EXHIBIT 4.2
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SHAREHOLDERS' AGREEMENT
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Dated as of
March 30, 1994
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TABLE OF CONTENTS
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Page
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ARTICLE I
CERTAIN DEFINITIONS...................................... 1
ARTICLE II
TRANSFER OF SHARES....................................... 4
Section 2.1. Transfer to Related Parties........... 4
Section 2.2. Transfers to Others................... 5
Section 2.3. MCA Right of First Refusal............ 5
Section 2.4. Individual Shareholder Right
of First Refusal.................... 9
Section 2.5. Legend on Certificates................ 10
Section 2.6. No Other Transfers; Termination
of Restrictions..................... 10
ARTICLE III
REGISTRATION OF COMMON STOCK............................. 10
Section 3.1. Piggyback Registration Rights......... 10
Section 3.2. Demand Registration Rights............ 12
Section 3.3. Provision of Information.............. 16
Section 3.4. New Certificates...................... 16
Section 3.5. Indemnification....................... 17
Section 3.6. Standby............................... 20
Section 3.7. Assignment............................ 20
ARTICLE IV
CORPORATE GOVERNANCE..................................... 20
Section 4.1. Representation on the Board
and Committees...................... 20
Section 4.2. Voting................................ 22
Section 4.3. Corporate Actions..................... 22
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ARTICLE V
CERTIFICATE OF INCORPORATION............................. 24
Section 5.1. Certificate of Incorporation.......... 24
ARTICLE VI
MISCELLANEOUS............................................ 24
Section 6.1. Survival of Agreement; Term........... 24
Section 6.2. Directors' and Officers' Insurance
and Indemnification................. 24
Section 6.3. Notices............................... 25
Section 6.4. Further Assurances.................... 26
Section 6.5. Binding Effect........................ 26
Section 6.6. Complete Agreement.................... 26
Section 6.7. Counterparts.......................... 26
Section 6.8. Headings.............................. 26
Section 6.9. Conflict with Bylaws.................. 26
Section 6.10. Governing Law......................... 26
Section 6.11. Injunctive Relief..................... 27
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SHAREHOLDERS' AGREEMENT
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This Shareholders' Agreement, dated March 30, 1994, is by and among
INTERPLAY PRODUCTIONS, INC., a California corporation (the "Company"), MCA INC.,
a Delaware corporation ("MCA"), and Xxxxx Xxxxx (the "Individual Shareholder"
and with MCA, the "Shareholders").
WITNESSETH:
WHEREAS, the Company, MCA and the Individual Shareholder have entered
into a Stock Purchase Agreement, dated January 25, 1994, pursuant to which,
among other things, MCA is purchasing from the Company and the Individual
Shareholder an aggregate of 3,041,495 shares of Common Stock, no par value, of
the Company;
WHEREAS, pursuant to and as a condition to the closing of the Stock
Purchase Agreement, the Company, MCA and the Individual Shareholder have agreed
to enter into this Shareholders' Agreement; and
WHEREAS, the Company, MCA and the Individual Shareholder desire to
enter into this Shareholders' Agreement to provide certain rights and
obligations among them;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants and provisions contained herein, and other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Shareholders' Agreement, the terms defined below shall
have the respective meanings hereinafter specified. Whenever used in this
Shareholders' Agreement, any noun or pronoun shall be deemed to include both the
singular and plural and to cover all genders. Unless otherwise specified, (a)
the terms "hereof," "herein" and similar terms refer to this Shareholders'
Agreement as a whole and (b) references herein to Sections refer to Sections of
this Shareholders' Agreement.
"Board" shall have the meaning specified in Section 4.1.
"Common Stock" shall mean the Common Stock of the Company, no par
value.
"Company" shall mean Interplay Productions, Inc., a California
corporation.
"Control" (including the terms "controlling," "controlled by" and
"under common control with") means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
corporation partnership or other entity (including without limitation, the power
to direct the voting of any securities held by such corporation, partnership or
other entity), whether through the ownership of the voting securities of such
corporation, partnership or other entity, by contract, or otherwise, unless the
context indicates otherwise; provided, however, that the ownership of fifty
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percent (50%) or more of the voting securities of such corporation, partnership
or other entity shall in any event be deemed to constitute control.
"Employee Options" shall have the meaning specified in Section 4.3(a)
of the Stock Purchase Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Incentive Plan" shall have the meaning specified in Section 4.4(ii).
"Individual Shareholder" shall have the meaning specified in the
preamble to this Shareholders' Agreement, and shall include his Permitted
Transferees.
"MCA" shall mean MCA, INC., a Delaware corporation.
"MCA Designees" shall have the meaning specified in Section 4.2.
"MCA Options" shall mean the options for the purchase of shares of
Common Stock granted pursuant to the Option Agreement.
"MCA Shareholders" shall mean MCA and its Permitted Transferees.
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"Option Agreement" shall mean the Option Agreement, dated the date
hereof, by and among MCA, the Company and the Shareholders listed therein.
"Permitted Transferees" shall mean individuals or entities to whom or
to which shares of Common Stock are transferred in accordance with Section 2.1
hereof.
"Person" shall have the meaning specified in Section 2.1(b).
"Proposal" shall have the meaning specified in Section 2.3.
"Public Offering" shall mean the completion of a sale by the Company
of shares of Common Stock pursuant to an effective registration statement under
the Securities Act.
"Purchaser" shall have the meaning specified in Section 2.3.
"Purchaser Information" shall have the meaning specified in Section
2.3.
"Registration Statement" shall have the meaning specified in Section
3.1.
"Restricted Securities" shall have the meaning specified in Section
3.1.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
"Shareholders" shall mean MCA and the Individual Shareholder, and,
subject to the transfer restrictions set forth herein, transferees which acquire
Common Stock in accordance with this Shareholders' Agreement, from time to time,
and are required by this Shareholders' Agreement to agree to be bound, and agree
to be bound, by the terms and conditions hereof (as amended). The term
"Shareholder" shall mean any one of the Shareholders and, in the case of a
Shareholder who is a natural person, the term "Shareholder" shall also include
such Shareholder's legal representatives, executors or administrators when the
context so requires.
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"Stock Purchase Agreement" shall mean the stock purchase agreement,
dated January 25, 1994, by and among the Company, MCA and the Individual
Shareholder.
"Third Party" shall have the meaning set forth in Section 2.3(b)
hereof.
"Third-Party Investment" shall have the meaning set forth in Section
2.3(b) hereof.
"Third-Party Shares" shall have the meaning set forth in Section
2.3(b) hereof.
ARTICLE II
TRANSFER OF SHARES
Section 2.1. Transfer to Related Parties. (a) The Individual
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Shareholder may transfer shares of Common Stock to a spouse or child of the
Individual Shareholder, to a trust for the benefit of a spouse or child of such
Individual Shareholder or as required by court order, and, upon the death of an
Individual Shareholder, such Individual Shareholder's executors, administrators
or legal representatives may transfer shares of the Common Stock to the
Individual Shareholder's heirs or legatees without complying with the
restrictions of Section 2.3 of this Shareholders' Agreement, so long as the
transferee agrees in writing to be bound by the terms and conditions of this
Shareholders' Agreement, as amended from time to time.
(b) The MCA Shareholders may transfer shares of Common Stock to any
corporation, partnership or other person or entity (collectively, a "Person"),
provided (i) the transferee agrees in writing to be bound by the terms and
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conditions of this Shareholders' Agreement, as amended from time to time, and
(ii) one of the following conditions has been met: (x) MCA owns, directly or
indirectly, 100% of the outstanding capital stock of the transferee; (y) MCA
owns, directly or indirectly, 50% or more of the outstanding capital stock of
the transferee and MCA has given the Company 150 days prior notice of any such
transfer; or (z) the transfer is made to a transferee controlled by MCA in
connection with a corporate reorganization of MCA involving more than $1 billion
in assets of MCA. The provisions of this Section 2.1(b) shall apply for a
maximum period of two years from and after the date hereof and shall cease to
restrict transfers by MCA of any of the shares of Common Stock after the earlier
of the second anniversary of the date hereof or the date the Company is first
subject to the periodic reporting requirements under the Exchange Act; provided,
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however,
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that nothing in this Section 2.1(b) shall affect the voting restrictions and the
rights of first refusal set forth in this Agreement. The MCA Shareholders hereby
agree that, before MCA divests itself of control over any transferee hereunder,
the MCA Shareholders shall first transfer all of the shares of Common Stock
beneficially owned by such transferee to another corporation, partnership or
other entity pursuant to the first sentence of this Section 2.1(b).
Section 2.2. Transfers to Others. (a) Following the earlier of the
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date the Company is first subject to the periodic reporting requirements under
the Exchange Act or two (2) years from the date hereof, in addition to transfers
permitted by Section 2.1, the Individual Shareholder may transfer shares of
Common Stock to any entity or individual, upon complying with the restrictions
of Section 2.3 of this Shareholders' Agreement, so long as such transfer is
accompanied by an opinion of counsel, satisfactory to the Company and MCA, that
such transfer may be effected without registration under the Securities Act and
so long as such transferee agrees in writing to be bound by the terms and
conditions of this Shareholders' Agreement, as amended from time to time.
(b) Following the earlier of the date the Company is first subject to
the periodic reporting requirements under the Exchange Act or two (2) years from
the date hereof, in addition to transfers permitted by Section 2.1, any MCA
Shareholder may transfer shares of Common Stock upon complying with the
restrictions set forth in Section 2.4 of this Shareholders' Agreement (i)
pursuant to a Registration Statement as contemplated by Article III or (ii)
pursuant to an opinion of counsel, satisfactory to the Company and MCA, that
such transfer may be effected without registration under the Securities Act, so
long as such transferee in the case of the foregoing clause (ii) agrees in
writing to be bound by the terms and conditions of this Shareholders' Agreement,
as amended from time to time.
Section 2.3. MCA Right of First Refusal. (a) For as long as the MCA
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Shareholders own 10% of the then outstanding Common Stock and except for the
transfer of shares of Common Stock (i) from the Individual Shareholder in
connection with the exercise of, and in accordance with the terms of, the MCA
Option, (ii) by the Individual Shareholder pursuant to Section 2.1, or (iii)
pursuant to subsection (b) of this Section 2.3, the Individual Shareholder may
not sell, give or transfer any shares of Common Stock to any other person or
entity unless (a) the Individual Shareholder shall have received a written offer
(the "Proposal") from a bona fide proposed purchaser of such shares (the
"Purchaser"), which Proposal shall remain open and
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available for acceptance for at least thirty (30) days and provide for the sale
of a designated number of shares to the Purchaser (subject only to the rights of
MCA under this Section 2.3) at a sales price consisting solely of cash at
closing, and containing the written agreement of the Purchaser to be bound by
the terms and conditions of this Shareholders' Agreement, as amended from time
to time, and (b) the Individual Shareholder shall have first offered such shares
of Common Stock to MCA in writing at the price and on the terms specified in the
Proposal. Each Proposal shall include the following information ("Purchaser
Information"): the name of the Purchaser; the identity of each holder of 10% or
more of the equity or voting power of the Purchaser; a description of any
agreement or understanding, written or oral, with any Shareholder, the Company,
or any affiliate of the Company; and any other information reasonably requested
by MCA. From and after the second anniversary of the date hereof, if MCA shall
not have exercised each of the MCA Options, MCA shall not be permitted to
exercise its right of first refusal under this Section 2.3 unless the price per
share at which the Individual Shareholder proposes to sell Common Stock shall be
less than $9 per share (adjusted to give effect to any stock splits, reverse
stock splits, reclassifications or other similar events occurring after the date
hereof), in which case MCA's rights of first refusal under this Section 2.3
shall continue to apply to such proposed sale. Subject to the first sentence of
this Section 2.3, the right of first refusal granted to MCA hereunder shall not
be transferable or assignable by MCA and may be retained by MCA notwithstanding
the transfer of Common Stock by MCA hereunder.
The offer to MCA shall be open for a period of fifteen (15) calendar
days from the date thereof. No exercise of a right of first refusal pursuant to
this section shall be effective unless such exercise shall be for the entire
number of shares to be sold, given or transferred.
Unless MCA elects to accept such offer as provided herein, the
Individual Shareholder may sell all (but not less than all) of such shares of
Common Stock to the Purchaser in accordance with the terms of the Proposal,
provided that such sale is made within one hundred twenty (120) days of the date
of the Proposal. If such sale is not consummated within such 120-day period, the
restrictions provided for herein shall again become effective, and no sale,
transfer, or assignment of such Common Stock may be made thereafter without
again offering the same to MCA in accordance with this Shareholders' Agreement.
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The Individual Shareholder may pledge or otherwise encumber his Common
Stock to secure indebtedness of the Individual Shareholder owing to a bank or
other financial institution approved in writing by MCA, which approval shall not
be unreasonably withheld; provided, however, that any transferee pursuant to
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this paragraph shall acquire only a security interest in the Common Stock and
the Individual Shareholder shall retain all voting rights to such Stock while
pledged or encumbered, and title to such Common Stock shall not pass to such
transferee until he or it has first offered such Common Stock to MCA at fair
market value. For purposes of this section, fair market value is to be
determined by an appraiser selected by MCA and approved by the Individual
Shareholder. Any appraiser selected hereto shall be a nationally recognized
investment banking firm. The fees of any such appraiser are to be borne by the
Individual Shareholder.
Notwithstanding the foregoing, MCA shall not have any right of first
refusal with respect to (i) shares of Common Stock sold by the Individual
Shareholder pursuant to Rule 144 under the Securities Act which are sold within
the volume limitations set forth in Rule 144(e) or pursuant to Rule 144(k)
(provided that any such transferee shall not be bound by the terms of this
Shareholders' Agreement) or (ii) shares of Common Stock sold pursuant to the
provisions of subsection (b) of this Section 2.3.
(b) Notwithstanding the provisions of subsection (a) of this Section
2.3, for a period ending on the earlier of (x) the second anniversary of the
date hereof and (y) the date of the Company's initial Public Offering, MCA shall
not have a right of first refusal in respect of a single investment in shares of
Common Stock of the Company by one or more third parties (the "Third Party
Investment"), which is not, prior to such investment, affiliated with the
Company or the Individual Shareholder (the "Third Party"), so long as the Third-
Party Investment meets each of the following conditions:
(i) the aggregate number of shares of Common Stock to be purchased by
the Third Party (the "Third-Party Shares") does not exceed fifteen (15%)
percent of the fully diluted outstanding shares of Common Stock of the
Company (the term "fully diluted" being used herein to mean after giving
effect to (A) the exercise of all then outstanding options, warrants or
other then-existing rights to purchase Common Stock, whether or not
immediately exercisable, (B) the issuance of shares of Common Stock to MCA
and (C) consummation of the Third-Party Investment);
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(ii) the price per share paid by the Third-Party for each of the
Third-Party Shares is not less than $8.22 in cash per share; and
(iii) the Third-Party is not one of the parties listed on Annex A
hereto.
The Individual Shareholder, the Company and MCA further covenant and
agree that (i) shares of Common Stock transferred to the Third Party in respect
of the first $14 million of the net proceeds to be paid in connection with the
Third Party Investment may be sold to the Third Party by the Individual
Shareholder and that the proceeds of any such sale may be retained by the
Individual Shareholder; (ii) shares of Common Stock transferred to the Third
Party in respect of the next $2 million of the net proceeds to be paid in
connection with the Third Party Investment shall be issued and sold by the
Company and that the proceeds of any such sale shall be retained by the Company;
and (iii) shares of Common Stock to be issued or transferred, as the case may
be, to the Third Party in respect of any amount in excess of $16 million to be
paid in connection with the Third Party Investment shall be issued or
transferred and sold by the Company and the Individual Shareholder,
respectively, in equal proportions and that the one half of the proceeds of any
such sale shall be retained by each of the Company and the Individual
Shareholder.
In connection with the Third-Party Investment, the Company shall be
permitted to grant to the Third-Party Investor (i) not more than one (1) seat on
the Company's Board of Directors; (ii) piggy-back registration rights which
shall be pari passu with those granted to MCA; and (iii) not more than one (1)
demand registration right, which shall not be exercisable prior to the second
anniversary of the date of this Agreement.
In the event of any issuance and sale of shares of Common Stock by the
Company pursuant to a Third-Party Investment, the Company and the Individual
Shareholder agree that, simultaneously with the consummation of any Third-Party
Investment, the Company shall issue to MCA, in exchange for the payment by MCA
of the aggregate par value, if any, of the Common Stock to be issued to MCA
pursuant to this paragraph, such number of shares of Common Stock so that MCA's
percentage ownership of the fully diluted outstanding Common Stock following the
consummation of the Third-Party Investment is identical to its percentage
ownership of the fully diluted outstanding Common Stock immediately prior to
such consummation.
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Section 2.4. Individual Shareholder Right of First Refusal. For so
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long as the Individual Shareholder owns 10% or more of the then outstanding
Common Stock and except for the transfer of shares of Common Stock by MCA
pursuant to Section 2.1, MCA may not sell, give or transfer any shares of Common
Stock to any other person or entity unless (a) MCA shall have received a
Proposal from a Purchaser, which Proposal shall remain open and available for
acceptance for at least thirty (30) days and provide for the sale of a
designated number of shares to the Purchaser (subject only to the rights of the
Individual Shareholder under this Section 2.4) at a sales price consisting
solely of cash at closing, and containing the written agreement of the Purchaser
to be bound by the terms and conditions of this Shareholders' Agreement, as
amended from time to time, and (b) MCA shall have first offered such shares of
Common Stock to the Individual Shareholder in writing at the price and on the
terms specified in the Proposal. Each Proposal shall include the Purchaser
Information and any other information reasonably requested by the Individual
Shareholder. For purposes of this paragraph, "MCA" shall be deemed to include
the MCA Shareholders.
The offer to the Individual Shareholder shall be open for a period of
fifteen (15) calendar days from the date thereof. No exercise of a right of
first refusal pursuant to this section shall be effective unless such exercise
shall be for the entire number of shares to be sold, given or transferred.
Unless the Individual Shareholder elects to accept such offer as
provided herein, MCA may sell all (but not less than all) of such shares of
Common Stock to the Purchaser in accordance with the terms of the Proposal,
provided that such sale is made within one hundred twenty (120) days of the date
of the Proposal. If such sale is not consummated within such 120-day period, the
restrictions provided for herein shall again become effective, and no sale,
transfer, or assignment of such Common Stock may be made thereafter without
again offering the same to the Individual Shareholder in accordance with this
Shareholders' Agreement.
MCA may pledge or otherwise encumber its Common Stock to secure
indebtedness of MCA or any of its affiliates; provided, however, that any
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transferee pursuant to this paragraph shall acquire only a security interest in
the Common Stock and MCA shall retain all voting rights to such Stock while
pledged or encumbered, and title to such Common Stock shall not pass to such
transferee until he or it has first offered such Common Stock to the Individual
Shareholder at fair market value. For purposes of this section, fair market
value is to be determined
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by an appraiser selected by the Individual Shareholder and approved by MCA. Any
appraiser selected hereto shall be a nationally recognized investment banking
firm. The fees of any such appraiser are to be borne by MCA.
If MCA proposes to sell all or substantially all of its Common Stock
in a transaction which would give rise to the Individual Shareholder's right of
first refusal under this Section 2.4, then the Individual Shareholder shall have
the right to assign his right of first refusal hereunder to the Company.
Section 2.5. Legend on Certificates. Each outstanding certificate
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representing shares of Common Stock beneficially owned by any Shareholder shall
bear an endorsement reading substantially as follows:
The transfer, sale, gift, pledge or encumbrance of the securities
represented by this certificate and the voting rights related thereto
(including the grant of an irrevocable proxy) are subject to the
provisions of an agreement dated March 28, 1994, among the Interplay
Productions, Inc. (the "Company"), MCA Inc. and the Individual
Shareholder (as defined therein), a copy of which is on file at the
principal executive office of the Company.
Section 2.6. No Other Transfers; Termination of Restrictions. Except
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as permitted by this Article II, none of the Shareholders shall transfer any
shares of Common Stock, and any purported transfer not permitted by this Article
II shall be void. The provisions of this Article II with respect to shares of
Common Stock shall apply equally to any rights or options to purchase Common
Stock or securities convertible into or exchangeable for Common Stock.
ARTICLE III
REGISTRATION OF COMMON STOCK
Section 3.1. Piggyback Registration Rights. If at any time while the
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Common Stock (shares of Common Stock and any securities issued as a dividend
thereon, or in exchange therefor, hereinafter in this Article III referred to as
"Restricted Securities") is outstanding, the Company proposes to file a
registration statement under the Securities Act (other than on Forms S-4 or S-8
under the Securities Act or their equivalent), with respect to any shares of
Common Stock (a "Registration Statement"), it will give written notice,
specifying the form and manner of, and all other relevant facts involved in,
such
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proposed registration (including without limitation, the identity of the
managing underwriter and the estimated price (net to the seller of any
underwriting commissions and discounts) at which the Restricted Securities are
expected to be sold), to each of the Shareholders that hold Restricted
Securities at least thirty (30) days prior to the date of filing of the proposed
Registration Statement. Upon written request by any Shareholder within fifteen
(15) days after receipt of such notice, the Company will include in the
securities transaction to be registered by such Registration Statement all of
the Restricted Securities of the Company that such Shareholder desires to sell,
subject to the following:
(a) The Company will pay the expense of such registration, except
that each holder of Restricted Securities that are included in such
registration shall pay all underwriting discounts and commissions
applicable to his or its Restricted Securities and all legal fees and
expenses of his or its counsel, if any; and
(b) If such Registration Statement is for a prospective underwritten
offering, the holder agrees to sell his or its Restricted Securities, if
the Company so requests, on the same basis as the other Restricted
Securities being sold under such Registration Statement, including
executing a customary underwriting agreement and providing customary
representations and warranties thereunder.
The Company may withdraw any Registration Statement before it becomes
effective or postpone the offering of Restricted Securities contemplated by such
Registration Statement without any obligation to the holder of any Restricted
Securities.
If such Registration Statement involves an underwritten offering by
the Company and the managing underwriter advises the Company in writing that, in
its opinion, the number of shares of Common Stock proposed to be included in
such Registration Statement exceeds the number which can be sold in such
offering without materially and adversely affecting the successful marketing
thereof, the Company will include in such Registration Statement to the extent
of the number of shares of Common Stock which the Company is so advised can be
sold in such offering without such material adverse effect (i) first, the shares
of Common Stock proposed by the Company to be sold for its own account; (ii)
second, the shares of Common Stock proposed to be registered by other
shareholders of the Company pursuant to a written demand registration right; and
(iii) third, other shares of Common Stock requested to be included in such
Registration Statement pro rata among all Shareholders and
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other Persons with piggyback registration rights both requesting and entitled to
such registration on the basis of the number of such securities requested to be
included by such Shareholders.
Section 3.2. Demand Registration Rights. (a) At any time after the
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second anniversary of the date hereof, the MCA Shareholders or the Individual
Shareholder may demand, by giving the notice set forth below, that the Company
file a registration statement under the Securities Act with respect to at least
1,000,000 shares of the Common Stock beneficially owned by the MCA Shareholders
or the Individual Shareholder; provided, however, that (x) the MCA Shareholders
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shall initially be entitled to two (2) demand registrations pursuant to this
Section 3.2 and shall be entitled to one (1) additional demand registration for
each exercise by MCA of the MCA Options under the Option Agreement and (y) the
Individual Shareholder shall be entitled to a total of four (4) demand
registrations pursuant to this Section 3.2; and provided, further, that the MCA
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Shareholders nor the Individual Shareholder shall be entitled to more than one
(1) demand registration per calendar year. The notice shall:
(i) be given in writing by an MCA Shareholder or the Individual
Shareholder;
(ii) set forth the number of shares of Common Stock subject to
registration;
(iii) be accompanied by an opinion of counsel to such MCA Shareholder
or the Individual Shareholder that the sale of the number of shares of
Common Stock proposed, and on the terms and to the prospective purchasers
proposed, must be registered under the Securities Act; and
(iv) request that the Company effect the registration of the sale of
such shares.
The MCA Shareholders or the Individual Shareholder desiring to sell
the shares of Common Stock described in the notice may not offer such shares
until the registration of the sale of such shares has been effected (unless such
registration is withdrawn or abandoned), and the consummation of any sale
pursuant thereto shall be subject to prior compliance by such MCA Shareholders
or the Individual Shareholder with Sections 2.4 and 2.3 hereof, respectively
(unless the provisions of either Section 2.4 or Section 2.3 are no longer in
effect). For purposes of this Section 3.2, if the sale of Common Stock hereunder
is underwritten, the MCA Shareholders or the Individual Shareholder shall
satisfy their respective obligations under
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Section 2.4 or Section 2.3 by: (i) delivering a letter from the managing
underwriter or underwriters of the proposed sale, specifying, in good faith, a
reasonable estimation of the offering price; (ii) offering all of the shares
included in the proposed sale to the MCA Shareholders or the Individual
Shareholder pursuant to either Section 2.4 or Section 2.3, in writing at the
price specified in the underwriter's letter; and (iii) complying with Section
2.4 or Section 2.3 in all other respects (other than with respect to the
provision of the Purchaser Information).
Upon receipt of a notice from any MCA Shareholders or the Individual
Shareholder demanding registration of the sale of such MCA Shareholders' or the
Individual Shareholder's shares of Common Stock, the Company shall, subject to
the provisions set forth below, use its best efforts to cause a registration
statement covering the sale of such MCA Shareholders' or the Individual
Shareholder's shares of Common Stock to become effective as soon as possible.
The Company's registration of the sale of MCA Shareholders' or the Individual
Shareholder's shares of Common Stock shall be subject to the terms and
conditions set forth in Subclauses (a) and (b) of Section 3.1 (provided, that
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the word "registration" shall be substituted for the words "Registration
Statement" in Subclause (b)). If the MCA Shareholders or the Individual
Shareholder shall have given written notice of the exercise of a demand right
pursuant to this Section 3.2 and such exercise shall thereafter be withdrawn
without any shares of Common Stock having been registered under the Securities
Act, the MCA Shareholder or the Individual Shareholder having delivered such
notice shall pay the expense of such registration.
If the Company has given written notice, pursuant to Section 3.1
hereof, to holders of Restricted Securities of its intention to file a
Registration Statement, and has not withdrawn such notice, no demand
registration notice shall be given under this Section 3.2 until sixty (60) days
after the effective date of a Registration Statement prepared pursuant to
Section 3.1.
The MCA Shareholders' or the Individual Shareholder's demand
registrations pursuant to this Section 3.2 shall be assignable to not more than
two (2) transferees each of the Common Stock held by any MCA Shareholder or the
Individual Shareholder.
Any MCA Shareholder's or the Individual Shareholder's right to demand
registration of any shares of Common Stock pursuant to this Section 3.2 shall
terminate on the date that such MCA Shareholder or the Individual Shareholder
shall be free to
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transfer such shares without restrictions as to volume pursuant to Rule 144(k)
under the Securities Act.
(b) If and whenever the Company is required by the provisions of this
Section 3.2 to use its best efforts to effect the registration of the sale of
any of its securities under the Securities Act, the Company shall, as
expeditiously as possible:
(i) prepare and file with the SEC a registration statement with
respect to such securities and use its best efforts to cause such
registration statement to become and remain effective;
(ii) cooperate with the MCA Shareholders or the Individual
Shareholder, as the case may be, and cooperate with any
underwriter who shall sell such shares in connection with its
review of the Company;
(iii) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective for sixty (60) days from the date of its effectiveness
and to comply with the provisions of the Securities Act and the
Exchange Act with respect to the disposition of all securities
covered by such registration statement for such period;
(iv) furnish to the MCA Shareholders or the Individual Shareholder, as
the case may be, such number of copies of the prospectus forming
a part of such registration statement (including each preliminary
prospectus), in conformity with the requirements of the
Securities Act, and such other documents as such MCA Shareholders
or the Individual Shareholder may reasonably request in order to
facilitate the disposition of such securities;
(v) use its best efforts to register or qualify the securities
covered by such registration statement under the "blue sky" laws
of such jurisdictions as the MCA Shareholders or the Individual
Shareholder, as the case may be, shall reasonably request, and do
any and all other acts and things which may be necessary or
advisable to enable the MCA Shareholders or the individual
-14-
shareholder, as the case may be, or any underwriter offering such
securities for the MCA Shareholders or the Individual
Shareholder, as the case may be, to consummate the disposition
thereof, during the period provided in subclause (iii) above, in
such jurisdictions; provided, however, that in no event shall the
-------- -------
Company be obligated to qualify to do business in any
jurisdiction where it is not then qualified or to take any action
which would subject it to the service of process in suits other
than those arising out of the offer or sale of the securities
covered by such registration statement in any jurisdictions where
it is not then subject;
(vi) (A) notify the MCA Shareholders or the Individual Shareholder, as
the case may be, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus
forming a part of such registration statement, 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 in the light of the
circumstances then existing, and (B) at the request of the MCA
Shareholders or the Individual Shareholder, prepare and furnish
to such of the MCA Shareholders or the Individual Shareholder a
reasonable number of copies of any supplement to or any amendment
of such prospectus that may be necessary to that, as thereafter
delivered to the purchasers of such securities, such prospectus
shall not include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances then existing; and
(vii) enter into an underwriting agreement in the form then currently
in use by major underwriters, and consistent with the provisions
of this Section 3.2, with the underwriters of the securities
covered by such registration statement.
In the case of any registration statement filed pursuant to a demand
delivered under this Section 3.2, the Company shall be permitted to include in
such registration statement a
-15-
number of shares of common stock which can be sold within the limitations set
forth in the next sentence of this paragraph. If such registration statement
involves an underwritten offering and the managing underwriter advises the MCA
Shareholders or the Individual Shareholder, as the case may be, in writing that,
in its opinion, the number of shares of Common Stock proposed to be included in
such registration statement exceeds the number which can be sold in such
offering without materially and adversely affecting the successful marketing
thereof, the Company will include in such registration statement to the extent
of the number of shares of Common Stock which the MCA Shareholders or the
Individual Shareholder are so advised can be sold in such offering without such
material adverse effect (i) first, the shares of Common Stock proposed to be
sold by the MCA Shareholders or the Individual Shareholder, as the case may be,
and (ii) second, such other shares of Common Stock requested to be included in
such registration statement by the Company which, in the opinion of the managing
underwriter, would not have the material adverse effect referred to above.
Anything in this Section 3.2 to the contrary notwithstanding, the
Company may defer the filing of any registration statement required under
Section 3.2, or delay the effectiveness of any such registration statement, for
a maximum of ninety (90) days from the date on which such registration would
otherwise have been filed or become effective, and if the Company shall have
filed a Registration Statement to offer shares of Common Stock, as described in
Section 3.1 hereof, for a maximum of sixty (60) days after such Registration
Statement shall have been declared effective.
Section 3.3. Provision of Information. As a condition to the Company's
------------------------
obligations under Section 3.1 or Section 3.2 to cause shares to be included in a
Registration Statement, or to be registered, respectively, the holder of any
Restricted Securities which are to be included therein shall provide such
information and execute such documents (including any reasonable and customary
agreement or undertaking relating to expenses, indemnification or other matters
contemplated by this Shareholders' Agreement) as may be required by the Company
in connection therewith.
Section 2.4. New Certificates. As expeditiously as possible after the
----------------
effectiveness of any Registration Statement or registration provided for in
Sections 3.1 or Section 3.2, respectively, the Company will deliver in exchange
for any certificates evidencing Restricted Securities so registered, new stock
certificates not bearing the legend set forth in Section 2.5 of this
Shareholders' Agreement. In the event that any such securities remain unsold
when such Registration Statement
-16-
or registration ceases to be effective, the stock certificates not bearing such
legend evidencing such unsold securities shall be delivered to the Company in
exchange for certificates bearing such legend.
Section 3.5. Indemnification. In connection with any registration of
---------------
securities pursuant to this Shareholders' Agreement, to the extent permitted by
law, the Company shall indemnify the MCA Shareholders and the Individual
Shareholder and the MCA Shareholders and the Individual Shareholder shall
indemnify the Company in the manner provided in this Section 3.5:
(a) The Company shall indemnify and hold harmless each MCA
Shareholder and the Individual Shareholder, each officer and each director,
if any, of such MCA Shareholder, the underwriter, if any, for the sale or
distribution of such MCA Shareholder's or the Individual Shareholder's
securities, and each person, if any, who controls such MCA Shareholder or
underwriter, against all losses, claims, damages or liabilities, joint or
several, to which such MCA Shareholders, the Individual Shareholder or any
such officer, director, underwriter or controlling person may become
subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or omissions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement,
prospectus or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing and,
subject to Section 3.5(c), the Company shall reimburse each MCA
Shareholder, the Individual Shareholder, and any such officer, director,
underwriter or controlling person, for any legal or other expenses
reasonably incurred by such MCA Shareholder, the Individual Shareholder,
and any such officer, director, underwriter or controlling person, in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be
-------- -------
required to indemnify and hold harmless or reimburse the MCA Shareholders,
the Individual Shareholder, or any such officer, director, underwriter or
controlling person, as the case may be, to the extent that any such loss,
claim, damage, liability or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission in any document made in reliance upon and in conformity with
-17-
written information furnished to the Company by or on behalf of such MCA
Shareholders, the Individual Shareholder, or any such officer, director,
underwriter or controlling person for use in the preparation of such
documents.
(b) Each MCA Shareholder and the Individual Shareholder shall
indemnify and hold harmless the Company, each of its directors and
officers, and each person, if any, who controls the Company, against all
losses, claims, damages or liabilities to which the Company or any such
director or officer or controlling person may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or omissions in respect thereof) arise out of or
are based upon any untrue or alleged untrue statement of any material fact
contained in any registration statement, prospectus or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances then existing, in each case, to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company by and on behalf of such
MCA Shareholder or the Individual Shareholder, as the case may be, for use
in the preparation thereof; and, subject to Section 3.5(c), such MCA
Shareholder or the Individual Shareholder, as the case may be, shall
reimburse the Company for any legal or other expenses reasonably incurred
by the Company or any such director, officer or controlling person in
connection with investigating or defending against any such loss, claim,
damage, liability or action.
(c) Within thirty (30) days after receipt by an indemnified party,
under (a) or (b) above, of notice of the commencement of any action or
proceeding, the indemnified party shall promptly notify the indemnifying
party, in writing, that such notice has been received. The failure to so
notify the indemnifying party shall not relieve the indemnifying party from
any liability hereunder with respect to the action or proceeding, except to
the extent that the indemnifying party is actually prejudiced by such
failure to give notice. In case any such action or proceeding is brought
against an indemnified party, the indemnifying party shall be entitled to
participate in and, unless in such indemnified party's reasonable judgment
a
-18-
conflict of interest between such indemnified and indemnifying parties may
exist in respect of such claim or proceeding, to assume the defense
thereof, jointly with any other indemnifying party similarly notified to
the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election to so assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any
legal or other expenses subsequently incurred by the latter in connection
with the defense thereof, other than reasonable costs of investigation. No
indemnifying party shall be liable for any settlement of any action or
proceeding effected without its written consent. No indemnifying party
shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim
or proceeding.
(d) If the indemnification provided for in this Section shall for any
reason be held by a court to be unavailable to an indemnified party under
subparagraph (a) or (b) hereof in respect of any loss, claim, damage or
liability, or any action or proceeding in respect thereof, then, in lieu of
the amount paid or payable under subparagraph (a) or (b) hereof, the
indemnified party and the indemnifying party under subparagraph (a) or (b)
hereof shall contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating the same), (i) in such proportion as is
appropriate to reflect the relative fault of the Company, the MCA
Shareholders and the Individual Shareholder with respect to the statements
or omissions which resulted in such loss, claim, damage or liability, or
action or proceeding in respect thereof, as well as any other relevant
equitable considerations, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as shall be
appropriate to reflect the relative benefits received by the Company, the
MCA Shareholders and the Individual Shareholder from the offering of the
securities hereunder. No individual or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any individual or entity who
was not guilty of such fraudulent misrepresentation.
-19-
(e) The indemnification and contribution required by this Section
shall be made by periodic payments of the amount thereof during the course
of the investigation or defense, as and when bills are received or expense,
loss, damage or liability is incurred.
Section 3.6. Standby. Each holder of any Restricted Securities agrees
-------
that, with respect to any registration statement under the Securities Act that
the Company may file, if requested by the managing underwriter of the sale to be
registered or, if such sale is not underwritten, the Company, such holder will
not sell any securities of the Company (whether or not such securities are
Restricted Securities, and however acquired), other than securities, if any, of
such holder included in such registration statement and securities sold to a
Permitted Transferee, for a period of at least five (5) days before, and up to
one hundred and twenty (120) days after, the date such registration statement is
declared effective.
Section 3.7. Assignment. The registration rights contained in this
----------
Shareholders' Agreement shall be transferable by the holder of any Restricted
Securities to any person or entity that acquires such Restricted Securities from
such holder (excluding any person or entity that acquires such Restricted
Securities in a transaction with respect to which a registration statement under
the Securities Act is effective at the time), provided that (a) the transfer of
such Restricted Securities is conducted in accordance with this Shareholders'
Agreement, and (b) such person or entity agrees, in writing, to be bound by the
terms and conditions of this Shareholders' Agreement, as amended from time to
time. Pursuant to Section 3.2 of this Shareholders' Agreement, the MCA
Shareholders' and the Individual Shareholder's rights to demand registration of
the Common Stock shall be assignable to not more than two (2) transferees of
each of the MCA Shareholders and the Individual Shareholder of the Common Stock
held by any MCA Shareholders or the Individual Shareholder.
ARTICLE IV
CORPORATE GOVERNANCE
Section 4.1. Representation on the Board and Committees. (a) The Board
------------------------------------------
of Directors of the Company (the "Board") shall consist of nine (9) members.
Upon consummation of the transactions contemplated by the Stock Purchase
Agreement, the Board shall consist of: five (5) designees of the Individual
Shareholder; two (2) designees of MCA; and one (1) designee of the Third Party,
if any, with one vacancy on the Board to be
-20-
filled as provided in the following sentence. Upon exercise by MCA of its option
to purchase the First Period Shares (as defined in the Option Agreement) under
the Option Agreement, MCA shall have the right to fill the vacancy referred to
in the immediately preceding sentence with a designee of its choice so that,
immediately following the election of such designee, the Board shall consist of:
five (5) designees of the Individual Shareholder; three (3) designees of MCA;
and one (1) designee of the Third Party, if any. Upon exercise by MCA of its
option to purchase the Second Period Shares (as defined in the Option Agreement)
under the Option Agreement, one of the Individual Shareholder's designees shall
resign from the Board so that, immediately following such resignation, the Board
shall consist of: four (4) designees of the Individual Shareholder; three (3)
designees of MCA; and one (1) designee of the Third Party, if any, with one
vacancy on the Board which shall remain unfilled. Following the exercise by MCA
of its option to purchase the Second Period Shares, upon request of the
Individual Shareholder, MCA agrees to vote the shares of Common Stock then owned
by it to amend the Company's Bylaws to reduce the size of the Board to eight (8)
members. In the event that a resolution relating to a matter brought before the
Board for a vote of the Board results in an equal number of directors voting in
favor of and against such resolution, the Shareholders agree that the Individual
Shareholder, as Chairman of the Board, shall cast the deciding vote in favor of
or against such resolution, as the case may be, and that such vote shall be
deemed to have definitively resolved the matter with respect to which the Board
was otherwise at an impasse. The provisions of this Section 4.1(a) are subject
to the limitations set forth in the last sentence of Section 4.1(c).
(b) From and after the date hereof, the Board shall establish a
Compensation Committee which shall consist of 3 members, one of whom shall be
designated by the MCA Shareholders. The consent of the MCA Shareholders'
designee on the Compensation Committee shall be required (i) to grant options
under the Incentive Plan (as defined below) to any employee of the Company whose
salary exceeds $100,000 per year and (ii) to establish any bonus plan of the
Company.
(c) The Shareholders agree to take all necessary action to provide
the MCA Shareholders and the Individual Shareholder with representation on the
Board and all committees thereof as set forth in this Section 4.1 and to cause
their nominees to vote as required in 4.1; provided that the representation of
--------
the MCA Shareholders on the Board and each such committee shall be no fewer than
one member. Such necessary action shall include, but not be limited to, an
increase in the size of the Board or any such committee or the removal of
incumbent directors or
-21-
incumbent members of any such committee. The provisions of this Section 4.1 and
of Section 4.2 shall terminate upon the date of the Company's initial Public
Offering.
Section 4.2. Voting. In the event that the MCA Shareholders and the
------
holders of shares of Common Stock sold pursuant to any Third-Party Investment
together beneficially own, in the aggregate, shares of Common Stock in excess of
the shares of Common Stock beneficially owned, in the aggregate, by the
Individual Shareholder, then the MCA Shareholders shall only vote such number of
shares of Common Stock as, when added to the number of Third-Party Shares, is
equal to the number of shares of Common Stock beneficially owned, in the
aggregate, by the Individual Shareholders. In the event that a resolution
relating to a matter brought to a vote of the Shareholders results in an equal
number of votes in favor of and against such resolution, the Shareholders agree
that the Individual Shareholder, as Chairman of the Board, shall cast the
deciding vote in favor of or against the resolution, as the case may be, and
that such deciding vote shall be deemed to have definitely resolved the matter
with respect to which the Shareholders were otherwise at an impasse. The voting
restrictions set forth in this Section 4.2 will terminate upon the consummation
of a Public Offering. To the extent required to enforce the provisions of this
Agreement, MCA and the Individual Shareholder hereby grant to the Secretary of
the Company an irrevocable proxy to vote the shares of Common Stock held by them
as such shares are required to be voted under Section 4.1 hereof and under this
Section 4.2.
Section 4.3. Corporate Actions. Without the prior written consent of
-----------------
MCA, the Company will not:
(i) amend or otherwise change its charter or by-laws;
(ii) issue, sell or agree to or authorize for issuance or sale, shares
of any class of its equity securities, other than (A) pursuant to the
consummation of the Third Party Investment, if any, (B) pursuant to and in
accordance with the terms of Employee Options outstanding on the date
hereof, (C) pursuant to options issued to employees of the Company after
the date hereof covering a number of shares of Common Stock no greater than
and having an average exercise price no less than the number of shares of
Common Stock covered by and average exercise price of Employee Options
outstanding on the date hereof that expire unexercised, (D) pursuant to
options issued to employees of the Company after the date hereof under an
-22-
option plan approved by MCA authorizing the grant of options in respect of
not more than an aggregate of 5% of the outstanding shares of Common Stock
(the "Incentive Plan") or (E) pursuant to a Public Offering;
(iii) issue, sell or agree to or authorize for issuance or sale any
securities convertible or exchangeable into, or options with respect to, or
warrants to purchase or rights to subscribe to, any shares of capital stock
of the Company, other than options referred to in clauses (C) and (D) of
the foregoing subparagraph (i);
(iv) effect any reorganization or reclassification of the capital
stock of the Company;
(v) other than pursuant to the agreements between the Company and
employees of the Company listed on schedule 4.4 hereto, declare, set aside,
make or pay any dividend or other distribution (whether in cash, stock or
property) with respect to its capital stock;
(vi) redeem, purchase or otherwise acquire or agree to redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital
stock (other than pursuant to non-cash exercise of options pursuant to
options granted pursuant to plans in effect on the date hereof or pursuant
to the Buy/Sell Agreements listed on the schedule of exceptions to the
Stock Purchase Agreement);
(vii) enter into any extraordinary corporate transaction such as a
merger or sale of all or substantially all of its assets;
(viii) make any capital expenditure, acquisition or divestiture above
$2,500,000;
(ix) incur any debt in excess of an aggregate of $17,000,000,
including currently available credit lines, whether or not the Company
shall have borrowed funds pursuant to such credit lines; or
(x) institute any material change in the overall composition of
senior management of the Company; provided, however, that the hiring of, or
-------- -------
the termination of employment of any single individual by the Company
(other than the termination of employment of the Individual Shareholder)
shall not require the consent of MCA pursuant to this clause (x).
-23-
The provisions of this Section 4.4 shall terminate upon the earlier of (i) such
time as the MCA Shareholders beneficially own in the aggregate less than fifteen
percent (15%) of the outstanding shares of Common Stock or (ii) the date of
consummation of the Company's initial Public Offering. If as of the second
anniversary of the date hereof, MCA has not exercised both of the MCA Options,
MCA's consent to the actions specified in this Section 4.3 shall not be
unreasonably withheld.
ARTICLE V
CERTIFICATE OF INCORPORATION
Section 5.1. Certificate of Incorporation. The Shareholders agree
----------------------------
that, as of the date of this Shareholders' Agreement, the Certificate of
Incorporation of the Company shall be as attached hereto as Exhibit A.
ARTICLE VI
MISCELLANEOUS
Section 6.1. Survival of Agreement; Term. This Shareholders' Agreement
---------------------------
shall not be terminated or amended, nor any provision hereof waived, except by
an instrument in writing signed by the Company, MCA and the Individual
Shareholder; provided that, without the consent of any party affected no such
--------
amendment, waiver or termination shall further restrict the transferability of
any Common Stock held by such party, impose any obligation on such party,
diminish the benefits of such party hereunder or restrict the rights of such
party as set forth herein; and provided further that this Shareholders'
-------- -------
Agreement shall automatically terminate on the tenth anniversary of the date of
this Shareholders' Agreement. Notwithstanding the foregoing, any provision of
this Shareholders' Agreement which specifically provides for termination of such
provision on an earlier date shall terminate on such other date.
Section 5.2. Directors' and Officers' Insurance and Indemnification.
------------------------------------------------------
To the extent commercially available, the Board shall consider maintaining
directors' and officers' insurance, and each director of the Company shall be
covered under such insurance. The Company at all times shall indemnify, defend
and hold harmless the directors and officers of the Company against all losses,
claims, damages or liabilities to the full extent permitted under California Law
or the Company's
-24-
Articles of Incorporation or Bylaws in effect at the date hereof (to the extent
consistent with applicable law).
Section 6.3. Notices. All notices to be given by any party hereunder
-------
shall be in writing and shall be deemed to have been duly given if mailed, by
first class or registered mail, three (3) business days after deposit in the
United States Mail, or if telexed or telecopied, sent by telegram, or delivered,
when confirmation is received, to the relevant party at its address set forth on
the stock ledger of the Company in the case of any Shareholder (excluding the
MCA Shareholders) or, in the case of the Company, to it at:
Interplay Productions, Inc.
00000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Camps
Telecopy: (000) 000-0000
with a copy to:
Stradling, Yocca, Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxxxxxx
Telecopy: (000) 000-0000
or, in the case of the MCA Shareholders, to them at:
MCA INC.
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Telecopy: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
The parties may change their respective addresses for purposes of notice
hereunder by giving notice of such change to all other parties in the manner
provided in this Section.
-25-
Section 6.4. Further Assurances. Each shareholder agrees to take, or
------------------
cause to be taken, all such further and other commercially reasonable actions as
shall be necessary to make effective the provisions of this Agreement. The
Individual Shareholder further covenants and agrees to use his reasonable best
efforts to assist in the marketing and consummation of any Public Offering.
Section 6.5. Binding Effect. This Shareholders' Agreement supersedes
--------------
all prior negotiations, statements and agreements of the parties hereto with
respect to the subject matter of this Shareholders' Agreement, and shall be
binding upon and inure to the benefit of the respective permitted successors and
assigns of the parties hereto.
Section 6.6. Complete Agreement. This Shareholders' Agreement
------------------
represents the entire agreement among the Shareholders and the Company with
respect to the matters set forth herein, and the parties hereto acknowledge that
there have been no representations, warranties, covenants or agreements made by
any party hereto other than those contained in this Shareholders' Agreement, the
Stock Purchase Agreement and the Option Agreement.
Section 6.7. Counterparts. This Shareholders' Agreement may be
------------
executed in counterparts, each of which shall be signed by the Company and one
or more Shareholders, and all of which are deemed to be one and the same
agreement binding upon the Company and each of the Shareholders.
Section 6.8. Headings. The headings of the various sections of this
--------
Shareholders' Agreement have been inserted for convenience of reference only and
shall not be deemed to be a part of this Shareholders' Agreement.
Section 6.9. Conflict with Bylaws. If and to the extent that any
--------------------
provision of this Shareholders' Agreement conflicts with or is inconsistent with
any provision of the Bylaws of the Company, such provision of this Shareholders'
Agreement shall be controlling and, to the extent practicable, the conflicting
or inconsistent provision of the Bylaws shall be construed in a manner
consistent with such provision of this Shareholders' Agreement.
Section 6.10. Governing Law. This Shareholders' Agreement shall be
-------------
governed by and construes in accordance with the laws of the State of
California, without regard to its conflicts of law doctrine. By execution and
delivery of this
-26-
Shareholders' Agreement, each of the Shareholders accept, generally and
unconditionally, the nonexclusive jurisdiction of the state or federal courts in
California, and irrevocably consent to the service of process of any such court
in any action or proceeding concerning this Shareholders' Agreement by the
mailing of copies of such service by registered or certified mail, postage
prepaid, to his or its notice address specified in Section 6.3 hereof, such
service to become effective ten (10) days after deposit in the United States
mail.
Section 6.11. Injunctive Relief. Each Shareholder recognizes that in
-----------------
the event a Shareholder fails to observe the terms and conditions of this
Shareholders' Agreement any remedy at law may prove to be inadequate relief to
the Company, MCA and the other Shareholders; therefore, each Shareholder agrees
that the Company, MCA and the other Shareholders shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages.
-27-
IN WITNESS WHEREOF, the parties have duly executed this Shareholders'
Agreement as of the date first above written.
INTERPLAY PRODUCTIONS, INC.
By: /s/ Xxxxx Xxxxx
------------------------------
Xxxxx Xxxxx
President
MCA INC.
By:______________________________
Xxxxxxx X. Xxxx
Executive Vice President
/s/ Xxxxx Xxxxx
---------------------------------
Xxxxx Xxxxx
-28-
IN WITNESS WHEREOF, the parties have duly executed this Shareholders'
Agreement as of the date first above written.
INTERPLAY PRODUCTIONS, INC.
By:
------------------------------
Xxxxx Xxxxx
President
MCA INC.
By: /s/ Xxxxxxx X. Xxxx
------------------------------
Xxxxxxx X. Xxxx
Executive Vice President
_________________________________
Xxxxx Xxxxx
-28-
INTERPLAY PRODUCTIONS
00000 XXX XXXXXX
XXXXXX, XXXXXXXXXX 00000
October 8, 1996
MCA INC.
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxx
RE: Amendment to the Shareholders' Agreement
Ladies and Gentlemen:
As you know, Interplay Productions, a California corporation (the "Company") is
contemplating the formation of a new wholly-owned subsidiary (the "Subsidiary")
for the purpose of conducting its OEM operations. In connection with such
formation, the Company may require certain waivers from and consents of MCA INC.
("MCA") pursuant to that certain Shareholders' Agreement dated March 30, 1994,
by and among the Company, MCA and Xxxxx Xxxxx (the "Shareholders' Agreement").
In connection with obtaining such consent from MCA, the Company has agreed to
amend the Shareholders' Agreement to include certain restrictions on actions
that may be taken in connection with the Subsidiary. This Letter Agreement will
evidence such amendments. Capitalized terms used but not defined herein shall
have the meanings ascribed to them in the Shareholders' Agreement.
Section 4.3 of the Shareholders' Agreement may preclude the Company from forming
the Subsidiary and transferring certain assets into such entity. The parties
hereby agree that, if the activities of the OEM division are spun off to the
Subsidiary, on and after the date on which assets are transferred to the
Subsidiary, existing Section 4.3 shall become subsection (a), and a new Section
4.3(b) shall be added which shall read as set forth on Attachment 1 hereto (with
"Subsidiary" defined as such Subsidiary).
MCA INC.
October 8, 1996
Page 2
If the above conforms with your understanding of our agreement with respect to
these issues, please sign this Letter Agreement where indicated below and return
the enclosed copy of this letter to my attention at the Company at your earliest
convenience.
Very truly yours,
INTERPLAY PRODUCTIONS
By: /s/ Xxxxx Xxxxx
---------------------
Xxxxx Xxxxx
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
AGREED AND ACKNOWLEDGED:
MCA INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Name/Title: Executive Vice President
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cc: Xxxx X. Xxxxxx, Esq.
Xxxxxx, Xxxxxx & Xxxxx
ATTACHMENT 1
(b) Without the prior written consent of MCA, the Subsidiary will not:
(i) amend or otherwise change its charter or bylaws;
(ii) issue, sell or agree to or authorize for issuance or sale,
shares of any class of its equity securities, other than (A) pursuant to options
issued to employees of the Subsidiary after the date hereof under an option plan
approved by MCA authorizing the grant of options in respect of not more than an
aggregate of 5% of the outstanding shares of Subsidiary common stock or (B)
pursuant to a Public Offering;
(iii) issue, sell or agree to or authorize for issuance or sale any
securities convertible or exchangeable into, or options with respect to, or
warrants to purchase or rights to subscribe to, any shares of capital stock of
the Subsidiary, other than options referred to in clause (A) of the foregoing
subparagraph (ii);
(iv) effect any reorganization or reclassification of the capital
stock of the Subsidiary;
(v) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property) with respect to its capital
stock unless, at the time of the record date and of the payment date related
thereto, the Subsidiary is wholly-owned by the Company;
(vi) redeem, purchase or otherwise acquire or agree to redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital stock
(other than pursuant to non-cash exercise of options pursuant to options granted
pursuant to plans approved by MCA);
(vii) enter into any extraordinary corporate transaction such as a
merger or sale of all or substantially all of its assets;
(viii) make any capital expenditure, acquisition or divestiture above
$2,500,000; or
(ix) incur any debt in excess of an aggregate (together with the
Company) of $17,000,000, including currently available credit lines, whether or
not the Company or Subsidiary shall have borrowed funds pursuant to such credit
line.
In addition to the foregoing, MCA shall be entitled to have access to and to
make copies of such books and records of the Subsidiary related to the
Subsidiary's business, operations and affairs, as MCA shall request from time to
time, provided MCA shall not be entitled to access or copies in excess of that
access and information required to be provided to a director of the Subsidiary
under applicable law.
The provisions of this Section 4.3(b) shall terminate upon the earlier of
(i) such time as the MCA Shareholders beneficially own in the aggregate less
than fifteen percent (15%) of the outstanding shares of Common Stock or (ii) the
date of consummation of the Company's initial Public Offering.