EXHIBIT 4.1
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STOCKHOLDERS' AGREEMENT
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by and among
WKI HOLDING COMPANY, INC.,
the SENIOR LENDERS,
the SUBORDINATED LENDERS,
the XXXXXX ENTITIES party hereto,
the MANAGEMENT MEMBERS party hereto,
and
the NEW DIRECTORS party hereto
Dated as of January 31, 2003
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TABLE OF CONTENTS
PAGE
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 2.1 Composition of the Board . . . . . . . . . . . . . . . . . . . 7
Section 2.2 Action by Stockholder Consent . . . . . . . . . . . . . . . . .8
Section 3.1 General Restrictions on Transfer . . . . . . . . . . . . . . . 8
Section 3.2 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.3 Accumulation Limitation . . . . . . . . . . . . . . . . . . . .9
Section 4.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . .9
Section 4.2 Demand Registration . . . . . . . . . . . . . . . . . . . . . 10
Section 4.3 Incidental Registration . . . . . . . . . . . . . . . . . . . 12
Section 4.4 Shelf Registration . . . . . . . . . . . . . . . . . . . . . .13
Section 4.5 Registration Procedures . . . . . . . . . . . . . . . . . . . 14
Section 4.6 Registration Expenses . . . . . . . . . . . . . . . . . . . . 17
Section 4.7 Indemnification by the Company . . . . . . . . . . . . . . . .18
Section 4.8 Indemnification by Holders . . . . . . . . . . . . . . . . . .19
Section 4.9 Conduct of Indemnification Proceedings . . . . . . . . . . . .19
Section 4.10 Contribution . . . . . . . . . . . . . . . . . . . . . . . . .20
Section 4.11 Participation in Underwritten Registrations . . . . . . . . . 21
Section 4.12 Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Section 4.13 Holdback Agreements. . . . . . . . . . . . . . . . . . . . . .21
Section 5.1 Tag-Along Right. . . . . . . . . . . . . . . . . . . . . . . .22
Section 5.2 Drag-Along Right. . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.1 Representations and Warranties of the Company . . . . . . . . 25
Section 6.2 Representations and Warranties of the Holders . . . . . . . . 25
Section 7.1 Exercise of Options; Vesting of New Common Stock . . . . . . .25
Section 7.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . .26
Section 7.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.5 Community Property States . . . . . . . . . . . . . . . . . . 26
Section 7.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . .26
Section 7.7 Specific Performance . . . . . . . . . . . . . . . . . . . . .26
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TABLE OF CONTENTS
(continued)
PAGE
Section 7.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.9 Successors and Assigns . . . . . . . . . . . . . . . . . . . .28
Section 7.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Section 7.11 Amendments and Waivers . . . . . . . . . . . . . . . . . . . .28
Section 7.12 Interpretation; Absence of Presumption . . . . . . . . . . . .28
Section 7.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . .28
Section 7.14 Further Assurances . . . . . . . . . . . . . . . . . . . . . .29
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THIS STOCKHOLDERS' AGREEMENT (the "Agreement"), dated as of January
31, 2003, is made by and among WKI Holding Company, Inc., a Delaware corporation
(the "Company"), the Senior Lenders, the Subordinated Lenders, the Xxxxxx
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Entities party hereto(, the New Directors and the Management Members. Reference
is made to Article I hereof for the definition of certain capitalized terms used
herein.
BACKGROUND
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A. The Company and certain of its affiliates (collectively, the
"Debtors") were debtors and debtors in possession under chapter 11 of the United
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States Bankruptcy Code.
B. Each of the Senior Lenders was a holder of claims against the
Debtors relating to the Prepetition Credit Facility; each of the Subordinated
Lenders was a holder of claims against the Company relating to the 9-5/8% Senior
Subordinated Notes; and the Xxxxxx Entities were the holders of claims against
the Debtors relating among others to the Xxxxxx Credit Facility, the Prepetition
Credit Facility, the 9-5/8% Senior Subordinated Notes and other prepetition
agreements between or among the Xxxxxx Entities and one or more of the Debtors.
C. Pursuant to the Plan, (i) a total of 5,752,179 shares of New
Common Stock are being issued to the Senior Lenders, the Subordinated Lenders
and the Xxxxxx Entities, in the amounts set forth on Schedule 1 annexed hereto
(subject to adjustment for rounding as provided in Section VI.G.2 of the Plan)
on account of their respective claims and (ii) the Company entered into the
Management Stock Plan. In accordance with the Management Stock Plan, a total of
710,944 shares of New Common Stock (subject to adjustment as provided in the
Management Stock Plan) have been reserved for issuance pursuant to options that
may be granted thereunder to employees and directors of the Company and its
subsidiaries.
D. Article IV. I of the Plan provides that each of the Xxxxxx
Entities and each Senior Lender and Subordinated Lender that receives New Common
Stock under the Plan and each participant in the Management Stock Plan shall
automatically be bound by a Stockholders' Agreement.
E. This Agreement constitutes the Stockholders' Agreement referred
to in the Plan.
F. Pursuant to the Confirmation Order, this Agreement has been
approved as valid and binding on the Company, the Senior Lenders, the
Subordinated Lenders, the Xxxxxx Entities, the participants in the Management
Stock Plan and their successors and assigns in accordance the terms hereof.
AGREEMENT
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In consideration of the premises and the covenants and agreements
contained herein and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, and in accordance with the Plan and the Confirmation Order, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Capitalized terms not defined herein shall
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have their respective meanings specified in the Plan. As used in this Agreement,
the following terms shall have the following respective meanings:
(a) "1933 Act" shall mean the Securities Act of 1933, as amended, and
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the regulations promulgated thereunder.
(b) "1934 Act" shall mean the Securities Exchange Act of 1934, as
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amended, and the regulations promulgated thereunder.
(c) "9-5/8% Senior Subordinated Notes" shall mean the 9-5/8% Senior
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Subordinated Notes of the Company issued pursuant to that certain Indenture
dated as of May 5, 1998 between the Company and The Bank of New York, as
indenture trustee.
(d) "Affiliate" shall have the meaning ascribed thereto in Rule 12b-2
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promulgated under the 1934 Act, and as in effect on the date hereof.
(e) "Agreement" shall mean this Agreement, as amended, modified,
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restated or supplemented from time to time.
(f) "Beneficially Own" shall mean, with respect to any security, having
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direct or indirect "beneficial ownership" of such security, as determined
pursuant to Rule 13d-3 under the 1934 Act, including without limitation pursuant
to any agreement, arrangement or understanding, whether or not in writing.
(g) "Board" shall mean the board of directors of the Company.
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(h) "Xxxxxx Entities" shall mean Xxxxxx Capital, Inc., Xxxxxx Chemical,
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Inc., Xxxxxx Holdings, Inc., Debtco, LLC and KPH, LLC.
(i) "Xxxxxx Credit Facility" shall mean the Amended and Restated Credit
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Agreement dated as of April 12, 2001 by and between the Company and Xxxxxx
Holdings, Inc. (as assignee of Xxxxxx, Inc.), as modified, amended or
supplemented through the date hereof.
(j) "Xxxxxx Termination Date" shall have the meaning specified in
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Section 2.1(d).
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(k) "Business Day" shall mean any day that is not a Saturday, a Sunday
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or other day on which banks are required or authorized by law to be closed in
The City of New York.
(l) "Cause" shall mean, with respect to a Director, (i) willful and
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continued failure or continued inability to perform substantially his or her
duties to the Company as a Director, (ii) willful conduct that is or is
reasonably likely to be significantly injurious to the Company monetarily or
otherwise, (iii) abuse of any illegal drug or other controlled substance or
habitual intoxication or (iv) conviction for, or guilty plea to, or plea of nolo
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contendre with respect to a felony.
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(m) "CEO" shall mean the Chief Executive Officer of the Company.
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(n) "Chairman" shall mean the chairman of the Board.
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(o) "Committee" shall mean a committee or subcommittee of the Board.
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(p) "Company" shall have the meaning specified in the preamble.
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(q) "Confirmation Order" shall mean the final Order of the United
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States Bankruptcy Court of the Northern District of Illinois, Eastern Division,
dated December 23, 2002 confirming the Plan, a copy of which is attached hereto
as Exhibit A.
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(r) "Debtors" shall have the meaning specified in paragraph A of the
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Background section.
(s) "Demand Registration" shall have the meaning specified in Section
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4.2(a).
(t) "Demanding Holder" shall have the meaning specified in Section
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4.2(a).
(u) "Director" shall mean a member of the Board.
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(v) "Drag-Along Right" shall have the meaning specified in Section 5.2.
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(w) "Drag-Along Rights Notice" shall have the meaning specified in
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Section 5.2.
(x) "Effective Date" shall mean the Effective Date of the Plan as
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defined therein, which Effective Date occurred on or about the date hereof.
(y) "Fully-Diluted Shares" means the number of shares of New Common
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Stock issued and outstanding assuming the exercise of all outstanding options,
warrants and rights to acquire, and the conversion of any securities convertible
into, shares of New Common Stock, whether or not then vested or exercisable.
When calculating the percentage of the Fully-Diluted Shares owned by a specified
Person, such Person shall be deemed to own all shares of New Common Stock
Beneficially Owned by such Person assuming the exercise of all outstanding
options, warrants and rights to acquire, and the conversion of any securities
convertible into, shares of New Common Stock, whether or not then vested or
exercisable.
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(z) "Group" shall mean any syndicate or group that would be considered
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a "person" for purposes of Section 13(d) of the 1934 Act; provided, however,
that neither the Holders nor any group of parties hereto shall be considered a
Group for purposes of this Agreement solely as a result of their entering into
this Agreement.
