1
EXHIBIT 10.17
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT is made as of October 30, 1996,
by and among TEMPE LIMITED, SCOTTSDALE LIMITED, SOUTH MOUNTAIN LIMITED,
XXXXXXXX LIMITED, GILA LIMITED, INVESTCORP INVESTMENT EQUITY LIMITED, BALLET
LIMITED, DENARY LIMITED, GLEAM LIMITED, HIGHLANDS LIMITED, NOBLE LIMITED,
OUTRIGGER LIMITED, QUILL LIMITED, RADIAL LIMITED, SHORELINE LIMITED, ZINNIA
LIMITED, each being a corporation organized under the laws of the Cayman
Islands (each, an "Investcorp Entity" and, collectively, the "Investcorp
Entities"), CANTRADE TRUST COMPANY LIMITED, in its capacity as trustee of The
Carmel Trust, a trust governed by the laws of Canada and established under a
trust settlement made August 17, 1977 ("Carmel"), each of the other individuals
or entities that is acquiring shares of the capital stock or options or
warrants to acquire shares of the capital stock of the Company (as defined
below) and that has executed a signature page to this Agreement (each,
including each Investcorp Entity and Carmel, a "Stockholder" and, collectively
with the Investcorp Entities and Carmel, the "Stockholders"), CSK GROUP, LTD.,
a Delaware corporation (the "Company") and CSK AUTO, INC., an Arizona
corporation formerly known as Northern Automotive Corporation and a
wholly-owned subsidiary of the Company ("Auto" and, collectively with the
Company, the "Companies").
W I T N E S S E T H:
WHEREAS, the Stockholders own or are acquiring shares of
capital stock of the Company (the "Capital Stock") or options to acquire shares
of Capital Stock or the Warrants (as defined in Section 8(i)), and
WHEREAS, the parties desire to promote their mutual interests
and the interests of the Company and Auto by imposing certain restrictions on
the transfer of shares of the Capital Stock now owned or hereafter acquired by
any Stockholder (collectively, the "Shares") and any Warrants now owned or
hereafter acquired by any Stockholder, and to set forth their agreement with
respect to certain other matters, all upon the terms and conditions set forth
below;
NOW THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
1. Certain Rights and Restrictions of the Stockholders.
None of the Stockholders may Transfer (as defined in Section 1(e)) any right,
title or interest in any or all of its Securities (as defined in Section 2(a)),
except as follows:
2
(a) Each of the Stockholders may Transfer all or
part of its Securities to any affiliate of that Stockholder, provided that such
Securities shall remain subject to this Agreement and each such transferee
shall execute and deliver a copy of this Agreement and be bound by all of the
provisions hereof as a "Stockholder". Each Investcorp Entity and each of their
respective affiliates and Permitted Transferees (as defined in Section 1(d))
that is a Stockholder and each person to whom any of them Transfers Securities
(including each of their respective subsequent transferees, other than pursuant
to Section 1(b), whether a direct transferee or a purchaser of Shares from the
Company as part of a redemption and reissuance pursuant to Section 5 of Article
IV of the Company's Restated Certificate of Incorporation (such Certificate of
Incorporation as in effect from time to time, the "Certificate of
Incorporation")), are collectively referred to as the "Investcorp Group".
Carmel and each of its affiliates and Permitted Transferees that is a
Stockholder and each person to whom any of them Transfers Securities (including
each of their respective subsequent transferees, other than pursuant to Section
1(b)) are collectively referred to as the "Carmel Group". Notwithstanding
anything contained in the previous two sentences, in the event that any
Stockholder shall at any time acquire any Securities from a member of the other
group, such Stockholder shall for all purposes of this Agreement remain a
member of its original group and such acquired Securities, if applicable, shall
for all purposes be included in any calculations of the amount of shares or
voting power held by members of such Stockholder's original group. As used in
this Agreement, references to a Stockholder's membership in a "group" means the
Investcorp Group or the Carmel Group, as the case may be. As used in this
Agreement, the term "person" means an individual, partnership, corporation,
trust, joint venture, limited liability company or other entity of whatever
nature. As used in this Agreement, an "affiliate" of any person means (i) any
person which, directly or indirectly, is in control of, is controlled by, or is
under common control with such person, (ii) any person who is a director or
officer (A) of such person, (B) of any subsidiary of such person or (C) of any
person described in clause (i) above, or (iii) any person which is a transferee
of any such person, is a company incorporated in the Cayman Islands and with
which Investcorp Bank E.C., a Bahrain corporation ("Investcorp"), or one of its
affiliates has an administrative relationship. For purposes of this
definition, control of a person shall mean the power, direct or indirect, (X)
to vote 50% or more of the securities having ordinary voting power for the
election of directors of such person, whether by ownership of securities,
contract, proxy or otherwise, or (Y) to direct or cause the direction of the
management and policies of such person, whether by ownership of securities,
contract, proxy or otherwise.
(b) Each of the Stockholders may sell any or all
of its Securities in an offering of such Securities pursuant to a registration
statement under the Securities Act of 1933, as amended (the "Securities Act")
subject to all applicable underwriters' restrictions with respect to inclusion
of such Securities in that offering.
(c) Each of the Stockholders may Transfer
Securities in accordance with Section 2, 3, 4 or 5 hereof.
2
3
(d) Each Stockholder that is a natural person
(collectively, the "Individual Stockholders") may Transfer (inter vivos or
testamentary) all or part of his or her Securities to his or her spouse or
former spouse (in connection with a divorce settlement), children, parents,
brothers or sisters, nieces, nephews or live-in companion, or to a trust or an
Individual Stockholder's estate for the benefit of any such persons, or to any
affiliate of such Individual Stockholder (collectively, "Permitted
Transferees"), provided that such Securities shall remain subject to this
Agreement and each such transferee shall execute and deliver a copy of this
Agreement and be bound by all of the provisions hereof as a "Stockholder".
(e) As used in this Agreement, a "Transfer" of
Securities shall mean and include a sale, assignment, transfer, encumbrance
(other than by pledge, hypothecation or mortgage in accordance with Section
1(f) hereof), disposition of by gift, bequest or other transfer or disposition
of any Securities in any manner.
(f) Each Stockholder shall have the right to
pledge, hypothecate or mortgage any Securities held by it (the "Pledged
Securities"); provided, however, that such pledge agreement provides that, in
the event of any proposed sale of any of the Pledged Securities by the secured
party, the Pledged Securities shall be subject to the rights of first refusal
of the Company and the Offeree Stockholders (as defined in Section 2(a) hereof)
in accordance with the provisions of Section 2 hereof; and further provided
that, in the event that the Company and/or the Offeree Stockholders do not
elect to purchase all of the Pledged Securities in accordance with Section 2
and the Pledged Securities are sold by the secured party to the proposed
Purchaser (as defined in Section 2), the Pledged Securities shall thereafter no
longer be subject to any of the terms or provisions contained in this Agreement
and no longer have any rights hereunder.
(g) Each of the applicable provisions of the
Certificate of Incorporation shall be given effect to prior to the application
of any of the provisions of Section 2, 3, 4 or 5 hereof. In so doing, time
periods during which any holder of shares of the Company's Class A, Class C or
Class D Stock has the right to act under the Certificate of Incorporation, or
during which any member of the Investcorp Group has the right to act under this
Agreement, shall run concurrently. Each time period during which members of
the Carmel Group have the right to act under this Agreement shall run
consecutively to the time periods referred to in the preceding sentence.
2. Certain Restrictions Upon Transfer of Shares; Right
of First Refusal.
(a) Except with respect to (i) Transfers
permitted by Section 1,3 or 5 hereof, and (ii) the initial sale of shares of
(A) Class E Stock by Carmel to Xxxxx Xxxxxx and (B) Class C Stock by members of
the Investcorp Group to the Chief Executive Officer of the Company (the sales
referred to in clauses (A) and (B) above, the "Executives' Initial Purchases"),
no Stockholder or any transferee of any Stockholder (including further
transferees, but excluding transferees and further transferees under Section
1(f), collectively for purposes of
3
4
this Section 2, a "Transferring Stockholder", and each of the other
Stockholders, the "Offeree Stockholders") shall Transfer any Shares (or any
rights, options, warrants (including, without limitation, the Warrants) or
other securities convertible into or exchangeable or exercisable for shares of
Capital Stock (collectively, "Convertible Securities" and, collectively with
Shares, "Securities")) unless such Transferring Stockholder complies with the
applicable provisions of this Section 2; provided, however, that following the
consummation of an initial public offering of shares of Capital Stock (an
"IPO"), a Transferring Stockholder may sell any of its Shares in a registered
public offering (including, without limitation, an IPO) or pursuant to Rule 144
under the Securities Act without complying with any of the provisions of this
Section.
(b) In the event that a Transferring Stockholder
receives and desires to accept an arm's-length written offer (a "Third Party
Offer") from an unaffiliated third party (the "Purchaser") to purchase
Securities owned by the Transferring Stockholder, the Transferring Stockholder
shall promptly provide written notice thereof to the Company and each of the
Offeree Stockholders, which notice shall specify the number of Securities that
the Transferring Stockholder desires to sell and the terms of the Third Party
Offer and shall also include a copy of the Third Party Offer. The Company and
the Offeree Stockholders shall have the irrevocable option, exercisable by
written notice to the Transferring Stockholder within 60 days after the receipt
of notice from the Transferring Stockholder (for purposes of this Section 2,
the "Option Period"), to purchase from such Transferring Stockholder all of
such Securities proposed to be sold by such Transferring Stockholder at the
same price, and on the same terms and conditions, as contained in the Third
Party Offer, or, if the Third Party Offer provides for non-cash consideration
or other terms and conditions not practically obtainable by the Company and/or
the Offeree Stockholders, then for cash consideration and upon terms and
conditions no less favorable to the Transferring Stockholder than those
contained in the Third Party Offer. In the event that the Transferring
Stockholder and Offeree Stockholders holding a majority of the outstanding
Shares held by all of the Offeree Stockholders that are members of the group of
which the Transferring Stockholder is not a member are unable to agree upon
whether such consideration and the other terms and conditions are at least as
favorable to the Transferring Stockholder as those contained in the Third Party
Offer, then such determination shall be made in accordance with the Valuation
Process (as defined in Section 2(g)).
