EXHIBIT 10.7
T.K.G. ACQUISITION CORP.
STOCKHOLDERS AGREEMENT
(COMMON STOCK UNDER STOCK INCENTIVE PLAN)
Stockholders Agreement, dated as of this ____ day of _________, 1996,
by and among Warburg, Xxxxxx Ventures, L.P., a Delaware limited partnership
("Warburg"); the individuals whose names and addresses appear from time to time
on Schedule I hereto (the "Management Stockholders"); and T.K.G. Acquisition
Corp., a Delaware corporation (the "Company"). Certain terms used in this
Agreement are defined in Section 6 hereof.
R E C I T A L S
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WHEREAS, pursuant to the T.K.G. Acquisition Corp. 1996 Stock Incentive
Plan (the "Stock Plan") of the Company, the Company will make certain grants or
sales of shares (including any capital stock of the Company issued as a dividend
or other distribution with respect to, or in exchange for or in replacement of
such shares and any shares of Common Stock issued upon exercise of any Options
(as defined below), the "Shares") of its Common Stock, par value $.01 per share
(the "Common Stock"), or options to purchase shares of Common Stock ("Options"
and, together with the Shares, the "Securities") to the Management Stockholders;
and
WHEREAS. Warburg and certain management investors have agreed to
purchase from the Company shares of its Common Stock and Series A 12%
Participating Convertible Preferred Stock, par value $1.00 per share (the
"Preferred Stock"); and
WHEREAS, the Warburg, the Management Stockholders and the Company
desire to promote their mutual interests by agreeing to certain matters relating
to the operations of the Company and the disposition and voting of the
Securities.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto hereby agree as follows:
1. COVENANTS OF THE PARTIES
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(a) Legends. The certificates evidencing the Securities acquired by
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the Stockholders pursuant the Stock Plan or their permitted transferees will
bear the following legend
reflecting the restrictions on the transfer of such securities contained in this
Agreement:
"The securities evidenced hereby are subject to the terms of that
certain Stockholders Agreement (Common Stock Under Stock Incentive
Plan), dated as of February 29, 1996, by and among the Company,
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Warburg, Xxxxxx Ventures, L.P. and certain holders of Common Stock,
including certain restrictions on transfer. A copy of such
Stockholders Agreement has been filed with the Secretary of the
Company and is available upon request."
(b) Employee Stock Incentives. The Company shall reserve an aggregate
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of 1,500,000 shares (the "Incentive Shares") of Common Stock for grant or sale
to key employees of the Company or its Subsidiaries, in such amounts and in such
manner (including incentive and non-qualified stock options, restricted stock
grants, stock bonuses or other stock incentive programs) as the Board of
Directors of the Company (the "Board") shall, from time to time, determine in
accordance with the provisions of the Stock Plan. The number of Incentive
Shares so reserved shall be adjusted as set forth in the Stock Plan.
(c) Additional Stockholders. The parties hereto acknowledge that,
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subject to the terms hereof, certain employees of the Company or its
Subsidiaries may become stockholders of the Company after the date hereof and
that such employees will be required, as a condition to the issuance of
Securities to them under the Stock Plan, to execute a Joinder Agreement in the
form attached hereto as Exhibit A (the "Joinder Agreement"). Upon execution of
a Joinder Agreement, such employees shall be deemed to be Management
Stockholders under this Agreement and shall be entitled to all of the rights and
benefits afforded to, and shall be subject to all the obligations of, such
Stockholders hereunder.