(aa) "Holder" shall mean each Senior Lender, each Subordinated Lender,
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each Xxxxxx Entity, any Holder pursuant to Section 7.1 hereof and any Permitted
Transferee.
(bb) "Holder Shelf Offering" shall have the meaning specified in
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Section 4.4(c).
(cc) "Incidental Registration" shall have the meaning specified in
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Section 4.3(a).
(dd) "Initial Public Offering" means the consummation of the first
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Public Offering.
(ee) "Majority Holders" shall mean Holders that Beneficially Own, in
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the aggregate, more than 50% of the Registrable Securities.
(ff) "Majority Senior Lenders" shall have the meaning specified in
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Section 2.1(c).
(gg) "Management Members" means those employees of the Company
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receiving after the Effective Date options to purchase New Common Stock under
the Management Stock Plan. Such employees shall be listed on Schedule 2 annexed
hereto and such Schedule shall be amended, modified, restated or supplemented by
the Company from time to time to reflect the granting or the exercise of stock
options pursuant to the Management Stock Plan and any Option Agreement entered
into in connection therewith.
(hh) "Management Stock Plan" shall have the meaning ascribed thereto in
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the Plan.
(ii) "Material Disclosure Event" means, as of any date of
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determination, any acquisition or divestiture or other transaction or
extraordinary event relating to the Company which is nonpublic and would be
required to be disclosed in a registration statement so that such registration
statement would not be materially misleading.
(jj) "NASDAQ" means the Nasdaq National Market.
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(kk) "New Common Stock" means the common stock, par value $0.01 per
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share, of the Company initially issued to the Holders pursuant to the Plan and
any other such common stock issued by the Company, including pursuant to the
Option Agreements, and outstanding.
(ll) "New Directors" means those Directors identified on Schedule 3
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annexed hereto as receiving options to purchase New Common Stock under the
Management Stock Plan following the Effective Date, as such Schedule may be
amended, modified, restated or supplemented by the Company from time to time to
reflect the granting or the exercise of options pursuant to the Management Stock
Plan and any Option Agreement entered into in connection therewith.
(mm) "Option Agreements" means agreements entered into by the Company
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providing for issuance of options issued pursuant to the Management Stock Plan.
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(nn) "Other Parties" shall mean the New Directors and the Management
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Members.
(oo) "Participation Notice" shall have the meaning specified in Section
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5.1.
(pp) "Participating Party" shall have the meaning specified in Section
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5.1.
(qq) "Permitted Transferee" shall mean, as to any Holder or Holders of
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New Common Stock, any Person who acquires from such Holder or Holders, in a
single transfer or series of related transfers made in compliance with the
applicable terms of this Agreement (including those set forth in Section 3.1)
either (i) all of such Holder's or Holders' shares of New Common Stock or (ii)
any lesser number of shares of New Common Stock if immediately following such
transfer or series of related transfers, such Person Beneficially Owns 1% or
more of the shares of New Common Stock then outstanding, other than a transferee
pursuant to a Public Offering.
(rr) "Person" shall mean any individual, corporation, partnership,
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limited liability company, joint venture, trust, unincorporated organization,
other form of business or legal entity or government authority.
(ss) "Plan" shall mean the Second Amended Joint Plan of Reorganization
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of World Kitchen, Inc., its Parent Corporation and its Subsidiary Debtors, dated
November 15, 2002, as modified, and confirmed on December 23, 2002 pursuant to
the Confirmation Order.
(tt) "Prepetition Credit Facility" shall mean the Amended and Restated
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Credit Agreement, dated as of April 12, 2001, among the Company; the several
lenders from time to time party thereto and JPMorgan Chase Bank, f/k/a The Chase
Manhattan Bank, as administrative agent; together with the Guarantee (as defined
therein), as the same may have been modified, amended or supplemented, together
with all instruments and agreements related thereto.
(uu) "Public Offering" shall mean the sale of shares of New Common
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Stock for cash by the Company or by one or more stockholders, in an underwritten
public offering registered under the 1933 Act following the date hereof.
(vv) "Register," "registered" and "registration" have the meaning
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specified in Section 4.1(a).
(ww) "Registrable Securities" shall have the meaning specified in
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Section 4.1(b).
(xx) "Required Period" shall have the meaning specified in Section
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4.4(b).
(yy) "SEC" shall mean the Securities and Exchange Commission.
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(zz) "Senior Lender" shall mean each holder of claims against the
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Debtors relating to the Prepetition Credit Facility, that is listed on Schedule
1, other than, prior to the Xxxxxx Termination Date, the Xxxxxx Entities or any
Affiliate of a Xxxxxx Entity.
(aaa) "Senior Lender Shares" shall mean the 4,233,512 shares of New
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Common Stock acquired by the Senior Lenders on the Effective Date, and,
following the Xxxxxx Termination Date, shall also include the 294,684 shares of
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New Common Stock acquired by the Xxxxxx Entities on the Effective Date relating
to the Xxxxxx Entities' claims against the Debtors relating to the Prepetition
Credit Facility and held by the Xxxxxx Entities immediately following the Xxxxxx
Termination Date, in each case, as the same may be transferred to their
Permitted Transferees.
(bbb) "Shelf Registration Statement" shall mean a shelf registration
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statement under Rule 415 under the 1933 Act.
(ccc) "Shelf Request" shall have the meaning specified in Section
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4.4(a).
(ddd) "Selling Holder" shall have the meaning specified in Section 5.1.
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(eee) "Subordinated Lender" shall mean each holder of claims against
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the Debtors relating to the 9-5/8% Senior Subordinated Notes.
(fff) "Subsidiary" of any Person shall mean another Person, an amount
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of the voting securities, other voting ownership or voting partnership or
membership interests, of which is sufficient to elect at least a majority of its
board of directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned or controlled
directly or indirectly by such Person.
(ggg) "Successful Offer" shall mean an offer to purchase all of the
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outstanding shares of New Common Stock that (i) is made for a period of at least
twenty business days pursuant to a writing that is delivered to all Holders and
meets all of the informational, timing, withdrawal and proration (but not
necessarily the filing) requirements applicable to tender offers registered with
the SEC, and (ii) is accepted or otherwise consented to by the holders of at
least 50% of the shares of New Common Stock not held, contracted for or
Beneficially Owned by the purchaser at the time such offer is first announced.
(hhh) "Suspension Notice" shall have the meaning specified in Section
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4.5.
(iii) "Suspension Period" shall have the meaning specified in Section
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4.5.
(jjj) "Tag-Along/Drag-Along Termination Date" means the earliest of the
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date of (i) the consummation of the transaction resulting from the first
exercise of Tag-Along Rights or Drag-Along Rights, (ii) consummation of a merger
of the Company with any entity other than one of the Company's wholly owned
Subsidiaries as a result of which the holders of New Common Stock immediately
prior to consummation of such merger own less than 50% of the voting power of
the surviving entity and (iii) the Public Offering of more than 25% of the
shares of New Common Stock held by parties to this Agreement other than the
Company and its wholly owned Subsidiaries.
(kkk) "Tag-Along/Drag-Along Transaction" means a transaction or series
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of related transactions involving the sale or other transfer of more than 60% of
the outstanding shares of New Common Stock to any Person or Group.
(lll) "Tag-Along Right" shall have the meaning specified in Section
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5.1.
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(mmm) "Tag-Along Rights Notice" shall have the meaning specified in
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Section 5.1.
ARTICLE II
BOARD COMPOSITION
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Section 2.1 Composition of the Board.
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(a) The parties hereto and their Permitted Transferees shall take all
necessary action as is required under applicable law to cause the number of
Directors comprising the Board to be seven (7) and the Board to be
non-classified.
(b) The parties hereto and their Permitted Transferees shall take all
necessary action as is required under applicable law to cause the CEO to be
elected to the Board and to serve as a Director until such time as such Person
ceases to be the CEO.
(c) The parties hereto and their Permitted Transferees shall take all
necessary action as is required under applicable law to cause five designees of
Holders that Beneficially Own, in the aggregate, more than 50% of the
outstanding Senior Lender Shares (the "Majority Senior Lenders"), to be elected
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to the Board. The Majority Senior Lenders shall designate one of the Directors,
who may, but need not, be an officer of the Company, to serve as Chairman.
(d) The parties hereto and their Permitted Transferees shall take all
necessary action as is required under applicable law to cause a designee of the
Xxxxxx Entities to be elected to the Board; provided, that the right of the
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Xxxxxx Entities to designate a Director shall terminate at such time as the
Xxxxxx Entities Beneficially Own less than the lesser of (i) the number of
shares (as adjusted for stock splits and similar transactions) of New Common
Stock received by the Xxxxxx Entities pursuant to the Plan and (ii) 10% of the
Fully-Diluted Shares of New Common Stock (the "Xxxxxx Termination Date").
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Following the Xxxxxx Termination Date, such Director shall be designated by the
Majority Senior Lenders.
(e) In the event that a vacancy in the Board is created at any time by
the death, disability, retirement, resignation or removal (with or without
Cause) of any Director, such vacancy shall be filled as elected by the
constituency entitled under this Section 2.1 to designate the Director whose
death, disability, retirement, resignation or removal (with or without Cause)
resulted in such vacancy. In the event the Xxxxxx Entities or the Majority
Senior Lenders, as the case may be, no longer have the right to designate
Directors pursuant to Section 2.1(c) or 2.1(d), as the case may be, the
Directors designated by such parties(y) shall promptly resign from the Board.
(f) Any Director may be removed from the Board (i) for Cause by Holders
that Beneficially Own, in the aggregate, at least two-thirds of the outstanding
shares of New Common Stock or (ii) without Cause by the constituency entitled
under this Section 2.1 to designate the Director being removed.