(c) In the event that a Transferring Stockholder,
at any time following the second anniversary of the date hereof, wishes to sell
any Securities owned by the Transferring Stockholder, whether or not the
Transferring Stockholder has received a Third Party Offer, the Transferring
Stockholder shall have the right to provide written notice thereof to the
Company and each of the Offeree Stockholders, which notice shall specify the
number of Securities that the Transferring Stockholder desires to sell and the
price and other terms and conditions pursuant to which it is willing to sell
its Securities (the "Offer Terms"). The Company and the Offeree Stockholders
shall have the irrevocable option, exercisable by written notice to the
Transferring Stockholder within the Option Period, to purchase from such
Transferring Stockholder all of such Securities proposed to be sold by such
Transferring Stockholder on the Offer Terms, or, if the Offer Terms provide for
non-cash consideration or
4
5
other terms and conditions not practically obtainable by the Company and/or the
Offeree Stockholders, then for cash consideration and upon terms and conditions
no less favorable to the Transferring Stockholder than those contained in the
Offer Terms. In the event that the Transferring Stockholder and Offeree
Stockholders holding a majority of the outstanding Shares held by all of the
Offeree Stockholders that are members of the group of which the Transferring
Stockholder is not a member are unable to agree upon whether such consideration
and the other terms and conditions are at least as favorable to the
Transferring Stockholder as those contained in the Offer Terms, then such
determination shall be made in accordance with the Valuation Process.
(d) The determination of whether the Company
shall exercise its right to purchase any or all of the Securities proposed to
be sold by the Transferring Stockholder pursuant to Section 2(b) or 2(c) shall
be made by the Offeree Stockholders, exercisable by the vote of the holders of
a majority of the outstanding Shares held by all of the Offeree Stockholders
that are members of the group of which the Transferring Stockholder is not a
member. If the Company does not so elect to purchase all of the Securities
proposed to be Transferred and the Offeree Stockholders submit written
elections to purchase more Securities than the number of Securities proposed to
be Transferred which the Company has not elected to purchase, the Offeree
Stockholders submitting such elections shall purchase such Securities not
purchased by the Company in proportion to their respective holdings of Shares
or such other proportion as they may agree upon.
(e) The closing of any such purchase by the
Company and/or the Offeree Stockholders pursuant to Section 2(b) or 2(c) hereof
shall occur at the offices of the Company within 60 days after the expiration
of the Option Period, at a date and time specified by the Company and/or the
Offeree Stockholders (or such other place, date and time mutually agreed upon
by the Company and/or the Offeree Stockholders and the Transferring
Stockholder). At the closing of any such purchase by the Company and/or the
Offeree Stockholders, the Transferring Stockholder shall deliver to the Company
and/or the Offeree Stockholders certificates evidencing the number of
Securities being purchased in valid form for transfer with appropriate duly
executed assignments, stock powers or endorsements, as the case may be, bearing
any necessary documentary stamps and accompanied by such certificates of
authority, consents to transfer or other instruments or evidences of the good
title of the Transferring Stockholder to such Securities, free and clear of any
and all claims, liens and encumbrances, as may reasonably be requested by the
Company and/or the Offeree Stockholders; provided that, in the case of Pledged
Securities being sold to the Company and/or the Offeree Stockholders pursuant
to Section 2(b) or 2(c), such Shares shall be free and clear of any and all
claims, liens and encumbrances upon the delivery by the Purchaser of the
purchase price therefor.
(f) If the Company and/or the Offeree
Stockholders shall fail to elect, within the Option Period and pursuant to the
terms of this Section 2, to purchase all of the Securities proposed to be
Transferred by the Transferring Stockholder pursuant to Section 2(b)
5
6
or 2(c), as the case may be, or at any time shall notify the Transferring
Stockholder of their elections not to purchase all of such Securities, then the
Transferring Stockholder shall be free, for a period of 90 days thereafter,
subject to the right of the Offeree Stockholders to sell certain of their
Shares in such transaction pursuant to Section 4, (i) in the case of a proposed
sale pursuant to Section 2(b), to sell to the Purchaser identified in the
notice of the Third Party Offer, but only to that Purchaser, and only for
consideration and upon terms and conditions no less favorable to the
Transferring Stockholder than those contained in the Third Party Offer, all of
the Securities proposed to be Transferred, or (ii) in the case of a proposed
sale pursuant to Section 2(c), to sell to up to three (3) Purchasers (none of
whom may be engaged in a business that is competitive, in a material respect,
with the business then conducted by Auto (except in the case of a transaction
in connection with which the Transferring Stockholder elects to require all of
the Other Stockholders to sell all of their Securities in accordance with
Section 3(a)), and counting for this purpose any group of Purchasers acting in
concert as a single Purchaser), but only upon terms and conditions no less
favorable to the Transferring Stockholder than the Offer Terms, all of the
Securities proposed to be Transferred; provided that, in either case, the
Purchaser executes a signature page to this Agreement and thereby becomes bound
by the provisions hereof. In the event that the Transferring Stockholder and
Offeree Stockholders holding a majority of the outstanding Shares held by all
of the Offeree Stockholders that are members of the group of which the
Transferring Stockholder is not a member are unable to agree upon whether such
consideration and the other terms and conditions are at least as favorable to
the Transferring Stockholder as those contained in the Third Party Offer, in
the case of a proposed sale pursuant to Section 2(b), or as the Offer Terms, in
the case of a proposed sale pursuant to Section 2(c), then such determination
shall be made in accordance with the Valuation Process. In addition, at any
time following the third anniversary of the date hereof, in the case of a
proposed sale pursuant to Section 2(c) pursuant to which the Transferring
Stockholder holds, and is offering to sell to the Company and the Offeree
Stockholders, all of the Securities held by the group of which it is a member,
if (A) the Company and/or the Offeree Stockholders shall fail to elect to
purchase all of the Securities proposed to be Transferred by the Transferring
Stockholder, (B) the Investcorp Group and the Carmel Group then hold in the
aggregate more than 50% of the then current voting power, and (C) the
Transferring Stockholder holds more than 50% of the number of Shares having
voting power held on the date hereof by the group of which the Transferring
Stockholder is a member, the Securities then held by the Offeree Stockholders
shall be subject to the right of the Transferring Stockholder to require all of
the Offeree Stockholders to sell all of their Securities in accordance with the
provisions of Section 3(a), during the 180-day period following the expiration
of the Option Period, to any Purchaser that acquires all of the Securities
proposed to be transferred by the Transferring Stockholder, provided that the
Transferring Stockholder and the group of which it is a member hold at least
the number of Shares required pursuant to Section 3(a) to invoke the provisions
of that Section. In the case of a proposed sale pursuant to Section 2(b), the
Transferring Stockholder shall not have the right to sell such Securities to
any other prospective purchaser, even if on the identical terms of the Third
Party Offer, or to the Purchaser for consideration and upon terms and
conditions less favorable to the Transferring Stockholder than those contained
in the Third Party Offer, without again first offering such Securities to the
6
7
Company and the Offeree Stockholders in accordance with the applicable terms of
this Section 2. In the case of a proposed sale pursuant to Section 2(c), the
Transferring Stockholder shall not have the right to sell such Securities to
any prospective Purchaser, for consideration and upon terms and conditions less
favorable to the Transferring Stockholder than the Offer Terms, without again
first offering such Securities to the Company and the Offeree Stockholders in
accordance with the applicable terms of this Section 2.
(g) For purposes of this Agreement, the
"Valuation Process" shall occur as follows: in the event that the Stockholders
are unable to agree as to a determination of the value of any consideration
and/or the terms and conditions of any proposed transaction hereunder,
including, without limitation, pursuant to Section 2(b), 2(c), 2(f), 3(b) or
6(b) hereof (the "Valuation Determination"), such determination shall be made
by a nationally recognized investment banking firm mutually agreed upon by (i)
members of the Investcorp Group holding a majority of the Shares held by all of
the members of the Investcorp Group, and (ii) members of the Carmel Group
holding a majority of the Shares held by all of the members of the Carmel
Group. In the event that such members of the Investcorp Group and the Carmel
Group are unable to agree upon such investment banking firm, then the
Investcorp Group and the Carmel Group shall each select one nationally
recognized investment banking firm who together select a third nationally
recognized investment banking firm that shall make the Valuation Determination.
In connection with any Valuation Determination relating to any non-cash
consideration, if such non-cash consideration consists of publicly traded
securities, the value of such securities shall be either (A) if such securities
are then traded on a national securities exchange, the average closing price
for the 20 trading days immediately prior to the date of determination, or (B)
if such securities are traded on NASDAQ, the average of the closing bid and
asked prices for the 20 trading days immediately prior to the date of
determination. The fees and disbursements of each of such investment bankers
retained in connection with the Valuation Process shall be borne by the
Company.
3. Rights of Certain Stockholders to Cause a Sale of All
Shares by All Stockholders.
(a) If, at any time following the first
anniversary of the date hereof, members of the Original Investcorp Group, on
the one hand, or members of the Original Carmel Group (for this purpose
consisting of only the members of such group on the date hereof and any of
their permitted transferees under Sections 1(a) and 1(d) hereof (the "Original
Investcorp Group" and the "Original Carmel Group", respectively)), on the other
hand, determine to sell all of their Securities in an arm's-length sale to any
unaffiliated third party pursuant to a bona fide written offer to purchase (i)
prior to an IPO, all of the outstanding Securities or (ii) following an IPO,
all of the Securities held by all of the Stockholders (such members of the
Original Investcorp Group or the Original Carmel Group, as the case may be,
desiring to sell their Securities, the "Selling Group"), and the Selling Group
then holds more than 50% of the number of Shares having voting power held on
the date hereof by the group of which the Selling Group is a member, then the
Selling Group shall give not less than 60 days notice of such intent (for
7
8
purposes of this Section 3, the "Sale Notice") to the other Stockholders owning
Securities (for purposes of this Section 3, the "Other Stockholders") and shall
include therewith a copy of such written offer and a description of the
proposed sale, including the proposed time and place of closing and the
consideration to be received by the members of the Selling Group. In the event
of such notice and such bona fide written offer, the members of the Selling
Group shall have the right to require each of the Other Stockholders to sell,
in which event all of the Other Stockholders shall sell, all of their
Securities in the same transaction (and upon the same terms (including, without
limitation, the same consideration per share) as to be received by the members
of the Selling Group) at the closing thereof (and each shall deliver
certificates for all of its Securities at such closing, free and clear of all
claims, liens and encumbrances). Notwithstanding the foregoing, none of the
Other Stockholders shall be required to accept any consideration for its
Securities in connection with such sale other than cash or Reasonably Liquid
Securities (as defined in Exhibit A annexed hereto), and only such amount of
Reasonably Liquid Securities as bears the same ratio to the total consideration
received by such Other Stockholder as the amount of Reasonably Liquid
Securities received by all of the members of the Selling Group, in the
aggregate, bears to the total consideration received by all of the members of
the Selling Group. If, in connection with such sale, any of the Other
Stockholders has received all cash consideration for its Securities while any
of the members of the Selling Group have received any consideration other than
cash, the amount of cash per share received by each of the Other Stockholders
shall be at least equal to the fair market value per share of the consideration
received by the members of the Selling Group, as the case may be. In the event
that members of the Selling Group holding a majority of the Shares held by all
of the members of the Selling Group and Other Stockholders holding a majority
of the outstanding Shares held by all of the Other Stockholders that are
members of the group of which the Selling Group is not a member are unable to
agree upon the fair market value per share of the consideration received by the
members of the Selling Group, then such determination shall be made in
accordance with the Valuation Process.