2. TRANSFER OF SECURITIES
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Without the approval of the Board and subject to the restrictions on
transfer under the Stock Plan, no Management Stockholder shall Transfer any
Securities, or any beneficial interest therein, except (i) to members of such
Management Stockholder's immediate family or trusts for the benefit of such
Management Stockholder or such Management Stockholder's immediate family; upon
the death of any Management Investor, to his or her respective executors,
administrators or testamentary trustees; to a corporation or partnership, the
sole stockholders or limited or general partners of which include only such
Management Investor and members of such Management Investor's immediate family;
a transfer from a Management Investor's trust or other transferee back to such
Management Investor; a transfer to the legal guardian of a disabled Management
Investor or of a Management
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Investor's disabled immediate family member, provided in each instance that (A)
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such transferee executes and delivers to the Company and Warburg a Joinder
Agreement and (B) any such transferee shall take such Securities subject to all
limitations and obligations imposed on the Management Stockholder under the
Stock Plan and any related grant agreement, (ii) to Warburg or an Affiliate
thereof or (iii) after an Initial Public Offering, upon 30 days prior written
notice to the Board; provided, however, that the restrictions on Transfer
pursuant to this Section 2 shall terminate after an Initial Public Offering when
Warburg owns less than 10% of the outstanding Common Stock and less than 10% of
the outstanding Preferred Stock. Any Transfer or purported Transfer made in
violation of this Section 2 shall be null and void and of no effect.
3. DRAG-ALONG RIGHT
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(a) If at any time and from time to time after the date of this
Agreement, the holder or holders of a majority of the outstanding shares of
voting capital stock of the Company (the "Proposed Transferors") wish to
Transfer in a bona fide arms' length sale all shares of Common Stock and
Preferred Stock then owned by them to any Person or Persons who are not
Affiliates of the Proposed Transferors (for purposes of this Section 3(a), the
"Proposed Transferee"), the Proposed Transferors shall have the right (the
"Drag-Along Right") to require each Management Stockholder to sell to the
Proposed Transferee all Securities (for the same per share consideration
received by the Proposed Transferor for each such class of capital stock, and
with respect to unexercised Options, less any exercise price payable with
respect thereto) then held by the Management Stockholders, subject to purchase
by the Proposed Transferee. Each Management Stockholders, agrees to take all
steps necessary to enable him or it to comply with the provisions of this
Section 3(a), including, if necessary, voting any Securities in favor of the
transaction with the Proposed Transferee (whether effected as a merger or
otherwise) to facilitate the Proposed Transferors' exercise of a Drag-Along
Right.
(b) To exercise a Drag-Along Right, the Proposed Transferors shall
give each Management Stockholder a written notice (for purposes of this Section
3, a "Drag-Along Notice") containing (i) the number of Securities that the
Proposed Transferee proposes to acquire from the Proposed Transferors, (ii) the
name and address of the Proposed Transferee, and (iii) the proposed purchase
price, terms of payment and other material terms and conditions of the Proposed
Transferee's offer. Each Management Stockholder shall thereafter be obligated
to sell the Securities subject to such Drag-Along Notice, provided that the sale
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to the Proposed Transferee is consummated within 120 days of delivery of the
Drag-Along Notice. If the sale is not consummated within such 120-day period,
then each Management Stockholder shall no longer be obligated to sell such
Management
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Stockholder's Securities pursuant to that specific Drag-Along Right but shall
remain subject to the provisions of this Section 3.
(c) Notwithstanding anything contained in this Section 3, in the
event that all or a portion of the purchase price consists of securities and the
sale of such securities to the Management Stockholders would require either a
registration under the Securities Act or the preparation of a disclosure
document pursuant to Regulation D under the Securities Act (or any successor
regulation) or a similar provision of any applicable state securities law, then,
at the option of the Proposed Transferors, the Management Stockholders may
receive, in lieu of such securities, the fair market value of such securities in
cash, as determined in good faith by the Board, unless, at the request of the
Management Stockholders holding a majority of the Shares, the appraisal
procedure set forth in Section 3(d) below is invoked.