(g) The provisions of this Section 2.1 shall terminate upon the
earliest to occur of (i) the consummation of a Successful Offer; (ii) the
consummation of a merger of the Company with any entity other than one of the
Company's wholly owned Subsidiaries as a result of which the holders of New
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Common Stock immediately prior to consummation of such merger own less than 50%
of the voting power of the surviving entity and (iii) the Public Offering of
more than 50% of the shares of New Common Stock held by parties to this
Agreement other than the Company and its wholly owned Subsidiaries.
Section 2.2 Action by Stockholder Consent. The parties hereto and
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their Permitted Transferees shall take all necessary action as is required under
applicable law to permit any action which may be taken by stockholders of the
Company at an annual or other meeting of the Company to be taken upon the
written consent of the holders of a majority of the shares of New Common Stock
issued and outstanding, or any other vote required pursuant to this Agreement,
without a meeting.
ARTICLE III
RESTRICTIONS ON TRANSFER OF STOCK
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Section 3.1 General Restrictions on Transfer. None of the Holders
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shall directly or indirectly sell, offer, transfer, assign, pledge, hypothecate
or otherwise dispose of any shares of the New Common Stock in a manner that
violates the provisions of this Agreement or any applicable federal or state
securities laws. No transfer, other than pursuant to a Public Offering or
pursuant to Article V, shall be permitted under this Agreement other than to a
Permitted Transferee who agrees in writing, in form and substance reasonably
satisfactory to the Company, to become bound, and becomes bound, by all of the
terms of this Agreement. Any transfer of shares of New Common Stock in
violation of this Agreement shall be void and of no effect for all purposes.
Section 3.2 Legend.
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(a) In addition to any other legend that may be required, all
certificates representing shares of New Common Stock shall bear a legend
stamped, typed or otherwise legibly placed on the face or reverse side thereof
substantially in the form set forth below:
NOTICE IS HEREBY GIVEN THAT the securities represented by this
certificate have not been registered under the Securities Act of
1933, as amended, or the securities laws of any state of the
United States or any non-U.S. jurisdiction. The securities cannot
be offered, sold, transferred or otherwise disposed of except (i)
pursuant to an effective registration statement or amendment
thereto under such Act and any other applicable laws or (ii)
pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of such Act and such other
applicable laws. The sale, transfer or other disposition of the
securities represented by this certificate and certain other
rights and obligations of the holder of this certificate are also
subject to the Stockholders' Agreement, dated as of January 31,
2003, by and among WKI Holding Company, Inc. (the "Company") and
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the other parties thereto (copies of which are available for
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review at the principal office of the Company), and the Company
reserves the right to refuse the transfer of such securities
until all terms and conditions have been fulfilled with respect
to such transfer as set forth in such agreement.
(b) If any shares of New Common Stock for which a legend is required
shall cease to be Registrable Securities or are sold pursuant to a Public
Offering, the Company shall, upon the written request of the holder thereof and
receipt of such other documentation as may be reasonably requested by the
Company, issue to such holder a new certificate evidencing such shares without
the first sentence of the legend required by Section 3.2(a) endorsed thereon.
If any shares of New Common Stock cease to be subject to this Agreement, the
Company shall, upon the written request of the holder thereof and receipt of
such other documentation as may be reasonably requested by the Company, issue to
such holder a new certificate evidencing such shares without the second sentence
of the legend required by Section 3.2(a) endorsed thereon.
Section 3.3 Accumulation Limitation. No party hereto shall enter into
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any definitive agreement or engage in any transaction if, as a result of and
upon consummation of such agreement or transaction, any Person or Group would
Beneficially Own, in the aggregate, 35% or more of the Fully-Diluted Shares of
New Common Stock, except pursuant to a Successful Offer or unless such Person or
Group shall have made a Successful Offer. For the avoidance of doubt, the
limitations set forth in this Section 3.3 shall apply to purchases of shares of
New Common Stock pursuant to Option Agreements. Any agreement, arrangement or
understanding, or any purchases of shares of New Common Stock, made in violation
of this Section 3.3 shall be void, and the purchaser shall not thereby obtain
ownership (or any voting, economic or other benefits of ownership) of any such
shares of New Common Stock. The provisions of this Section 3.3 shall terminate
upon the earliest to occur of (i) the consummation of a Successful Offer; (ii)
the consummation of a merger of the Company with any entity other than one of
the Company's wholly owned Subsidiaries as a result of which the holders of New
Common Stock immediately prior to consummation of such merger own less than 50%
of the voting power of the surviving entity and (iii) the Public Offering of
more than 25% of the shares of New Common Stock held by parties to this
Agreement other than the Company and its wholly owned Subsidiaries.
ARTICLE IV
REGISTRATION RIGHTS
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Section 4.1 Certain Definitions
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(a) "Register," "registered," and "registration" refer to a
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registration effected by preparing and filing a registration statement or
similar document in compliance with the 1933 Act, and the automatic
effectiveness or the declaration or ordering of effectiveness of such
registration statement or document.
(b) "Registrable Securities" shall mean issued and outstanding (i)
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shares of New Common Stock, (ii) shares of New Common Stock issuable pursuant to
the Option Agreements and (iii) any securities paid, issued or distributed in
respect of any of the shares of New Common Stock by way of stock dividend, stock
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split or distribution, or in connection with a combination of shares,
recapitalization, reorganization, merger or consolidation or otherwise;
provided, however, that (1) any shares of New Common Stock that have previously
been registered pursuant to a Demand Registration or are sold to the public
pursuant to a registered public offering or pursuant to Rule 144 under the 1933
Act or another exemption from the registration requirements of the 1933 Act
pursuant to which the shares of New Common Stock are thereafter freely tradeable
without restriction under the 1933 Act, or that cease to be outstanding, shall
cease to be Registrable Securities; (2) any shares of New Common Stock that are
transferable pursuant to paragraph (k) of Rule 144 (or any successor provision
thereto) shall not be Registrable Securities; and (3) any Registrable Securities
acquired by any Holder or any of its Affiliates from another Holder or any of
its Affiliates in a transaction that is not a Public Offering shall continue to
be Registrable Securities.
Section 4.2 Demand Registration.
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(a) One or more Holders, individually or in the aggregate, following
the Effective Date holding (x) more than 30% of the Registrable Securities or
(y) if there has been a prior Public Offering, more than the lesser of (A) 20%
of the Registrable Securities and (B) 15% of the issued and outstanding New
Common Stock, shall have the right at any time to request that the Company
register under the 1933 Act, at least 50% of the Registrable Securities held by
it or them (any registration resulting from such a request a "Demand
------
Registration" with such Holder or Holders making such request the "Demanding
------------ ---------
Holder"). A request for a Demand Registration shall specify the number of
------
shares of Registrable Securities proposed to be sold. A registration made
pursuant to such a request shall not qualify as a Demand Registration hereunder
until (a) the registration statement relating thereto has been declared
effective by the SEC and (b) the Demanding Holder is able to register at least
50% of the Registrable Securities requested to be included in such registration.
The Company shall not be required to effect, and the Holders shall not be
entitled to request, more than three Demand Registrations of the Company under
this Section 4.2. No Demand Registration may require that a registration
statement become effective earlier than 120 days after the effective date of the
registration statement filed pursuant to the immediately preceding Demand
Registration. For the avoidance of doubt, in the case of any Demand
Registration requested by more than one Demanding Holder, any action to be taken
by the Demanding Holders will be deemed effected upon the written consent of
Demanding Holders holding greater than 50% of the shares of New Common Stock
requested to be included in such Demand Registration.
(b) Promptly (but in no event more than 10 days) after receipt of a
request for a Demand Registration, the Company shall provide notice of such
request to the non-Demanding Holders, and each such non-Demanding Holder shall
have the right, within 10 days after the date of receipt of such notice from the
Company, to request that the Company include in the offering to which the Demand
Registration relates all or a portion of such non-Demanding Holders' Registrable
Securities, pro rata, on the basis of the number of shares of Registrable
Securities proposed to be included in such Demand Registration.
(c) If a Demand Registration is an underwritten offering and the
managing underwriters advise the Company in writing that, in their opinion, the
number of Registrable Securities requested to be included in such offering,
exceeds the number of Registrable Securities, if any, which can be sold therein
10
without adversely affecting the marketability of the offering, the Company shall
include in such Demand Registration (A) first, the number of Registrable
Securities requested to be included in such registration by any Holders reduced
pro rata, if necessary, among such Holders based on the number of Registrable
Securities requested to be included in such registration by each such Holder,
(B) second, if all Registrable Securities requested to be included in such
registration by any Holders have been included, the number of equity securities
to be registered for the account of the Company (or otherwise proposed to be
included at the request of the Company) and (C) third, if all Registrable
Securities requested to be included in such registration by any Holders and the
Company have been included, the number of equity securities to be registered for
the account of any other Person.
(d) Notwithstanding the foregoing, if the Company shall furnish to the
Demanding Holder a certificate signed by an officer of the Company stating that,
in the reasonable good faith judgment of the Board, it would not be in the best
interests of the Company and its stockholders for such registration to be
effected (because the Company is engaging in or intends to engage in a Material
Disclosure Event, but, in any case, not including for purposes of the Company
avoiding its obligations hereunder), then the Company shall have the right to
defer such registration for a period of not more than 90 days after receipt of
the request of the Demanding Holder; provided, however, that (i) the Company
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shall not be entitled to defer its obligation to effect a registration for an
aggregate of more than 180 days within any 365-day period and (ii) the Company
shall make and communicate to the Demanding Holder its determinations under this
paragraph in respect of a registration under this Section 4.2 within 15 days of
the Company's receipt of the Demand Registration notice in respect of such
registration or, to the extent reasonably practicable, promptly after becoming
aware of any transaction or extraordinary event giving rise to such
determination. Each Holder agrees that in the event it receives any notice from
the Company under this Section 4.2(d), it will keep the fact of such notice
confidential, except as otherwise required by law.
