
x/x Xxx Xxxxxxx Xxxxxxxxx
00000 Xxxxx Xxxxxx Boulevard
Fifth Floor
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Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
and
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
To the Purchasers:
To the address specified on the signature page executed by
each such Purchaser.
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
To the Other Investors:
To the address specified on the signature
page executed by each such Other Investor.
SECTION 7.7 INSPECTION. So long as this Agreement shall be in effect,
this Agreement and, amendments hereto and waivers hereof shall be distributed
to all parties hereto after becoming effective and shall be available upon the
request of any Investor.
SECTION 7.8 GOVERNING LAW. THIS AGREEMENT SHALL GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS, EXCEPT AS TO MATTERS OF CORPORATE GOVERNANCE,
WHICH SHALL BE INTERPRETED IN ACCORDANCE WITH THE GENERAL CORPORATION LAW OF
THE STATE OF DELAWARE.
SECTION 7.9 SECTION HEADINGS. The section headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
SECTION 7.10 ENTIRE AGREEMENT. This Agreement, together with the Stock
Purchase Agreement and the Registration Rights Agreements attached as Exhibit C
hereto, constitutes the entire agreement and understanding among the parties
hereto with respect to the
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subject matter hereof and thereof and supersedes any and all prior agreements
and understandings, written or oral, relating, to the subject matter hereof.
SECTION 7.11 SEVERABILITY. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdictions, it being intended that
all rights and obligations of the panics hereunder shall be enforceable to the
fullest extent permitted by law.
SECTION 7.12 COUNTERPARTS. This Agreement may be signed in counterparts,
each of which shall constitute an original and which together shall constitute
one and the same agreement.
SECTION 7.13 REQUIRED APPROVALS. If approval of this Agreement or any of
the transactions contemplated hereby shall be required by any governmental or
supra-governmental agency or instrumentality or is considered to be necessary
or advisable to all the parties hereto, all parties hereto shall use their best
efforts to obtain such approval. If any required approval is not obtained or
it becomes clear that such approval will not be granted, any party shall
immediately give the other parties hereto notice and the parties hereto shall
promptly meet and negotiate in good faith to modify their respective
obligations as necessary.
SECTION 7.14 CONSISTENCY. In the event of a conflict between this
Agreement on the one hand and the Charter Documents or any agreement relating
to the securities of the Company, or its Subsidiaries on the other hand, the
terms and provisions of this Agreement shall be deemed to set forth the true
intentions of the parties (to the extent permitted by applicable law) and shall
supersede the terms of any other agreement.
SECTION 7.15 PUBLIC DISCLOSURE. The Company shall not, and shall not
permit any of its Subsidiaries to, make any public announcements or disclosures
relating or referring to any Investor, any of its affiliates, or any of their
respective directors, officers, partners, employees or agents (including,
without limitation, any Person designated as a director of the Company or
Dominick's pursuant to the terms hereof) unless such Investor has consented to
the form and substance thereof, which consent shall not be unreasonably
withheld except to the extent such disclosure is, in the opinion of counsel,
required by law or by stock exchange regulation, provided that (i) any such
required disclosure shall only be made, to the extent consistent with law,
after consultation with such Investor and (ii) no such announcement or
disclosure (except as required by law or by stock exchange regulation) shall
identify any such Person without such Investor's prior consent.
(signature pages follow)
28
32
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
DOMINICK'S SUPERMARKETS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
DOMINICK'S FINER FOODS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
S-1
33
THE YUCAIPA AFFILIATES
YUCAIPA BLACKHAWK PARTNERS, L.P.
By: Yucaipa Management L.L.C., its
General Partner
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
Number of Shares of
Common Stock: 2,018,106
YUCAIPA CHICAGO PARTNERS, L.P.
By: Yucaipa Management L.L.C., its
General Partner
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
Number of Shares of
Common Stock: 253,470
YUCAIPA DOMINICK'S PARTNERS, L.P.
By: Yucaipa Management L.L.C., its
General Partner
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
Number of Shares of
Common Stock: 663,333
/s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
S-2
34
THE PURCHASERS
APOLLO INVESTMENT FUND, L.P.
By: Apollo Advisors, L.P.
Its General Partner
By: Apollo Capital Management, Inc.
Its Managing General Partner
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
Title:
Address for notice:
c/o Apollo Advisors, L.P.
0 Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn:
Fax:
Number of Shares of
Common Stock:
Number of Shares of
Class B Common Stock:
X-0
00
XXXXXX XXXXXXXXXX XXXX XXX, L.P.
By: Apollo Advisors II, L.P.
Its General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title:
Address for notice:
c/o Apollo Advisors II, L.P.
0 Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn:
Fax:
Number of Shares of
Common Stock:
Number of Shares of
Class B Common Stock:
S-4
36
APOLLO OVERSEAS PARTNERS III, L.P.
By: Apollo Advisors II, L.P.
Its Managing General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
Title:
Address for notice:
c/o Apollo Advisors II, L.P.
0 Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn:
Fax:
Number of Shares of
Common Stock:
Number of Shares of
Class B Common Stock:
S-5
37
APOLLO (UK) PARTNERS III, L.P.
By: Apollo Advisors II, L.P.
Its Managing General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title:
Address for notice:
c/o Apollo Advisors II, L.P.
0 Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn:
Fax:
Number of Shares of
Common Stock:
Number of Shares of
Class B Common Stock:
S-6
38
BT INVESTMENT PARTNERS, INC.
By: /s/ Xxxxxx X. Xxxx
------------------------------
Name: Xxxxxx X. Xxxx
Title: Managing Director
Address for Notice:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-7
39
CHASE EQUITY ASSOCIATES, L.P.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: General Partner
Address for Notice:
Xxx Xxxxx Xxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. XxXxxxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
X-0
00
XXXXXXXX/XXXX I PARTNERS, L.P.
By: /s/
------------------------------
Name:
Title:
By: /s/ Xxxx X. Xxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
Address for Notice:
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxx
Fax: (000) 000-0000
Number of Shares of Common Stock:
Number of Shares of Class B Common Stock:
TCW SHARED OPPORTUNITY
FUND II, L.P.
By: /s/
------------------------------
Name:
Title:
By: /s/ Xxxx X. Xxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
Address for Notice:
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxx
Fax: (000) 000-0000
Number of Shares of Common Stock:
Number of Shares of Class B Common Stock:
S-9
41
INVESTORS
BAHRAIN INTERNATIONAL BANK, E.C.
By: /s/ Xxxxxx Xx Xxxxx
---------------------------------
Name: Xxxxxx Xx Xxxxx
Title: Chief Financial Officer
Address for Notice:
c/o Dilmun Investments, Inc.
Metro Center
Xxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-10
42
BANKERS TRUST NEW YORK CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
-------------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title:
Address for Notice:
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-11
43
BHF-BANK AKTIENGESELLSCHAFT
By: /s/ Xxxx Xxxxx /s/ Xxxxx Xxxxxxxxx
-------------------------------------------------
Name: Xxxx Xxxxx Xxxxxx Xxxxxxxxx
Title: AVP SVP
Address for Notice:
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-12
44
CONTINENTAL CASUALTY COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
Address for Notice:
c/o Loews Holding Corp.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-13
45
FLEET NATIONAL BANK
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title:
Address for Notice:
Fleet National Bank
0 Xxxxxxx Xxxxxx
Xxxx Xxxx XXXXX00X
Xxxxxx, XX 000000
Attention: Xxx X. Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-14
46
FSC CORP.
By: /s/ Xxxx Xxxxxxx Xxxxxx
---------------------------------
Name: Xxxx Xxxxxxx Xxxxxx
Title: Vice President
Address for Notice:
x/x Xxxx xx Xxxxxx
000 Xxxxxxx Xxxxxx, XX 00-00-00
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxx Xxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-15
47
INDOSUEZ DOMINICK'S PARTNERS, L.P.
By: /s/ Xxxxx Xxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President
By: /s/ Xxxxxx Xxxxxx
---------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
Address for Notice:
x/x Xxxxxxxx Xxxxxxx
0000 Xxxxxx of the Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxx, Esq.
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
X-00
00
XXXXXXXXXXXXX XXXXXXXXXXX (U.S.) CAPITAL
CORPORATION
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Title: SVP
Address for Notice:
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-17
49
MIDLAND MONTAGU PRIVATE EQUITY INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
Title: Director
Address for Notice:
000 Xxxxxxxx - 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-18
50
OKGBD & CO.
By: /s/ Xxxx Xxxxxx
-----------------------------
Name:
Title:
Address for Notice:
Xxx Xxx Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-19