(d) Appraisal Procedure. If the Management Stockholders invoke an
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appraisal procedure to determine the amount of the fair market value in cash of
the consideration for the Securities under Section 3(c) (the "Subject
Securities"), then the Proposed Transferors, on the one hand, and the Management
Stockholders, on the other hand, shall each promptly appoint as an appraiser an
individual who shall be a member of a reputable valuation firm. Each appraiser
shall, within 30 days of appointment, separately investigate the value of the
consideration for the Subject Securities as of the proposed transfer date and
shall submit a notice of an appraisal of that value to each party. Each
appraiser shall be instructed to determine such value without regard to income
tax consequences to the Management Stockholders as a result of receiving cash
rather than other consideration. If, upon the completion of the initial
appraisals (the "Earlier Appraisals"), the higher appraised value of such
consideration is not more than 110% of the lower appraised value of such
consideration, the average of the two appraisals on a per share basis shall be
controlling as the amount of the cash equivalent. If the higher appraised value
is more than 110% of the lower appraised value, the appraisers, within 10 days
of the submission of the last appraisal, shall appoint a third appraiser who
shall be member of a reputable valuation firm. The third appraiser shall,
within 30 days of his appointment, appraise the value of the consideration for
the Subject Securities (without regard to the income tax consequences to the
Management Stockholders as a result of receiving cash rather than other
consideration) as of the proposed transfer date and submit notice of his
appraisal to each party. The value determined by the third appraiser shall be
controlling as the amount of the cash equivalent unless the value is greater
than the two Earlier Appraisals, in which case the higher of the two Earlier
Appraisals will control, and unless that value is lower than the two Earlier
Appraisals, in which case the lower of the two Earlier Appraisals will control.
If any party fails to
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appoint an appraiser or if one of the two initial appraisers fails after
appointment to submit his appraisal within the required period, the appraisal
submitted by the remaining appraiser shall be controlling. The cost of the
foregoing appraisals shall be shared one-half by the Proposed Transferor and
one-half by the Management Stockholders.
4. REGISTRATION RIGHTS
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(a) Definitions. As used in this Section 4:
(i) "Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act;
(ii) the term "Holder" shall mean any holder of Registrable
Securities;
(iii) the terms "register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act (and any post-effective amendments filed or
required to be filed) and the declaration or ordering of effectiveness of such
registration statement;
(iv) the term "Registrable Securities" means (A) the shares of Common
Stock issued to Management Stockholders under the Stock Plan, which have
theretofore become vested and have not theretofore become forfeited under the
Stock Plan, and (B) any capital stock of the Company issued as a dividend or
other distribution with respect to, or in exchange for or in replacement of, the
shares of Common Stock referred to in clause (A) above; provided that
"Registrable Securities" shall not include any shares previously registered on a
registration relating solely to employee benefit plans.
(v) "Registration Expenses" shall mean (x) all expenses incurred by
the Company in compliance with Sections 4(b) hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company blue sky fees and expenses and the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company, which shall
be paid in any event by the Company) and (y) all reasonable fees and
disbursements of counsel for each of the Holders; and
(vi) "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities.
(b) Company Registration.
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(i) If the Company shall determine to register any shares of Common
Stock either for its own account or for the account of a security holder or
holders, other than a registration relating solely to employee benefit plans, or
a registration relating solely to a Commission Rule 145 transaction, or a
registration on any registration form which does not permit secondary sales or
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of Registrable
Securities, the Company will:
(A) promptly give to each of the Holders a written notice thereof
(which shall include a list of the jurisdictions in which the Company
intends to attempt to qualify such securities under the applicable blue sky
or other state securities laws); and
(B) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities (of the same class of equity
securities being registered under such registration statement) specified in
a written request or requests, made by the Holders within fifteen (15) days
after receipt of the written notice from the Company described in clause
(i) above, except as set forth in Section 4(b)(ii) below. Such written
request may specify all or a part of the Holders' Registrable Securities of
the same class of equity securities being registered under such
registration statement.
(ii) Underwriting. If the registration of which the Company gives
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notice is for a registered public offering involving an underwriting, the
Company shall so advise each of the Holders as a part of the written notice
given pursuant to Section 4(b)(i)(A). In such event, the right of each of the
Holders to registration pursuant to this Section 4(b) shall be conditioned upon
such Holders' participation in such underwriting and the inclusion of such
Holders' Registrable Securities in the underwriting to the extent provided
herein. The Holders whose shares are to be included in such registration shall
(together with the Company and the Other Stockholders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected for underwriting by the Company. Notwithstanding any other provision
of this Section 4(b), if the representative determines that marketing factors
require a limitation on the number of shares to be underwritten, the Company
shall so advise all holders of Registrable Securities requesting registration,
and the Registrable Securities of the Company held by Holders shall be excluded
from such registration and underwriting to the extent required by such
limitation. If any of the Holders or any officer, director or Other Stockholder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the
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underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
(iii) Number and Transferability. Each of the Holders shall be
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entitled to have its shares included in an unlimited number of registrations
pursuant to this Section 4(b). The registration rights granted pursuant to this
Section 4(b) shall be assignable, in whole or in part, to any permitted
transferee of the Shares, provided such transferee executes and delivers to the
Company and to Warburg a Joinder Agreement.