(e) The Demanding Holder shall select the book-running and other
managing underwriters in connection with an offering pursuant to a Demand
Registration, and any additional investment bankers and managers to be used in
connection with the offering, in each case which shall be reasonably
satisfactory to the Company. The Demanding Holder shall, in consultation with
the managing underwriter(s), have the power to determine the offering price, the
underwriting discounts and commissions, the terms of the underwriting agreement,
the timing of the registration and related offering and all other administrative
matters related to the registration and related offering. To the extent that
Holders other than the Demanding Holder elect to participate in such Demand
Registration and related offering, such other Holders shall, subject to the
price to such Holders being satisfactory to such Holders, enter into, and sell
their Registrable Securities only pursuant to, the offering pursuant to the
Demand Registration, and shall, subject to the price to such Holders being
satisfactory to such Holders, either commit to attend the closing of the
offering pursuant thereto and take such other actions as may be reasonably
necessary to effect their participation in the offering and to provide any
assurances reasonably requested by the managing underwriter(s) or the Company in
that regard, or shall deliver to the Company, in custody, certificates
representing all Registrable Securities to be included in the registration and
shall execute and deliver to the Company a custody agreement and power of
attorney, each in form and substance appropriate for the purpose of effecting
their participation in such Demand Registration. In addition to any other
11
obligations of the Company hereunder, the Company shall cooperate with the
Holders participating in the Demand Registration and the managing underwriter(s)
and their counsel and take such other actions as may be reasonably necessary in
connection with the foregoing.
Section 4.3 Incidental Registration.
-----------------------
(a) At any time that the Company proposes to register any shares of New
Common Stock under the 1933 Act for sale for its own account or for the account
of others (other than pursuant to a Demand Registration), and the registration
form to be used may be used for the registration of Registrable Securities (each
an "Incidental Registration"), the Company shall give written notice of such
-----------------------
proposed registration to the Holders as soon as practicable (but in no event
less than 20 days before the anticipated filing date of the registration
statement effecting such registration), and the Company shall include in any
such registration by it all Registrable Securities with respect to which it has
received written requests for inclusion therein within 10 days after receipt by
such Holders of such written notice from the Company, subject to the provisions
of Section 4.3(b). If any Incidental Registration is an underwritten offering,
the Company shall select the book-running and other managing underwriters in
connection with such offering and any additional investment bankers and managers
to be used in connection with the offering.
(b) If an Incidental Registration is an underwritten primary
registration on behalf of the Company, the Company shall include in such
registration all Registrable Securities requested to be included in such
registration; provided, however, that if the managing underwriters advise the
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Company in writing that in their opinion the number of such securities requested
to be included in such registration exceeds the number or class which can be
sold in such offering without adversely affecting the marketability of the
offering, the Company shall include in such registration (1) first, the
securities that the Company proposes to register in such Incidental
Registration, (2) second, to the extent Registrable Securities requested for
inclusion therein need to be reduced as a result of such advice, the Registrable
Securities requested to be included in such registration, reduced pro rata among
the Holders of such Registrable Securities on the basis of the number of
Registrable Securities requested to be included in such registration and (3)
third, if all Registrable Securities requested to be included in such
registration by any Holders have been included, the number of equity securities
to be registered for the account of any other Person.
(c) The Company shall not be obligated to include any Registrable
Securities in a registration statement (1) filed on Forms S-4 or S-8 or such
other similar successor forms then in effect under the 1933 Act, (2) pursuant to
which the Company is offering to exchange its own securities or (3) relating
solely to dividend reinvestment plans.
(d) Any Incidental Registration shall be managed by the Company; the
Company shall have the power to select the managing underwriter(s) for such
offering, and shall in consultation with the managing underwriter(s) have the
power to determine the offering price, the underwriting discounts and
commissions, the terms of the underwriting agreement, the timing of the
registration and related offering, counsel to the Company, and all other
administrative matters related to the registration and related offering. To the
extent that the Holders participate in such a registration and related offering,
such Holders shall, subject to the price to such Holders being satisfactory to
12
such Holders, enter into, and sell their Registrable Securities only pursuant
to, the underwriting arranged by the Company, and shall, subject to the price to
such Holders being satisfactory to such Holders, either commit to attend the
closing of the offering and take such other actions as may be reasonably
necessary to effect their participation in the offering and to provide any
assurances reasonably requested by the Company and the managing underwriter(s)
in that regard, or shall deliver to the Company, in custody, certificates
representing all Registrable Securities to be included in the registration and
shall execute and deliver to the Company a custody agreement and a power of
attorney, each in form and substance appropriate for the purpose of effecting
their participation in such registration.
Section 4.4 Shelf Registration.
------------------
(a) In addition to any Demand Registrations pursuant to Section 4.2 and
any Incidental Registrations pursuant to Section 4.3, at any time when the
Company is a registrant entitled to use Form S-3 or any successor form thereto
then in effect under the 1933 Act to register the Registrable Securities, any
Holder or Holders who are Affiliates of the Company at the time such request is
made and holding at least ten percent of the outstanding Registrable Securities
may request in writing (a "Shelf Request") that the Company file, and cause to
-------------
become effective, a Shelf Registration Statement relating to such Holder's or
Holders' Registrable Securities; provided that no Shelf Request may require that
--------
a Shelf Registration Statement become effective earlier than 120 days after the
effective date of the registration statement filed pursuant to the immediately
preceding Demand Registration. Upon receipt of such Shelf Request, the Company
will, in any event, as promptly as reasonably practicable but in any event,
subject to the proviso in the immediately preceding sentence, not later than 45
days after receipt of such Shelf Request, file such Shelf Registration
Statement. The Company shall use reasonable best efforts to cause such Shelf
Registration Statement to be declared effective by the SEC as promptly as
practicable after such filing but in any event not later than 120 days following
the date of the Shelf Request.
(b) The Company shall (i) cause the Shelf Registration Statement
required or requested pursuant to Section 4.4(a) to include a resale prospectus
intended to permit each Holder to sell, at such Holder's election, all or part
of the Registrable Securities held by such Holder without restriction, (ii) use
its reasonable best efforts to prepare and file with the Commission such
amendments and post-effective amendments to such Shelf Registration Statement as
may be necessary to keep such Shelf Registration Statement continuously
effective (subject to any Suspension Period(s) referred to below) for a period
(the "Required Period") ending on the earlier of (x) the first date on which all
---------------
Holders can sell all of the Registrable Securities included in the Shelf
Registration Statement without limit under Rule 144(k) under the 1933 Act and
(y) two years following the date of the Shelf Request, and (iii) use its
reasonable best efforts to cause the resale prospectus to be supplemented by any
required prospectus supplement. The Company shall not be required to effect
more than one registration pursuant to a Shelf Request provided that a
--------
registration pursuant to this Section 4.4 shall not be deemed to have been
effected unless it has been declared effective by the SEC and has remained
effective for the Required Period, it being understood that if, after it has
become effective, an offering of Registrable Securities pursuant to a Shelf
Registration Statement is terminated by any stop order, injunction, or other
order of the SEC or other governmental agency or court, such registration
pursuant thereto will be deemed not to have been effected.
13
(c) During the period of effectiveness of the Shelf Registration
Statement, any Holder shall be entitled to sell all or part of the Registrable
Securities registered on behalf of such Holder pursuant to such Shelf
Registration Statement ("Holder Shelf Offering").
---------------------
(d) Any Holder may, by written notice to the Company, request that the
Company take all reasonable steps necessary to assist and cooperate with such
Holder to facilitate a Holder Shelf Offering, subject to the provisions hereof.
Such request will specify the number or principal amount, as the case may be, of
Registrable Securities proposed to be sold and will also specify the intended
method of disposition thereof, which method of disposition may be, at the
election of such Holder, an underwritten offering; provided, however, that any
--------
Holder Shelf Offering that is an underwritten offering shall count as one of the
three Demand Registrations allowed to the Holders in the aggregate pursuant to
Section 4.2(a). No Holder shall be entitled to request that a Holder Shelf
Offering be an underwritten offering if, as of the date of such request, three
(3) Demand Registrations have already been effected.
(e) Notwithstanding the foregoing, if the Company shall furnish to the
Holder or Holders making a Shelf Request a certificate signed by an officer of
the Company stating that, in the reasonable good faith judgment of the Board, it
would not be in the best interests of the Company and its stockholders for a
registration pursuant to a Shelf Request to be effected (because the Company is
engaging in or intends to engage in a Material Disclosure Event, but in any
case, not including for purposes of the Company avoiding its obligations
hereunder), then the Company shall have the right to defer such registration for
a period of not more than 90 days after receipt of the Shelf Request by the
Holder or Holders; provided, however, that (i) the Company shall not be entitled
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to defer its obligation to effect a registration pursuant to a Shelf Request for
an aggregate of more than 180 days within any 365-day period and (ii) the
Company shall make and communicate to the Holder or Holders making the Shelf
Request its determinations under this paragraph in respect of a registration
under this Section 4.4 within 15 days of the Company's receipt of the Shelf
Request in respect of such registration or, to the extent reasonably
practicable, promptly after becoming aware of any transaction or extraordinary
event giving rise to such determination. Each Holder agrees that in the event
it receives any notice from the Company under this Section 4.4(e), it will keep
the fact of such notice confidential, except as otherwise required by law.