(b) Notwithstanding the provisions of Section
3(a) hereof, in the event of a transaction subject to Section 3(a) (other than
in a transaction initiated by members of the Selling Group pursuant to Section
2(c) pursuant to which the Selling Group holds, and has first offered to sell
to the Company and the Offeree Stockholders, all of the Securities held by the
group of which the Selling Group is a member) pursuant to which the Selling
Group has required the Other Stockholders to sell all of their Securities in
the same transaction, Other Stockholders holding a majority of the outstanding
Shares held by all of the Other Stockholders that are members of the group of
which the Selling Group is not a member shall have the right, exercisable by
written notice to the Selling Group (for purposes of this Section 3, the
"Buy-Out Notice") within 60 days of their receipt of the Sale Notice, to elect
to have the Company and/or the Other Stockholders purchase all of the
Securities held by all of the members of the Selling Group and each of the
Other Stockholders that were previously willing to sell their Securities for
consideration having at least the same value as the consideration proposed to
be received by each Stockholder pursuant to the third party offer. In the
event that members of the Selling Group holding a majority of the Shares held
by all of the members of the Selling Group and
8
9
Other Stockholders holding a majority of the outstanding Shares held by all of
the Other Stockholders that are members of the group of which the Selling Group
is not a member are unable to agree upon whether such consideration is at least
as favorable to the Selling Group, then such determination shall be made in
accordance with the Valuation Process. The closing of any such purchase by the
Company and/or the Other Stockholders shall occur at the offices of the Company
within 60 days following the date that the Buy-Out Notice is provided to the
Selling Group, at a date and time specified by the Company and/or the Offeree
Stockholders (or such other place, date and time mutually agreed upon by the
Company, the Offeree Stockholders, if applicable, and the Selling Group). At
the closing of any such purchase, each member of the Selling Group shall
deliver to the Company and/or the Offeree Stockholders certificates for all of
its Securities, free and clear of all claims, liens and encumbrances.
4. Tag-Along Rights.
(a) With respect to any proposed Transfer of
Shares by any Stockholders (for purposes of this Section 4, the "Transferring
Stockholders") other than (i) in accordance with Section 1(a), 1(b), 1(d),
1(f), or in the case of a Transfer pursuant to Section 2(b) or 2(c) in which
the Company and/or the Offeree Stockholders have elected to purchase all of the
Securities being offered by the Transferring Stockholder, 3, 5 or 9, (ii)
following an IPO, any sale of its Shares in a registered public offering or
pursuant to Rule 144 under the Securities Act, or (iii) the Executives' Initial
Purchases, no Transferring Stockholder shall Transfer any Shares unless prior
to such Transfer each of the other Stockholders (for purposes of this Section
4, the "Other Stockholders") and the Company shall have been given notice of
the proposed transaction, which notice shall specify the number of Shares that
the Transferring Stockholders desire to sell, the identity of the prospective
purchaser (for purposes of this Section 4, the "Purchaser"), and the proposed
terms thereof and shall also include a copy of the written offer from the
Purchaser, and each of the Other Stockholders shall have been provided a firm
irrevocable right, which right shall be exercisable by written notice (which
shall specify the number of Shares (up to the total number of Shares held by
the Transferring Stockholders) that the Other Stockholders desire to sell)
within 60 days after giving notice to the Other Stockholders, to sell to the
Purchaser, at the same time and upon the same terms and conditions offered to
the Transferring Stockholders by the Purchaser, the number of its Shares (for
purposes of this Section 4, the "Proportionate Amount") that bears the same
ratio to the total number of Shares held by that Other Stockholder as the total
number of Shares proposed to be sold by the Transferring Stockholders to the
Purchaser bears to the total number of Shares held by all of the Transferring
Stockholders. Notwithstanding the foregoing, in the event that the
Transferring Stockholders are members of the Carmel Group and such Shares
proposed to be transferred by them are being exchanged by them for an interest
in real property or a business venture, the maximum number of Shares that the
Other Stockholders shall have the right to sell to the Purchaser shall be 49%
of the total number of all of the Shares to be sold to the Purchaser and,
similarly, the Other Stockholders shall not have the right to acquire more than
49% of the total consideration to be exchanged by the Purchaser for all of such
Shares.
9
10
(b) To the extent that the Other Stockholders
exercise the foregoing option, the number of Shares to be sold by the
Transferring Stockholders shall be reduced by the aggregate number of Shares
that the Other Stockholders are entitled to include in the sale to the
Purchaser and Shares of the Other Stockholders shall be substituted therefor.
(c) Any Purchaser of Shares pursuant to this
Section 4 shall execute a signature page to this Agreement and thereby become
bound by the provisions hereof.
(d) Notwithstanding anything to the contrary
contained in this Agreement, neither the Investcorp Group nor the Carmel Group
shall have the right to sell Shares held by them pursuant to this Section 4 in
connection with any proposed Transfer of Shares by Transferring Stockholders,
in excess of their Proportionate Amount of Shares because any agreement among
members of such group (including, without limitation, pursuant to the
Certificate of Incorporation) would permit such group to sell, in the
aggregate, more than the Proportionate Amount of the Shares held by them in
connection with such proposed Transfer by Transferring Stockholders.
5. Buy-Sell Arrangements.
(a) In the event that, at any time following the
third anniversary of the date hereof, members of the Investcorp Group, on the
one hand, or members of the Carmel Group, on the other hand, wish to sell all
of their Securities (such Stockholders wishing to sell their Securities, the
"Offering Stockholders"), and the Offering Stockholders then hold at least 25%
of the then current voting power, the Offering Stockholders shall promptly
provide written notice thereof to the Company and each of the other
Stockholders, which notice shall specify the number of Securities that the
Offering Stockholders then hold and desire to sell and the price at which they
are willing to sell such Securities. The Company and each of the other
Stockholders who are members of the group of which the Offering Stockholders
are not members (for purposes of this Section 5, such other Stockholders, the
"Offeree Stockholders") shall have the irrevocable option, exercisable by
written notice to the Offering Stockholders within 120 days after the receipt
of notice from the Offering Stockholders (for purposes of this Section 5, the
"Option Period"), to purchase from such Offering Stockholders all of the
Securities then held by such Offering Stockholders at the Offering
Stockholders' asking price (the "Offer Price"). The determination of whether
the Company shall exercise its right to purchase any or all of the Securities
proposed to be sold by the Offering Stockholders pursuant to this Section 5
shall be made by the Offeree Stockholders, exercisable by the vote of the
holders of a majority of the outstanding Shares held by all of the Offeree
Stockholders. If the Company does not elect to purchase all of the Securities
proposed to be sold and the Offeree Stockholders submit written elections to
purchase more Securities than the number of Securities proposed to be sold
which the Company has not elected to purchase, the Offeree Stockholders
submitting such elections shall purchase such Securities not purchased by the
Company in proportion to their respective holdings of their Securities or such
other proportion as they may agree upon.
10
11
(b) If the Company and/or the Offeree
Stockholders shall fail to elect, within the Option Period and pursuant to the
terms of this Section 5, to purchase all of the Securities proposed to be sold
by the Offering Stockholders, or at any time shall notify the Offering
Stockholders of their elections not to purchase all of such Securities, then
the Offering Stockholders shall, within 60 days after the expiration of the
Option Period, purchase from the Offeree Stockholders all of the Securities
then held by all of the Offeree Stockholders at the Offer Price; provided,
however, that the holders of a majority of the outstanding Shares held by all
of the Offering Stockholders shall have the right to elect to have the Company
purchase any or all of the Securities then held by all of the Offeree
Stockholders, and the balance, if any, of such Securities purchased by the
Offering Stockholders in such proportions as they may agree upon.
(c) The closing of any such purchase pursuant to
this Section 5 shall occur at the offices of the Company within 60 days after
the expiration of the Option Period, at a date and time specified by the
Company and/or the acquiring Stockholders (or such other place, date and time
mutually agreed upon by the Company, the Offeree Stockholders and the Offering
Stockholders). At the closing of any such purchase, the selling Stockholders
shall deliver to the Company and/or the acquiring Stockholders certificates
evidencing the number of Securities being purchased in valid form for transfer
with appropriate duly executed assignments, stock powers or endorsements, as
the case may be, bearing any necessary documentary stamps and accompanied by
such certificates of authority, consents to transfer or other instruments or
evidences of the good title of the selling Stockholder to such Securities, free
and clear of any and all claims, liens and encumbrances, as may reasonably be
requested by the Company and/or the acquiring Stockholders.