(c) Form S-3. Following the Initial Public Offering the Company shall
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use its best efforts to qualify for registration on Form S-3 for secondary
sales. After the Company has qualified for the use of Form S-3, Holders of
Registrable Securities shall have the right to request unlimited registrations
on Form S-3 (such requests shall be in writing and shall state the number of
shares of Registrable Securities to be disposed of and the intended method of
disposition of shares by such holders), subject only to the following:
(i) The Company shall not be required to effect a registration
pursuant to this Section 4(c) unless the Holder or Holders of Registrable
Securities requesting registration propose to dispose of shares of Registrable
Securities having an aggregate price to the public (before deduction of
underwriting discounts and expenses of sale) of more than $5,000,000.
(ii) The Company shall not be required to effect a registration
pursuant to this Section 4(c) within 180 days of the effective date of the most
recent registration pursuant to this Section 4(c) in which securities held by
the requesting Holder could have been included for sale or distribution.
(iii) The Company shall not be required to effect a registration
pursuant to this Section 4(c) if the Company shall furnish to the Holders a
certificate signed by the President or Chief Executive Officer of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for such registration statement to be filed and it is therefore essential to
defer the filing of such registration statement. In such event, the Company
shall have the right to defer the filing of the registration statement no more
than once during any twelve (12) month period for a period of not more than one
hundred twenty (120) days after receipt of the request of the Holder or Holders
under this Section 4(d).
(iv) The Company shall not be obligated to effect any registration
pursuant to this Section 4(c) in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless the Company is
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already subject to service in such jurisdiction and except as may be required by
the Securities Act or applicable rules or regulations thereunder.
The Company shall give written notice thereof to all Holders of
Registrable Securities within five (5) days of the receipt of a request for
registration pursuant to this Section 4(c) and shall provide a reasonable
opportunity for other Holders of Registrable Securities to participate in the
registration, provided that if the registration is for an underwritten offering,
the terms of Section 4(b)(ii) shall apply to all participants in such offering.
Subject to the foregoing, the Company will use its best efforts to effect
promptly the registration of all shares of Registrable Securities on Form S-3 to
the extent requested by the Holder or Holders thereof for purposes of
disposition.
(d) Expenses of Registration. All Registration Expenses incurred in
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connection with any registration, qualification or compliance pursuant to this
Section 4 (whether or not such registration, qualification or compliance is
effectuated) shall be borne by the Company, and all Selling Expenses shall be
borne by the Holders of the securities so registered (or proposed to be
registered) pro rata on the basis of the number of their shares so registered
(or proposed to be registered.
(e) Registration Procedures. In the case of each registration
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effected by the Company pursuant to Section 4, the Company will keep the
Holders, as applicable, advised in writing as to the initiation of each
registration and as to the completion thereof. At its expense, the Company
will:
(i) keep such registration effective for a period of one hundred
twenty (120) days or until the Holders, as applicable, have completed the
distribution described in the registration statement relating thereto, whichever
first occurs; provided, however, that (A) such 120-day period shall be extended
for a period of time equal to the period during which the Holders, as
applicable, refrain from selling any securities included in such registration in
accordance with provisions in Section 4(i) hereof; and (B) in the case of any
registration of Registrable Securities on Form S-3 which are intended to be
offered on a continuous or delayed basis, such 120-day period shall be extended
until all such Registrable Securities are sold, provided that Rule 415, or any
successor rule under the Securities Act, permits an offering on a continuous or
delayed basis, and provided further that applicable rules under the Securities
Act governing the obligation to file a post-effective amendment permit, in lieu
of filing a post-effective amendment which (y) includes any prospectus required
by Section 10(a)(3) of the Securities Act or (z) reflects facts or events
representing a material or fundamental change in the information set forth in
the registration statement, the incorporation by reference of
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information required to be included in (y) and (z) above to be contained in
periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in
the registration statement; and
(ii) furnish such number of prospectuses and other documents incident
thereto as each of the Holders, as applicable, from time to time may reasonably
request.