Section 4.5 Registration Procedures. Subject to the limitations in
-----------------------
Sections 4.2, 4.3 and 4.4, whenever the Holders have requested that any
Registrable Securities be registered pursuant to this Agreement, the Company
shall use its reasonable best efforts to effect the registration and sale of
such Registrable Securities in accordance with the intended method of
disposition thereof, and pursuant thereto the Company shall as promptly as
reasonably practicable:
(a) prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use its reasonable best efforts to cause such
registration statement to become effective;
(b) 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 until the earlier
of the date when all such Registrable Securities have been sold and two years
from the date it is declared effective by the SEC, and to comply with the
14
provisions of the 1933 Act with respect to the disposition of all securities
covered by such registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement;
(c) if requested, prior to filing such registration statement or any
amendment or supplement thereto, furnish to the selling Holders and each
managing underwriter, if any, copies thereof, and thereafter furnish to the
selling Holders and each such underwriter, if any, such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including without limitation all exhibits thereto and documents incorporated by
reference therein) and the prospectus included in such registration statement
(including without limitation each preliminary prospectus) as such Holders or
such underwriter may reasonably request in order to facilitate the sale of the
Registrable Securities;
(d) use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller; provided, that the Company shall not be
--------
required to (1) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subsection, (2) subject
itself to taxation in any such jurisdiction, or (3) consent to general service
of process (i.e., service of process which is not limited solely to securities
law violations) in any such jurisdiction;
(e) notify each seller of such Registrable Securities, at any time when
a prospectus relating thereto is required to be delivered under the 1933 Act, of
the happening of any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements therein not misleading, and use its
commercially reasonable efforts to prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not contain an untrue statement of
a material fact or omit to state any fact necessary to make the statements
therein not misleading;
(f) notify each seller of such Registrable Securities and, if requested
by any such seller of Registrable Securities, confirm such notice in writing,
(1) when the prospectus or any prospectus supplement or post-effective amendment
included in such registration statement has been filed, and, with respect to any
registration statement or any post-effective amendment thereto, when the same
has become effective, (2) of any request by the SEC for amendments to such
registration statement or amendments or supplements to the prospectus or for
additional information relating thereto, (3) of the issuance by the SEC of any
stop order suspending the effectiveness of the registration statement under the
1933 Act or of the suspension by any state securities commission of the
qualification of such Registrable Securities, as applicable, for offering or
sale in any jurisdiction, or the initiation of any proceeding for any of the
preceding purposes;
(g) use reasonable best efforts to cause all such Registrable
Securities to be listed on each securities exchange on which the same class of
securities issued by the Company are then listed and, if not so listed, to be
15
listed on the NASDAQ (or such other national securities exchange, as the Board
determines provides the best liquidity, on which such Registrable Securities may
be listed), if so requested by the holders of a majority of the Registrable
Securities being sold, or if so requested by the managing underwriter of an
offering pursuant to such registration statement;
(h) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(i) enter into such customary agreements (including without limitation
underwriting agreements in customary form) and take all such other actions as
the underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities;
(j) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the managers,
officers, members, employees and independent accountants of the Company to
supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration statement;
(k) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC, and make available to the Holders,
as soon as reasonably practicable, an earning statement covering the period of
at least twelve months beginning with the first day of the first full calendar
quarter of the Company after the effective date of the registration statement,
which earning statement shall satisfy the provisions of Section 11(a) of the
1933 Act and Rule 158 promulgated thereunder;
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included in such registration statement for sale in any
jurisdiction, use its reasonable best efforts promptly to obtain the withdrawal
of such order;
(m) use its reasonable best efforts to cause such Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the sellers thereof to consummate the disposition of such Registrable
Securities;
(n) obtain a "cold comfort" letter from the independent public
accountants of the Company in customary form and covering such matters of the
type customarily covered by "cold comfort" letters as the holders of a majority
of the Registrable Securities being sold reasonably request;
(o) cooperate, and cause its management to cooperate, in the selling
effort of such offering, and, if the managing underwriter or holders owning a
majority of the Registrable Securities being sold in such offering reasonably
request, coordinate and conduct a "road show" in connection with such offering;
and
16
(p) otherwise facilitate such registration and related offering.
Notwithstanding the foregoing, the Company may, by notice in writing
to each Holder, suspend the rights of the Holders to use any prospectus included
in any Demand Registration Statement, Incidental Registration Statement or Shelf
Registration Statement for any period determined by the Company (subject to the
next sentence) if there shall occur a Material Disclosure Event and, the Company
furnishes to such Holders a certificate (a "Suspension Certificate") signed by
----------------------
an officer of the Company stating that such Material Disclosure Event has
occurred and that it would not be in the best interests of the Company and its
stockholders to disclose such Material Disclosure Event at such time (such
period, a "Suspension Period"). Notwithstanding the foregoing, no Suspension
-----------------
Period shall exceed 90 days in any one instance and be invoked by the Company
more than two times in any 12-month period; provided, however, that if the
Company deems it necessary to file a post-effective amendment to any Shelf
Registration Statement in order to comply with Section 4.4(b) hereof or to
include other information provided by a Holder for inclusion in the prospectus
included in any Demand Registration Statement, Incidental Registration Statement
or Shelf Registration Statement, then such period of time from the date of
filing such post-effective amendment until the date on which the applicable
registration statement, as so amended, is declared effective by the SEC shall
not be treated as a Suspension Period. In the event a Suspension Certificate is
delivered to Holders pursuant to this Section 4.5(p), the resulting Suspension
Period shall automatically terminate on the third business day following the
first such delivery of a Suspension Certificate unless prior to such time the
Board determines that such Material Disclosure Event has occurred and that it
would not be in the best interests of the Company and its stockholders to
disclose such Material Disclosure Event at such time. Each Holder agrees that,
upon receipt of notice from the Company of the occurrence of a Material
Disclosure Event (a "Suspension Notice"), such Holder will forthwith discontinue
-----------------
any disposition of Registrable Securities pursuant to any registration statement
or any public sale or distribution including pursuant to Rule 144 until the
earlier of (i) the expiration of the Suspension Period and (ii) such Holder's
receipt of a notice from the Company to the effect that such suspension has
terminated. If so directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies,
then in such Holder's possession, of the most recent prospectus covering such
Registrable Securities at the time of receipt of such Suspension Notice. In the
event of a Suspension Notice, the Company shall, promptly after such time as the
related Material Disclosure Event no longer exists, take any and all actions
necessary or desirable to give effect to any Holders' rights under this
Agreement that may have been affected by such notice, including the Holders'
rights with respect to any registration statement. Each Holder agrees that in
the event it receives any such notice from the Company, it will keep the fact of
such notice confidential, except as otherwise required by law.
The Company may require any selling Holder promptly to furnish in
writing to the Company such information regarding such Holder's plan of
distribution of the Registrable Securities and other information as the Company
may from time to time reasonably request or as may be legally required in
connection with such registration.
Section 4.6 Registration Expenses. In connection with any Demand
---------------------
Registration, Incidental Registration or Shelf Request, each selling Holder
shall be responsible for any underwriting discounts or commissions that may be
payable in connection with the sale of its respective securities. The Company
17
shall pay all other expenses incurred in connection with such registration,
including without limitation (1) all filing fees with the SEC, (2) fees and
expenses of compliance with securities or blue sky laws (including without
limitation reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the securities), (3) printing expenses, (4) the fees and
expenses incurred in connection with the listing of the securities, (5) fees and
expenses of counsel and independent certified public accountants for the Company
(including without limitation the expenses of any comfort letters pursuant to
Section 4.4(o) hereof), (6) the reasonable fees and expenses of any additional
experts retained by the Company in connection with such registration and (7)
fees and expenses of one counsel to the selling Holders, selected by, in the
case of a Demand Registration, the Demanding Holder or, in the case of an
Incidental Registration or Shelf Request, Holders holding a majority of the
Registrable Securities to be included.
Section 4.7 Indemnification by the Company. Unless otherwise agreed to
------------------------------
in the underwriting agreement for the relevant offering, the Company agrees to
indemnify and hold harmless each Person who participates as an underwriter, each
Holder and their respective partners, members, agents, directors, officers and
employees and each Person, if any, who controls any Holder or underwriter within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as
follows:
(a) against any and all losses, liabilities, claims, damages, judgments
and reasonable expenses whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement pursuant to which Registrable Securities of such Holder
were registered under the 1933 Act, including without limitation all documents
incorporated therein by reference, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any prospectus, including without
limitation all documents incorporated therein by reference, or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and
(b) against any and all losses, liabilities, claims, damages, judgments
and reasonable expenses whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, investigation or proceeding by any
governmental agency or body, any stock exchange or similar competent regulatory
body, commenced or threatened, or of any other claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of the Company
(which consent shall not be unreasonably withheld);
provided, however, that this indemnity agreement (i) does not apply to any
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Holder or underwriter with respect to any loss, liability, claim, damage,
judgment or expense to the extent arising out of any untrue statement or alleged
untrue statement of a material fact contained in any prospectus, or the omission
or alleged omission therefrom of a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in any such case made in reliance upon and in conformity
with written information furnished to the Company by such Holder or underwriter
18
expressly for use in a registration statement (or any amendment thereto) or any
prospectus (or any amendment or supplement thereto) and (ii) shall not inure to
the benefit of any Holder or underwriter if a copy of the current prospectus (or
amendment or supplement) was not provided to a purchaser and such current
prospectus (or amendment or supplement) would have cured the defect giving rise
to such loss, claim, damage, liability, judgment or expense; provided, however,
-------- -------
that, in the case of a Holder, such Holder received a copy of the current
prospectus (or amendment or supplement) prior to the sale of any securities to
such purchaser pursuant to such registration.