6. Preemptive Rights.
(a) Other than (i) the (A) grants and exercises
of options to purchase shares of Class B Stock to be granted to employees
pursuant to stock option or stock purchase plans adopted by the Company's Board
of Directors, and (B) initial sale of shares of Class B Stock by the Company to
any employee of the Company who is currently a party to an Amended and Restated
Participation Agreement with the Company dated June 19, 1996, representing up
to an aggregate of 10% of the outstanding shares of Capital Stock (on a
fully-diluted basis) in connection with the grants and exercises of options and
sales of shares of Capital Stock pursuant to clauses (A) and (B) above (the
"Management Transactions"), (ii) issuances of Securities as consideration in
connection with the acquisition of assets or a business at any time following
an IPO ("Acquisition Consideration Securities"), (iii) the issuance of the
Warrants and the issuance of any shares of Capital Stock upon the exercise of
the Warrants, and (iv) the initial sale to Carmel of an aggregate of 490,000
shares of Class E Stock, in the event that the Company at any time hereafter
proposes to issue any Securities pursuant to an offering by the Company which
is exempt from the registration requirements of the Securities Act (the
"Offered Securities"), each Stockholder shall be entitled to purchase from the
Company such amount of the same class of Securities as the Offered Securities
that would enable each such
11
12
Stockholder to maintain the same percentage of the issued and outstanding
Capital Stock of the Company (calculated as if all Convertible Securities, if
any, proposed to be included in the Offered Securities had been converted into
shares of Capital Stock) as is owned by such Stockholder immediately prior to
the time at which the Offered Securities are proposed to be issued (the
"Applicable Percentage"). Notwithstanding anything to the contrary contained
in this Agreement, whenever pursuant to any provision of this Agreement such
calculation is required, for purposes of calculating the applicable percentage
of the outstanding shares of Capital Stock or the percentage of the voting
power held at any time by any Stockholder or either group, (A) all Acquisition
Consideration Securities issued at any time that are then outstanding shall be
treated as though not outstanding, and (B) all Convertible Securities issued at
any time in connection with which issuance holders of a majority of the Shares
held by all members of the Investcorp Group or holders of a majority of the
Shares held by all members of the Carmel Group did not exercise their right to
purchase such Convertible Securities pursuant to this Section 6 that are then
outstanding shall be treated as though not outstanding. Notwithstanding
anything herein to the contrary, for purposes of each provision of this
Agreement in calculating the applicable percentage of the outstanding shares or
the number of shares of Capital Stock represented by the outstanding shares of
Capital Stock held at any time by any Stockholder or either group, only in
those cases in which such holdings are to be compared to the holdings of
another Stockholder or group, (I) all Securities issued at any time pursuant to
any registered public offering by the Company that are then outstanding shall
be treated as though not outstanding, and (II) all Securities and options to
acquire Securities issued to members of management of any of the Companies or
any of their other subsidiaries that are then outstanding shall be treated as
though not outstanding.
(b) In the event that the Company proposes to
issue any Offered Securities, the Company shall promptly provide written notice
thereof (for purposes of this Section 6(b), the "Preemptive Rights Notice") to
each of the Stockholders, which notice shall specify the number of, and
describe the terms of, each type of Offered Security that the Company proposes
to issue and shall include therewith any documentation relating thereto. Each
Stockholder shall have the option, exercisable by written notice to the Company
within 60 days after the receipt of the Preemptive Rights Notice, to purchase
from the Company such amount of the same class of Securities as the Offered
Securities that would enable such Stockholder to maintain its Applicable
Percentage, at the same price (net of any discounts or commissions) (except
that, at its option, each such Stockholder may, if the consideration proposed
to be received by the Company is other than cash, pay cash in an amount equal
to the fair market value (as reasonably determined in good faith by the Board
of Directors) of such other consideration), and on the same terms and
conditions, as set forth in the Preemptive Rights Notice (but in no event at a
greater price, or upon terms less favorable than, that upon which the Offered
Securities are ultimately issued). In the event that holders of a majority of
the Shares held by all of the Stockholders electing to exercise their right to
purchase Offered Securities disagree with the Board's determination as to the
fair market value of any such non-cash consideration proposed to be received by
the Company, then such determination shall be made in accordance with the
Valuation Process. If within such 60-day period any such offer to sell
12
13
such Offered Securities shall not be accepted, in whole or in part, by any
Stockholders, the Company may issue the same Offered Securities to third
persons but only upon the same terms and for the same consideration set forth
in the Preemptive Rights Notice and no later than 60 days after the expiration
of the 60-day period. The Company shall not have the right to sell such
Offered Securities to any prospective purchaser upon any terms or conditions
other than those contained in the Preemptive Rights Notice, without again first
offering such Offered Securities to each of the Stockholders in accordance with
the terms of this Section 6. In the event any such offer is accepted, in whole
or in part, by any Stockholder, the Company shall sell such Offered Securities
to each such Stockholder for the consideration and on the terms set forth
above. The closing for such transaction shall take place as proposed by the
Company with respect to the Offered Securities proposed to be issued (but in no
event sooner than 60 days after the exercise of the option by such Stockholders
without their consent, and in no event prior to the closing of the sale of the
Offered Securities to the other purchasers), at which closing the Company shall
deliver certificates for the Offered Securities in the name of each such
Stockholder against receipt of the consideration therefor. Any and all Offered
Securities acquired by any Stockholders pursuant to this Section shall
automatically and without further action be subject to this Agreement.
(c) In the event that the Company at any time
hereafter proposes to issue any Securities to any member of the Investcorp
Group or any of their respective affiliates (the "Investcorp Offered
Securities"), each member of the Carmel Group shall be entitled to purchase
from the Company such amount of the same class of Securities as the Investcorp
Offered Securities, in accordance with the provisions of Section 6(b) as if
such Investcorp Offered Securities constitute "Offered Securities", that would
enable each such member of the Carmel Group to maintain its Applicable
Percentage. In the event that the Company at any time hereafter proposes to
issue any Securities to any member of the Carmel Group or any of their
respective affiliates (the "Carmel Offered Securities"), each member of the
Investcorp Group shall be entitled to purchase from the Company such amount of
the same class of Securities as the Carmel Offered Securities, in accordance
with the provisions of Section 6(b) as if such Carmel Offered Securities
constitute "Offered Securities", that would enable each such member of the
Investcorp Group to maintain its Applicable Percentage.
7. Board of Directors.
(a) Each of the Stockholders covenants and agrees
to vote all of its Shares to cause (i) the size of the Board of Directors of
each of the Companies and each of their other subsidiaries to initially be set
at nine (9) members, consisting of (A) three (3) nominees designated by the
Carmel Group, (B) one (1) member of management, who shall be Xxxxx Xxxxxx, and
(C) five (5) nominees designated by the Investcorp Group, and (ii) the members
of each of such Boards of Directors to at all times be the same. Subject to
the following sentence, the size of the Boards of Directors may be increased or
decreased in accordance with the respective By-laws of each of such companies.
Notwithstanding the foregoing, (I) during any period in which the Investcorp
Group shall hold a greater number of Shares than the Carmel
13
14
Group, the Investcorp Group have the right to designate one (1) nominee more
than the Carmel Group to such Boards of Directors, and (II) during any period
in which the Carmel Group shall hold a greater number of Shares than the
Investcorp Group, the Carmel Group have the right to designate one (1) nominee
more than the Investcorp Group to such Boards of Directors, provided that, as
part of or at any time following an IPO, there shall be no change made as to
which group shall have the right to designate a greater number of nominees
unless the transaction which results in the recalculation of relative positions
is a sale of Shares by any members of the group previously holding the greater
number of Shares; and further provided that the Carmel Group shall at all times
have the right to designate up to five (5) nominees to each of such Boards. In
the event that the size of such Boards of Directors is at any time increased to
allow any members of management of any of the companies to serve as a member of
such Boards, the relative numbers of nominees of the Boards which each of the
Investcorp Group and the Carmel Group, respectively, shall have the right to
designate shall be adjusted so as to preserve the right of the group holding
the greater number of Shares to designate a majority of the nominees to such
Boards assuming that the minority of such Boards consist of all of the nominees
of the other group and the members of management of the companies. In
addition, in the event that, following an IPO, it is determined that
independent members should be added to the Company's Board of Directors, the
Investcorp Group and the Carmel Group shall each have the right to designate an
equal number of such additional directors.
(b) Each member of the Boards of Directors
designated by the Investcorp Group or the Carmel Group, respectively, may only
be removed and replaced by the party designating such member.
(c) Meetings of the Boards of Directors of each
of the Companies shall be held no less frequently than quarterly, at mutually
agreed upon times and in New York, New York, Phoenix, Arizona or other mutually
agreed upon locations. Meetings of the Boards of each of the Companies and
each of their other subsidiaries shall be held on the same dates and at the
same locations. Directors shall be permitted to participate by telephone in
all such meetings of the Boards and any committees thereof.
(d) Each of the Stockholders shall cause each of
the Companies to distribute to each of the members of the Boards of Directors
monthly unaudited financial statements for such company, which shall include a
Statement of Operations, Balance Sheet, Statement of Cash Flows and financial
statement footnotes, as well as such other financial and other information
concerning such company as any director may from time to time reasonably
request. Each of the Stockholders shall also distribute, and cause each of the
Companies to distribute, to each of the members of the Boards of Directors (i)
each report or analysis prepared by any of the Companies, prepared by any
consultant, advisor or other third party, commissioned, directly or indirectly,
by, or otherwise furnished to, any of the Companies or any of the Stockholders,
prepared by or on behalf of any lender or potential lender to any of the
Companies, concerning the business, operations or prospects of any of the
Companies, and (ii) drafts of each document proposed to be filed by any of the
Companies with the Commission (as
14
15
defined in Section 9.1(c)) or any other authority or agency that is provided to
the officers of any of the Companies. In addition, each of the Stockholders
shall also cause each of the Companies to provide to each individual who has
been designated by the Carmel Group pursuant to this Agreement to be a member
of the Boards of Directors, and to each consultant or advisor from time to time
selected by any such individual, on behalf of and in such individual's capacity
as agent for any persons or entities holding from time to time at least 10% of
the then current voting power, at reasonable times, on reasonable notice and in
a manner not disruptive to the business of the Companies, full access to the
documents and records of each of the Companies as well as such copies of such
documents and records as such individuals may reasonably request.
(e) The Carmel Group shall at all times have the
right to designate one (1) member of each committee, if any, from time to time
established by the Board of Directors of any of the Companies.
(f) Each member of each of the Companies' Board
of Directors or any committee thereof shall receive the same fees, if any, for
serving, and shall be reimbursed for all reasonable out-of-pocket expenses
incurred in connection with any Board of Directors or committee activities, as
the case may be.