(f) Indemnification.
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(i) The Company will indemnify each of the Holders, as applicable,
each of its officers, directors and partners, and each person controlling each
of the Holders, with respect to each registration which has been effected
pursuant to this Section 4, and each underwriter, if any, and each person who
controls any underwriter, against all claims, losses, damages and liabilities
(or actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other document (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the Company of the
Securities Act or any rule or regulation thereunder applicable to the Company
and relating to action or inaction required of the Company in connection with
any such registration, qualification or compliance, and will reimburse each of
the Holders, each of its officers, directors and partners, and each person
controlling each of the Holders, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission based upon written
information furnished to the Company by any Holder with respect to such Holder
or underwriter with respect to such underwriter and stated to be specifically
for use therein.
(ii) Each of the Holders will, if Registrable Securities held by it
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers and each underwriter, if any, of the Company's securities covered by
such a registration statement, each person who controls the Company or such
underwriter within the meaning of the Securities Act and the rules and
regulations thereunder, each Other Stockholder and each of their officers,
directors, and partners, and each person controlling such Other Stockholder
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact with respect to such
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Holder contained in any such registration statement, prospectus, offering
circular or other document made by such Holder, or any omission (or alleged
omission) to state therein a material fact with respect to such Holder required
to be stated therein or necessary to make the statements by such Holder therein
not misleading, and will reimburse the Company and such Other Stockholders,
directors, officers, partners, persons, underwriters or control persons for any
legal or any other expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by such Holder
with respect to such Holder and stated to be specifically for use therein;
provided, however, that the obligations of each of the Holders hereunder shall
be limited to an amount equal to the proceeds to such Holder of securities sold
as contemplated herein.
(iii) Each party entitled to indemnification under this Section 4(f)
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom provided that counsel for the Indemnifying Party,
who shall conduct the defense of such claim or any litigation resulting
therefrom shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld) and the Indemnified Party may participate in such
defense at such party's expense (unless the Indemnified Party shall have
reasonably concluded that there may be a conflict of interest between the
Indemnifying Party and the Indemnified Party in such action, in which case the
fees and expenses of counsel shall be at the expense of the Indemnifying Party),
and provided further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 4 unless the Indemnifying Party is materially prejudiced
thereby. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each 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 to such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with the defense of
such claim and litigation resulting therefrom.
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(iv) If the indemnification provided for in this Section 4(f) is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any loss, liability, claim, damage or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(v) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with any underwritten public offering contemplated by
this Agreement are in conflict with the foregoing provisions, the provisions in
such underwriting agreement shall be controlling.
(vi) The foregoing indemnity agreement of the Company and Holders is
subject to the condition that, insofar as they relate to any loss, claim,
liability or damage made in a preliminary prospectus but eliminated or remedied
in the amended prospectus on file with the Commission at the time the
registration statement in question becomes effective or the amended prospectus
filed with the Commission pursuant to Commission Rule 424(b) (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any
underwriter if a copy of the Final Prospectus was furnished to the underwriter
and was not furnished to the person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the Securities Act.
(vii) Any indemnification payments required to be made to an
Indemnified Party under this Section 4(f) shall be made as the related claims,
losses, damages, liabilities or expenses are incurred.
(g) Information by the Holders. Each of the Holders and each Other
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Stockholder holding securities included in any registration, shall furnish to
the Company such information regarding such Holder or Other Stockholder and the
distribution proposed by such Holder or Other Stockholder as the Company may
reasonably request in writing and as shall be reasonably required
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in connection with any registration, qualification or compliance referred to in
this Section 4.
(h) Rule 144 Reporting.