Section 4.8 Indemnification by Holders. Unless otherwise agreed to in
--------------------------
the underwriting agreement for the relevant offering, each selling Holder
severally agrees to indemnify and hold harmless the Company, each underwriter
and the other selling Holders, and each of their respective partners, directors,
officers and employees (including without limitation each officer of the Company
who signed the registration statement), and each Person, if any, who controls
the Company, any underwriter or any other selling Holder within the meaning of
Section 15 of the 1933 Act, against any and all losses, liabilities, claims,
damages, judgments and expenses described in the indemnity contained in Section
4.7 (provided that any settlement of the type described therein is effected with
the written consent of such selling Holder), as incurred, but only with respect
to untrue statements of a material fact contained in any prospectus or the
omissions, or omissions therefrom of a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in any such case made in reliance upon and in conformity
with written information furnished to the Company by such selling Holder
expressly for use in such registration statement (or any amendment thereto) or
such prospectus (or any amendment or supplement thereto); provided, however,
-------- -------
that such selling Holder shall not be required to provide any such indemnity to
the extent that any such losses, liabilities, claims, damages, judgments or
expenses result from the failure of the Company to promptly amend or take action
to correct or supplement any such prospectus on the basis of corrected or
supplemental information furnished in a timely manner, in writing to the Company
by such selling Holder expressly for such purpose. Notwithstanding any other
provisions of this Section 4.8, in the case of distributions to the public, an
indemnifying Holder shall not be required to pay any amount under this Section
4.8 in excess of the amount by which (A) the total price at which the
Registrable Securities sold by such indemnifying Holder and its affiliated
indemnifying Holders and distributed to the public were offered to the public
exceeds (B) the amount of any damages which such indemnifying Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
Section 4.9 Conduct of Indemnification Proceedings. Unless otherwise
--------------------------------------
agreed to in the underwriting agreement for the relevant offering, each
indemnified party shall give reasonably prompt notice to each indemnifying party
of any action or proceeding commenced against it in respect of which indemnity
may be sought hereunder; provided, however, that failure so to notify an
-------- -------
indemnifying party shall not relieve such indemnifying party from any liability
which it may have under this indemnity agreement, except to the extent that the
indemnifying party is materially prejudiced by such failure to give notice. If
the indemnifying party so elects within a reasonable time after receipt of such
notice, such indemnifying party may assume the defense of such action or
proceeding at such indemnifying party's expense with counsel chosen by the
indemnifying party and approved by the indemnified party defendant in such
action or proceeding, which approval shall not be unreasonably withheld;
provided, however, that, if such indemnified party determines in good faith that
-------- -------
19
a conflict of interest exists and that therefore it is advisable for such
indemnified party to be represented by separate counsel or that, upon advice of
counsel, there may be legal defenses available to it which are different from or
in addition to those available to the indemnifying party, then the indemnifying
party shall not be entitled to assume such defense and the indemnified party
shall be entitled to separate counsel (limited in each jurisdiction to one
counsel for all underwriters, one counsel for the Company and another counsel
for all other indemnified parties under this Agreement) at the indemnifying
party's expense. If an indemnifying party is not so entitled to assume the
defense of such action or does not assume such defense, after having received
the notice referred to in the first sentence of this paragraph, the indemnifying
party will pay the reasonable fees and expenses of counsel for the indemnified
party (limited in each jurisdiction to one counsel for all underwriters, one
counsel for the Company and another counsel for all other indemnified parties
under this Agreement). No indemnifying party will be liable for any settlement
effected without the written consent of such indemnifying party, which consent
shall not be unreasonably withheld. If an indemnifying party is entitled to
assume, and assumes, the defense of such action or proceeding in accordance with
this paragraph, such indemnifying party shall not, except as otherwise provided
in this Section 4.9, be liable for any fees and expenses of counsel for the
indemnified party incurred thereafter in connection with such action or
proceeding.
Section 4.10 Contribution. Unless otherwise agreed to in the
------------
underwriting agreement for the relevant offering:
(a) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Sections 4.7
through 4.9 is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms in respect of any
losses, liabilities, claims, damages, judgments and expenses suffered by an
indemnified party referred to therein, each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, liabilities,
claims, damages, judgments and expenses in such proportion as is appropriate to
reflect the relative fault of the Company on the one hand and of the liable
selling Holders (including without limitation, in each case, that of their
respective officers, directors, employees and agents) on the other in connection
with the statements or omissions which resulted in such losses, liabilities,
claims, damages, judgments or expenses, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of the
liable selling Holders (including without limitation, in each case, that of
their respective officers, directors, employees and agents) on the other shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, on the one hand,
or by or on behalf of the selling Holders, on the other, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, liabilities, claims, damages, judgments and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in Section 4.9, any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim.
20
(b) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 4.10 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in subparagraph (a) above.
Notwithstanding any other provisions of this Section 4.10, in the case of
distributions to the public, an indemnifying Holder shall not be required to
contribute any amount in excess of the amount by which (A) the total price at
which the Registrable Securities sold by such indemnifying Holder and its
affiliated indemnifying Holders and distributed to the public were offered to
the public exceeds (B) the amount of any damages which such indemnifying Holder
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall be
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(c) For purposes of Section 4.7 through this Section 4.10, each Person,
if any, who controls a Holder or an underwriter within the meaning of Section 15
of the 1933 Act (and their respective partners, directors, officers and
employees) shall have the same rights to contribution as such Holder or
underwriter; and each Director of the Company, each officer of the Company who
signed the registration statement, and each Person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act, shall have the same
rights to contribution as the Company.
Section 4.11 Participation in Underwritten Registrations. No Holder
-------------------------------------------
may participate in any underwritten registered offering contemplated hereunder
unless such Holder (a) agrees, subject to the price to such Holder being
satisfactory to such Holder, to sell its securities on the basis provided in any
underwriting arrangements at the indicated price of such offering and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up agreements and other documents reasonably
required under the terms hereof and of such underwriting arrangements.
Section 4.12 Rule 144. The Company covenants that from and after an
--------
Initial Public Offering it shall file any reports required to be filed by it
under the 1933 Act and the 1934 Act and that it shall take such further action
as the Holders may reasonably request, all to the extent required from time to
time to enable the Holders to sell Registrable Securities without registration
under the 1933 Act within the limitation of the exemptions provided by Rule 144
under the 1933 Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
any Holder, the Company shall promptly deliver to the Holders a written
statement as to whether it has complied with such requirements.
Section 4.13 Holdback Agreements.
-------------------
(a) To the extent not inconsistent with applicable law, each Holder
agrees not to effect any public sale or distribution (including without
limitation sales pursuant to Rule 144) of equity securities of the Company or
any securities convertible into or exchangeable or exercisable for such
securities, during the seven days prior to and the period of up to 180 days
beginning on the effective date of any Demand Registration, Incidental
Registration, or Shelf Registration Statement (with respect to an underwritten
21
offering) for a public offering to be underwritten on a firm commitment basis in
which Registrable Securities are included (except as part of such underwritten
registration), unless the underwriters managing the registered public offering
otherwise agree with respect to all Holders, equally.
(b) The Company agrees (1) not to effect any public sale or
distribution (including without limitation sales pursuant to Rule 144) of its
equity securities or any securities convertible into or exchangeable or
exercisable for such equity securities, during the seven days prior to and the
period of up to 180 days beginning on the effective date of any Demand
Registration, Incidental Registration, or Shelf Registration Statement (with
respect to an underwritten offering) for a public offering to be underwritten on
a firm commitment basis in which Registrable Securities are included (except as
part of such underwritten registration or pursuant to registrations on Forms S-4
or S-8 or any successor forms), unless the underwriters managing the registered
public offering otherwise agree, and (2) to use its reasonable best efforts to
cause each other stockholder of at least 5% of the Fully-Diluted Shares to agree
not to effect any public sale or distribution (including without limitation
sales pursuant to Rule 144) of any such securities during such period (except as
part of such underwritten registration, if otherwise permitted), unless the
underwriters managing the registered public offering otherwise agree.
ARTICLE V
TAG-ALONG AND DRAG-ALONG RIGHTS
Section 5.1 Tag-Along Right. At any time prior to the
---------------
Tag-Along/Drag-Along Termination Date, no Holder or Group of Holders
(individually and collectively, as applicable, the "Selling Holder") shall
--------------
consummate, or enter into any agreement providing for, a Tag-Along/Drag-Along
Transaction (other than a Public Offering and other than any sale to an
Affiliate of such Selling Holder) unless, prior to consummation of such
agreement, it shall have offered each other Holder (and each Other Party that
would become a Holder upon the exercise of any stock options exercisable upon
the occurrence of such Tag-Along/Drag-Along Transaction) a right (a "Tag-Along
---------
Right") to participate in such transaction on the same terms and conditions
-----
(including timing of payment and form and amount of per share consideration) as
the Selling Holder by including in such transaction (i) in the case of a Holder,
the same percentage of such other Holder's New Common Stock as the New Common
Stock being sold by the Selling Holder represents of all the New Common Stock of
such Selling Holder and (ii) in the case of an Other Party, the same percentage
of currently exercisable options to purchase New Common Stock held by such Other
Party (after giving effect, if applicable, to acceleration of vesting of any
options by reason of such Tag-Along/Drag-Along Transaction) as the New Common
Stock being sold by the Selling Holder represents of all the New Common Stock of
such Selling Holder, as follows:
(a) The Selling Holder shall deliver to the Company at least 35 days
prior to consummating any such transaction a written notice (a "Tag-Along Rights
----------------
Notice") of such transaction setting forth all material details of the intended
------
transaction, and the Company shall promptly deliver such Tag-Along Rights Notice
to each other Holder and each such Other Party.