8. Certain Management and Other Matters. Each of the
Companies covenants and agrees that it shall not take any of the following
actions without the approval of a majority of the members of its Board of
Directors, including the approval of at least one (1) director designated by
the Investcorp Group and at least one (1) director designated by the Carmel
Group (in each case excluding members of management of any of the Companies and
any independent directors designated by such groups), and each of the
Stockholders shall not cause or permit any of the Companies to take any of the
following actions without such approval:
(a) the making of any assignment for the benefit
of its creditors or the commencement or authorization of any proceedings by it
under any bankruptcy, reorganization, insolvency, receivership or other similar
law or statute;
(b) the addition of any new line of business that
is not reasonably related to its then existing business, or the discontinuance
of any part of its business that accounted for in excess of 20% of its revenues
during the preceding 12-month period;
(c) the liquidation, dissolution or termination
of its corporate existence;
(d) any amendment to its Certificate of
Incorporation or By-laws;
15
16
(e) any recapitalization or other reorganization,
except for any recapitalization or other reorganization that does not in any
manner affect the relative voting rights or financial or economic interests of
the Stockholders;
(f) any purchase or other acquisition of assets
or any other business or operations, or investment in any person or entity
(other than any of the Companies), in a single transaction or series of related
transactions, that is either (i) not reasonably related to the business then
conducted by it or (ii) although reasonably related to such business, (A)
requires a commitment of in excess of $75,000,000 in the aggregate or (B) if
such acquisition is made by merger or consolidation, the fair market value of
the consideration paid for the business acquired is in excess of $75,000,000;
(g) any (i) sale or other disposition of Auto or
any of its subsidiaries by way of a merger or consolidation by it with any
other corporation or entity or (ii) sale or other disposition of its assets in
excess of $25,000,000 in the aggregate for all of the Companies in a single
transaction or series of related transactions, other than (A) sales and other
dispositions in the ordinary course of business and (B) as part of any sale
lease-back arrangements at market interest rates;
(h) other than refinancings of existing
indebtedness, incurring any obligation for borrowed money in excess of
$75,000,000 in the aggregate for all of the Companies in a single transaction
or series of related transactions;
(i) the issuance or sale of any shares of any
class of its capital stock, options or other rights for the issuance or sale of
any shares within a period of (i) one year of the date hereof, or (ii) in the
case of any issuance or sale pursuant to a public offering, two years of the
date hereof, other than (A) the Management Transactions, (B) the reissuance of
shares of the Company's Class A Stock and Class C Stock in accordance with the
terms of Section 5 of Article IV of the Certificate of Incorporation as in
effect on the date hereof, (C) the issuance of the Warrants (as defined in the
Certificate of Incorporation) and the issuance of any shares of Capital Stock
upon the exercise of the Warrants, (D) the issuance of shares of Common Stock
(as defined in the Certificate of Incorporation) upon the conversion of shares
of Class A, Class B, Class C, Class D and Class E Stock upon the occurrence of
a Triggering Event (as defined in the Certificate of Incorporation), and (E)
the initial sale and issuance to Carmel of 490,000 shares of Class E Stock;
provided that any such issuance in the case of clause (C) above does not in any
way affect the relative voting rights or financial or economic interests of the
Investcorp Group and the Carmel Group;
(j) the execution, amendment, modification or
termination of any agreement, or the commitment to any obligation otherwise,
which provides for total payments or receipts over the term of such agreement
or commitment in excess of $20,000,000 and is reasonably likely to result in a
fundamental change in the character of its business, other than the execution,
amendment, modification or termination of any lease agreement in the ordinary
16
17
course of business and the incurrence of any indebtedness to the extent
permitted pursuant to paragraph (h) above;
(k) at any time within two (2) years following
the date hereof, the election, termination, or substantial change in function
or duties of its Chief Operating Officer, or, at any time within one (1) year
following the date hereof, the election, termination, or substantial change in
function or duties of its (i) Vice President -- Finance, (ii) Vice President or
other officer in charge of store merchandising, (iii) Vice President or other
officer in charge of distribution, (iv) Vice President or other officer in
charge of management information systems, (v) Vice President -- Store
Operations or other officer having similar responsibilities, (vi) Vice
President -- Priority Parts or other officer having similar responsibilities,
(vii) Vice President -- Commercial Sales or other officer having similar
responsibilities, or (viii) Vice President -- Legal, General Counsel or other
officer having similar responsibilities;
(l) the making of any advance to, loan to or
guarantee of any obligation of, any person or entity, other than any of the
Companies, in excess of $1,000,000 in the aggregate for all of the Companies in
a single transaction or series of related transactions, other than within six
(6) months following the date hereof, to (i) the Chief Executive Officer of the
Company in an amount not to exceed $3,000,000, and (ii) to Xxxxx Xxxxxx in an
amount not to exceed $3,760,000, in each case to fund the initial purchases of
shares of Capital Stock by such individuals;
(m) the repurchase or redemption of any class of
its securities, other than (i) pursuant to Section 2, 3(b) or 5 hereof, (ii)
from any employee in connection with the termination of such employee, (iii)
with respect to shares of the Company's Class A Stock and Class C Stock in
accordance with the terms of Section 5 of Article IV of the Certificate of
Incorporation as in effect on the date hereof, (iv) with respect to shares of
Capital Stock upon the exercise of the Warrants, or (v) the redemption by the
Company of 100 shares of Class F Stock from Carmel; or
(n) the making of any investment in Investcorp or
any Stockholder or any of their respective affiliates or related parties, or
the entering into of any transaction, or amendment, modification or termination
of any agreement, with Investcorp or any Stockholder or any of their respective
affiliates or related parties or that benefits Investcorp or any Stockholder or
any of their respective affiliates or related parties other than by virtue of
being a stockholder.
The Company covenants and agrees, and each of the Stockholders
covenants and agrees to cause the Company, to provide the following severance
payments to each employee of Auto listed on Schedule I attached hereto (each,
an "Identified Employee"): (i) in the case of any Identified Employee
terminated at any time prior to the second anniversary of the date hereof, an
amount equal to 12 months salary, and (ii) in the case of any Identified
Employee terminated at any time on or after the second anniversary, an amount
equal to 6 months salary, unless, in each
17
18
instance, at least one (1) director appointed by the Carmel Group (excluding
any independent directors designated by such group) shall otherwise agree.
Each of the Stockholders covenants and agrees to cause Auto
and each of its subsidiaries to, from time to time, declare and pay dividends
in an amount sufficient in order to enable the Company to make all required
interest payments with respect to the Class A CSK Notes and the Class B CSK
Notes (each as defined in the Stock Purchase Agreement (as defined below),
collectively, the "CSK Notes"), to the extent permitted under applicable law
and the terms (including the default provisions) of any indebtedness of the
Companies.
Each of the Stockholders covenants and agrees to cause the
Company to take all steps necessary to effectuate any recapitalization or
reorganization of the Shares held by (x) the Carmel Group into one or more new
classes of capital stock, as may from time to time be requested by members of
the Carmel Group holding a majority of all of the Shares held by the Carmel
Group, or (y) the Investcorp Group into one or more new classes of capital
stock, as may from time to time be requested by members of the Investcorp Group
holding a majority of all of the Shares held by the Investcorp Group, in either
case that does not in any way affect the relative voting rights or financial or
economic interests of the other Stockholders.
Except as provided in the preceding sentence and subsection
(ii) of Section 8(i) and in the case of each of the exceptions to such Section,
each of the Stockholders covenants and agrees that it shall not permit the
Company to, and the Company covenants and agrees that it shall not, issue any
Securities of any class unless, prior thereto, the Stockholders shall have
amended this Agreement in accordance with Section 17.4 hereof so as to cause
the terms and provisions hereof to become applicable to such new Securities and
to preserve the relative rights of the Stockholders under this Agreement. In
addition, each of the Stockholders covenants and agrees that, in the event that
any of the provisions of the Certificate of Incorporation conflict with any of
the provisions of this Agreement, or with the purposes and intents of this
Agreement (including the establishment and preservation of the relative voting
and equity rights of the Investcorp Group and the Carmel Group as set forth in
the Stock Purchase Agreement dated as of September 29, 1996 among each of the
Investcorp Entities, Carmel, the Company and CSK Holdings, Ltd. (as amended
from time to time, the "Stock Purchase Agreement")), it shall cause the Company
to amend its Certificate of Incorporation so as to remedy such conflict in a
manner that does not in any way affect the relative voting rights or financial
or economic interests of the Investcorp Group and the Carmel Group.
Each of the Stockholders covenants and agrees to vote all of
its Shares to implement each of the provisions of this Agreement and to cause
each of the Companies to perform all of its obligations under this Agreement,
including, without limitation, (I) to elect each of the nominees and committee
members in accordance with Sections 7(a) and 7(e) hereof, and (II) to cause the
Company to purchase all Securities that it may from time to time be required to
purchase from the Stockholders pursuant to Sections 2, 3(b) and 5 hereof and to
18
19
procure any financing and borrow any funds thereunder that may be necessary in
order to enable the Company to purchase such Securities.
9. Registration Rights.
9.1 Required Registration.
(a) At any time after the earlier of (i) an IPO,
or (ii) the fifth anniversary of the date of this Agreement, any holders of
Registrable Stock (as defined below) may request the Company to register under
the Securities Act all or any portion of the shares of Registrable Stock held
by such requesting holder or holders for sale in the manner specified in such
notice; provided, however, that the Shares of Registrable Stock for which
registration has been requested shall constitute at least 5% of the total
number of shares of Capital Stock then outstanding (or any lesser percentage if
the reasonably anticipated aggregate price to the public of such public
offering would exceed $50,000,000). Notwithstanding the foregoing, Carmel
shall have the right, from time to time, to designate in writing to the Company
one or more members of the Carmel Group that shall not have the right to
request such registration by the Company (the "Designated Holders"). The
Designated Holders shall thereafter have no right to request registration
unless and until the Company is otherwise notified in writing by Carmel or
unless any of the other members of the Carmel Group, other than the Designated
Holders, have also requested such registration. For purposes of this
Agreement, "Registrable Stock" shall mean all of the Shares held by any
Stockholder, excluding Shares which (i) have been registered under the
Securities Act pursuant to an effective registration statement filed thereunder
and disposed of in accordance with the registration statement covering them,
(ii) have been publicly sold pursuant to Rule 144 under the Securities Act, or
(iii) are otherwise publicly tradable pursuant to any other applicable
exemption from registration under the Securities Act.
(b) Following receipt of any notice under this
Section 9.1, the Company shall immediately notify all holders of Registrable
Stock from whom notice has not been received and such holders shall then be
entitled within 30 days thereafter to request the Company to include in the
requested registration all or any portion of their shares of Registrable Stock.
The Company shall use its best efforts to register under the Securities Act,
for public sale in accordance with the method of disposition specified in the
notice from requesting holders described in paragraph (a) above, the number of
shares of Registrable Stock specified in such notice (and in all notices
received by the Company from other holders within 30 days after the giving of
such notice by the Company). If such method of disposition shall be an
underwritten public offering, the holders of a majority of the shares of
Registrable Stock to be sold in such offering may designate the managing
underwriter of such offering, subject to the approval of the Company, which
approval shall not be unreasonably withheld or delayed. The Company shall be
obligated to register Registrable Stock pursuant to this Section 9.1 on up to
four (4) occasions upon the request of any members of the Investcorp Group and
on up to four (4) occasions upon the request of any members of the Carmel
Group; provided, however, that such obligation shall be deemed satisfied only
when a registration statement covering all shares of Registrable Stock
19
20
specified in notices received as aforesaid, for sale in accordance with the
method of disposition specified by the requesting holders, shall have become
effective and, if such method of disposition is a firm commitment underwritten
public offering, all such shares shall have been sold pursuant thereto.
(c) The Company shall be entitled to include in
any registration statement referred to in this Section 9.1, for sale in
accordance with the method of disposition specified by the requesting holders,
shares of Capital Stock to be sold by the Company for its own account, except
as and to the extent that, in the opinion of the managing underwriter (if such
method of disposition shall be an underwritten public offering), such inclusion
would adversely affect the marketing of the Registrable Stock to be sold.
Except for registration statements on Form X-0, X-0 or any successor thereto,
the Company will not file with the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act (the
"Commission") any other registration statement with respect to its Capital
Stock, whether for its own account or that of other stockholders, from the date
of receipt of a notice from requesting holders pursuant to this Section 9.1
until the completion of the period of distribution of the registration
contemplated thereby.
9.2 Incidental Registration. If the Company at any time
(other than pursuant to Section 9.1 or Section 9.3) proposes to register any of
its equity securities under the Securities Act for sale to the public, whether
for its own account or for the account of other security holders or both
(except with respect to registration statements on Form X-0, X-0 or another
form not available for registering the Registrable Stock for sale to the
public), each such time it will give written notice to all holders of
outstanding Registrable Stock of its intention so to do. Upon the written
request of any such holder, received by the Company within 30 days after the
giving of any such notice by the Company, to register any of its Registrable
Stock, the Company will use its best efforts to cause the Registrable Stock as
to which registration shall have been so requested to be included in the
securities to be covered by the registration statement proposed to be filed by
the Company, all to the extent requisite to permit the sale or other
disposition by the holder (in accordance with its written request) of such
Registrable Stock so registered. In the event that any registration pursuant
to this Section 9.2 shall be, in whole or in part, an underwritten public
offering of Capital Stock, the number of shares of Registrable Stock to be
included in such an underwriting may be reduced (pro rata among the requesting
holders based upon the number of shares of Registrable Stock held by such
requesting holders) if and to the extent that the managing underwriter shall be
of the opinion that such inclusion would adversely affect the marketing of the
securities to be sold by the Company therein. Notwithstanding the foregoing
provisions, the Company may withdraw any registration statement referred to in
this Section 9.2 without thereby incurring any liability to the holders of
Registrable Stock.
9.3 Registration on Form S-3. If, at any time, (a) a
holder or holders of Registrable Stock, other than one or more Designated
Holders without any of the other holders of Registrable Stock, request that the
Company file a registration statement on Form S-3 or any
20
21
successor thereto for a public offering of all or any portion of the shares of
Registrable Stock held by such requesting holder or holders, and (b) the
Company is a registrant entitled to use Form S-3 or any successor thereto to
register such shares, then the Company shall use its best efforts to register
under the Securities Act on Form S-3 or any successor thereto, for public sale
in accordance with the method of disposition specified in such notice, the
number of shares of Registrable Stock specified in such notice. Whenever the
Company is required by this Section 9.3 to use its best efforts to effect the
registration of Registrable Stock, each of the procedures and requirements of
Section 9.1 (including but not limited to the requirement that the Company
notify all holders of Registrable Stock from whom notice has not been received
and provide them with the opportunity to participate in the offering) shall
apply to such registration; provided, however, that there shall be no
limitation on the number of registrations on Form S-3 which may be requested
and obtained under this Section 9.3.
9.4 Registration Procedures. If and whenever the Company
is required by the provisions of Section 9.1, 9.2 or 9.3 to use its best
efforts to effect the registration of any shares of Registrable Stock under the
Securities Act, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission a
registration statement (which, in the case of an underwritten public offering
pursuant to Section 9.1, shall be on Form S-1 or other form of general
applicability satisfactory to the managing underwriter selected as therein
provided) with respect to such securities and use its best efforts to cause
such registration statement to become and remain effective for the longer of
(i) a period of nine (9) months, or (ii) the period of the distribution
contemplated thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for the period specified in paragraph (a) above and comply
with the provisions of the Securities Act with respect to the disposition of
all Registrable Stock covered by such registration statement in accordance with
the sellers' intended method of disposition set forth in such registration
statement for such period;
(c) furnish to each seller of Registrable Stock
and to each underwriter such number of copies of the registration statement and
each such amendment and supplement thereto (in each case including all
exhibits) and the prospectus included therein (including each preliminary
prospectus) as such persons reasonably may request in order to facilitate the
public sale or other disposition of the Registrable Stock covered by such
registration statement;
(d) use its best efforts to register or qualify
the Registrable Stock covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as the sellers of
Registrable Stock or, in the case of an underwritten public offering,
21
22
the managing underwriter reasonably shall request; provided, however, that the
Company shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in any such
jurisdiction;
(e) use its best efforts to list the Registrable
Stock covered by such registration statement with any securities exchange on
which the Capital Stock of the Company is then listed;
(f) immediately notify each seller of Registrable
Stock and each underwriter under such registration statement, at any time when
a prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event of which the Company has knowledge as a
result of which the prospectus contained in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and promptly prepare and furnish to such seller a reasonable number of copies
of a prospectus supplemented or amended so that, as thereafter delivered to the
purchasers of such Registrable Stock, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing;
(g) if the offering is underwritten and at the
request of any seller of Registrable Stock, use its best efforts to furnish on
the date that Registrable Stock is delivered to the underwriters for sale
pursuant to such registration: (i) an opinion dated such date of counsel
representing the Company for the purposes of such registration, addressed to
the underwriters and to such seller, to such effects as reasonably may be
requested by counsel for the underwriters or by such seller or its counsel, and
(ii) a letter dated such date from the independent public accountants retained
by the Company, addressed to the underwriters and to such seller, stating that
they are independent public accountants within the meaning of the Securities
Act and that, in the opinion of such accountants, the financial statements of
the Company included in the registration statement or the prospectus, or any
amendment or supplement thereof, comply as to form in all material respects
with the applicable accounting requirements of the Securities Act, and such
letter shall additionally cover such other financial matters (including
information as to the period ending no more than five (5) business days prior
to the date of such letter) with respect to such registration as such
underwriters reasonably may request;
(h) make available for inspection by each seller
of Registrable Stock, any underwriter participating in any distribution
pursuant to such registration statement, and any attorney, accountant or other
agent retained by such seller or underwriter, reasonable access to all
financial and other records, pertinent corporate documents and properties of
the Company, as such parties may reasonably request, and cause the Company's
officers, directors and employees
22
23
to supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration statement;
(i) cooperate with the selling holders of
Registrable Stock and the managing underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing Registrable Stock
to be sold, such certificates to be in such denominations and registered in
such names as such holders or the managing underwriters may request at least
two (2) business days prior to any sale of Registrable Stock;
(j) permit any holder of Registrable Stock which
holder, in the sole and exclusive judgment, exercised in good faith, of such
holder, might be deemed to be a controlling person of the Company, to
participate in good faith in the preparation of such registration or comparable
statement and to require the insertion therein of material furnished to the
Company in writing, which in the reasonable judgment of such holder, its
counsel and the Company should be included; and
(k) otherwise cooperate in such manner as may be
reasonably requested by sellers of the Registrable Stock, in the marketing of
all Registrable Stock to be sold, including, without limitation, participating
in any customary "road shows" and related presentations to prospective
purchasers in connection therewith, and use all reasonable efforts to maximize
the price at which the Registrable Stock is to be sold.
For purposes of Section 9.4(a) and 9.4(b) and of Section
9.1(c), the period of distribution of Registrable Stock in an underwritten
public offering shall be deemed to extend until each underwriter has completed
the distribution of all securities purchased by it, and the period of
distribution of Registrable Stock in any other registration shall be deemed to
extend until the earlier of the sale of all Registrable Stock covered thereby
and 180 days after the effective date thereof.
In connection with each registration hereunder, the sellers of
Registrable Stock will furnish to the Company in writing such information
requested by the Company with respect to themselves and the proposed
distribution by them as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws.
In connection with each registration pursuant to Section 9.1,
9.2 or 9.3 covering an underwritten public offering, the Company and each
seller agree to enter into a written agreement with the managing underwriter
selected in the manner herein provided in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such underwriter and companies of the Company's size and investment
stature.
9.5 Expenses. All expenses incurred by the Company in
complying with Section 9.1, 9.2 and 9.3, including, without limitation, all
registration and filing fees, printing
23
24
expenses, fees and disbursements of counsel and independent public accountants
for the Company, fees and expenses (including counsel fees) incurred in
connection with complying with state securities or "blue sky" laws, fees of the
securities exchange upon which the Capital Stock of the Company is then listed,
transfer taxes, fees of transfer agents and registrars, costs of any insurance
which might be obtained, and the fees and disbursements of counsel to the
sellers of Registrable Stock, but excluding any Selling Expenses (as defined
below), are called "Registration Expenses". All underwriting discounts and
selling commissions applicable to the sale of Registrable Stock are called
"Selling Expenses".
The Company shall pay all Registration Expenses in connection
with each registration statement under Section 9.1, 9.2 or 9.3; provided,
however, that (a) if the sellers of Registrable Stock requesting registration
pursuant to Section 9.3 (the "Requesting Stockholders") are members of the
Investcorp Group and members of the Investcorp Group have requested that a
registration statement be filed under Section 9.3 on two (2) or more occasions
during the prior 12-month period, then the Requesting Stockholders shall pay
all Registration Expenses in connection with such requested registration, and
(b) if the Requesting Stockholders are members of the Carmel Group and members
of the Carmel Group have requested that a registration statement be filed under
Section 9.3 on two (2) or more occasions during the prior 12-month period, then
the Requesting Stockholders shall pay all Registration Expenses in connection
with such requested registration. All Selling Expenses in connection with each
registration statement under Section 9.1, 9.2 or 9.3 shall be borne by the
participating sellers in proportion to the number of shares sold by each, or by
such participating sellers, other than the Company (except to the extent the
Company shall be a seller), as they may agree.
9.6 Indemnification and Contribution.
(a) In the event of a registration of any of the
Registrable Stock, under the Securities Act pursuant to Section 9.1, 9.2 or
9.3, the Company will indemnify and hold harmless each seller of such
Registrable Stock thereunder, its officers and directors, each underwriter of
such Registrable Stock thereunder and each other person, if any, who controls
such seller or underwriter within the meaning of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, to which such
seller, officer, director, underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such Registrable Stock was
registered under the Securities Act pursuant to Section 9.1, 9.2 or 9.3, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, (ii) any blue sky application or other document executed
by the Company specifically for that purpose or based upon written information
furnished by the Company filed in any state or other jurisdiction in order to
qualify any or all of the Registrable Stock under the securities laws thereof
(any such application, document or information herein called a "Blue Sky
Application"), (iii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
24
25
statements therein not misleading, (iv) any violation by the Company or its
agents of any rule or regulation promulgated under the Securities Act
applicable to the Company or its agents and relating to action or inaction
required of the Company in connection with such registration, or (v) any
failure to register or qualify the Registrable Stock in any state where the
Company or its agents have affirmatively undertaken or agreed in writing that
the Company (the undertaking of any underwriter chosen by the Company being
attributed to the Company) will undertake such registration or qualification on
the seller's behalf (provided that in such instance the Company shall not be so
liable if it has undertaken its best efforts to so register or qualify the
Registrable Stock) and will reimburse each such seller, and such officer and
director, each such underwriter and each such controlling person for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case if and to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by any seller of
Registered Stock, any such underwriter or any such controlling person in
writing specifically for use in such registration statement or prospectus.
(b) In the event of a registration of any of the
Registrable Stock under the Securities Act pursuant to Section 9.1, 9.2 or 9.3,
each seller of such Registrable Stock thereunder, severally and not jointly,
will indemnify and hold harmless the Company, each person, if any, who controls
the Company within the meaning of the Securities Act, each officer of the
Company who signs the registration statement, each director of the Company,
each other seller of Registrable Stock, each underwriter and each person who
controls any underwriter within the meaning of the Securities Act, against all
losses, claims, damages or liabilities, joint or several, to which the Company
or such officer, director, other seller, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Registrable Stock
was registered under the Securities Act pursuant to Section 9.1, 9.2 or 9.3,
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or any Blue Sky Application or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse the Company and each such officer, director,
other seller, underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that such seller will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
such seller, as such, furnished in writing to the Company by such seller
specifically for use in such registration statement or prospectus; and
provided, further, however, that the liability of each seller hereunder shall
be limited to the proportion of any such loss, claim, damage, liability or
expense which is equal to the proportion that the public offering price of the
25
26
shares sold by such seller under such registration statement bears to the total
public offering price of all securities sold thereunder, but not in any event
to exceed the proceeds received by such seller from the sale of Registrable
Stock covered by such registration statement. Not in limitation of the
foregoing, it is understood and agreed that the indemnification obligations of
any seller herewith pursuant to any underwriting agreement entered into in
connection herewith, shall be limited to the obligations contained in this
paragraph (b).
(c) Promptly after receipt by an indemnified
party hereunder of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to such indemnified party other than under this
Section 9.6 and shall only relieve it from any liability which it may have to
such indemnified party under this Section 9.6 if and to the extent the
indemnifying party is prejudiced by such omission. In case any such action
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such indemnified
party, and, after notice from the indemnifying party to such indemnified party
of its election so to assume and undertake the defense thereof, the
indemnifying party shall not be liable to such indemnified party under this
Section for any legal expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected; provided, however, that,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the
interests of the indemnifying party, the indemnified party shall have the right
to select a separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (i) any holder of Registrable Stock exercising rights under this
Agreement, or any controlling person of any such holder, makes a claim for
indemnification pursuant to this Section 9.6 but it is judicially determined
(by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 9.6 provides for indemnification in
such case, or (ii) contribution under the Securities Act may be required on the
part of any such selling holder or any such controlling person in circumstances
for which indemnification is provided under this Section 9.6; then, and in each
such case, the Company and such holder will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after contribution
from others) in such proportions so that such holder is responsible for the
portion
26
27
represented by the percentage that the public offering price of its Registrable
Stock offered by the registration statement bears to the public offering price
of all securities offered by such registration statement, and the Company is
responsible for the remaining portion; provided, however, that, in any such
case, (A) no such holder will be required to contribute any amount in excess of
the public offering price of all such Registrable Stock offered by it pursuant
to such registration statement, and (B) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.
(e) The indemnities provided in this Section 9.6
shall survive the transfer of any Registrable Stock by such holder.
9.7 Rule 144 and Rule 144A Reporting. With a view to
making available the benefits of certain rules and regulations of the
Commission which may at any time permit the sale of the Registrable Stock to
the public without registration, at all times after 90 days after any
registration statement covering a public offering of securities of the Company
under the Securities Act shall have become effective, the Company agrees to:
(a) make and keep public information available,
as those terms are understood and defined in Rule 144 and Rule 144A
under the Securities Act;
(b) use its best efforts to file with the
Commission in a timely manner all reports and other documents required
of the Company under the Securities Act and the Securities Exchange
Act of 1934, as amended (the "Exchange Act"); and
(c) furnish to each holder of Registrable Stock
forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of such Rule 144 and Rule
144A and of the Securities Act and the Exchange Act, a copy of the
most recent annual or quarterly report of the Company, and such other
reports and documents so filed by the Company as such holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing such holder to sell any Registrable Stock without
registration.
9.8 Lock-Up Arrangements. If requested in writing by the
underwriters for an underwritten public offering of securities of the Company,
each holder of Registrable Stock who is a party to this Agreement shall agree
not to sell publicly any shares of Registrable Stock or any other shares of
Capital Stock (other than shares of Registrable Stock or other shares of
Capital Stock being registered in such offering), without the consent of such
underwriters, for a period of not more than (a) 180 days following the
effective date of the registration statement relating to an IPO, or (b) 90 days
following the effective date of the registration statement relating to any
other offering thereafter; provided, however, that all persons entitled to
registration rights with respect to shares of Capital Stock who are not parties
to this Agreement, all other persons selling shares of Capital Stock in such
offering and all executive officers and
27
28
directors of the Company shall also have agreed not to sell publicly their
Capital Stock under the circumstances and pursuant to the terms set forth in
this Section 9.8.
10. Reclassification. In the event that any Shares
should, as a result of a stock split or stock dividend or combination of Shares
or any other change or exchange for other securities, by reclassification,
reorganization, redesignation, merger, consolidation, recapitalization,
split-up, spinoff, partial or complete liquidation, sale of assets,
distribution to stockholders, combination of Shares or otherwise, be increased
or decreased or changed into or exchanged for a different number or kind of
shares of capital stock or other securities of the Company or of another
corporation, the number of Shares held by the Stockholders shall be
appropriately and proportionately adjusted to reflect such action and the terms
and provisions of this Agreement shall be appropriately adjusted and apply to
all of the capital stock of any class of the Company now owned or that may be
issued hereafter to any Stockholder in consequence of any such event.
11. Purchase for Investment; Legend. Each of the
Stockholders acknowledges that all of its Securities are being or have been
acquired for investment and for its own account and not with a view to the
distribution thereof in violation of the Securities Act and that no Transfer of
the Securities may be made except in compliance with applicable federal and
state securities laws. All of the certificates for Securities now or hereafter
owned by the Stockholders and subject to the terms of this Agreement shall have
endorsed in writing, stamped or printed, upon the back thereof, the following
legend (or a legend of similar effect):
"THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO AND
TRANSFERABLE ONLY IN ACCORDANCE WITH THE PROVISIONS
OF A STOCKHOLDERS' AGREEMENT, DATED AS OF OCTOBER 30,
1996. A COPY OF THAT AGREEMENT, AS IT MAY BE AMENDED
FROM TIME TO TIME, IS MAINTAINED WITH THE CORPORATE
RECORDS OF THE COMPANY AND IS AVAILABLE FOR
INSPECTION AT THE OFFICE OF THE COMPANY, AT 000 X.
XXXXXXXX XXXXXX, XXXXXXX, XXXXXXX 00000."
12. Termination. This Agreement shall be effective as of
the date hereof and shall terminate, other than with respect to Section 9, at
such time as either the Investcorp Group or the Carmel Group holds Shares
representing less than the lesser of (a) 5% of the then current voting power,
or (b) 10% of the number of Shares having voting power held by such group on
the date hereof. Notwithstanding the foregoing, Section 8 hereof shall
terminate at such earlier time as either (i) the Investcorp Group and the
Carmel Group fail to hold in the aggregate
28
29
Shares representing more than 50% of the then current voting power or (ii)
either the Original Investcorp Group or the Original Carmel Group holds less
than 50% of the number of Shares having voting power held by such group on the
date hereof.
13. Specific Performance. Inasmuch as the Shares and the
Warrants of the Company cannot be readily purchased or sold in the open market
and the parties hereto desire to impose certain restrictions on transfers of
the Shares and the Warrants, irreparable damage will result in the event that
this Agreement is not specifically enforced and the parties hereto agree that
any damages available at law for a breach of this Agreement would not be an
adequate remedy. Therefore, the provisions hereof and the obligations of the
parties hereunder shall be enforceable in a court of equity, or other tribunal
having jurisdiction by a decree of specific performance, and appropriate
injunctive relief may be applied for and granted in connection therewith. Such
remedies and all other remedies provided for in this Agreement shall, however,
be cumulative and not exclusive and shall be in addition to any other remedies
which any party may have under this Agreement or otherwise.
14. Additional Stockholders and Companies. Any person or
entity required or permitted to become a party to this Agreement in connection
with the acquisition of Shares or Warrants from a Stockholder or a successor
thereto, shall, on or before the transfer or issuance to it of Shares, sign a
signature page hereto and shall thereby become a party to this Agreement;
provided, however, that nothing contained herein shall be deemed to permit any
Transfer of Shares or Warrants by any Stockholder not otherwise expressly
permitted pursuant to the terms of this Agreement. As a party to this
Agreement, each holder of Shares or Warrants shall be bound by this Agreement
and shall hold such Shares or Warrants with all rights conferred, and subject
to all of the obligations and restrictions imposed, hereunder. In addition to
the foregoing, each of the Companies and the Stockholders hereby covenants and,
in the case of the Stockholders, agrees to vote its Shares, to cause each other
company and other entity from time to time owned or controlled by any of the
Companies to become a party to this Agreement and thereby become bound by the
provisions hereof and to therefore be a "Company" for purposes of that
definition.
15. Possession of Securities; Effectiveness of Transfers.
(a) Investcorp Management Services Limited, a
Cayman Islands corporation ("IMSL") and indirect wholly-owned subsidiary of
Investcorp, on the one hand, and Carmel, on the other hand, each covenant and
agree that, throughout the term of this Agreement, it shall maintain in its
possession each of the certificates representing the Securities held by all of
the members of the Investcorp Group or the Carmel Group, respectively, in order
to facilitate compliance with the terms of this Agreement by all the members of
the group with respect to whose Securities it is so acting. Notwithstanding
the foregoing, IMSL and Carmel each shall have the right, from time to time, to
appoint a third party that is reasonably acceptable to the other to similarly
act in its place.
29
30
(b) Notwithstanding the provisions of Section
15(a) hereof, no Securities shall be transferred on the Company's books and
records, and no transfer of Securities shall be otherwise effective, unless any
such transfer is made in accordance with the terms and conditions of this
Agreement and the applicable provisions of the Certificate of Incorporation.
In the event of any purported transfer of any Securities in violation of the
provisions of this Agreement, such purported transfer shall be void and of no
effect, and no dividend of any kind whatsoever nor any distribution pursuant to
liquidation or otherwise shall be paid by the Company to the purported
transferee in respect of such Securities and the rights to any such dividend or
distribution shall remain vested in the transferor, and the voting rights of
such Securities on any matter whatsoever shall remain vested in the transferor,
and the transferor shall not be relieved of any of its obligations hereunder as
the holder of such Securities, during the period commencing with the violation
and ending when compliance shall have occurred.
16. Action Necessary to Effectuate the Agreement. The
parties hereto agree to take or cause to be taken all such corporate and other
action as may be necessary to effect the intent and purposes of this Agreement.
17. Miscellaneous.
17.1 Notices. All notices, instructions and other
communications in connection with this Agreement shall be in writing and may be
given by personal delivery or mailed, certified mail, return receipt requested,
postage prepaid or by a nationally recognized overnight courier to the parties
at the address of the Company as follows, and at the address of each
Stockholder as set forth on the signature pages to this Agreement (or at such
other address as the Company may specify in a notice to the Stockholders or as
any Stockholder may specify, in a notice to the Company and the other
Stockholders):
If to the Company or Auto:
CSK Group, Ltd.
000 X. Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: President
With a copy to:
Xxxxxx Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
30
31
With an additional copy to:
Investcorp International, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxx
Notices shall be deemed to have been given (i) when actually delivered
personally, (ii) the next business day if sent by overnight courier (with proof
of delivery), and (iii) on the fifth day after mailing by certified mail.
17.2 No Waiver. No course of dealing and no delay on the
part of any party hereto in exercising any right, power or remedy conferred by
this Agreement shall operate as a waiver thereof or otherwise prejudice such
party's rights, powers and remedies conferred by this Agreement or shall
preclude any other or further exercise thereof or the exercise of any other
right, power and remedy.
17.3 Binding Effect; Assignability. This Agreement shall
be binding upon and, except as otherwise provided herein, shall inure to the
benefit of the respective parties and their permitted successors and assigns,
including, without limitation, transferees of any Registrable Stock. This
Agreement shall not be assignable except as otherwise provided herein.
17.4 Amendment and Waiver. This Agreement may not be
amended, modified or supplemented, and no waiver or consent to departures from
the provisions hereof shall bind any Stockholder who has not given such waiver
or consent, unless the written consent of Stockholders holding at least 90% of
the voting power and economic value then subject to this Agreement has been
obtained.
17.5 Governing Law; Service of Process. This Agreement
shall be construed both as to validity and performance in accordance with, and
governed by, the laws of the State of Delaware applicable to agreements to be
performed in Delaware. Each Stockholder irrevocably consents to the
jurisdiction and venue of any state or federal court situated in the City of
New York, and further consents to the service of any and all process in any
action or proceeding arising out of or relating to this Agreement by the
mailing of copies of such process to such party at its address specified in
Section 17.1 hereof.
17.6 Counterparts. This Agreement may be executed in one
or more counterparts each of which shall be deemed an original but all of which
together shall constitute one and the same instrument, and all signatures need
not appear on any one counterpart.
17.7 Headings. All headings and captions in this
Agreement are for purposes of reference only and shall not be construed to
limit or affect the substance of this Agreement.
31
32
17.8 Agreement Governs in Event of Conflict. In the event
the provisions of the Company's Certificate of Incorporation or By-laws
conflict with or are inconsistent with the provisions of this Agreement, this
Agreement shall govern and each Shareholder shall vote his, her or its Shares
to amend or modify the Certificate of Incorporation or By-laws, as the case may
be, to conform to the terms hereof.
17.9 Certain Public Disclosures. Except as required by
law, none of the Companies shall at any time make any filing with the
Commission or any other authority or agency or any press release referring in
any way to any member of the Investcorp Group or the Carmel Group without the
prior written consent of the directors of the Company nominated by such group.
17.10 Severability. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
17.11 Entire Agreement. This Agreement contains, and is
intended as, a complete statement of all the terms of the arrangements between
the parties with respect to the matters provided for, supersedes any previous
agreements and understandings between the parties with respect to those matters
and cannot be changed or terminated orally.
[END OF PAGE]
32
33
IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders' Agreement as of the date first above written.
CSK GROUP, LTD.
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: President
CSK AUTO, INC.
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: President
ACCEPTED AND AGREED, solely with
respect to Section 15(a) hereof
(and Sections 12, 13, 16 and 17 to
the extent they apply to such Section):
INVESTCORP MANAGEMENT SERVICES
LIMITED
By: /s/ H. Xxxxxxx Xxxxxx, III
----------------------------------
Name: H. Xxxxxxx Xxxxxx, III
Title: Director
[SIGNATURES CONTINUED ON NEXT PAGE]
33
34
CANTRADE TRUST COMPANY LIMITED,
in its capacity as trustee of The Carmel Trust
By: /s/ Xxxxxx Xxxxx
------------------------------------------
Xxxxxx Xxxxx, attorney-in-fact
Address for Carmel:
Cantrade Trust Company Limited,
in its capacity as trustee of
The Carmel Trust
c/o Mr. Xxxxxx Xxxxx
00 Xxxxxx Xxxx
Xxxxxxx, X0X 0X0, Xxxxxx
with a copy to:
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
[SIGNATURES CONTINUED ON NEXT PAGE]
34
35
TEMPE LIMITED
By: /s/ Martonmere Services Ltd.
-----------------------------------
Name: Martonmere Services Ltd.
Title: Director
SCOTTSDALE LIMITED
By: /s/ Martonmere Services Ltd
-----------------------------------
Name: Martonmere Services Ltd.
Title: Director
SOUTH MOUNTAIN LIMITED
By: /s/ Martonmere Services Ltd
-----------------------------------
Name: Martonmere Services Ltd.
Title: Director
XXXXXXXX LIMITED
By: /s/ Martonmere Services Ltd.
-----------------------------------
Name: Martonmere Services Ltd.
Title: Director
GILA LIMITED
By: /s/ The Director Ltd.
-----------------------------------
Name: The Director Ltd.
Title: Director
[SIGNATURES CONTINUED ON NEXT PAGE]
35
36
INVESTCORP INVESTMENT EQUITY
LIMITED
By: /s/ The Director Ltd.
--------------------------------------
Name: The Director Ltd.
Title: Director
BALLET LIMITED
By: /s/ Xxxxxxx Xxxx
--------------------------------------
Name: Xxxxxxx Xxxx
Title: Authorized Representative
DENARY LIMITED
By: /s/ Xxxxxx Xxx-Xxxxx
--------------------------------------
Name: Xxxxxx Xxx-Xxxxx
Title: Authorized Representative
GLEAM LIMITED
By: /s/ Xxxxx Xxxxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Authorized Representative
HIGHLANDS LIMITED
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Authorized Representative
[SIGNATURES CONTINUED ON NEXT PAGE]
36
37
NOBLE LIMITED
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Authorized Representative
OUTRIGGER LIMITED
By: /s/ P. Xxxxx Xxxxxxxxx
-------------------------------------
Name: P. Xxxxx Xxxxxxxxx
Title: Authorized Representative
QUILL LIMITED
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Authorized Representative
RADIAL LIMITED
By: /s/ Xxxxxxx Xxxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Authorized Representative
SHORELINE LIMITED
By: /s/ H. Xxxxxxx Xxxxxx, III
-------------------------------------
Name: H. Xxxxxxx Xxxxxx, III
Title: Authorized Representative
[SIGNATURES CONTINUED ON NEXT PAGE]
37
38
ACCEPTED AND AGREED, as the holder of the Warrant
INVESTCORP BANK E.C.
By: /s/ Xxxx X. Xxxx
------------------------------------
Name: Xxxx X. Xxxx
Title: Authorized Representative
Address for Investcorp:
X.X. Xxx 0000
Xxxxxx, Xxxxxxx
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
38
39
EXHIBIT A
"Reasonably Liquid Securities" means securities ("Buyer
Securities") of the unaffiliated person purchasing the Company's Securities
from the Selling Group (the "Third Party Purchaser"):
(a) (i) which are listed or quoted on the London
Stock Exchange, the Tokyo Stock Exchange, the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market (each, a "Securities
Exchange");
(ii) the Market Capitalization of which is at
least equal to five times the Selling Group's Market Value; and
(iii) the Average Trading Volume of which
multiplied by 60 is at least equal to the aggregate number of such Buyer
Securities given to all Stockholders and other security holders of the Company
selling Securities of the Company in the transaction (collectively, the
"Sellers"), excluding Buyer Securities given to any of the Sellers which such
Sellers have agreed in writing not to sell or otherwise dispose of for at least
60 days following the date of issuance thereof to such Sellers in the
transaction; or
(b) which are the subject of a firm commitment
underwriting, pursuant to an underwriting agreement with a nationally
recognized investment banking firm in customary form reasonably satisfactory to
the Sellers; provided that the obligation of the Other Stockholders to sell
their Securities to the Third Party Purchaser shall be conditioned upon the
closing of the public offering of such Buyer Securities pursuant to the above
referenced underwriting agreement.
"Market Capitalization" means the Market Price multiplied by
the number of Buyer Securities outstanding (on a pro forma basis to reflect the
issuance of Buyer Securities to the Sellers) on the date of issuance to the
Sellers.
"Market Price" means the average closing price of one Buyer
Security on the principal Securities Exchange on which the Buyer Securities are
traded for the 20 trading days ending on the day prior to the date of issuance
thereof to the Sellers.
"Selling Group's Market Value" means the aggregate Market
Price of a number of Buyer Securities equal to the number to be given to the
Sellers in the transaction.
"Average Trading Volume" means the average reported daily
trading volume in the Buyer Securities on the Securities Exchange on which they
are traded for the 60 trading days ending on the day prior to the date of
issuance thereof to the Sellers.
A-1