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With a view to making available the benefits of certain rules and
regulations of the Commission which may permit the sale of the restricted
securities to the public without registration, the Company agrees to:
(A) make and keep public information available as those terms
are understood and defined in Rule 144, at all times from and after
ninety (90) days following the effective date of the first registration
under the Securities Act filed by the Company for an offering of its
securities to the general public;
(B) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act at any time after it has
become subject to such reporting requirements; and
(C) so long as the Holder owns any Registrable Securities,
furnish to the Holder upon request, a written statement by the Company as
to its compliance with the reporting requirements of Rule 144 (at any
time from and after ninety (90) days following the effective date of the
first registration statement filed by the Company for an offering of its
securities to the general public), and of the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of
the Company, and such other reports and documents so filed as the Holder
may reasonably request in availing itself of any rule or regulation of
the Commission allowing the Holder to sell any such securities without
registration.
(i) "Market Stand-off" Agreement. Each of the Holders agrees, if
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requested by the Company and an underwriter of shares of Common Stock (or other
securities) of the Company, not to sell or otherwise transfer or dispose of any
shares of Common Stock (or other securities) of the Company held by such Holder
during the 90-day period (or such longer period if requested by such
underwriter, up to 180 days) following the effective date of a registration
statement of the Company filed under the Securities Act, provided that:
(i) such agreement only applies to the first such registration
statement of the Company which includes securities to be sold on the Company's
behalf to the public in an underwritten offering; and
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(ii) all officers and directors of the Company enter into similar
agreements.
If requested by the underwriters, the Holders shall execute a separate
agreement to the foregoing effect. The Company may impose stop-transfer
instructions with respect to the shares (or securities) subject to the foregoing
restriction until the end of said 90-day period (or such longer period if
requested by the underwriter, up to 180 days). The provisions of this Section
4(i) shall be binding upon any transferee who acquires Registrable Securities,
whether or not such transferee is entitled to the registration rights provided
hereunder.
(j) Termination. The registration rights set forth in this Section 4
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shall not be available to any Holder if, in the opinion of counsel to the
Company, all of the Registrable Securities then owned by such Holder could be
sold in any 90-day period pursuant to Rule 144 under the Securities Act (without
giving effect to the provisions of Rule 144(k)). The Company will arrange for a
provision to the transfer agent for such shares of an opinion of counsel in
connection with any such sale under Rule 144.
5. TERMINATION. The Agreement shall terminate on the date on which
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the Board and the holder or holders of a majority of the Securities issued under
the Stock Plan shall have agreed in writing to terminate this Agreement;
provided that Section 3 shall terminate upon an Initial Public Offering.
Notwithstanding anything in this Agreement to the contrary, if a
Management Stockholder's employment with the Company or its Subsidiaries is
terminated, whether by such Management Stockholder or by the Company or its
Subsidiaries, whether with or without cause, all rights of such Management
Stockholder under this Agreement (but not the obligations) shall be terminated;
provided that the Company's rights under Section 3 shall remain in full force
and effect.
6. INTERPRETATION OF THIS AGREEMENT
--------------------------------
(a) Terms Defined. As used in this Agreement, the following terms
-------------
have the respective meaning set forth below:
Affiliate: means any person or entity, directly or indirectly,
---------
controlling, controlled by or under common control with such person or entity.
Exchange Act: the Securities Exchange Act of 1934, as amended.
------------
Initial Public Offering: means the completion of an underwritten
-----------------------
initial public offering for shares of Common Stock pursuant to a registration
statement under the Securities Act
13
resulting in net proceeds to the Company and/or any selling stockholders of not
less than $25,000,000.
Other Stockholders: holders of securities of the Company other than
------------------
Registrable Securities who are entitled, by contract with the Company or
otherwise, to have securities included in a registration.
Person: an individual, partnership, joint-stock company, corporation,
------
limited liability company, trust or unincorporated organization, and a
government or agency or political subdivision thereof.
Security, Securities: as defined in Section 2(1) of the Securities
--------------------
Act.
Securities Act: the Securities Act of 1933, as amended.
--------------
Subsidiary: a corporation of which the Company owns, directly or
----------
indirectly, more than fifty percent (50%) of the Voting Stock.
Transfer: any sale, assignment, pledge, hypothecation, or other
--------
disposition or encumbrance, whether or not for consideration.
