Exhibit 10.4
MEMBERS' AGREEMENT
MEMBERS' AGREEMENT (as the same may hereafter be amended, supplemented or
modified, this "Agreement"), dated as of August 29, 1996, among TREX Company,
LLC, a Delaware limited liability company (together with its successors and
assigns, the "Company"), each of the Purchasers (the "Purchasers") named on
Schedule A hereto, and the Persons named on Schedule B hereto (the "Management
Holders").
RECITALS:
The Company and each of the Purchasers have entered into separate
Securities Purchase Agreements (the "Securities Purchase Agreements"), dated as
of even date herewith, pursuant to which the Company has agreed to sell, and the
Purchasers have agreed to purchase, (i) $24,250,000 in aggregate principal
amount of the Company's 10% Senior Notes (the "Senior Notes") due August 30,
2003, (ii) $5,000,000 in aggregate principal amount of the Company's 12%
Subordinated Notes (the "Subordinated Notes", and together with the Senior
Notes, the "Notes") due August 30, 2004, and (iii) 1,000 Class B Units, for an
aggregate consideration of $29,250,000 in cash.
AGREEMENT:
NOW THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto mutually agree as follows:
1. HOLDERS' PUT RIGHTS.
1.1 GRANTING OF PUT; PRICE. At any time or from time to time after the Put
Effective Date, each holder of any Bundled Securities, upon written notice to
the Company (a "Put Notice"), shall be entitled to sell, and the Company shall
be obligated to purchase from such holder, any or all of the Bundled Securities
held by such holder at a purchase price (the "Put Option Purchase Price") equal
to the sum of:
(a) the product of:
(i) the number of Class B Units sought to be sold by the holder
thereof at such time; multiplied by
(ii) the Unit Price of Class B Units determined as of the date of
such Put Notice;
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plus
(b) the product of:
(i) the number of Class A Units sought to be sold by such
holder at such time that have been issued upon the conversion of Class
B Units; multiplied by
(ii) the Unit Price of Class A Units determined as of the date of
such Put Notice.
1.2 PUT NOTICE. Each Put Notice delivered pursuant to Section 1.1 shall
specify:
(a) the name of the holder of Bundled Securities delivering such Put
Notice;
(b) that such holder is exercising its option, pursuant to this
Section 1, to sell certain of the Bundled Securities held by such holder;
and
(c) the number of, and a description of, the Bundled Securities being
tendered, including a statement, to the extent relevant, of:
(i) the total number of Class B Units sought to be sold by such
holder; and
(ii) the total number of Class A Units sought to be sold by such
holder that were issued upon the conversion of Class B Units.
1.3 COMPANY NOTICES.
(a) The Company, within thirty (30) days of receipt of such Put
Notice, shall deliver to the holder or holders exercising its or their put
option pursuant to this Section 1 a notice specifying the Put Repurchase
Date, providing the names and addresses of each of the holders of Bundled
Securities, and stating the type and number of the Bundled Securities held
by each such holder.
(b) The Company, not less than ten (10) days prior to the Put
Repurchase Date, shall deliver to the holder or holders exercising its or
their put option pursuant to this Section 1 a notice containing a detailed
calculation of the Unit Price with respect to the Class B Units and (if
such holder holds Class A Units at such time) the Class A Units and
containing a detailed calculation of the Put Option Purchase Price
(calculated as if the date of such notice was the Put Repurchase Date) with
respect to the Bundled Securities which are to be so repurchased from such
holder.
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1.4 OBLIGATION TO PURCHASE BUNDLED SECURITIES. The Company shall be
obligated to purchase any or all of such holder's Bundled Securities as
specified in such holder's Put Notice, and shall pay the Put Option Purchase
Price payable to such holder in cash in immediately available funds, on the Put
Repurchase Date, against delivery by such holder of any and all certificates or
other instruments evidencing such Bundled Securities, together with appropriate
instruments of transfer or assignment, if any, duly endorsed in blank.
1.5 SUBORDINATION. The rights of the holders of Bundled Securities to
receive the Put Option Purchase Price shall be subordinated to the rights of the
holders of the Notes to receive payments in respect thereof to the same extent
as the rights of the holders of the Subordinated Notes to receive payments in
respect thereof are subordinated, pursuant to Section 22 of the Securities
Purchase Agreements, as in effect on the date hereof, are subordinated to the
rights of the holders of the Senior Notes to receive payments in respect
thereof, with the same effect as if the provisions of Section 22 of the
Securities Purchase Agreements, and the definitions of defined terms used
therein, were set forth herein, mutatis mutandis.
1.6 LIMITATIONS ON RIGHT OF REPURCHASE. Notwithstanding anything contained
in this Section 1 to the contrary, the Company shall not be obligated to pay the
Put Option Purchase Price in respect of a Put Notice, if, at any time:
(a) payment of the Put Option Purchase Price at such time would
result in a breach of, or default or event of default in respect of, the
Securities Purchase Agreements, the Senior Notes or the Subordinated Notes
without the written consent of those holders of the Senior Notes and the
Subordinated Notes the consent of which would be necessary to waive such
breach, default or event of default (and such consent shall not have been
obtained), or
(b) payment of the Put Option Purchase Price is, at such time,
prohibited by applicable law (including, without limitation, Section 18-607
of the Delaware Limited Liability Company Act);
provided, however, that if such breach, event of default, default or violation
would not result from the purchase of any number of Bundled Securities which is
less than the total number of Bundled Securities the Company is obligated to
purchase on the Put Repurchase Date, the Company shall purchase on the Put
Repurchase Date the maximum number of Bundled Securities it may so purchase,
allocated among the holders which have elected to have their Bundled Securities
so repurchased ratably according to the number of Bundled Securities so tendered
(without regard to whether such Bundled Securities are Class A Units or Class B
Units. If as a result of the operation of clauses (a) or (b) above any Bundled
Securities specified in a Put Notice may not be purchased for cash by the
Company, then the Put Notice with respect to such Bundled Securities shall be
deemed to be rescinded, subject to the right of the holders of such Bundled
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Securities to deliver another Put Notice or Put Notices with respect to such
Bundled Securities.
2. SPECIAL RIGHT OF REPURCHASE.
2.1 GRANTING OF CALL; PRICE. At any time after the Call Effective Date,
the Company may give written notice to each holder of Bundled Securities (a
"Repurchase Notice") of its intention to repurchase all, but not less than all,
of the Bundled Securities, at a purchase price (the "Repurchase Price"), with
respect to each holder of Bundled Securities, equal to the sum of:
(a) the product of:
(i) the number of Class B Units held by the holder thereof at
such time; multiplied by
(ii) the Unit Price of Class B Units determined as of the date of
such Repurchase Notice;
plus
(b) the product of:
(i) the number of Class A Units held by such holder at such time
that have been issued upon the conversion of Class B Units; multiplied
by
(ii) the Unit Price of Class A Units determined as of the date of
such Repurchase Notice.
2.2 REPURCHASE NOTICE. Such Repurchase Notice shall:
(a) state that the Company intends to purchase the Bundled Securities
from each of the holders thereof;
(b) specify the date on which the Company will repurchase the Bundled
Securities of each such holder, which date shall be not less than thirty
(30) days nor more than sixty (60) days from the date of such Repurchase
Notice (the "Call Repurchase Date");
(c) provide the names and addresses of each of such holders, and
state the type and number of the Bundled Securities held by each such
holder;
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(d) contain a detailed calculation of the Unit Price with respect to
the Class B Units and (if such holder holds Class A Units at such time) the
Class A Units; and
(e) contain a detailed calculation of the Repurchase Price
(calculated as if the date of such notice were the Call Repurchase Date)
with respect to the Bundled Securities which shall be due to each such
holder in connection with such repurchase.
2.3 OBLIGATION TO REPURCHASE. The Repurchase Notice having been so given
to each such holder, the Company shall be obligated to purchase all of each such
holder's Bundled Securities, and shall pay the Repurchase Price payable to each
such holder in immediately available funds, on the Call Repurchase Date, and
each such holder shall deliver to the Company any and all certificates or other
instruments evidencing its respective Bundled Securities, together with
appropriate instruments of transfer or assignment, if any, duly endorsed in
blank.
2.4 SUBORDINATION. The rights of the holders of Bundled Securities to
receive the Repurchase Price shall be subordinated to the rights of the holders
of the Notes to receive payments in respect thereof to the same extent as the
rights of the holders of the Subordinated Notes to receive payments in respect
thereof are subordinated, pursuant to Section 22 of the Securities Purchase
Agreements, as in effect on the date hereof, are subordinated to the rights of
the holders of the Senior Notes to receive payments in respect thereof, with the
same effect as if the provisions of Section 22 of the Securities Purchase
Agreements, and the definitions of defined terms used therein, were set forth
herein, mutatis mutandis.
2.5 LIMITATIONS ON RIGHT OF REPURCHASE. Notwithstanding anything contained
in this Section 2 to the contrary, the Company shall not at any time be
permitted to exercise the call option provided for in this Section 2, or pay the
Repurchase Price on the Call Repurchase Date, if, at such time:
(a) payment of the Repurchase Price at such time would result in a
breach of, or default or event of default in respect of, the Securities
Purchase Agreements, the Senior Notes or the Subordinated Notes without the
written consent of those holders of the Senior Notes and the Subordinated
Notes the consent of which would be necessary to waive such breach, default
or event of default, or
(b) payment of the Repurchase Price is, at such time, prohibited by
applicable law (including, without limitation, Section 18-607 of the
Delaware Limited Liability Company Act).
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3. TAG-ALONG RIGHTS.
3.1 TAG-ALONG RIGHTS IN RESPECT OF SALES BY INITIAL MEMBERS AND THE
COMPANY.
(a) RIGHT TO SELL PROPORTIONATE NUMBER OF ISSUABLE UNITS. Each of the
Initial Members hereby agrees that it will not sell all or any portion of
the Issuable Units owned by it and the Company agrees that it will not sell
any Issuable Units (other than in a registered public offering in which the
holders of Bundled Securities are entitled to participate pursuant to
Section 6.2) hereof unless, as part of such transaction, each holder of
Bundled Securities shall have the right (but, subject to Section 4 hereof,
not the obligation) to sell a proportionate amount of the Bundled
Securities then held by such holder at the same price and on the same
terms, and to the same purchaser or purchasers.
For purposes of this Section 3.1, the "proportionate amount" which a
holder of Bundled Securities shall be entitled to sell with respect to any
proposed transaction shall be equal to the product (calculated as of the
date of such proposed transaction) of:
(i) the total number of Bundled Securities then owned by such
holder; times
(ii) the quotient of:
(A) the aggregate number of Issuable Units proposed to be
sold in such transaction by the Other Members and/or the Company;
divided by
(B) the aggregate number of Issuable Units owned by the
Other Members participating in such sale plus the aggregate
number of Issuable Units, if any, proposed to be sold by the
Company in such transaction.
(b) NOTICE OF PROPOSED SALE. The Initial Members and/or the Company
intending to sell any Issuable Units shall provide to each of the holders
of the Bundled Securities written notice of such intention not less than
forty-five (45) days prior to the closing of such proposed sale. Such
written notice (the "Notice of Sale") shall specify in detail the terms of
such proposed sale (including the type of Security proposed to be sold and
the price per unit of such Security), shall state the date on which such
proposed sale is to be consummated and shall designate one party to whom
notice of the determination to participate in such proposed sale should be
delivered.
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(c) ELECTION BY HOLDERS. Upon receipt of a Notice of Sale, each
holder of Bundled Securities shall have twenty (20) days to deliver written
notice of its election to participate in such sale and the number of
Issuable Units which it elects to sell, which number shall not exceed its
proportionate amount.
(d) PRO RATA CUTBACK OF NUMBER OF ISSUABLE UNITS SOLD. In the event
that the Initial Members and/or the Company intending to sell the Issuable
Units shall be unable to sell the aggregate number of Issuable Units to be
sold by the Other Members and/or the Company and which the holders of the
Bundled Securities have elected to sell pursuant to Section 3.1(a) hereof
at the price specified in the Notice of Sale, then the number of Issuable
Units to be sold by the Other Members and/or the Company and such holders
of Bundled Securities electing to sell such Issuable Units shall be reduced
ratably (as between such groups and as among the members of such groups) to
the extent necessary to reduce the total number of Issuable Units to be
included in such offering to the maximum number which the selling Other
Members and/or the Company can sell at such price. Whether or not any such
adjustment in the number of Issuable Units to be sold is required to be
made, the Initial Members and/or the Company shall give each such holder
which has elected to sell Issuable Units written notice of the number of
Units it is permitted to sell pursuant to this Section 3.1 (after giving
effect to the provisions of this Section 3.1(d)) not less than fifteen (15)
days prior to the date of such sale.
(e) CONVERSION. As provided in the Limited Liability Company
Agreement, the Issuable Units may be converted by the purchasers thereof
into Class A Units.
(f) CLOSING OF SALE. Each holder of Bundled Securities electing to
participate in a sale described in any Notice of Sale shall deliver to the
purchaser specified in such Notice of Sale, against payment of the total
purchase price for the Issuable Units to be purchased (at the price per
Issuable Unit specified in such Notice of Sale), on the closing date
specified in such Notice of Sale, a certificate or certificates, if any,
representing the number of Issuable Units which it has elected to sell (net
of any reduction pursuant to Section 3.1(d)) pursuant to this Section 3.1,
together with appropriate instruments of transfer, if any, duly endorsed in
blank.
(g) EXPENSES OF SALE. All expenses and costs of any sale of Issuable
Units pursuant to this Section 3.1 (other than the fees of counsel to the
holders of Bundled Securities related to such sale) shall be for the
account of and paid by the Initial Members.
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4. BOARD OBSERVATION RIGHTS.
4.1 BOARD OBSERVATION RIGHTS. At any time during which any CIGNA Affiliate
shall hold any Bundled Securities, CIGNA Investments shall have the right to
have its designated representative attend (or, in the case of a telephonic
meeting, to listen by telephone to) any meeting of the Board of Managers. The
Company shall give each CIGNA Affiliate holding Bundled Securities:
(a) prior written notice of each such meeting, to be given no later
than the earlier of:
(i) the date written notice is actually given to the Board of
Managers; and
(ii) the latest date on which notice may permissibly be given by
law;
(b) within sixty (60) days of each such meeting, copies of the
records of proceedings of, or minutes of, such meeting; and
(c) in the event that CIGNA Investments has notified the Company in
writing that it will be in attendance at any such meeting, all information
provided to the Board of Managers at or prior to such meeting in respect of
the matters to be discussed thereat.
4.2 COOPERATION WITH CIGNA INVESTMENTS. At all times during which any
CIGNA Affiliate shall hold any Bundled Securities, the Company shall permit
CIGNA Investments, at its expense, to visit and inspect any of the Properties of
the Company or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants (and by this provision
the Company authorizes said accountants to discuss the finances and affairs of
the Company and the Subsidiaries) all at such reasonable times and as often as
may be reasonably requested.
5. HOLDERS' PREEMPTIVE RIGHTS.
5.1 RIGHT TO ELECT PURCHASE OF ADDITIONAL ISSUABLE UNITS. In the event
that the Company shall at any time offer to sell any Issuable Units (other than
Excluded Units) then the Company shall offer to each holder of Bundled
Securities the right to subscribe for and purchase a portion of the total number
of the Issuable Units so sold equal to the Additional Issuable Units Number with
respect to such holder at such time, at the same price, on the same date and on
the same terms offered to the proposed purchasers, on the terms set forth in
this Section 5.
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5.2 NOTICE OF SALE OF ISSUABLE UNITS. The Company shall give not less than
sixty (60) days written notice to each holder of Bundled Securities of any sale
of Issuable Units described in Section 5.1, which notice shall specify:
(a) the number of Issuable Units and the type of Issuable Units to be
offered;
(b) the purchase price per Issuable Unit to be paid by the purchasers
of such Issuable Units;
(c) if any of such Issuable Units consist of Rights, the terms of
such Rights, including the exercise price and expiration date;
(d) the date on which such proposed sale is to be consummated (the
"Additional Sale Closing Date");
(e) the Additional Issuable Units Number with respect to such holder;
(f) that such holder shall have the right to purchase a number of the
Issuable Units so offered equal to the Additional Issuable Units Number;
and
(g) that such holder may elect to purchase a number of the Issuable
Units so offered equal to the Additional Issuable Units Number by
delivering notice to the Company on or before the date which is thirty (30)
days prior to the date of such proposed sale (the "Additional Issuable
Units Election Date"), and that such notice shall constitute an irrevocable
subscription to purchase such indeterminate number of Issuable Units at
such purchase price.
5.3 DETERMINATION OF NUMBER OF ISSUABLE UNITS TO BE PURCHASED. Following
the Additional Issuable Units Election Date, the Company shall determine the
Additional Issuable Units Number with respect to each holder of Bundled
Securities electing to purchase Additional Issuable Units, and shall notify each
such holder in writing within ten (10) days after the Additional Issuable Units
Election Date of:
(a) the purchase price per Issuable Unit and the type of such
Issuable Units;
(b) the aggregate consideration to be paid by such holder (which
shall equal the product of the Additional Issuable Units Number times the
purchase price per Issuable Unit);
(c) the Additional Sale Closing Date; and
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(d) wire instructions for the account to which the Company wishes
holders of Bundled Securities electing to participate in the sale to
transfer funds pursuant to Section 5.4.
5.4 CLOSING OF SALE. Each holder of Bundled Securities electing to
participate in a sale pursuant to this Section 5 shall deliver to the Company by
wire transfer in immediately available funds on the Additional Sale Closing Date
the aggregate consideration (as set forth in Section 5.3(b)) for the Additional
Issuable Units Number of Issuable Units to be purchased by such holder. The
Company shall deliver to each holder of Bundled Securities electing to
participate in a sale pursuant to this Section 5, against such wire transfer, a
certificate or certificates representing a number of Issuable Units equal to the
Additional Issuable Units Number with respect to such holder. If the Issuable
Units being issued consist of Rights, such holder shall receive a certificate or
certificates evidencing such Rights. If the Issuable Units being issued consist
of Common Units, such holder shall receive a certificate or certificates, if
any, evidencing Common Units of such type.
5.5 NO OTHER AUTHORIZATION OF EQUITY SECURITIES. The Company will not
authorize or issue any class of equity securities (including, without
limitation, Common Units) not authorized on the date hereof.
6. REGISTRATION RIGHTS.
6.1 REQUIRED REGISTRATION.
(a) FILING OF REGISTRATION STATEMENT. The Company will, upon the
written request of the Initiating Holders given at any time after the
Initial Public Offering Date requesting that the Company effect the
registration under the Securities Act of all or part of such Initiating
Holders' Registrable Securities and specifying the Registrable Securities
to be sold and the intended method of disposition thereof, promptly give
written notice of such requested registration to all holders of Registrable
Securities, and thereupon will use its best efforts to effect the
registration (the "Required Registration") under the Securities Act of:
(i) the Registrable Securities that the Company has been so
requested to register by the Initiating Holders; and
(ii) all other Registrable Securities that the Company has been
requested to register by the holders thereof by written request given
to the Company within thirty (30) days after the giving of such
written notice by the Company (which request shall specify the
Registrable Securities to be sold and the intended method of
disposition of such Registrable Securities);
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all to the extent required to permit the disposition (in accordance with
the intended method thereof as aforesaid) of the Registrable Securities so
to be registered; provided, however, that the Company shall be required to
effect only two (2) registrations pursuant to this Section 6.1 that are
deemed effected under Section 6.1(e) hereof.
(c) TIME FOR FILING AND EFFECTIVENESS. On or before the date which is
ninety (90) days after the request for such registration, the Company shall
file with the SEC the Required Registration with respect to all Registrable
Securities to be so registered, and shall use its best efforts to cause
such Required Registration to become effective as promptly as practicable
after the filing thereof, and use its best efforts to cause such Required
Registration to become effective no later than the day which is one hundred
eighty (180) days after the request for such registration.
(c) SELECTION OF UNDERWRITERS. If Registrable Securities that the
Company has been requested to register pursuant to a Required Registration
are to be disposed of in an underwritten public offering, the underwriters
of such offering shall be one or more underwriting firms of recognized
standing selected by the Requisite Holders and reasonably acceptable to the
Company.
(d) PRIORITY ON REQUIRED REGISTRATIONS. If the managing underwriter
shall advise the Company in writing (with a copy to each holder of
Registrable Securities requesting sale) that, in such underwriter's
opinion, the number of shares of Securities requested to be included in
such Required Registration exceeds the number that can be sold in such
offering within a price range acceptable to the Company (such writing to
state the basis of such opinion and the approximate number of shares of
Securities that may be included in such offering without such effect), the
Company will include in such Required Registration, to the extent of the
number of shares of Securities that the Company is so advised can be sold
in such offering:
(i) first, Registrable Securities requested to be sold by the
holders of Bundled Securities pursuant to this Section 6.1, pro rata
among the holders requesting sale on the basis of the number of
Issuable Units requested to be so registered by such holders; and
(ii) second, all other Securities proposed to be registered by
the Company and any Other Members, in such proportions as the Company
and such Other Members shall agree.
(e) WHEN REQUIRED REGISTRATION IS DEEMED EFFECTED. A Required
Registration pursuant to this Section 6.1 shall not be deemed to have been
effected for purposes of the proviso to Section 6.1(a) hereof if:
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(i) the registration does not become effective and remain effective
for a period of at least one hundred eighty (180) days, without
interference by the issuance by the SEC of any stop order with respect
thereto;
(ii) in the case of any underwritten offering undertaken on a firm
commitment basis, all the Registrable Securities requested to be registered
in connection therewith were not sold;
(iii) the Requisite Holders withdraw their request for registration in
its entirety at any time because the Requisite Holders reasonably believed
that the registration statement or any prospectus related thereto contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made
therein (in the case of any prospectus, in light of the circumstances under
which they were made) not misleading, notified the Company of such fact and
requested that the Company correct such alleged misstatement or omission,
and the Company has refused to correct such alleged misstatement or
omission; or
(iv) the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such Required
Registration are not satisfied, other than by reason of some-act or
omission by the holders of the Registrable Securities that were to have
been registered and sold.
6.2 INCIDENTAL REGISTRATION.
(A) FILING OF REGISTRATION STATEMENT. If the Company at any time proposes
to register any of its Common Units (an "Incidental Registration") under the
Securities Act (other than pursuant to a registration statement on Form S-4 or
Form S-8 or any successor forms thereto, in connection with an offer made
solely to existing Security holders or employees of the Company), for sale to
the public in a public offering, it will each such time give prompt written
notice to all holders of Registrable Securities of its intention to do so, which
notice shall be given to all such holders at least thirty (30) Business Days
prior to the date that a registration statement relating to such registration is
proposed to be filed with the SEC. Upon the written request of any such holder
to include its shares under such registration statement (which request shall be
made within fifteen (15) Business Days after the receipt of any such notice and
shall specify the Registrable Securities intended to be disposed of by such
holder), the Company will use its best efforts to effect the registration of all
Registrable Securities that the Company has been so requested to register by
such holder; provided, however, that if, at any time after giving written notice
of its intention to register any Securities and prior to the effective date of
the registration statement filed in
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connection with such registration, the Company shall determine for any
reason not to register such Common Units, the Company may, at its election,
give written notice of such determination to each such holder and,
thereupon, shall be relieved of its obligation to register any Registrable
Securities of such Persons in connection with such registration.
(b) SELECTION OF UNDERWRITERS. Notice of the Company's intention to
register such Common Units shall designate the proposed underwriters of
such offering (which shall be one or more underwriting firms of recognized
standing) and shall contain the Company's agreement to use its best
efforts, if requested to do so, to arrange for such underwriters to include
in such underwriting the Registrable Securities that the Company has been
so requested to sell pursuant to this Section 6.2, it being understood that
the holders of Registrable Securities shall have no right to select
different underwriters for the disposition of their Registrable Securities.
(c) PRIORITY ON INCIDENTAL REGISTRATIONS. If the managing underwriter
shall advise the Company in writing (with a copy to each holder of
Registrable Securities requesting sale) that, in such underwriter's
opinion, the number of shares of Common Units requested to be included in
such Incidental Registration exceeds the number that can be sold in such
offering within a price range acceptable to the Company (such writing to
state the basis of such opinion and the approximate number of Common Units
that may be included in such offering without such effect), the Company
will include in such Incidental Registration, to the extent of the number
of Common Units that the Company is so advised can be sold in such
offering:
(i) in the case of any registration initiated by the Company for
the purpose of selling Securities for its own account:
(A) first, the number of Common Units that the Company
proposes to issue and sell for its own account; and
(B) second, Registrable Securities requested to be sold by
the holders of Bundled Securities pursuant to this Section 6.2
and all Common Units proposed to be registered by Other Members,
pro rata among such holders on the basis of the number of
Issuable Units requested to be so registered by such holders; and
(ii) in the case of a registration initiated by any Other Member
pursuant to demand or required registration rights in favor of such
Other Member:
(A) first, Registrable Securities requested to be sold by
the Other Members requesting such Registration and Registrable
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Securities requested to be sold by the holders of Bundled
Securities pursuant to this Section 6.2, pro rata among such
holders on the basis of the number of Issuable Units requested to
be so registered by such holders; and
(B) second, the number of Common Units that the Company
proposes to issue and sell for its own account.
6.3 REGISTRATION PROCEDURES. The Company will use its best efforts to
effect each Required Registration pursuant to Section 6.1 hereof and any
Incidental Registration of any Registrable Securities as provided in Section 6.2
hereof, and to cooperate with the sale of such Registrable Securities in
accordance with the intended method of disposition thereof as quickly as
practicable, and the Company will as expeditiously as possible:
(a) subject, in the case of an Incidental Registration, to the proviso
to Section 6.2(a), prepare and file with the SEC the registration statement
and use its best efforts to cause the Registration to become effective;
provided, however, that before filing any registration statement or
prospectus or any amendments or supplements thereto, the Company will
furnish to the holders of the Registrable Securities covered by such
registration statement, their counsel, and the underwriters, if any, and
their counsel, copies of each original registration statement proposed to
be filed at least fifteen (15) days prior thereto and copies of each
amendment, prospectus and supplement at least three (3) Business Days prior
thereto, which documents will be subject to the reasonable review, within
such period, of such holders, their counsel and the underwriters; and the
Company will not file any registration statement or amendment thereto or
any prospectus or any supplement thereto (including such documents
incorporated by reference) to which the Requisite Holders shall reasonably
object within such period;
(b) subject, in the case of an Incidental Registration, to the proviso
to Section 6.2(a), prepare and file with the SEC such amendments and post-
effective amendments to any registration statement and any prospectus used
in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities covered by
such registration statement until such time as all of such Securities have
been disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof set forth in such registration statement and
cause the prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under
the Securities Act, provided that if the Company is not then eligible to
use a registration statement on Form S-3 under the Securities Act, the
Company shall not be obligated to keep such registration statement
effective for more than two (2) years after the original effective date of
such registration statement;
14
(c) furnish to each holder of Registrable Securities included in such
Registration and the underwriter or underwriters, if any, without charge, at
least one signed copy of the registration statement and any post-effective
amendment thereto, upon request, and such number of conformed copies thereof and
such number of copies of the prospectus (including each preliminary prospectus
and each prospectus filed under Rule 424 under the Securities Act), any
amendments or supplements thereto and any documents incorporated by reference
therein, as such holder or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Securities being sold by such
holder (it being understood that the Company consents to the use of the
prospectus and any amendment or supplement thereto by each holder of Registrable
Securities covered by such registration statement and the underwriter or
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by the prospectus or any amendment or supplement
thereto);
(d) notify each holder of the Registrable Securities of any stop order or
other order suspending the effectiveness of any registration statement, issued
or threatened by the SEC in connection therewith, and take all reasonable
actions required to prevent the entry of such stop order or to remove it or
obtain withdrawal of it at the earliest possible moment if entered;
(e) if requested by the managing underwriter or underwriters or any holder
of Registrable Securities in connection with any sale pursuant to a registration
statement, promptly incorporate in a prospectus supplement or post-effective
amendment such information relating to such underwriting as the managing
underwriter or underwriters or such bolder reasonably requests to be included
therein; and make all required filings of such prospectus supplement or post
effective amendment as soon as practicable after being notified of the matters
incorporated in such prospectus supplement or post-effective amendment;
(f) on or prior to the date on which a Registration is declared effective,
use its best efforts to register or qualify, and cooperate with the holders of
Registrable Securities included in such Registration, the underwriter or
underwriters, if any, and their counsel, in connection with the registration or
qualification of the Registrable Securities covered by such Registration for
offer and sale under the securities or "blue sky" laws of each state and other
jurisdiction of the United States as any such holder or underwriter reasonably
requests in writing; use its best efforts to keep each such registration or
qualification effective, including through new filings, or amendments or
renewals, during the period such registration statement is required to be kept
effective; and do any and all other acts or things necessary or advisable to
enable the disposition in all such jurisdictions reasonably requested of the
Registrable Securities covered by such Registration; provided, however, that the
Company will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to
15
take any action which would subject it to general service of process in any such
jurisdiction where it is not then so subject;
(g) in connection with any sale pursuant to a Registration, cooperate with
the holders of Registrable Securities and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Securities to be
sold under such Registration, and enable such Securities to be in such
denominations and registered in such names as the managing underwriter or
underwriters, if any, or such holders may request;
(h) use its best efforts to cause the Registrable Securities to be
registered with or approved by such other governmental agencies or authorities
within the United States and having jurisdiction over the Company or any
Subsidiary as may reasonably be necessary to enable the seller or sellers
thereof or the underwriter or underwriters, if any, to consummate the
disposition of such Securities;
(i) make available for inspection by any holder of Registrable Securities
included in any Registration, any underwriter participating in any disposition
pursuant to any Registration, and any attorney, accountant or other agent
retained by any such seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such Person in connection
with such Registration;
(j) use its best efforts to obtain:
(i) at the time of effectiveness of each Registration, a "comfort
letter" from the Company's independent certified public accountants
covering such matters of the type customarily covered by "cold comfort
letters" as the Requisite Holders and the underwriters reasonably request;
and
(ii) at the time of any underwritten sale pursuant to the
registration statement, a "bring-down comfort letter," dated as of the date
of such sale, from the Company's independent certified public accountants
covering such matters of the type customarily covered by comfort letters as
the Requisite Holders and the underwriters reasonably request;
(k) use its best efforts to obtain, at the time of effectiveness of each
Incidental Registration and at the time of any sale pursuant to each
Registration, an opinion or opinions, favorable to the Requisite Holders in form
and scope, from counsel for the Company in customary form;
16
(i) notify each seller of Registrable Securities covered by such
Registration, upon discovery that, or upon the happening of any event as a
result of which, the prospectus included in such Registration, as then in
effect, includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and promptly prepare, file with the SEC
and furnish to such seller or holder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers or prospective purchasers
of such Securities, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they are made;
(m) otherwise comply with all applicable rules and regulations of the
SEC, and make generally available to its security holders (as contemplated
by Section 11(a) under the Securities Act) an earnings statement satisfying
the provisions of Rule 158 under the Securities Act not later than ninety
(90) days after the end of the twelve (12) month period beginning with the
first month of the Company's first fiscal quarter commencing after the
effective date of the registration statement, which statement shall cover
said twelve (12) month period;
(n) provide and cause to be maintained a transfer agent and registrar
for all Registrable Securities covered by each Registration from and after
a date not later than the effective date of such Registration;
(o) use its best efforts to cause all Registrable Securities covered
by each Registration to be listed subject to notice of issuance, prior to
the date of first sale of such Registrable Securities pursuant to such
Registration, on each securities exchange on which the Common Units issued
by the Company are then listed, and admitted to trading on NASDAQ, if the
Common Units or any such other Securities are then admitted to trading on
NASDAQ; and
(p) enter into such agreements (including underwriting agreements in
customary form) and take such other actions as the Requisite Holders shall
reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities.
The Company may require each holder of Registrable Securities that will be
included in such Registration to furnish the Company with such information in
respect of such holder of its Registrable Securities that will be included in
such Registration as the Company may reasonably request in writing and as is
required by applicable laws or regulations.
6.4 PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement registering Registrable
Securities under the
17
Securities Act, the Company will give the holders of such Registrable Securities
so registered, their underwriters, if any, and their respective counsel and
accountants the opportunity to participate in the preparation of such
registration statement (other than reports and proxy statements incorporated
therein by reference and lawfully and properly filed with the SEC) and each
prospectus included therein or filed with the SEC, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of such holders' or such
underwriters' to conduct a reasonable investigation within the meaning of the
Section 11 (b)(3) of the Securities Act.
6.5 RIGHTS OF REQUESTING HOLDERS. Each holder of Registrable Securities
which makes a written request therefor within thirty (30) days after the notice
to such holders provided for in Section 6.1 or Section 6.2 hereof, as the case
may be, hereof, shall have the right to receive the copies of the information,
notices and other documents described in Section 6.3(c), Section 6.3(l) and
Section 6.3(m) hereof in connection with any proposed Registration by the
Company under the Securities Act.
6.6 REGISTRATION EXPENSES. The Company will pay all Registration Expenses
in connection with each registration of Registrable Securities, including,
without Limitation, any such registration not effected by the Company.
6.7 INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company shall indemnify, to
the fullest extent permitted by law, each holder of Registrable Securities,
its officers, directors and agents, if any, and each Person, if any, who
controls such holder within the meaning of section 15 of the Securities
Act, against all losses, claims, damages, liabilities (or proceedings in
respect thereof) and expenses (under the Securities Act or common law or
otherwise), joint or several, resulting from any violation by the Company
of the provisions of the Securities Act or any untrue statement or alleged
untrue statement of a material fact contained in any registration statement
or prospectus (and as amended or supplemented if amended or supplemented)
or any preliminary prospectus or caused by any omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein (in the case of any prospectus, in light of
the circumstances under which they were made) not misleading, except to the
extent that such losses, claims, damages, liabilities (or proceedings in
respect thereof) or expenses are caused by any untrue statement or alleged
untrue statement contained in or by any omission or alleged omission from
information concerning any holder furnished in writing to the Company by
such holder expressly for use therein. If the offering pursuant to any
registration statement provided for under this Section 6 is made through
underwriters, no action or failure to act on the part of such underwriters
(whether or not such
18
underwriter is an Affiliate of any holder of Registrable Securities) shall
affect the obligations of the Company to indemnify any holder of
Registrable Securities or any other Person pursuant to the preceding
sentence. If the offering pursuant to any registration statement provided
for under this Section 6 is made through underwriters, the Company agrees,
to the extent required by such underwriters, to enter into an underwriting
agreement in customary form with such underwriters and to indemnify such
underwriters, their officers, directors and agents, if any, and each
Person, if any, who controls such underwriters within the meaning of
section 15 of the Securities Act to the same extent as hereinbefore
provided with respect to the indemnification of the holders of Registrable
Securities; provided that the Company shall not be required to indemnify
any such underwriter, or any officer or director of such underwriter or any
Person who controls such underwriter within the meaning of section 15 of
the Securities Act, to the extent that the loss, claim, damage, liability
(or proceedings in respect thereof) or expense for which indemnification is
claimed results from such underwriter's failure to send or give a copy of
an amended or supplemented final prospectus to the Person asserting an
untrue statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of Registrable
Securities to such Person if such statement or omission was corrected in
such amended or supplemented final prospectus prior to such written
confirmation and the underwriter was provided with such amended or
supplemented final prospectus.
(b) INDEMNIFICATION BY THE HOLDERS. In connection with any
registration statement in which a holder of Registrable Securities is
participating, each such holder, severally and not jointly, shall
indemnify, to the fullest extent permitted by law, the Company, each
underwriter and their respective officers, directors and agents, if any,
and each Person, if any, who controls the Company or such underwriter
within the meaning of section 15 of the Securities Act, against any losses,
claims, damages, liabilities (or proceedings in respect thereof) and
expenses resulting from any untrue statement or alleged untrue statement of
a material fact or any omission or alleged omission of a material fact
required to be stated in the registration statement or prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or
necessary to make the statements therein (in the case of any prospectus, in
light of the circumstances under which they were made) not misleading, but
only to the extent that such untrue statement is contained in or such
omission is from information so concerning a holder furnished in writing by
such holder expressly for use therein; provided, however, that such
holder's obligations hereunder shall be limited to an amount equal to the
proceeds to such holder of the Registrable Securities sold pursuant to such
registration statement.
(c) CONTROL OF DEFENSE. Any Person entitled to indemnification under
the provisions of this Section 6.7 shall give prompt notice to the
indemnifying party of any claim with respect to which it seeks
indemnification and unless in such indemnified party's reasonable judgment
a conflict of interest between such
19
indemnified and indemnifying parties may exist in respect of such claim,
permit such indemnifying party to assume the defense of such claim, with
counsel reasonably satisfactory to the indemnified party; and if such
defense is so assumed, such indemnifying party shall not enter into any
settlement without the consent of the indemnified party if such settlement
attributes liability to the indemnified party and such indemnifying party
shall not be subject to any liability for any settlement made without its
consent (which shall not be unreasonably withheld); and any underwriting
agreement entered into with respect to any registration statement provided
for under this Section 6 shall so provide. In the event an indemnifying
party shall not be entitled, or elects not, to assume the defense of a
claim, such indemnifying party shall not be obligated to pay the fees and
expenses of more than one counsel or firm of counsel for all parties
indemnified by such indemnifying party in respect of such claim, unless in
the reasonable judgment of any such indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties in respect to such claim.
(d) CONTRIBUTION. If for any reason the foregoing indemnity is
unavailable, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such losses,
claims, damages, liabilities or expenses:
(i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party on the one hand and the
indemnified party on the other; or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, in such
proportion as is appropriate to reflect not only the relative benefits
received by the indemnifying party on the one hand and the indemnified
party on the other but also the relative fault of the indemnifying
party and the indemnified party as well as any other relevant
equitable considerations.
Notwithstanding the foregoing, no holder of Registrable Securities shall be
required to contribute any amount in excess of the amount such holder would
have been required to pay to an indemnified party if the indemnity under Section
6.7(b) hereof was available. No Person guilty of fraudulent misrepresentation
(within the meaning of section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The obligation of any Person to contribute pursuant to this
Section 6.7 shall be several and not joint.
(e) TIMING OF PAYMENTS. An indemnifying party shall make payments of
all amounts required to be made pursuant to the foregoing provisions of
this Section 6.7 to or for the account of the indemnified party from time
to time
20
promptly upon receipt of bills or invoices relating thereto or when
otherwise due or payable.
(f) SURVIVAL. The indemnity and contribution agreements contained in
this Section 6.7 shall remain in full force and effect regardless of any
investigation made by or on behalf of a participating holder of Registrable
Securities, its officers, directors, agents or any Person, if any, who
controls such holder as aforesaid, and shall survive the transfer of such
Securities by such holder.
6.8 HOLDBACK AGREEMENTS; REGISTRATION RIGHTS TO OTHERS.
(a) In connection with each underwritten sale of Registrable
Securities, the Company agrees, and each holder of Registrable Securities
by acquisition of such Registrable Securities agrees, to enter into
customary holdback agreements concerning sale or distribution of
Registrable Securities and other equity Securities of the Company, except,
in the case of any holder of Registrable Securities, to the extent that
such holder is prohibited by applicable law or exercise of fiduciary duties
from agreeing to withhold Registrable Securities from sale or is acting in
its capacity as a fiduciary or investment adviser. Without limiting the
scope of the term "fiduciary," a holder shall be deemed to be acting as a
fiduciary or an investment adviser if its actions or the Registrable
Securities proposed to be sold are subject to the Employee Retirement
Income Security Act of 1974, as amended, or the Investment Company Act of
1940, as amended, or if such Registrable Securities are held in a separate
account under applicable insurance law or regulation.
(b) If the Company shall at any time after the date hereof provide to
any holder of any Securities of the Company rights with respect to the
registration of such Securities under the Securities Act:
(i) such rights shall not be in conflict with or adversely
affect any of the rights provided in this Section 6 to the holders of
Registrable Securities; and
(ii) if such rights are provided on terms or conditions more
favorable to such holder than the terms and conditions provided in
this Section 6, the Company will provide (by way of amendment to this
Section 6 or otherwise) such more favorable terms or conditions to the
holders of Registrable Securities.
6.9 OTHER REGISTRATION OF COMMON UNITS. If any Common Units required to be
reserved for purposes of conversion of any class of Common Units into any other
class of Common Units require registration with or approval of any governmental
authority under any federal or state law (other than the Securities Act) before
such Common Units may be issued upon conversion, the Company will, at its
expense and as
21
expeditiously as possible, use its best efforts to cause such Common Units to be
duly registered or approved, as the case may be.
6.10 AVAILABILITY OF INFORMATION. The Company will comply with the
reporting requirements of Sections 13 and 15(d) of the Exchange Act and will
comply with all other public information reporting requirements of the SEC as
from time to time in effect, and cooperate with the holders of Registrable
Securities, so as to permit disposition of the Registrable Securities pursuant
to an exemption from the Securities Act for the sale of any Registrable
Securities (including, without limitation, the current public information
requirements of Rule 144(c) and Rule 144A under the Securities Act). The Company
win also cooperate with each holder of any Registrable Securities in supplying
such information as may be necessary for such holder to complete and file any
information reporting forms presently or hereafter required by the SEC as a
condition to the availability of an exemption from the Securities Act for the
sale of any Registrable Securities.
7. RESTRICTIONS ON TRANSFER AND OTHER AGREEMENTS.
7.1 RESTRICTIONS ON TRANSFER TO TRANSFEREES. No party hereto shall sell,
assign, transfer or otherwise dispose of any Issuable Units to any transferee
under any circumstance, and the Company shall neither issue nor sell any
additional Issuable Units, to any transferee, unless such transferee shall have
assumed in writing all of the obligations of its transferor imposed by this
Agreement and shall have agreed to be bound by each of the terms and provisions
of this Agreement to which such transferor was bound, pursuant to an undertaking
substantially in the form set forth as Exhibit A hereto.
7.2 COOPERATION BY THE COMPANY. The Company shall refuse to register any
transfer of any Issuable Units to any transferee unless the Company shall have
received from the prospective transferee a written agreement to be bound by the
provisions of this Agreement as required by Section 7.1 hereof, and such other
evidence as the Company may reasonably require to establish compliance with such
Section 7.1. The Company shall be protected in, and shall have no liability to
any Other Member for, and no such holder shall assert any claim against the
Company for, failing to register any transfer of any Issuable Units in an effort
to comply with the provisions of this Agreement, unless such refusal to transfer
is made in bad faith.
7.3 LEGENDING OF CERTIFICATES. Each certificate, if any, representing any
Issuable Units shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS OF A MEMBERS' AGREEMENT, DATED AS OF AUGUST 29, 1996,
THE PROVISIONS OF WHICH ARE INCORPORATED HEREIN BY REFERENCE.
SUCH MEMBERS' AGREEMENT PROVIDES, AMONG OTHER THINGS, THAT THIS
22
SECURITY MAY NOT BE SOLD OR TRANSFERRED TO ANY PERSON WHO HAS NOT
EXPRESSLY ASSUMED THE OBLIGATIONS OF SUCH AGREEMENT AND CONTAINS,
AMONG OTHER PROVISIONS, PROVISIONS WHICH LIMIT THE TRANSFER OF
THIS SECURITY. A COPY OF SUCH MEMBERS' AGREEMENT IS AVAILABLE
FROM THE COMPANY UPON REQUEST."
7.4 SECURITIES ACT RESTRICTIONS; LEGEND. The Company shall not register
any transfer of Issuable Units if it has reason to believe that such transfer is
being requested in violation of the registration requirements of Section 5 of
the Securities Act. Except as otherwise permitted by Section 7.6 hereof, each
certificate, if any, representing an Issuable Unit shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE OFFERED OR SOLD EXCEPT IN A TRANSACTION REGISTERED UNDER
SUCH ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT."
7.5 TERMINATION OF RESTRICTIONS.
(a) WITH RESPECT TO ISSUABLE UNITS SOLD IN A PUBLIC OFFERING. Each
and all of the provisions of this Agreement shall terminate immediately as
to any Issuable Units (but this Agreement shall remain in force with
respect to any remaining Issuable Units);
(i) when such Issuable Units have been effectively registered
under the Securities Act and disposed of in accordance with the
registration statement covering such Issuable Units; or
(ii) when they shall have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the Securities
Act; or
(iii) when they shall have been otherwise transferred and
subsequent disposition of them shall not require registration or
qualification under the Securities Act or any similar state law then
in force.
Whenever such restrictions shall terminate as to any Issuable Units, the
holder thereof shall be entitled to receive from the Company, without
expenses (other than transfer taxes, if any), new Issuable Units of like
tenor not bearing the applicable legends set forth in Section 7.3 or
Section 7.4 hereof.
23
(B) UPON A TAG-ALONG SALE. The provisions of Section 1 and Section 2
of this Agreement shall terminate immediately with respect to Bundled
Securities sold (but the provisions of Section 1 and Section 2 of this
Agreement shall remain in force with respect to any remaining Bundled
Securities not so sold) in any sale pursuant to Section 3.1 of this
Agreement.
7.6 TERMINATION OF VARIOUS PROVISIONS. The provisions of Section 1,
Section 2, Section 3, Section 4 and Section 5 of this Agreement shall terminate
on the Public Market Date.
8. EARNBACK OF BUNDLED SECURITIES.
(a) COMPANY OPTION TO REPURCHASE BUNDLED SECURITIES. Upon the earliest to
-----------------------------------------------
occur of (i) the Public Market Date, (ii) the Call Repurchase Date, (iii) the
Put Repurchase Date, (iv) the sale of all or substantially all of the assets of
the Company for cash, (v) the sale of all of the Common Units of the Company for
cash, or (vi) the merger of the Company with another Person pursuant to which
the holders of Common Units receive solely cash consideration in exchange for
such Common Units, the Company shall have the option to repurchase, at the price
and in the manner set forth in Section 8(b) below, the Bundled Securities,
ratably from the holders thereof (so long as such securities have not been sold
to the public either (x) pursuant to a registration statement filed pursuant to
the Securities Act or (y) pursuant to the exemption from registration provided
by Rule 144 promulgated pursuant to the Securities Act), representing up to but
not exceeding 15% of the Common Units of the Company on a fully-diluted basis
(with the result that the Purchasers and/or their transferees will retain
Bundled Securities representing at least 10% of the Common Units of the Company
on a fully-di1uted basis); provided that all Notes shall have been previously
--------
paid in full or will be repaid in full, together with all accrued interest and
Prepayment Premium, if any, thereon in accordance with the terms of the
Securities Purchase Agreements, concurrently with the applicable event described
in clauses (i) through (vi) above and such repurchase; and provided further that
-------- -------
the holders of the Notes and the Bundled Securities, considered as a whole, will
receive an Internal Rate of Return of at least 25% after giving effect to all
payments in respect of the Notes and the Bundled Securities (other than Tax
Distributions, as defined in the Limited Liability Company Agreement) previously
and concurrently received by them (including as a payment for this purpose the
value of the remaining Bundled Securities to be retained at such time by such
holders as a group (valued at the Unit Price)).
(b) EXERCISE OF OPTION. The option of the Company to repurchase Bundled
------------------
Securities pursuant to Section 8(a) above may be exercised only once and must be
exercised, if at all, prior to or simultaneously with the applicable event
described in Section 8(a)(i) through 8(a)(vi). The Company shall give each
holder of Bundled Securities not less than 30 days' prior written notice of its
exercise of such option stating the date of the repurchase (which shall be no
later than the date of the applicable event described in Section 8(a)(i) through
8(a)(vi)) and providing in reasonable detail a
24
calculation of the number of Bundled Securities to be purchased and Internal
Rate of Return of such holders through the date of purchase. The price per
Common Unit to be paid by the Company upon exercise of such option shall be
$.01 per Class A Unit and Class B Unit. In the event that any holder of Bundled
Securities shall disagree with the Company's calculation of the number of Class
A Units and Class B Units to be purchased and the Internal Rate of Return, such
holder may, within 15 days of its receipt of the Company's notice and
calculation deliver a notice to the Company objecting to such calculation. If
the Company and such holder do not resolve such dispute within 10 days after
such holder has sent such notice of objection, such calculations shall be made
by an investment banking firm of recognized standing (which shall own no
Securities of and shall not be an Affiliate, Subsidiary or related Person of,
the Company) retained by the Company and reasonably acceptable to the Required
Holders.
9. CLAWBACK.
In the event that there occurs any transaction or series of transactions
which results in (i) the sale of all or substantially all of the Common Units
of the Company, (ii) the merger of the Company with another Person, (iii) the
sale of all or substantially all of the assets of the Company, or (iv) the
occurrence of a Public Market Date, and any of the foregoing occurs on a date
which is within nine months after a Call Repurchase Date, then each holder of
Bundled Securities which sold such Bundled Securities to the Company on such
Call Repurchase Date shall have the right to receive from the Company, within 5
days after the occurrence of such transaction or series of transactions, a cash
payment in an amount per unit of Bundled Securities so sold equal to the
difference, if any, between
(x) (A) the total amount of consideration received by the holders of the
Common Units of the Company divided by the number of Common Units
-------
subject to the sale of all or substantially all of the Common Units of
the Company, in the case of clause (i) above, or a merger of
the Company, in the case of clause (ii) above, (B) the total amount of
consideration received by the Company divided by the number of Common
-------
Units outstanding at the time of the sale of substantially all of the
assets of the Company, in the case of clause (iii) above, or (C) the
total amount of consideration received by the Company divided by the
-------
number of Common Units sold by the Company on the Public Market Date,
in the case of clause (iv) above, and
(y) the Repurchase Price received by such holder on such Call Repurchase
Date divided by the number of Bundled Securities purchased from such
-------
holder by the Company on such Call Repurchase Date.
In the event any non-cash consideration is received by the shareholders of the
Company or by the Company in any such transaction or series of transactions,
such non-cash consideration shall be valued at the fair market value thereof by
an investment banking
25
firm (which investment banking firm shall own no Securities of, and shall not be
an Affiliate, Subsidiary or a related Person of, the Company) of recognized
national standing retained by the Company and reasonably acceptable to the
Required Holders, and which value shall be determined without regard to the
absence of a liquid or ready market for such non-cash consideration.
10. DEFINED TERMS.
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
ADDITIONAL ISSUABLE UNITS ELECTION DATE -- Section 5.2(f).
ADDITIONAL ISSUABLE UNITS NUMBER -- with respect to any holder of Bundled
Securities electing to purchase Issuable Units pursuant to Section 5 hereof,
means the product of:
(a) the aggregate number of Issuable Units offered to be sold by the
Company; times
(b) the quotient of:
(i) the aggregate number of Issuable Units held on the Additional
Issuable Units Election Date by such holder; divided by
(ii) the aggregate number of Issuable Units outstanding on the
Additional Issuable Units Election Date;
in each case, prior to giving effect to the offering of such Issuable Units
giving rise to the rights of such holders to purchase additional Issuable
Units pursuant to Section 5 hereof.
For purposes of this definition, holders of Rights at any time shall be deemed
to be holders of the Common Units that are at such time issuable upon exercise
in full of such Rights, whether or not such holders are then entitled so to
exercise such Rights pursuant to the terms thereof.
ADDITIONAL SALE CLOSING DATE -- Section 5.2(d).
AFFILIATE -- means, at any time, a Person (other than a Subsidiary or
a Purchaser):
(a) that directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the
Company;
26
(b) that beneficially owns or holds five percent (5%) or more of the
Class A Units of the Company; or
(c) five percent (5%) or more of the Voting Stock (or in the case of a
Person that is not a corporation, five percent (5%) or more of the equity
interests) of which is beneficially owned or held by the Company or a
Subsidiary;
at such time.
As used in this definition,
control - means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
AGREEMENT -- the introductory paragraph hereof.
BOARD OF MANAGERS -- means the Board of Managers (as defined in Section 4.2
of the Limited Liability Company Agreement) of the Company or any committee
thereof that, in the instance, shall have the lawful power to exercise the power
and authority of such board OF directors.
BUNDLED SECURITIES - means the following:
(a) any Class B Units that have been issued by the Company; and
(b) any Class A Units into which such Class B Units shall have been
converted at any time; and
(c) any Securities issued or issuable in exchange for or in
replacement of any Securities referred to in clause (a) or clause (b)
above, including, without limitation, upon the occurrence of an
Incorporation Event.
BUNDLED SECURITY HOLDER -- means, at any time, a holder (other than the
Company or any Affiliate or Subsidiary) of the Bundled Securities at such time
(excluding any Bundled Securities held directly or indirectly by the Company or
any Affiliate or Subsidiary).
BUSINESS DAY -- means a day other than a Saturday, a Sunday or a day on
which banks in New York City are required or permitted by law (other than a
general banking moratorium or holiday for a period exceeding four (4)
consecutive days) to be closed.
CALL EFFECTIVE DATE -- means August 29, 2002.
CALL REPURCHASE DATE -- Section 2.2.
27
CIGNA AFFILIATE -- means CIGNA Investments and any Person controlled by,
controlling or under common control with, or advised with respect to its
investments by, CIGNA Investments.
CIGNA INVESTMENTS -- means CIGNA Investments, Inc.
CLASS A UNIT - defined in Section 1.2(1) of the Limited Liability Company
Agreement and includes any shares of Securities issued or issuable in exchange
for or in replacement of any Class A Units, including, without limitation, upon
the occurrence of an Incorporation Event.
CLASS B UNIT - defined in Section 1.2(1) of the Limited Liability Company
Agreement and includes any shares of Securities issued or issuable in exchange
for or in replacement of any Class B Units, including, without limitation, upon
the occurrence of an Incorporation Event.
CLOSING DATE -- means August 29, 1996.
COMMON UNITS -- means and includes:
(a) the Class A Units and Class B Units of the Company;
(b) any other equity securities of the Company which are not limited
to a fixed sum or a fixed percentage of par value in respect of
participation in dividends and distributions in liquidation; and
(c) any other Securities of the Company or any other Person that at
any time shall be issuable or shall have been issued in exchange for or in
replacement of Common Units, including, without limitation, upon the
occurrence of an Incorporation Event.
COMPANY -- the introductory paragraph hereof.
EXCHANGE ACT -- means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
EXCLUDED UNITS -- means and includes all Issuable Units issued:
(a) in connection with the conversion of Class B Units into Class A
Units;
(b) to employees of the Company as compensation or pursuant to any
employee benefit plan, so long as:
28
(i) after giving effect to the issuance of such Issuable Units,
the aggregate number of Issuable Units issued pursuant to this clause
(b) since the date of this Agreement and then remaining outstanding
does not exceed five percent (5%) of the number of Common Units
outstanding on a fully-diluted basis; and
(ii) no other holder of any Rights or any Securities convertible
or exchangeable into, Common Units or any other Securities of the
Company, shall have the right to any preemptive or similar rights in
respect of such issuance.
INCIDENTAL REGISTRATION -- Section 6.2 hereof.
INCORPORATION EVENT - defined in Section 11.2.
INITIAL MEMBERS -- means and includes the Class A Members (as defined in
Section 1.2(1) of the Limited Liability Company Agreement) as of the date hereof
and their respective successors and assigns.
INITIAL PUBLIC OFFERING DATE -- means the first date upon which Common
Units shall have been issued or sold pursuant to an underwritten public offering
(whether on a firm commitment basis or a best efforts basis if such best efforts
are successful) thereof pursuant to an effective registration statement filed
with the SEC pursuant to the Securities Act.
INITIATING HOLDERS -- means, at any time, the holders (other than the
Company or any Affiliate thereof) of at least fifty percent (50%) of the
Bundled Securities at such time (excluding any Bundled Securities held directly
or indirectly by the Company or any affiliate thereof).
INTERNAL RATE OF RETURN -- means the internal rate of return on the
aggregate amount initially paid by the Purchasers to the Company for the Senior
Notes and the Subordinated Notes. In calculating the amount required to provide
a 25% internal rate of return, each amount taken into account as part of such
computation (including principal, interest and Prepayment Premium, if any, paid
on and in respect of the Notes) shall be discounted back to the date of Closing
utilizing an annual discount rate of 25%. The amount sufficient to provide the
required return shall be that amount which, when so discounted and added to all
other amounts received in respect of the Notes and the Bundled Securities (other
than Tax Distributions, as defined in the Limited Liability Company Agreement)
so discounted equals the aggregate purchase price for the Notes and the Class B
Units issued on the date of Closing.
29
ISSUABLE UNIT -- means and includes at any time:
(a) an issued and outstanding Common Unit, and
(b) a Right and (without duplication) all Common Units issuable upon
exercise of such Right, in each case at such time.
For purposes of this definition of "Issuable Unit", a Right to acquire one
Common Unit shall constitute one Issuable Unit, and a Person shall be deemed to
own an Issuable Unit if such Person has a Right to acquire such Issuable Unit
whether or not such Right is exercisable at such time.
LIMITED LIABILITY COMPANY AGREEMENT - means that certain Limited Liability
Company Agreement dated as of August 29, 1996 by and among Mobil, the Management
Holders and the Purchasers.
MANAGEMENT HOLDERS -- the introductory paragraph hereof.
MOBIL - the introductory paragraph hereof.
NASDAQ -- means the National Association of Securities Dealers Automated
Quotation System.
NOTES -- defined in the Recitals.
NOTICE OF SALE -- Section 3.1(b).
OTHER MEMBERS -- means and includes, at any time, all holders of Issuable
Units at such time (other than the holders of Bundled Securities), including,
without limitation, the Initial Members.
PERSON -- means an individual, partnership, corporation, limited liability
company, trust, unincorporated organization, or a government or agency or
political subdivision there of.
PREPAYMENT PREMIUM - defined in the Securities Purchase Agreements.
PUBLIC MARKET DATE -- means the first day upon which at least thirty-five
percent (35%) (by number of Issuable Units) of the Common Units of the Company
have been sold by the Company and for the Company's own account in one or more
public offerings pursuant to a registration statement or registration statements
filed with the SEC pursuant to the provisions of the Securities Act.
30
PUBLIC OFFERING -- shall mean, with respect to any Issuable Units, any sale
in a transaction either registered under, or requiring registration under,
Section 5 of the Securities Act.
PURCHASERS -- the introductory paragraph hereof.
PUT EFFECTIVE DATE -- means August 29, 2001.
PUT NOTICE -- Section 1.1.
PUT OPTION PURCHASE PRICE -- Section 1.1.
PUT REPURCHASE DATE -- means, with respect to the exercise of any put
option pursuant to Section 1 of this Agreement, a date designated by the Company
which is not less than forty-five (45) but not more than sixty (60) days after
the date of the Put Notice relating to the exercise of such put option.
REGISTRABLE SECURITIES -- means, at any time:
(a) any Class B Units that have been issued by the Company;
(b) any Class A Units into which such Class B Units shall have been
converted at any time;
(c) any other Securities that are issuable in exchange for or in
replacement of any of the Class B Units or Class A Units referred to in
clause (a) or clause (b) above, including, without limitation, upon the
occurrence of an Incorporation Event.
As to any particular Registrable Securities once issued, such Securities shall
cease to be Registrable Securities:
(i) when a registration statement with respect to the sale of such
Securities shall have become effective under the Securities Act and such
Securities shall have been disposed of in accordance with such registration
statement;
(ii) when they shall have been distributed to the public pursuant to
Rule 144 (or any successor provision) under the Securities Act; or
(iii) when they shall have been otherwise transferred and subsequent
disposition of them shall not require registration or qualification under
the Securities Act or any similar state law then in force.
31
REGISTRATION -- means each Required Registration and each Incidental
Registration.
REGISTRATION EXPENSES -- means all expenses incident to the Company's
performance of or compliance with Section 6.1 through Section 6.5 hereof,
inclusive, including, without limitation, all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), expenses of printing certificates
for the Registrable Securities in a form eligible for deposit with Depositary
Trust Company, messenger and delivery expenses, internal expenses (including,
without limitation, all salaries and expenses of the Company's officers and
employees performing legal or accounting duties), and fees and disbursements of
counsel for the Company and its independent certified public accountants
(including the expenses of any management review, cold comfort letters or any
special audits required by or incident to such performance and compliance),
securities acts liability insurance (if the Company elects to obtain such
insurance), the reasonable fees and expenses of any special experts retained by
the Company in connection with such registration, fees and expenses of other
Persons retained by the Company and fees and expenses of counsel (including
local counsel) for holders of Registrable Securities, selected by the Requisite
Holders; but not including any underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities or fees and expenses of more
than one counsel representing the holders of Registrable Securities or any other
selling expenses, discounts or commissions incurred in connection with the sale
of Registrable Securities.
REPURCHASE NOTICE -- Section 2.1.
REPURCHASE PRICE -- Section 2.1.
REQUIRED HOLDERS -- means, at any time, the holders (other than the Company
or any Affiliate or Subsidiary) of at least sixty-six and two-thirds percent
(66-2/3%) of the Bundled Securities at such time (excluding any Bundled
Securities held directly or indirectly by the Company or any Affiliate or
Subsidiary).
REQUIRED INITIAL MEMBERS -- means, at any time, Initial Members (other than
the Company or any Subsidiary) holding at least fifty-one percent (51%) of those
Issuable Units held by the Initial Members at such time (excluding any Issuable
Units held directly or indirectly by the Company or any Subsidiary).
REQUIRED REGISTRATION -- Section 6.1(a).
REQUISITE HOLDERS -- means, with respect to any registration or proposed
registration of Registrable Securities pursuant to Section 6 hereof, any holder
or holders (other than the Company or any Affiliate or Subsidiary) holding at
least sixty-six and two-thirds percent (66-2/3%) of the shares of Registrable
Securities (excluding any
32
shares of Registrable Securities directly or indirectly held by the Company or
any Affiliate or Subsidiary) to be so registered.
RIGHT -- means and includes any warrant, option (including, without
limitation, options held by Mobil and the Management Holders) or other right to
acquire Common Units.
SEC -- means, at any time, the Securities and Exchange Commission or any
other federal agency at such time administering the Securities Act.
SECURITIES ACT -- means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
SECURITIES PURCHASE AGREEMENTS -- defined in the Recitals.
SECURITY -- means "security" as defined by Section 2(1) of the Securities
Act.
SENIOR NOTES -- defined in the Recitals.
SUBORDINATED NOTES -- defined in the Recitals.
SUBSIDIARY -- means, as to any Person, any corporation in which such Person
or one or more Subsidiaries of such Person or such Person and one or more
Subsidiaries of such Person owns sufficient voting securities to enable it or
them (as a group) ordinarily, in the absence of contingencies, to elect a
majority of the directors (or Persons performing similar functions) of such
corporation. The term "Subsidiary," as used herein without reference to any
Person, shall mean a Subsidiary of the Company.
UNIT PRICE -- means, with respect to any Common Unit, the fair value of a
Class A Unit as of a date that is within fifteen (15) days of the date as of
which the determination is to be made, determined by an investment banking firm
or securities rating service (which investment banking firm or securities rating
service shall own no Securities of, and shall not be an Affiliate, Subsidiary or
a related Person of, the Company) of recognized national standing retained by
the Company and reasonably acceptable to the Required Holders, and which
determination is made:
(a) under the assumption that all Rights have been exercised; and
(b) without regard to the absence of a liquid or ready market for
such Class A Unit.
For all purposes in this Agreement, the value of a Class B Unit shall be deemed
to be equal to the value of a Class A Unit.
33
VOTING STOCK -- means, with respect to any corporation, any shares of stock
of such corporation whose holders are entitled under ordinary circumstances to
vote for the election of directors of such corporation (irrespective of whether
at the time stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).
11. MISCELLANEOUS.
11.1 CONVERSION TO CORPORATION FORM.
(a) On or before the Initial Public Offering Date, the Company shall
change its form of business entity to a corporation taxed in accordance
with Subchapter C of the Internal Revenue Code.
(b) Upon the conversion of the Company's form of business entity as
set forth in clause (a) above, the Company (or the successor entity
thereto) shall issue common stock to the holders of Class A Units and Class
B Units (having substantially the same voting rights as the Class A Units
and Class B Units, respectively) in exchange for and in replacement of the
Class A Units and Class B Units held by such holders.
11.2 BINDING EFFECT; INCORPORATION, ETC. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. In the event that the Company (a) changes its
form of business entity to a corporation (an "Incorporation Event") or otherwise
changes its form of business entity, (b) consolidates or merges with any other
Person, (c) sells, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets (whether now owned or hereafter acquired) in a
single transaction or series of transactions to any Person, the Company shall
cause any such Person or other successor to the Company to agree in writing to
be bound by all the provisions of this Agreement.
11.3 NOTICES. All written communications provided for hereunder shall be
sent by United States mail (registered or certified mail) or nationwide
overnight delivery service (with charges prepaid), or by facsimile, delivery
confirmed with a copy by first class mail or overnight courier (with charges
prepaid), and:
(a) if to the Company, at:
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
34
with a copy to:
Xxxxx Xxxxxx, Esq.
Xxxxx & Xxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Facsimile: (000) 000-0000
or such other address as the Company shall designate to each holder of Bundled
Securities in writing:
(b) if to any Initial Member, if the address for such Initial Member
is set forth in Schedule A hereto, then at the address set forth therein
for such Initial Member or, if the address for such holder is not set forth
therein, then at the address provided to the Company by such holder or such
other address as such holder shall designate to the Company in writing; and
(c) if to any holder of Bundled Securities, if such holder is a
Purchaser, then at the address set forth in Schedule A hereto for such
Purchaser, or, if such holder is not a Purchaser, then at the address
provided to the Company by such holder or such other address as such holder
shall designate to the Company in writing.
The Company, upon the written request of any holder of Bundled Securities or
Initial Member, will promptly supply such holder with a list of the names and
addresses of each party hereto at such time.
11.4 AMENDMENTS AND WAIVERS.
(a) The provisions of Section 1, Section 2, Section 5 and Section 10
hereof, and of any term defined in Section 8 hereof as used in any such
Section, may be amended, modified or supplemented, and compliance with any
such Section hereof waived, only by a writing duly executed by or on behalf
of each of the Bundled Security Holders and the Company.
(b) the provisions of Section 6 hereof, and of any term defined in
Section 8 hereof as used in Section 6 hereof, may be amended, modified or
supplemented only by a writing duly executed by or on behalf of the
Required Holders and the Company; provided, however, that compliance by the
Company with the provisions of Section 6 hereof, with respect to any
particular registration, may be waived by the Requisite Holders; and
provided, further, that no amendment, modification or supplement of the
provisions of Section 6.1(d) or Section 6.2(c) hereof which adversely
affect the rights of any Initial Member shall be made without the consent
of such Initial Member;
35
(c) the provisions of Section 3 and Section 7 hereof, and of any term
defined in Section 8 hereof as used in any such Section, may be amended,
modified or supplemented, and compliance with any such Section hereof
waived, only by a writing duly executed by or on behalf of the Required
Holders, the Required Initial Members and the Company; provided, however,
that any amendment, modification or supplement of any such provisions or
definitions that change the relative rights among the Initial Members shall
require the consent of each Initial Member; and
(d) the provisions of Section 4 hereof, and of any term defined in
Section 8 hereof as used in Section 4 hereof, may be amended, modified or
supplemented, and compliance with any such Section hereof waived, only by
a writing duly executed by or on behalf of the holders of Bundled
Securities which are CIGNA affiliates, the Required Initial Members and the
Company.
11.5 EXPIRATION OF AGREEMENT. All provisions of this Agreement shall
terminate with respect to any Issuable Units which are sold in a Public
Offering.
11.6 AVAILABILITY OF INFORMATION. At any time that any class of the Common
Units is registered under section 12(b) or section 12(g) of the Exchange Act,
the Company will comply with the reporting requirements of sections 13 and 15(d)
of the Exchange Act (whether or not it shall be required to do so pursuant to
such Sections) and will comply with all other public information reporting
requirements of the SEC from time to time in effect. In addition, the Company
shall file such reports and information, and shall make available to the public
and to the holders of Bundled Securities such information, as shall be necessary
to permit such holders to offer and sell Issuable Units pursuant to the
provisions of Rules 144 and 144A promulgated under the Securities Act. The
Company will also cooperate with each such holder in supplying such information
as may be necessary for such holder to complete and file any information
reporting forms presently or hereafter required by the SEC as a condition to the
availability of an exemption from the registration provisions of the
Securities Act in connection with the sale of any Issuable Units. The Company
will furnish to each such holder, promptly upon their becoming available, copies
of all financial statements, reports, notices and proxy statements sent or made
available generally by the Company to its holders of equity securities, and
copies of all regular and periodic reports and all registration statements and
prospectuses filed by the Company with any securities exchange or with the SEC.
11.7 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
INTERNAL LAW OF THE STATE OF NEW YORK.
11.8 JURISDICTION; JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW
YORK STATE COURT IN ANY ACTION OR
36
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER
DOCUMENTS AND INSTRUMENTS CONTEMPLATED HEREBY AND EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. NONE OF THE PARTIES
HERETO SHALL ALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR
OTHER LITIGATION PROCEDURE BASED UPON OR ARISING OUT OF OR OTHERWISE RELATED TO
THIS AGREEMENT AND EACH OF THE PARTIES HERETO HEREBY WAIVES ANY AND ALL RIGHT TO
ANY SUCH JURY TRIAL AND ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM
NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY SUCH PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 9.6.
11.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
11.10 DESCRIPTIVE HEADINGS. Descriptive headings of the several sections
of this Agreement are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
11.11 SEVERABILITY. The fact that any given provision of this Agreement
is found to be unenforceable, void or voidable under the laws of any
jurisdiction shall not effect the validity of the remaining provisions of this
Agreement in such jurisdiction, and shall not effect the enforceability of the
entire Agreement under the laws of any other jurisdiction.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
TREX COMPANY, LLC
By: /s/ X. X. Xxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxx
-------------------------
Title: C.E.O.
------------------------
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY, on behalf of one or
more separate accounts
By: CIGNA Investments, Inc.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Name: XXXXX X. XXXXXXXX
---------------------------
Title: MANAGING DIRECTOR
--------------------------
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY
By: CIGNA Investments, Inc.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Name: XXXXX X. XXXXXXXX
---------------------------
Title: MANAGING DIRECTOR
--------------------------
S-1
LIFE INSURANCE COMPANY OF NORTH
AMERICA
By: CIGNA Investments, Inc.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Name: XXXXX X. XXXXXXXX
---------------------------
Title: MANAGING DIRECTOR
--------------------------
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxxxxx
/s/ Xxxxxx X. Xxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxx X. Ferrari
-------------------------------
Xxxxxx X. Ferrari
S-2
AMENDMENT TO MEMBERS' AGREEMENT
THIS AMENDMENT dated as of June 15, 1998 to the Members' Agreement dated as
of August 29, 1996 is between TREX Company, LLC, a Delaware limited liability
company (the "Company") and each of the persons listed on Schedule 1 hereto (the
"Members").
RECITALS:
A. The Company has heretofore entered into that certain Securities Purchase
Agreement dated as of August 29, 1996, as amended (the "Securities Purchase
Agreement") with each of Connecticut General Life Insurance Company, Connecticut
General Life insurance Company, on behalf of one or more separate accounts, and
Life Insurance Company of North America. The Company has heretofore issued
$24,250,000 of its 10% Senior Notes due August 30, 2003, $5,000,000 of its 12%
Subordinated Notes due August 30, 2004, and 1,000 of its Class B Units pursuant
to the Securities Purchase Agreement.
B. The Company has heretofore entered into that certain Members' Agreement
dated as of August 29, 1996 (the "Members' Agreement") with each of Connecticut
General Life Insurance Company, Connecticut General Life Insurance Company, on
behalf of one or more separate accounts, Life Insurance Company of North
America, Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxxxxx, Xxxxxx X. Marheny and Xxxxxx
X. Ferrari.
C. The Company and the Members now desire to amend certain provisions of
the Members' Agreement in the respects, but only in the respects, hereinafter
set forth.
NOW, THEREFORE, the Company and the Members, in consideration of good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, do hereby agree as follows:
I. The definition of "Public Market Date" in Section 10 of the Members'
Agreement is hereby amended by deleting such definition in its entirety and
replacing it with the following;
"Public Market Date - means the first day upon which Common Units of the
Company have been sold by the Company and for the Company's own account in
one or more public offerings pursuant to a registration statement or
registration statements filed with the SEC pursuant to the provisions of
the Securities Act, and the aggregate gross cash proceeds received by the
Company and for the Company's own account as a result of such sale or sales
equals or exceeds $40,000,000."
This Amendment shall be construed in connection with and as part of the
Members' Agreement, and except as expressly amended by this agreement, all
terms, conditions, and covenants contained in the Members' Agreement are hereby
ratified and shall be and remain in full force and effect. Any terms used but
not defined herein, shall have the meanings ascribed thereto in the Members'
Agreement.
1
Any and all notices, requests certificates and other instruments executed
and delivered after the execution and delivery of this amendment may refer to
the Members' Agreement without making specific reference to this amendment but
nevertheless all such references shall be deemed to include this amendment
unless the context otherwise requires.
This Amendment shall be governed by and construed in accordance with the
law of the State of New York excluding choice-of-law principles of the law of
such State that would require the application of the laws of a jurisdiction
other than such State.
This Amendment may be executed in any number or counterparts, each executed
counterpart constituting an original, but all together only one Amendment.
IN WITNESS WHEREOF, the Company and the Members have caused this
instrument to be executed, all as of the day and year first above written.
THE COMPANY: TREX COMPANY, LLC
By /s/ X.X. Xxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: CFO
THE MEMBERS: CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By CIGNA Investments, Inc.
By /s/ Xxxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
ON BEHALF OF ONE OR MORE SEPARATE ACCOUNTS
By CIGNA Investments, Inc.
By /s/ Xxxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
2
LIFE INSURANCE COMPANY OF NORTH AMERICA
By CIGNA Investments, Inc.
By /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By Lincoln Investment Management, Inc.,
Its Attorney In Fact
By /s/
------------------------------
Name:
Title:
/s/ X. X. Xxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxxxxx
/s/ Xxxxxx X. Xxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxx X. Ferrari
-------------------------------
Xxxxxx X. Ferrari
3
SCHEDULE 1
Members
Connecticut General Life Insurance Company
Connecticut General Life Insurance Company, on behalf of one or more separate
accounts
Life Insurance Company of North America
The Lincoln National Life Insurance Company
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxx X. Ferrari
4