(b) Any such other Holder or Other Party desiring to participate in
such transaction (a "Participating Party") must deliver to the Selling Holder,
-------------------
within 20 days of receiving a Tag-Along Rights Notice, written notice (a
22
"Participation Notice") of the Participating Party's desire to participate in
--------------------
such transaction. Any such other Holder or Other Party that does not deliver to
the Selling Holder a Participation Notice with respect to such Tag-Along Right
within the applicable time period shall be deemed to have waived its right to
participate in such transaction. In any such case, the Selling Holder shall
have 180 days following the expiration of such 20-day period in which to
consummate the transaction on terms not materially more favorable to the Selling
Holder than those contained in the Tag-Along Rights Notice. Promptly after the
consummation of any such transaction, the Selling Holder shall notify the
Company and the Company shall notify the other Holders and such Other Parties of
the consummation thereof. The Participation Notice shall constitute an
irrevocable commitment by the Participating Party to participate in the
transaction on the terms contained in the Tag-Along Rights Notice. If the
Selling Holder does not complete the transaction within the 180-day period
specified in this Section 5.1(b), the Selling Holder may not engage in such
transaction without repeating the procedures in this Section 5.1.
(c) Concurrently with the Tag-Along Rights Notice, the Selling Holder
shall provide each other Holder and each Other Party (or provide the Company for
delivery to each other Holder or each Other Party) with such information and
instructions as shall be necessary to enable such other Holder or Other Party to
participate in the transaction on the same terms and conditions (including time
of payment and form and amount of per share consideration) as the Selling
Holder, and each Participating Party shall cooperate in such transaction by
providing the Selling Holder all materials, such as executed purchase and sale
agreements and stock transfer documentation, as the Selling Holder may
reasonably request in order to consummate the transaction.
(d) Any material default in performance by any other Holder or Other
Party of its obligations hereunder to the Selling Holder under this Section 5.1
shall relieve the Selling Holder of its obligations under this Section 5.1 with
respect to such other Holder or Other Party.
(e) Each of the Selling Holder and any other party to any such
transaction shall have the right, in its sole discretion, at all times prior to
consummation of such transaction to abandon, rescind, annul, withdraw or
otherwise terminate such transaction, whereupon all Tag-Along Rights in respect
of such transaction pursuant to this Article shall become null and void, and
neither the Selling Holder nor any other such party shall have any liability or
obligation to any Participating Party with respect thereto. If such transaction
is not consummated substantially in accordance with the terms conveyed with the
Tag-Along Rights Notice, the provisions of this Section 5.1 shall apply again to
consummation of the proposed transaction upon terms materially different from
those set forth in the Initial Tag-Along Rights Notice and to subsequent
proposed transactions. Nothing herein shall be construed to obligate the
Selling Holder to accept any offer or terms for, or to consummate, any
Tag-Along/Drag-Along Transaction or other transaction.
Section 5.2 Drag-Along Right. In the event that, prior to the
----------------
Tag-Along/Drag-Along Termination Date, a Selling Holder engages in a
Tag-Along/Drag-Along Transaction, the Selling Holder shall have the right (a
"Drag-Along Right") to require each other Holder and Other Party to participate
----------------
in such transaction on substantially the same terms as the Selling Holder by
including in such transaction (i) in the case of a Holder, the same percentage
of such other Holder's New Common Stock as the New Common Stock being sold by
the Selling Holder represents of all of the Selling Holder's New Common Stock
23
and (ii) in the case of an Other Party, the same percentage of currently
exercisable options to purchase New Common Stock held by such Other Party (after
giving effect, if applicable, to the acceleration of vesting of any options by
reason of such Tag-Along/Drag-Along Transaction) as the New Common Stock being
sold by the Selling Holder represents of all of the Selling Holder's New Common
Stock, as follows:
(a) The Selling Holder's Drag-Along Right shall apply to all other
Holders and Other Parties equally and may not be exercised selectively with
respect to the other Holders and Other Parties.
(b) The Selling Holder shall deliver to the Company a written notice (a
"Drag-Along Rights Notice") of the Selling Holder's exercise of its Drag-Along
------------------------
Right in such transaction at least 30 days prior to consummating any such
transaction setting forth all material details of such transaction, and the
Company shall promptly deliver such Drag-Along Rights Notice to each other
Holder and Other Party.
(c) In the case of an Other Party, (i) the purchase price for any stock
options in connection with the exercise of a Drag-Along Right shall be equal to
the purchase price pursuant to the Drag Along Notice attributable to the number
of shares of New Common Stock issuable upon the exercise of such option less the
exercise price thereof and (ii) notwithstanding any provision of the Option
Agreements, such options shall be deemed assignable to and exercisable in the
hands of any purchaser pursuant to this Section 5.2.
(d) The Selling Holder shall provide each other Holder and Other Party
with such information and instructions as shall be necessary to enable such
other Holder and Other Party to participate in the intended transaction on
substantially the same terms and conditions as the Selling Holder, and each such
other Holder and Other Party shall cooperate in such transaction by providing
the Selling Holder all materials, such as executed purchase and sale agreements
and stock transfer documentation, as the Selling Holder may reasonably request.
(e) The Selling Holder shall have the right, in its sole discretion, at
all times prior to consummation of the transaction to abandon, rescind, annul,
withdraw or otherwise terminate such transaction, and the Selling Holder shall
not have any liability or obligation to any other Holder or Other Party with
respect thereto. Nothing herein shall be construed to obligate the Selling
Holder to accept any offer or terms for, or to consummate, any
Tag-Along/Drag-Along Transaction or other transaction.
(f) The Holders hereby agree and acknowledge that their agreement to
the provisions of this Section 5.2 constitutes their irrevocable proxy to vote
for, and to waive any appraisal rights with respect to, any merger or business
combination transaction that has been approved by a vote of Holders holding 60%
or more of the outstanding shares of New Common Stock.
24
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 6.1 Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to each of the Holders that the execution and delivery
of this Agreement by the Company will not (i) violate any provision of law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award applicable to the Company as of the date of this Agreement, (ii) require
the consent, waiver, approval, license or authorization of or any filing by the
Company with any governmental authority or (iii) violate, result (with or
without notice or the passage of time, or both) in a breach of or give rise to
the right to accelerate, terminate or cancel any obligation under or constitute
(with or without notice or the passage of time, or both) a default under, any of
the terms or provisions of any charter document or bylaw, agreement, note,
indenture, mortgage, contract, order, judgment, ordinance, regulation or decree
to which the Company is subject or by which the Company is bound as of the date
of this Agreement and which would have a material adverse effect on the ability
of the Company to perform its obligations under this Agreement.
Section 6.2 Representations and Warranties of the Holders. Each of the
---------------------------------------------
Holders severally represents and warrants to each other Holder and the Company
that the entrance into this Agreement by such Holder by virtue of the adoption
of the Plan will not (i) violate any provision of law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award applicable to such
Holder as of the date of this Agreement, (ii) require the consent, waiver,
approval, license or authorization of or any filing by such Holder with any
governmental authority or (iii) violate, result (with or without notice or the
passage of time, or both) in a breach of or give rise to the right to
accelerate, terminate or cancel any obligation under or constitute (with or
without notice or the passage of time, or both) a default under, any of the
terms or provisions of any charter document or bylaw, agreement, note,
indenture, mortgage, contract, order, judgment, ordinance, regulation or decree
to which such Holder is subject or by which such Holder is bound as of the date
of this Agreement and which would have a material adverse effect on the ability
of such Holder to perform its obligations under this Agreement.
ARTICLE VII
GENERAL PROVISIONS
------------------
Section 7.1 Exercise of Options; Vesting of New Common Stock. Upon the
------------------------------------------------
exercise of any rights of any Other Party or their successors under any of the
Option Agreements whereby such Other Party becomes a holder of New Common Stock,
such party shall be deemed a Holder with respect to such New Common Stock and
shall be subject to all rights and obligations hereunder and such New Common
Stock shall be subject to the terms and conditions of this Agreement.
Section 7.2 Termination. The provisions of this Agreement, other than
-----------
the provisions of Section 4.7, 4.8, 4.9, 4.10 and 7.4, shall terminate upon the
earliest to occur of:
25
(a) a mutual agreement to terminate this Agreement among the Company,
Holders holding not less than 66-2/3% of the shares of New Common Stock subject
to this Agreement and, prior to the later of the Xxxxxx Termination Date and the
date the Xxxxxx Entities hold no Registrable Securities, the Xxxxxx Entities;
and
(b) as to any of the Holders, at such time as such party ceases to own
any shares of New Common Stock; provided, however, that the provisions hereof
will apply to any Permitted Transferees of such Holder even after such
provisions terminate with respect to such Holder and such Permitted Transferee
shall be deemed a Holder hereunder.
The provisions of Sections 4.7, 4.8, 4.9, 4.10 and 7.4 shall survive any
termination of this Agreement.
Section 7.3 Counterparts. This Agreement may be executed in one or
------------
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective on the Effective Date. Copies of executed
counterparts transmitted by telecopy, telefax or other electronic transmission
service shall be considered original executed counterparts for purposes of this
Section, provided receipt of copies of such counterparts is confirmed.
Section 7.4 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE
TO THE CHOICE OF LAW PRINCIPLES THEREOF.
Section 7.5 Community Property States. Each party hereto, if such
-------------------------
party is a natural person, represents and covenants that (a) such party's
spouse, if any, has duly executed or shall duly execute the Consent of Spouse
attached hereto as Exhibit B, (b) such Consent of Spouse was delivered as of the
---------
date hereof, or, if later, the date such party became a party hereto and (c)
such Consent of Spouse was duly authorized, executed and delivered by such
spouse and effectively binds such spouse to the terms set forth therein.
Section 7.6 Entire Agreement. This Agreement contains the entire
----------------
agreement among the parties with respect to the subject matter hereof and there
are no agreements, understandings, representations or warranties among the
parties other than those set forth or referred to herein. This Agreement is not
intended to confer upon any Person not a party hereto (and their successors and
assigns) any rights or remedies hereunder, except as otherwise expressly
provided in Sections 4.7, 4.8, 4.10 and 7.1.
Section 7.7 Specific Performance. The parties hereto each acknowledge
--------------------
that, in view of the uniqueness of arrangements contemplated by this Agreement,
the parties hereto would not have an adequate remedy at law for money damages in
the event that this Agreement were not performed in accordance with its terms,
and therefore agree that the parties hereto shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which the
parties hereto may be entitled at law or in equity.
Section 7.8 Notices. All notices, requests, demands or other
-------
communications required by or otherwise with respect to this Agreement shall be
in writing and shall be deemed to have been duly given to any party when
delivered by hand, by messenger, or by a nationally-recognized overnight
26
delivery company, when sent by telecopy and confirmed by return telecopy, or
when delivered by first-class mail, postage prepaid and return receipt
requested, in each case to the applicable addresses set forth below (or such
other addresses as a party may designate by written notice to each other party).
(a) Notices to the Company shall be addressed to:
WKI Holding Company, Inc.
00000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000 and (000) 000-0000
Attention: General Counsel and Chief Financial Officer
with a copy to:
Xxxxx Day
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
(b) Notices to the Xxxxxx Entities shall be addressed to:
X/x Xxxxxx Xxxxxxxx, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Telecopy: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxx, Esq.
(c) Notices to Senior Lenders or Subordinated Lenders shall be sent to
the addresses set forth on Schedule 1 annexed hereto.
(d) Notices to Management Members shall be sent to the addresses set
forth on Schedule 2 annexed hereto.
(e) Notices to New Directors shall be sent to the addresses set forth
on Schedule 3 annexed hereto.
27
Section 7.9 Successors and Assigns. This Agreement shall be binding
----------------------
upon and inure to the benefit of the parties hereto and their respective
successors; provided, however, that except as set forth in the next sentence or
-------- -------
as otherwise specifically permitted under this Agreement (including pursuant to
Section 3.1), no party may assign its rights and obligations hereunder. Each
party may assign its rights and obligations hereunder to one or more
majority-owned, direct or indirect Subsidiaries or other Affiliates.
Section 7.10 Headings. The Section, Article and other headings
--------
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement. All references
to Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated.
Section 7.11 Amendments and Waivers. This Agreement may not be
----------------------
modified or amended except by an instrument or instruments in writing signed by
the Company and parties holding a majority of the shares of New Common Stock
held by all parties against whom enforcement of any such modification or
amendment is sought; provided, however, that the provisions set forth in Article
-------- -------
IV other than Sections 4.7, 4.8, 4.9 and 4.10 may be modified or amended by an
instrument or instruments in writing signed by the Company and the Majority
Holders (provided such modifications or amendments apply equally to all
Holders); provided, further, that prior to the later of the Xxxxxx Termination
-------- -------
Date and the date the Xxxxxx Entities hold no Registrable Securities, this
Agreement may not be modified or amended in a manner adverse to the Xxxxxx
Entities without the written consent of the Xxxxxx Entities; and provided,
--------
further, that Section 7.2 may be amended only by an instrument executed by the
-------
Company and the number of Holders specified in such section. Any party hereto
may, only by an instrument in writing, waive compliance by the other parties
hereto with any term or provision hereof on the part of such other parties
hereto to be performed or complied with. The waiver by any party hereto of a
breach of any term or provision hereof shall not be construed as a waiver of any
subsequent breach.
Section 7.12 Interpretation; Absence of Presumption.
--------------------------------------
(a) For the purposes hereof, (i) words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to
include the other gender as the context requires, (ii) the terms "hereof,"
"herein," and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement, (iii) the word "including" and words of
similar import when used in this Agreement shall mean "including, without
limitation," unless the context otherwise requires or unless otherwise
specified, (iv) the word "or" shall not be exclusive, and (v) provisions shall
apply, when appropriate, to successive events and transactions.
(b) This Agreement shall be construed without regard to any presumption
or rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
Section 7.13 Severability. The provisions of this Agreement are
------------
severable, and, if any term of this Agreement or the application thereof to any
party or circumstance shall be held invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such term to the other
28
parties or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by applicable law. In the event that the deletion
of such term shall be adverse to any party hereto, the parties shall use
reasonable commercial efforts to arrive at an accommodation that best preserves
for the parties the benefits and obligations of the offending term.
Section 7.14 Further Assurances. The parties hereto agree that, from
------------------
time to time, each of them will, and will cause their respective Affiliates to,
execute and deliver such further instruments and take such other action as may
be necessary to carry out the purposes and intents hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
29
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
The Company.
WKI HOLDING COMPANY, INC.
By: /s/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxxx
Title: Vice President, Treasurer
30
Schedule 1
----------
INITIAL CAPITALIZATION*
----------------------
SENIOR LENDERS
---------------------------------------- ---------
JPMorgan Chase Bank 514,534
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx Xxxx
---------------------------------------- ---------
ABN AMRO Bank N.V. 117,703
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx
---------------------------------------- ---------
AMROC Investments, Inc. 160,306
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Leau Xxxxxxxxx
---------------------------------------- ---------
Ares Leveraged Investment Fund, L.P. 61,797
1999 Avenue of the Stars
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx
---------------------------------------- ---------
Bank of America, N.A. 86,315
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxx
---------------------------------------- ---------
Bank of New York 102,090
Xxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xx XxXxxxxx
---------------------------------------- ---------
Fleet National Bank 267,008
Mail Stop: XX XX 00000X
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx Xxxxx
---------------------------------------- ---------
Citicorp USA, Inc. 350,408
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxx
---------------------------------------- ---------
---------------
* All amounts are subject to adjustment for rounding as provided in Section
VI.G.2 of the Plan.
31
---------------------------------------- ---------
Credit Suisse First Boston International 256,988
Xxx Xxxxx Xxxxxx
Xxxxxx, Xxxxxxx X00 0XX
Attn: Xxxx Xxxxxx
---------------------------------------- ---------
Deutsche Bank Trust Company Americas 257,200
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxx
---------------------------------------- ---------
Dresdner Bank AG 102,090
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx
---------------------------------------- ---------
Xxxxxx & Company 46,025
c/o JPMorgan Chase & Company
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
---------------------------------------- ---------
General Electric Capital Corp. 180,430
c/o GE Capital Commercial Finance
00 Xxxx Xxxxx Xxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
---------------------------------------- ---------
KZH CNC LLC 39,368
c/o JPMorgan Chase Bank
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx Xxxxxx
---------------------------------------- ---------
KZH CypressTree-1 LLC 62,990
c/o JPMorgan Chase Bank
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx Xxxxxx
---------------------------------------- ---------
KZH Pondview LLC 57,438
c/o JPMorgan Chase Bank
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx Xxxxxx
---------------------------------------- ---------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx 39,234
000 Xxxxx Xxxxxx
Xxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxx
---------------------------------------- ---------
32
---------------------------------------- ---------
Xxxxxx Xxxxxxx Prime Income Trust 52,654
0000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
---------------------------------------- ---------
OCM Administrative Services II, LLC 1,203,706
c/o Oaktree Capital Management
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx Xxx
---------------------------------------- ---------
Societe Generale 125,550
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
---------------------------------------- ---------
SPS High Yield Loan Trading 63,228
c/o JPMorgan Chase Bank
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx Xxxx
---------------------------------------- ---------
Xxxxx Fargo Bank 86,450
0000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
---------------------------------------- ---------
TOTAL 4,233,512
---------------------------------------- ---------
XXXXXX ENTITIES
Debtco, LLC 294,684
Xxxxxx Holdings Inc. 615,483
SUBORDINATED LENDERS**
Non-Xxxxxx Entities 480,307
Xxxxxx Entities 128,193
---------------
** Names, addresses and share amounts will be supplemented following actual
issuance of the shares.
33
Schedule 2
----------
MANAGEMENT MEMBERS
------------------
This Schedule 2 will be completed following the granting of stock options
pursuant to the Management Stock Plan to employees.
34
Schedule 3
----------
NEW DIRECTORS
-------------
This Schedule 3 will be completed following the granting of stock options
to New Directors pursuant to the Management Stock Plan.
35
Exhibit A
---------
CONFIRMATION ORDER
36
Exhibit B
---------
CONSENT OF SPOUSE
Reference is made to the Stockholders' Agreement (the "Stockholders'
Agreement"), dated as of [______], 2002, by and among WKI Holding Company, Inc.,
the Senior Lenders party thereto, the Subordinated Lenders party thereto, the
Xxxxxx Entities party thereto, the Management Members party thereto and the New
Directors party thereto, attached hereto, as same may be subsequently modified,
supplemented or amended in accordance with its terms. Capitalized terms used
but not defined herein shall have the meaning set forth in the Stockholders'
Agreement.
The undersigned is the spouse of one of the parties to the
Stockholders' Agreement and hereby acknowledges that he/she has read the
attached Stockholders' Agreement and knows its contents. The undersigned is
aware that by its provisions, his/her spouse agrees to sell all or a portion of
his/her New Common Stock, whether now owned or later obtained through the
exercise of stock options or otherwise, including his/her community property
interest therein, if any, on the occurrence of certain events. The undersigned
hereby consents to the sale, approves the provisions of the Stockholders'
Agreement, and agrees that those securities and his/her interest in them, if
any, are subject to the provisions of the Stockholders' Agreement and that
he/she will take no action at any time to hinder operation of the Stockholders'
Agreement on those securities or his/her interest, if any, in them, and, to the
extent required, will take any further actions necessary to effectuate the
provisions of the Stockholders' Agreements.
----------------------------------
[Spouse]
37