Voting Stock: securities of any class or classes of a corporation the
------------
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
(b) Accounting Principles. Where the character or amount of any asset
---------------------
or amount of any asset or liability or item of income or expense is required to
be determined or any consolidation or other accounting computation is required
to be made for the purposes of this Agreement, this shall be done in accordance
with U.S. generally accepted accounting principles at the time in effect, to the
extent applicable, except where such principles are inconsistent with the
requirements of this Agreement.
(c) Directly or Indirectly. Where any provision in this Agreement
----------------------
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
(d) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York applicable to contracts
made and to be performed entirely within such State.
14
(e) Section Headings. The headings of the sections and subsections of
----------------
this Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
7. MISCELLANEOUS
-------------
(a) Notices.
-------
(i) All communications under this Agreement shall be in writing and
shall be delivered by hand or mailed by overnight courier or by registered or
certified mail, postage prepaid:
(A) if to any of the Management Stockholders, at the address of such
Management Stockholder shown on Schedule I, or at such other address as the
Management Stockholder may have furnished the Company in writing;
(B) if to Warburg, at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxx X. Xxxxxx, or at such other address as Warburg may have
furnished the Company in writing; and
(C) if to the Company, to T.K.G. Acquisition Corp., c/o Warburg,
Xxxxxx Ventures, L.P., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxx X. Xxxxxx, or at such other address as it may have furnished
in writing to each of the Stockholders.
(ii) Any notice so addressed shall be deemed to be given: if
delivered by hand, on the date of such delivery; if mailed by courier, on the
first business day following the date of such mailing; and if mailed by
registered or certified mail, on the third business day after the date of such
mailing.
(b) Reproduction of Documents. This Agreement and all documents
-------------------------
relating thereto, including, without limitation, (i) consents, waivers and
modifications which may hereafter be executed and , (ii) documents received by
each Stockholders pursuant hereto and (iii) financial statements, certificates
and other information previously or hereafter furnished to each Management
Stockholder, may be reproduced by each Management Stockholder by an
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and each Management Stockholder may destroy any original
document so reproduced. All parties hereto agree and stipulate that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by each Management
Stockholder in the regular course of business) and that any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.
15
(c) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and assigns of each of the parties.
(d) Entire Agreement; Amendment and Waiver. This Agreement, together
--------------------------------------
with the Stock Plan, and the Subscription Agreements constitute the entire
understanding of the parties hereto relating to the subject matter hereof and
supersede all prior understandings among such parties. This Agreement may be
amended, and the observance of any term of this Agreement may be waived, with
(and only with) the written consent of Warburg and the holder or holders (other
than Warburg) of a majority of the shares of Common Stock.
(e) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
16
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement as of the date first above written.
T.K.G. ACQUISITION CORP.
By: _______________________________
Name:
Title:
WARBURG, XXXXXX VENTURES, L.P.
By: Warburg, Xxxxxx & Co.,
General Partner
By: _______________________________
Name:
Title:
MANAGEMENT STOCKHOLDERS:
-----------------------------------
Xxxxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxx
17
SCHEDULE I
Management Stockholders
-----------------------
Xxxxxx X. Xxxxxxx
[address]
Xxxx X. Xxxxx
[address]
EXHIBIT A
---------
JOINDER AGREEMENT
-----------------
Joinder Agreement, dated as of this ____ day of February, 1996, by and
among T.K.G. Acquisition Corp., a Delaware corporation (the "Company"), and the
undersigned (the "Stockholder").
Reference is made to that certain Stockholders Agreement (Common Stock
Under Stock Incentive Plan) (the "Stockholders Agreement"), dated as of February
29, 1996, by and among T.K.G. Acquisition Corp., Warburg, Xxxxxx Ventures, L.P.
and the other holders of Securities from time to time party thereto, as the same
may from time to time be amended.
By executing this Joinder Agreement, the Stockholder hereby agrees to
be bound by the terms of the Stockholders Agreement as if he were an original
signatory to such Agreement and shall be deemed to be a Management Stockholder
thereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Joinder
Agreement as of the date first above written.
------------------------------
Name:
Agreed to and Accepted by:
T.K.G. ACQUISITION CORP.
_____________________________
Name:
Title:
