EXHIBIT 4.2
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
by and among
FS EQUITY PARTNERS IV, L.P.,
RIPPLEWOOD PARTNERS, L.P.,
RIPPLEWOOD ADVANCE AUTO PARTS
EMPLOYEE FUND I L.L.C.,
XXXXXXXX X. XXXXXXX,
THE XXXXXX XXXXXXX TRUST DATED JULY 13, 1964,
WA HOLDING CO.
AND
ADVANCE HOLDING CORPORATION
November 2, 1998
TABLE OF CONTENTS
Page
1. Definitions................................................................. 2
2. Rights Upon Issuance of Additional Securities............................... 5
2.1 Issuance Notice........................................................ 5
2.2 Response Notice........................................................ 5
2.3 Revised Issuance Notice................................................ 5
2.4 Pro Rata Share......................................................... 5
2.5 Termination and Assignment............................................. 6
3. Transfer of Shares by FS Stockholder, Sears Stockholder or Ripplewood
Stockholder; Rights of Inclusion............................................ 6
3.1 Right of Inclusion..................................................... 6
3.2 Third-Party Offer...................................................... 7
3.3 Allocation of Included Shares.......................................... 9
3.4 Consummation........................................................... 10
3.5 Termination and Assignment............................................. 11
4. Obligation to Sell Securities............................................... 12
4.1 Sale Obligation........................................................ 12
4.2 Termination and Assignment............................................. 12
5. Restrictions on Transfers of Securities; Right of First Offer............... 13
5.1 Transfer Restrictions.................................................. 13
5.2 Right of First Offer................................................... 16
5.3 Termination and Assignment............................................. 19
5.4 Taubman Option and Option Shares....................................... 19
6. Registration Rights; Acquisitions of Common Stock. ......................... 19
6.1 Registration Rights. .................................................. 19
6.2 Acquisition of Common Stock. .......................................... 20
7. Representation on the Board of Directors ................................... 20
7.1 The Board ............................................................. 20
7.2 Approval Right ........................................................ 21
7.3 Certain Actions of the Board .......................................... 22
7.4 Termination and Assignment ............................................ 25
8. Certain Covenants of the Company ......................................... 25
8.1 Audited Financial Statements ........................................ 25
8.2 Other Financial Information ........................................ 25
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TABLE OF CONTENTS (continued)
Page
9. Copy of Agreement ...................................................... 26
10. Governing Law .......................................................... 26
11. Representations and Warranties ......................................... 26
12. Amendment and Waiver; Successors; After Acquired Shares ................ 26
13. Interpretation ......................................................... 27
14. Notices ................................................................ 27
15. Legends ................................................................ 27
16. Further Assurances ..................................................... 28
17. Injunctive Relief; Disputes ............................................ 28
18. Severability ........................................................... 29
19. Entire Agreement ....................................................... 29
20. Counterparts ........................................................... 29
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SCHEDULE 1 Ownership of Capital Stock by Stockholders Upon Consummation
of Transactions Contemplated by Merger Agreement ............... 32
EXHIBIT A Terms of the Registration Rights of the Common Stock .......... A-1
EXHIBIT B Irrevocable Proxy ............................................. B-1
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AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Agreement") is made
and entered into as of November 2, 1998 by and among Advance Holding
Corporation, a Virginia corporation (the "Company"), FS Equity Partners IV,
L.P., a Delaware limited partnership ("FSEP IV" or the "FS Stockholder"),
Ripplewood Partners, L.P. ("Ripplewood Partners"), Ripplewood Advance Auto Parts
Employee Fund I L.L.C. ("Ripplewood Employee Fund" and, together with Ripplewood
Partners, the "Ripplewood Stockholder"), Xxxxxxxx X. Xxxxxxx and the Xxxxxx
Xxxxxxx Trust dated July 13, 1964 (the "Trust") (Xx. Xxxxxxx and the Trust
collectively, the "Existing Stockholders" and each individually, an "Existing
Stockholder") and WA Holding Co., a Delaware corporation (the "Sears
Stockholder").
RECITALS
A. The Existing Stockholders, the FS Stockholder, Ripplewood Stockholder
and the Company entered into this Agreement effective as of April 15, 1998, to
establish certain rights, obligations and restrictions with respect to the
securities of the Company owned by them.
B. Pursuant to an Agreement and Plan of Merger dated as of August 16,
1998, by and among Sears, Xxxxxxx and Co., the Sears Stockholder, the Company,
Western Auto Supply Company, Advance Acquisition Corporation ("Newco"), Advance
Stores Company, Incorporated and certain stockholders of the Company, (i)
Western Auto Supply Company will merge with and into Newco with Newco as the
surviving corporation, and in partial consideration for the shares of Western
Auto Supply Company converted as a result of said merger Sears Stockholder will
receive from Newco that number of shares of Common Stock of the Company shown on
Schedule 1 to this Agreement and (ii) FS Stockholder, Ripplewood Stockholder and
Existing Stockholder will purchase additional shares of Common Stock of the
Company so that their total ownership of the Common Stock will be as shown on
Schedule 1 hereto.
C. In connection with the transactions contemplated by the Merger
Agreement, and as a condition to consummation of the transactions contemplated
thereby, the parties wish to amend and restate this Agreement to add Sears
Stockholder as a party and to further establish certain rights, obligations and
restrictions with respect to the securities of the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following capitalized
-----------
terms shall have the following meanings:
Additional Securities: All Securities which are issued and sold by
---------------------
the Company other than (i) the Initial Shares, (ii) any Securities issued or
issuable to all of the holders of Common Stock then outstanding on a
proportionate basis, (iii) any Securities issued or issuable to any Employees
pursuant to any equity incentive plan, individual agreement, bonus, award, stock
purchase plan, stock option plan or other stock agreement or arrangement which
in each event is approved by the Board (a "Benefit Plan"), (iv) any Securities
issued in exchange for debt securities of the Company or any Subsidiary,
provided, that the overall terms of the exchange transaction are fair and in the
best interests of the Company as determined in reasonable good faith by the
Board, and provided, further, that if a Stockholder or its Affiliates own debt
Securities being exchanged, all other Stockholders owning such debt securities
being exchanged shall have the right to participate in such exchange on the same
terms as the other Stockholders or their Affiliates, (v) any Securities issued
to any source of, or to any party arranging, financing for the Company or any
Subsidiary of the Company, provided, that the overall terms of the financing
transaction involving the issuance of debt and Securities are fair and in the
best interests of the Company as determined in reasonable good faith by the
Board and provided, further, in the event any Stockholder or any of its
Affiliates are participating in or providing such financing, that the other
Stockholders have the opportunity to participate in such financing and, if they
so participate, to purchase or otherwise receive on the same terms their Pro
Rata Share (as defined in Section 2.4) of any Securities (vi) any Securities
issued pursuant to a public offering registered under the Securities Act, (vii)
any Securities that are issued or issuable in connection with the acquisition by
the Company or a Subsidiary of any business, business assets or securities from
any Person, provided, that such Securities are not issued for less than their
fair market value, as determined in good faith by the Board and (viii) any
Securities that are issued or issuable upon the exercise of rights, options or
warrants to purchase Securities, or upon the conversion or exchange of
Securities convertible into or exchangeable for Securities, including the Option
Shares. Notwithstanding the foregoing, if Securities are issued to any
Stockholder(s) to finance an acquisition, such Securities shall be Additional
Securities.
Affiliate: Such term shall have the meaning given to such term
---------
pursuant to Rule 12b-2 of the General Rules and Regulations promulgated under
the Securities Exchange Act of 1934, as amended.
Board: The Board of Directors of the Company.
-----
Business means the sale of automotive parts and accessories at retail
--------
or wholesale or by catalog and the rendering of services relating thereto,
including, without limitation, carrying on or participating in the business of
any chain of automotive service facilities, supplying a dealer network with
automotive parts and accessories, or any wholesale or catalog operation or
retail chain that is engaged as a significant line of business in the
distribution or sale of automotive parts or accessories or rendering services
relating thereto.
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Common Stock: The Class A Common Stock, par value $0.01 per share, of
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the Company.
Employee: Any employee, independent director or consultant of the
--------
Company or any Subsidiary of the Company.
Existing Stockholders: Xxxxxxxx X. Xxxxxxx and the Trust.
---------------------
FS Principals: Xxxx X. Xxxxx, Xxxxxxxx X. Xxxxxxx, Xxxx X. Xxxxxxxx,
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J. Xxxxxxxxx Xxxxxxx, Xxxxxx X. Xxxxxx, Xxx X. Xxxxx, Xxxx X. Xxxx, Xxxxxxx X.
Xxxxxxx, Xx. and Xxxxxxx X. Xxxxxxx.
Initial Shares: Shall mean the 27,436,318 shares of Common Stock
--------------
issued and outstanding on the date hereof and held beneficially and of record by
the Stockholders as set forth on Schedule 1, and any Option Shares shown on
Schedule 1.
Option Shares: Any shares of Common Stock issued pursuant to the
-------------
exercise of the Taubman Option.
Permitted Transferee: Permitted Transferee shall mean, (w) with
--------------------
respect to any Stockholder, a controlled Affiliate which shall include any
corporation, investment fund or partnership that is (i) a controlled Affiliate
of such Stockholder or (ii) with respect to the FS Stockholder, organized and
controlled by three or more of the FS Principals or (iii) with respect to the
Ripplewood Stockholder, organized and controlled by Xxxxxxx X. Xxxxxxx or (iv)
with respect to Stockholder, includes Sears, Xxxxxxx and Co. or any controlled
Affiliate thereof, (x) with respect to the FS Stockholder, for the period ending
one year from the date of this Agreement, any institutional investor, merchant
banking firm, or institutional limited partner of an FS Stockholder who
purchases shares from FS Stockholder within one year from the date hereof (an
"Unaffiliated Permitted Transferee"), provided that the number of Shares of
Common Stock transferred to such Unaffiliated Permitted Transferee would not
cause the FS Stockholder (in the aggregate) to own less than 25% of the Common
Stock, grant any approval rights over major transactions or to transfer any
other rights except in compliance with this Agreement, and provided, further,
that such Unaffiliated Permitted Transferee delivers an undertaking binding upon
such Unaffiliated Permitted Transferee reasonably satisfactory to the Sears
Stockholder, Ripplewood Stockholder, Xx. Xxxxxxx and their respective counsel to
be bound by all obligations of the FS Stockholder hereunder, except those
explicitly made not binding in this Agreement upon such Unaffiliated Permitted
Transferee, (y) with respect to the Trust, the beneficiaries of the Trust (the
"Trust Transferees"), subject to Section 5.1, and (z) with respect to Xx.
Xxxxxxx and any Permitted Transferee of the Trust pursuant to clause (y) or
their respective Permitted Transferees that are individual persons (an
"Individual Stockholder"), (i) such Individual Stockholder's spouse, children,
grandchildren or other living descendants, or a trust or family partnership of
which there are no principal (i.e., corpus) beneficiaries or partners other than
the grantor or one or more of such Individual Stockholder, the Individual
Stockholder's
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spouse or described relatives and provided, in the case of a trust, that the
existing beneficiaries and/or trustee(s) and/or grantor(s) of such trust have
the power to act with respect to the trust's assets without court approval and,
in the case of a family partnership, that the partners thereof have the power to
act with respect to the partnership's assets without court approval and the
partnership is not permitted to (a) distribute assets to Persons who are not
among the relatives listed above or (b) have partners who are not among the
relatives listed above or (ii) a legal representative of such Individual
Stockholder in the event such Individual Stockholder becomes mentally
incompetent or to such Individual Stockholder's personal representative
following the death of such Individual Stockholder. No person shall be deemed a
Permitted Transferee if a transfer to such person would be an event defined as a
"change of control" in either the indenture governing the Company's Senior
Discount Debentures or the indenture governing Advance Stores Company,
Incorporated's Subordinated Debentures, each as in existence on the date hereof
and to the extent the same remain in effect (a "Change in Control Event").
Person: Any individual, corporation, entity, partnership, joint
------
venture, association, joint-stock company, trust, unincorporated organization or
other entity.
Public Market Sale: Any sale of Common Stock after the Initial Public
------------------
Offering which is made pursuant to Rule 144 promulgated by the SEC under the
Securities Act or which is made pursuant to a registration statement filed with
and declared effective by the SEC.
Public Offering: A public offering of shares of Voting Securities of
---------------
the Company registered under the Securities Act, but shall not include an
offering registered on Form S-4 or Form S-8 (or any substitute form that is
adopted by the SEC). The term "Initial Public Offering" shall mean an
underwritten Public Offering of Voting Securities which results in gross
proceeds to the Company in excess of $25 million from the sale of Voting
Securities.
SEC: The Securities and Exchange Commission.
---
Securities: Shall mean (i) Voting Securities, (ii) all rights,
----------
options, warrants to purchase such Voting Securities or the securities described
in the following clause and (iii) all other securities or capital stock of any
type whatsoever, including, without limitation, (A) non-voting common stock,
preferred stock, debt securities and securities that are, or may become,
convertible into or exchangeable for, or that entitle the holder to purchase,
Voting Securities and (B) preferred stock.
Securities Act: The Securities Act of 1933, as amended.
--------------
Stockholders: The FS Stockholder, the Sears Stockholder, the
------------
Ripplewood Stockholder and the Existing Stockholders.
Subsidiary: With respect to any Person, a corporation or other entity
----------
of which a majority of the shares of stock or other ownership interests are
owned, directly or indirectly, by
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such Person.
Taubman Option: The options to purchase 500,000 shares of Common
--------------
Stock as described in the option agreements dated as of April 15, 1998 ("Option
Agreements") issued one-half to Xxxxxxxx X. Xxxxxxx and one-half to the Trust by
the Company, as described in the Option Agreements.
Voting Securities: All Securities of the Company which possess
-----------------
general voting power to elect members of the Board (not including, unless the
context dictates otherwise, any options or warrants to purchase, or non-voting
securities convertible into, Voting Securities).
2. Rights Upon Issuance of Additional Securities. The Company
---------------------------------------------
hereby grants to each Stockholder the following rights with respect to
any and all proposed issuances or sales of Additional Securities by
the Company:
2.1 Issuance Notice. The Company shall give each
---------------
Stockholder written notice of the Company's intention to
issue and sell Additional Securities (the "Issuance
Notice"), describing the type of Additional Securities, the
price at which the Additional Securities will be issued and
sold and the general terms upon which the Company proposes
to issue and sell the Additional Securities, including the
anticipated date of such issuance or sale.
2.2 Response Notice. Each Stockholder shall have 30 days
---------------
from the date the Issuance Notice is received to agree to
purchase all or any portion of its Pro Rata Share (as
defined below in Subsection 2.4) of such Additional
Securities by giving written notice to the Company of its
desire to purchase Additional Securities (the "Response
Notice") and stating therein the quantity of Additional
Securities to be purchased. Such Response Notice shall
constitute the irrevocable agreement of such Stockholder to
purchase the quantity of Additional Securities indicated in
the Response Notice at the price and upon the terms stated
in the Issuance Notice. Any purchase by Stockholders of
Additional Securities shall be consummated on the later (i)
the closing date specified in the Issuance Notice or (ii)
the closing date on which Additional Securities described in
the applicable Issuance Notice are first issued and sold if
other Persons are also purchasing Additional Securities.
Each Stockholder that has elected to purchase its Pro Rata
Share of Additional Securities will have the right to
purchase all or any portion of the Additional Securities
unsubscribed for by the other Stockholders, up to its pro
rata share of such unsubscribed portion (determined by the
number of Voting
5
Securities owned by the party or parties who elect to
purchase such unsubscribed for portion) if oversubscribed.
2.3 Revised Issuance Notice. The Company shall have 120
-----------------------
days from the date of the Issuance Notice to consummate the
proposed issuance and sale of the Additional Securities that
are not being purchased by Stockholders at a price and upon
the terms that are not materially less favorable to the
Company than those specified in the Issuance Notice. If the
Company proposes to issue Additional Securities after such
120-day period or at a price and upon terms that are
materially less favorable to the Company than those
specified in the Issuance Notice it must again comply with
this Section 2.
2.4 Pro Rata Share. For purposes of this Section 2, the
--------------
Pro Rata Share of a Stockholder shall be a fraction, (i) the
numerator of which shall be the total number of shares of
Voting Securities then held by the Stockholder and (ii) the
denominator of which shall be the total number of shares of
Voting Securities then issued and outstanding and held by
parties to this Agreement.
2.5 Termination and Assignment. The rights provided to
--------------------------
each of the Stockholders under this Section 2 shall
terminate upon the later to occur of (i) the 180th day after
the consummation of an Initial Public Offering and (ii) such
time as less than 50% of the outstanding Common Stock is
held by the Stockholders and their Permitted Transferees
(the later of such times described in clauses (i) or (ii)
referred to herein as a "Liquidity Event"). A Stockholder's
rights under this Section 2 will terminate after such
Stockholder has transferred a number of Voting Securities
which represents 50% or more of the number of Voting
Securities (including the Common Stock purchasable upon
exercise of Existing Stockholders' options to acquire Voting
Securities under the Taubman Option and as appropriately
adjusted for any stock split, recapitalization or similar
transaction) held by such Stockholder on the date hereof
other than transfers to a Permitted Transferee or permitted
assignee. For purposes of the immediately preceding sentence
(i) Ripplewood Partners and Ripplewood Employee Fund shall
be deemed to be one Stockholder and (ii) the Existing
Stockholders shall be deemed to be one Stockholder. The
rights granted under this Section 2 shall not be assignable;
provided, however that a Stockholder may assign its rights
under this Section 2 relating to the shares which it is then
transferring to a
6
Permitted Transferee or any purchaser in a private
transaction of more than 25% of the shares of Common Stock
then held by such Stockholder (with (i) Ripplewood Partners
and Ripplewood Employee Fund and (ii) the Existing
Stockholders, each considered collectively for this
purpose).
3. Transfer of Shares by FS Stockholder, Sears Stockholder or
----------------------------------------------------------
Ripplewood Stockholder; Rights of Inclusion.
-------------------------------------------
3.1 Right of Inclusion.
------------------
(a) The FS Stockholder agrees not to Transfer (as defined in
Section 5.1) all or any portion of the shares of Common Stock it
holds to any Person (individually, a "Third Party" and,
collectively, "Third Parties") unless the Sears Stockholder, the
Ripplewood Stockholder and each Existing Stockholder are given an
opportunity to sell to the Third Party such number of shares of
Common Stock owned by the Sears Stockholder, the Ripplewood
Stockholder and such Existing Stockholder as is determined in
accordance with Subsection 3.3 of this Section 3; provided,
--------
however, that the Sears Stockholder, the Ripplewood
-------
Stockholder and the Existing Stockholders shall have no rights
pursuant to this Section 3 with respect to Transfers by the FS
Stockholder or a Permitted Transferee of the FS Stockholder of
Common Stock to (i) any Permitted Transferee of the FS
Stockholder or Permitted Transferees of such Permitted Transferee
(except Transfers either to an Unaffiliated Permitted Transferee
(x) more than one year after the date hereof or (y) prior to one
year after the date hereof if after such Transfer, FS Stockholder
would own less than 25% of the Common Stock or would have granted
any approval rights over major corporate transactions or would
have transferred rights not in compliance with this Agreement) or
(ii) to any limited or general partner or employee of the FS
Stockholder or any Permitted Transferee of the FS Stockholder in
a transaction constituting either (x) a distribution or (y) on
isolated sale of less than 5% of the Common Stock for employment
incentive purposes.
(b) The Sears Stockholder agrees not to Transfer (as defined in
Section 5.1) all or any portion of the shares of Common Stock it
holds to any Person (individually, a "Third Party" and,
collectively, "Third Parties") unless the FS Stockholder, the
Ripplewood Stockholder and each Existing Stockholder are given an
opportunity to sell to the Third Party such number of shares of
Common Stock owned by the FS Stockholder, the Ripplewood
Stockholder and such Existing Stockholder as is determined in
accordance with Subsection 3.3 of this Section 3; provided,
--------
7
however, that the FS Stockholder, the Ripplewood Stockholder and
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the Existing Stockholders shall have no rights pursuant to this
Section 3 with respect to Transfers by the Sears Stockholder or a
Permitted Transferee of the Sears Stockholder of Common Stock to
any Permitted Transferee of the Sears Stockholder or Permitted
Transferees of such Permitted Transferee.
(c) The Ripplewood Stockholder agrees not to Transfer (as
defined in Section 5.1) all or any portion of the shares of
common stock it holds to any third party unless the FS
Stockholder is given an opportunity to sell to the third party
such number of shares of Common Stock owned by the FS Stockholder
as is determined in accordance with subsection 3.3 of this
Section 3; provided, however, that the FS Stockholder shall have
no rights pursuant to the Section 3 with respect to Transfers by
the Ripplewood Stockholder to any Permitted Transferee of the
Ripplewood Stockholder. To the extent the FS Stockholder
exercises its rights under this Section 3.1(c), the Existing
Stockholders and Sears Stockholder shall thereupon have the
rights described in Section 3.1(a).
3.2 Third-Party Offer.
-----------------
(a) Prior to the consummation of any sale of all or any portion
of the shares of Common Stock held by the Sears Stockholder or FS
Stockholder ("Selling Stockholder") to a Third Party, the Selling
Stockholder shall cause each bona fide offer from such Third
Party to purchase such shares from the Selling Stockholder (a
"Third-Party Offer") to be reduced to writing and shall send
written notice of such Third-Party Offer (the "Initial Offer
Notice") to the other Stockholders. Each Third-Party Offer shall
include an offer to purchase shares of Common Stock from the
Stockholders holding rights under Section 3.1 in the amounts
determined in accordance with Subsection 3.3 of this Section 3,
at the same time, at the same price and on the same terms as the
sale by the Selling Stockholder to the Third Party, and according
to the terms and conditions of this Agreement. The Initial Offer
Notice shall be accompanied by a true copy of the Third-Party
Offer (including all material information available to the
Selling Stockholder relating thereto). If a Stockholder desires
to accept the offer contained in the Initial Offer Notice, such
Stockholder shall furnish written notice to the Selling
Stockholder, within 20 days after its receipt of the Initial
Offer Notice, indicating such Stockholder's irrevocable
acceptance of the offer included in the Initial Offer Notice and
setting forth the maximum number of shares of Common Stock such
Stockholder agrees to sell to the Third Party (the "Acceptance
Notice"). If a Stockholder does not furnish an Acceptance Notice
to the
8
Selling Stockholder in accordance with these provisions by the
end of such 20-day period, such Stockholder shall be deemed
to have irrevocably rejected the offer contained in the Initial
Offer Notice. All shares of Common Stock set forth in the
Acceptance Notices of the Stockholders together with the shares
of Common Stock proposed to be sold by the Selling Stockholder to
the Third Party are referred to collectively as "All Offered
Shares". Within five days after the date on which the Third Party
informs the Selling Stockholder of the total number of shares of
Common Stock which such Third Party has agreed to purchase in
accordance with the terms specified in the Initial Offer Notice,
the Selling Stockholder shall send written notice (the "Final
Notice") to the participating Stockholders setting forth the
number of shares of Common Stock each participating Stockholder
shall sell to the Third Party as determined in accordance with
Subsection 3.3 of this Section 3, which number shall not exceed
the maximum number specified by a Stockholder in its Acceptance
Notice. Within five days after the date of the Final Notice (or
such shorter period as may reasonably be requested by the Selling
Stockholder to facilitate the sale), the participating
Stockholders shall furnish to the Selling Stockholder (i) a
written undertaking to deliver, upon the consummation of the sale
of Common Stock to the Third Party as indicated in the Final
Notice, the certificates representing the shares of Common Stock
held by each Stockholder which will be transferred pursuant to
such Third-Party Offer (such shares shall be referred to herein
as the "Included Shares") and (ii) a limited power-of-attorney
authorizing the Selling Stockholder to transfer the Included
Shares pursuant to the terms of such Third-Party Offer. Each
Stockholder shall be required to make customary representations
and warranties in connection with such transfer with respect to
its own authority to transfer and its title to the shares of
Common Stock transferred. In any such transaction the Company
will cooperate with all Stockholders to facilitate the
transaction.
(b) Prior to the consummation of any sale of all or any portion
of the shares of Common Stock held by the Ripplewood Stockholder
to a Third Party, the Ripplewood Stockholder shall cause each
bona fide offer from such Third Party to purchase such shares
from the Ripplewood Stockholder (a "Ripplewood Third-Party
Offer") to be reduced to writing and shall send written notice of
such Ripplewood Third-Party Offer (the "Ripplewood Initial Offer
Notice") to the FS Stockholder (with a copy to Sears
Stockholder). Each Ripplewood Third-Party Offer shall include an
offer to purchase shares of Common Stock from the FS Stockholder,
in the amounts determined in accordance with Subsection 3.3 of
this Section 3, at the same time, at the same price and on the
same terms as the sale by the Ripplewood Stockholder to the Third
Party, and according to the terms
9
and conditions of this Agreement. The Ripplewood Initial Offer
Notice shall be accompanied by a true copy of the Ripplewood
Third-Party Offer (including all material information available
to the Ripplewood Stockholder relating thereto). If the FS
Stockholder desires to accept the offer contained in the
Ripplewood Initial Offer Notice, the FS Stockholder shall furnish
written notice to the Ripplewood Stockholder, within 20 days
after its receipt of the Ripplewood Initial Offer Notice,
indicating the FS Stockholder's irrevocable acceptance of the
offer included in the Ripplewood Initial Offer Notice and setting
forth the maximum number of shares of Common Stock the FS
Stockholder agrees to sell to the Third Party (the "Acceptance
Notice"). If the FS Stockholder does not furnish an Acceptance
Notice to the Ripplewood Stockholder in accordance with these
provisions by the end of such 20-day period, the FS Stockholder
shall be deemed to have irrevocably rejected the offer contained
in the Ripplewood Initial Offer Notice. All shares of Common
Stock set forth in the Acceptance Notice of the FS Stockholder
together with the shares of Common Stock proposed to be sold by
the Ripplewood Stockholder to the Third Party are referred to
collectively as "All Offered Shares". Within five days after the
date on which the Third Party informs the Ripplewood Stockholder
of the total number of shares of Common Stock which such Third
Party has agreed to purchase in accordance with the terms
specified in the Ripplewood Initial Offer Notice, the Ripplewood
Stockholder shall send written notice (the "Ripplewood Final
Notice") to the FS Stockholder setting forth the number of shares
of Common Stock the FS Stockholder shall sell to the Third Party
as determined in accordance with Subsection 3.3 of this Section
3, which number shall not exceed the maximum number specified by
the FS Stockholder in its Acceptance Notice. Within five days
after the date of the Ripplewood Final Notice (or such shorter
period as may reasonably be requested by the Ripplewood
Stockholder to facilitate the sale), the FS Stockholder shall
furnish to the Ripplewood Stockholder (i) a written undertaking
to deliver, upon the consummation of the sale of Common Stock to
the Third Party as indicated in the Ripplewood Final Notice, the
certificates representing the shares of Common Stock held by the
FS Stockholder which will be transferred pursuant to such
Ripplewood Third-Party Offer (such shares, including any shares
sold by other Stockholders exercising rights under Section
3.1(a), shall be referred to herein as the "Included Shares") and
(ii) a limited power-of-attorney authorizing the Ripplewood
Stockholder to transfer the Included Shares pursuant to the terms
of such Ripplewood Third-Party Offer. Each Stockholder shall be
required to make customary representations and warranties in
connection with such transfer with respect to its own authority
to transfer and its title to the shares of Common Stock
transferred. In any such transaction the Company will
10
cooperate with all Stockholders to facilitate the transaction.
The fact that other Shareholders will have Tag-Along Rights upon
an exercise of the FS Stockholders' Tag-Along Rights hereunder
shall not result in an extension of any time periods specified in
this Section 3.2(b).
3.3 Allocation of Included Shares. The maximum number of
-----------------------------
shares of Common Stock that may be sold by FS Stockholder,
Sears Stockholder, Ripplewood Stockholder and each Existing
Stockholder and all other holders of Common Stock who have
rights to participate in sales of Common Stock by the FS
Stockholder, Sears Stockholder or Ripplewood Stockholder
pursuant to written agreements by and between the FS
Stockholder, the Sears Stockholder, the Ripplewood
Stockholder or the Company and any such holder (the "Other
Tag-Along Rights Holders") in any sale governed by this
Section 3 shall be (i) All Offered Shares in the event the
Third Party has agreed to purchase All Offered Shares and
all shares of Common Stock that the Other Tag-Along Rights
Holders who have elected to participate in such sale seek to
include in such sale or (ii) such number of shares of Common
Stock equal to the product of (a) the total number of shares
of Common Stock which the Third Party has agreed to purchase
times (b) a fraction, the numerator of which is the number
of shares of Common Stock owned by the FS Stockholder, the
Sears Stockholder, the Ripplewood Stockholder, Existing
Stockholders or each Other Tag-Along Rights Holder who is
eligible to and has elected to participate in such sale, as
the case may be, on the date of the Final Notice or
Ripplewood Final Notice and the denominator of which is the
total number of shares of Common Stock owned on the date of
the Final Notice or Ripplewood Final Notice by all of the FS
Stockholder, the Sears Stockholder, the Ripplewood
Stockholder, the Existing Stockholders and the Other Tag-
Along Rights Holders who have elected to participate in such
sale; provided, however, that, in the event the FS
-------- -------
Stockholder, the Sears Stockholder, the Ripplewood
Stockholder, the Existing Stockholders or any Other Tag-
Along Rights Holder elects to sell a number of shares of
Common Stock which is less than the number of shares such
holder could sell pursuant to clause (ii) above, the shares
of Common Stock that the other such holders can sell in such
transaction shall be increased by an aggregate amount equal
to the number of shares which any of the FS Stockholder, the
Ripplewood Stockholder, the Existing Stockholders or any
Other Tag-Along Rights Holder could have sold in such
transaction but chose not to sell, and any such increase
11
shall be allocated among such other holders on a pro rata
basis based upon the number of shares of Common Stock owned
on the date of the Final Notice or Ripplewood Final Notice
by such other holders. The Company shall not grant to any
Person that is not a party to this Agreement on the date
hereof rights which are more favorable than or which would
interfere with (it being understood that the granting of
substantially similar rights to Other Tag-Along Rights
Holders shall not by itself be deemed to so interfere) those
granted to the Existing Stockholders pursuant to this
Section 3 without Xx. Xxxxxxx'x or his representative's
prior written consent. The Stockholders shall use reasonable
best efforts to cause the Company to amend existing
agreements under the Company's stock plans for management,
and adopt new forms of agreements, so that Management
Stockholders having Tag-Along Rights can exercise such
rights in a sale either by FS Stockholder or Sears
Stockholder.
3.4 Consummation. The Sears Stockholder, FS Stockholder
------------
or Ripplewood Stockholder shall have 90 days from the date
of the Final Notice or Ripplewood Final Notice,
respectively, in which to sell to the Third Party the shares
of Common Stock owned by the Sears Stockholder, FS
Stockholder or Ripplewood Stockholder and the Included
Shares of the other Stockholders having Tag-Along Rights on
terms which are not materially less favorable to the sellers
of shares of Common Stock than those specified in the
applicable Initial Offer Notice; provided, however, that in
-------- -------
the event there is a decrease in the price to be paid by the
Third Party for the shares of Common Stock to be sold from
the price set forth in the Initial Offer Notice or the
Ripplewood Initial Offer Notice, as applicable, which
decrease is acceptable to the Sears Stockholder, FS
Stockholder (in the case of a Third Party Offer) or
Ripplewood Stockholder (in the case of a Ripplewood Third
Party Offer), or other material change in terms which are
less favorable to the Sears Stockholder, FS Stockholder or
Ripplewood Stockholder, as the case may be, but which are
acceptable to the Sears Stockholder, FS Stockholder or
Ripplewood Stockholder, as the case may be, the Sears
Stockholder, FS Stockholder or Ripplewood Stockholder, as
the case may be, shall notify the participating Stockholders
of such decrease or change in terms, and each of the
participating Stockholders shall have five business days
from the date of receipt of the notice of such decrease or
change in terms to reduce the number of shares of Common
Stock it will sell to such Third Party as previously
indicated in the applicable Acceptance Notice and
12
the number of shares that all other participating
stockholders (including Other Tag-Along Rights Holders) may
transfer shall be increased in accordance with the
provisions of Section 3.3; and provided, further, that in
-------- -------
the event there is an increase in the price to be paid by
the Third Party for the shares of Common Stock to be sold
from the price set forth in the applicable Initial Offer
Notice or other material change in terms which are more
favorable to the Sears Stockholder, FS Stockholder or
Ripplewood Stockholder, as the case may be, the Sears
Stockholder, FS Stockholder or Ripplewood Stockholder, as
the case may be, shall notify the other Stockholders of such
increase or change in terms, and each of the Stockholders
who was eligible to but did not elect to participate to the
full extent of their rights hereunder shall have five
business days from the date of receipt of the notice of such
increase or change in terms to increase the number of shares
of Common Stock it will sell to such Third Party, and the
number of shares that all other participating stockholders
(including other Tag-Along Rights Holders) may transfer
shall be decreased proportionately if necessary. A Third
Party purchaser of shares of Common Stock which complies
with this Section 3 shall not be subject to the obligations
contained in this Section 3 with respect to future sales of
their shares. The Sears Stockholder, FS Stockholder or
Ripplewood Stockholder, as the case may be, shall cause to
be remitted to the participating Stockholders the total
sales price of the Included Shares of the participating
Stockholders sold pursuant thereto, which consideration
shall be in the same form and per share amount as the
consideration received by the Sears Stockholder, FS
Stockholder or Ripplewood Stockholder, as the case may be,
and as specified in the Initial Offer Notice (or Ripplewood
Initial Offer Notice, as applicable), net (i) in an exercise
of Tag-Along Rights by an Existing Stockholder, of the
reasonable, incremental out-of-pocket expenses incurred by
the FS Stockholder or Sears Stockholder in connection with
such sale as a result of the Existing Stockholders'
participation therein or (ii) in an exercise of Tag-Along
Rights by the Sears Stockholder, the Ripplewood Stockholder
or the FS Stockholder, of the pro rata portion (based on the
number of shares of Common Stock included by each
Stockholder compared to the aggregate number of shares of
Common Stock included in such sale) of the reasonable
out-of-pocket expenses incurred in connection with a sale
consummated pursuant to this Section 3. The Sears
Stockholder, FS Stockholder or Ripplewood Stockholder shall
furnish, or shall cause to be furnished, such other evidence
of the completion and time of
13
completion of such sale and the terms thereof as may be
reasonably requested by the participating Stockholders
including, without limitation, evidence of the expenses
incurred by the Sears Stockholder, FS Stockholder or
Ripplewood Stockholder, as the case may be, in connection
with such sale. If and to the extent that, at the end of 90
days following the date of the Final Notice (or Ripplewood
Final Notice, as applicable), the Sears Stockholder, FS
Stockholder or Ripplewood Stockholder, as the case may be,
has not completed the sale contemplated thereby, the Sears
Stockholder, FS Stockholder or Ripplewood Stockholder, as
the case may be, shall return to the participating
Stockholders all certificates representing the Included
Shares and all powers-of-attorney which the participating
Stockholders may have transmitted pursuant to the terms
hereof.
3.5 Termination and Assignment. Any Permitted Transferee
--------------------------
of the FS Stockholder (other than an Unaffiliated Permitted
Transferee) and any assignee of the FS Stockholder's rights
under Section 4 shall agree to be bound by this Section 3 to
the same extent as the FS Stockholder. Any Permitted
Transferee of the Ripplewood Stockholder shall agree to be
bound by this Section 3 to the same extent as the Ripplewood
Stockholder. Any Permitted Transferee of the Sears
Stockholder shall agree to be bound by this Section 3 to the
same extent as the Sears Stockholder. The obligations of the
FS Stockholder, Sears Stockholder and the Ripplewood
Stockholder and any Permitted Transferee or assignee
pursuant to the provisions of this Section 3 shall terminate
upon a Liquidity Event or, as to any such holder only, upon
a distribution without consideration of all of the shares of
Common Stock that such holder holds to its stockholders or
the limited or general partners or employees of such holder
or their Affiliates. The rights granted to the Stockholders
pursuant to this Section 3 may not be assigned, except that
these rights shall inure to the benefit of a Permitted
Transferee of a Stockholder (and its Permitted Transferees)
provided that such persons have agreed to be bound by
Sections 4 and 5 of this Agreement, and may be assigned to a
purchaser or transferee of more than 50% of the shares of
Common Stock then held by any Stockholder, and such rights
shall be further assignable to any purchaser of more than
50% of the shares of such transferee. No additional Tag-
Along Rights shall be granted without the approval of the
Company's Board of Directors and no such grant may be a Tag-
Along Right on sales by a specific Stockholder without its
consent, or a grant that would prevent a
14
Stockholder from participating pro rata in a sale in which
it could exercise Tag-Along Rights. Nothing in this section
shall be construed as granting rights of inclusion in any
Public Market Sale.
4. Obligation to Sell Securities.
-----------------------------
4.1 Sale Obligation. From and after April 1, 2000, or
---------------
earlier if consented to by Sears Stockholder, if the FS
Stockholder finds a third-party buyer to which it sells all
of the shares of Common Stock held by the FS Stockholder and
its Permitted Transferees and assignees (whether such sale
is by way of purchase, merger or other form of transaction),
upon the request of the FS Stockholder, each of the Existing
Stockholders and the Ripplewood Stockholder shall sell all
of the shares of Common Stock and the Taubman Option
beneficially owned by such Existing Stockholder and the
Ripplewood Stockholder to such third-party buyer pursuant to
the same terms and conditions negotiated by the FS
Stockholder for the sale of shares of Common Stock held by
the FS Stockholder and subject to the provisions of the
Taubman Option with respect to the consideration to be
received for such Option; provided, that an Existing
--------
Stockholder and the Ripplewood Stockholder shall have no
obligation to sell its shares of Common Stock and the
Taubman Option pursuant to this Section 4 unless the FS
Stockholder (including its Permitted Transferees and
assignees) sells all of the shares of Common Stock held by
them. Each of the Existing Stockholders and the Ripplewood
Stockholder agrees to such sale, and to execute such
agreements, powers of attorney, voting proxies or other
documents and instruments as may be necessary to consummate
such sale. Each of the Existing Stockholders and the
Ripplewood Stockholder further agrees to timely take such
other actions as the FS Stockholder may reasonably request
as necessary in connection with the approval of the
consummation of such sale, including voting all Voting
Securities in favor of such sale. Each Existing Stockholder
shall pay the reasonable incremental out-of-pocket expenses
incurred by the FS Stockholder in connection with the
inclusion of such Existing Stockholder in a sale consummated
pursuant to this Section 4. The Ripplewood Stockholder shall
pay its pro rata portion (based on the total value of the
consideration received by such Stockholder compared to the
aggregate consideration received by all Stockholders in the
transaction) of the reasonable out-of-pocket expenses
incurred by the FS Stockholder in connection with a sale
consummated pursuant to this Section 4.
15
4.2 Termination and Assignment. The obligations of the
--------------------------
Existing Stockholders and Ripplewood Stockholder pursuant to
this Section 4 shall be binding on any transferee of or
purchaser of shares of Common Stock or all or any part of
the Taubman Option from an Existing Stockholder or from the
Ripplewood Stockholder or from one of their Permitted
Transferees, and any subsequent transferee, except for a
transferee purchasing shares in a Public Market Sale, or any
subsequent transferee thereof, and an Existing Stockholder,
the Ripplewood Stockholder, Permitted Transferee or any
other transferee shall obtain and deliver to the FS
Stockholder a written commitment to be bound by such
provisions from each such transferee or Permitted Transferee
prior to any Transfer. Notwithstanding the immediately
preceding sentence, a Trust Transferee shall not be required
to deliver the written commitment referred to in such
sentence upon receipt of shares by way of distribution from
the trust; provided, however, that if such Trust Transferee
does not deliver such commitment within 30 days after
receipt of notice from the Company requesting delivery of
such documents (and referring specifically to this
Agreement) (such period, the "Document Delivery Period"),
the Company need not register such Transfer on its records
and the Company (or its designee) shall have a repurchase
right as to such shares pursuant to Section 5.1(c). The
Trust shall promptly notify the Company of the occurrence of
any event that would cause a distribution from the Trust.
The obligations pursuant to this Section 4 shall likewise be
binding on any transferee of or purchaser of shares from the
FS Stockholder (and any subsequent transferee), except for a
transferee purchasing shares in a Public Market Sale or any
subsequent transferee thereof, or an assignee of the rights
held by FS Stockholder under this Section 4, and the FS
Stockholder shall obtain an undertaking by such transferee
to be so bound. The obligations of the Existing Stockholders
and the Ripplewood Stockholder pursuant to this Section 4,
and the obligations of any such transferee and Permitted
Transferee, shall continue after the consummation of an
Initial Public Offering until the occurrence of a Liquidity
Event. The rights of FS Stockholder under this Section 4
shall not be assignable except to a purchaser of more than
50% of the shares of Common Stock then held by FS
Stockholder and its Permitted Transferees (with FSEP IV and
any Permitted Transferee therefrom considered collectively
for this purpose) that holds after such purchase more than
25% of the outstanding Common Stock or to a Permitted
Transferee of all of
16
FS Stockholder's stock and shall terminate in the event that
the FS Stockholder (or such Permitted Transferee or
permitted assignee) holds a number of shares of Common Stock
which represents less than 20% of the total number of shares
of Common Stock outstanding at any time (with FSEP IV, any
Permitted Transferee and/or permitted assignee considered
collectively for this purpose).
5. Restrictions on Transfers of Securities; Right of First Offer.
-------------------------------------------------------------
5.1 Transfer Restrictions.
---------------------
(a) Transfer Restrictions Binding Existing Stockholders. No
---------------------------------------------------
Existing Stockholder shall, without the prior written approval of
FS Stockholder, Transfer any shares of Common Stock or any right,
title or interest therein except in a manner in compliance with
this Agreement, including (without limitation) Subsection 5.2; or
(i) pledge, hypothecate or encumber any shares of Common Stock,
(ii) sell, assign, transfer, gift or otherwise dispose of or
convey or distribute to its beneficiaries (in the case of the
Trust) ((i) and (ii) collectively, the "Transfer") any shares of
Common Stock, or any right, title or interest therein, except in
compliance with the Securities Act and all applicable state
securities laws; or (iii) Transfer any shares of Common Stock
(other than to a Permitted Transferee, provided the documents
enumerated in clauses (i) - (iii) below are delivered), or any
right, title or interest therein, until after April 1, 2000 (the
"Permitted Transfer Date") or, if earlier, upon consummation of
an Initial Public Offering by the Company, except pursuant to
this Agreement or due to involuntary dissolution of the Trust or
death. As long as it has any obligations under this Agreement, to
the extent permitted by its Declaration of Trust, the Trust shall
remain in full force and effect and shall not be dissolved or
revoked. After the Permitted Transfer Date, or at such earlier
date as required by law or the Declaration of Trust of the Trust,
the Existing Stockholders may Transfer shares of Common Stock to
a Permitted Transferee, without complying with Section 5.2,
provided that each of such transferees (i) executes a written
undertaking to be and becomes bound by this Agreement in the same
manner and to the same extent as the Existing Stockholders, (ii)
executes an irrevocable power of attorney appointing Xxxxxxxx X.
Xxxxxxx (or an individual designated by Xxxxxxxx X. Xxxxxxx if he
is unable to act due to death or disability) as such transferee's
attorney-in-fact with sole irrevocable power and authority to
make all decisions on behalf of and take all actions required to
be taken by such transferee in connection with this Agreement,
including (without limitation) any required sale of shares of
Common Stock pursuant to Section 4 hereof, and (iii) if requested
by FS Stockholder, delivers an
17
opinion of legal counsel reasonably satisfactory to FS
Stockholder that such undertaking is binding and enforceable.
Notwithstanding the immediately preceding sentence, a Trust
Transferee shall not be required to deliver the items referred to
in such sentence upon receipt of shares by way of distribution
from the Trust; provided, however, that if such Trust Transferee
-------- -------
does not deliver such items within the Document Delivery Period
the Company need not register such Transfer on its records and
the Company (or its designee) shall have a repurchase right as to
such shares pursuant to Section 5.1(c). The Trust shall promptly
notify the Company of the occurrence of any event that would
cause a distribution from the Trust.
(b) Conditions to Transfer. Any attempt to Transfer, pledge,
----------------------
hypothecate or encumber shares of Common Stock, or any right,
title or interest therein, not in compliance with this Agreement
shall be null and void, and the Company shall not give effect to
any such attempted transaction or Transfer. No Transfer shall be
effective which would cause a Change in Control Event. Any shares
of Common Stock Transferred pursuant to the terms and
requirements of this Agreement (including Sections 3, 4 and 5)
shall be Transferred free and clear of all mortgages, liens,
pledges, charges and security interests or encumbrances, or any
obligations or liabilities in connection therewith, other than
obligations under this Agreement of transferees. Each
Stockholder, on the execution and delivery of this Agreement,
agrees that such Stockholder will not Transfer any shares of
Common Stock prior to delivery to the Company of an opinion of
counsel in form and substance reasonably satisfactory to the
Company with respect to compliance with the Securities Act, or
until a registration statement with respect to such shares of
Common Stock under the Securities Act has become effective;
except that no opinion shall be required in the case of a
Transfer by any Stockholder to a Permitted Transferee or by FS
Stockholder or a Permitted Transferee to any limited or general
partner or employee of the FS Stockholder or any Permitted
Transferee. Except as expressly provided to the contrary herein,
all transferees of shares of Common Stock except for a transferee
acquiring shares in a Public Market Sale and transferees of such
Public Market Sale transferee will be bound by this Agreement in
the same manner and to the same extent as the transferor and
prior to any Transfer must deliver to the Company and the
Stockholders a written undertaking to be and become so bound.
Upon completion of any Transfer in compliance with this
Agreement, the transferee shall become a Stockholder and entitled
to certain rights hereunder.
(c) Repurchase Option. If Voting Securities held by a Trust
-----------------
18
Transferee become subject to a repurchase option pursuant to
Section 4.2 or Section 5.1(a) above, upon notice of exercise
thereof from the Company (or its designee), such Voting
Securities shall be deemed to have been redeemed by the Company
or purchased by its designee for, and any certificates
representing such Voting Securities shall thereafter represent
the right to receive, 85% of their fair market value in cash
(which value shall be determined by an Appraising Firm (as
defined in Section 5.2)). The Company (or its designee) shall
have 60 days from the expiration of the Document Delivery Period
to deliver such notice and shall pay such amount promptly (within
90 days from the expiration of the Document Delivery Period) upon
delivering such notice, whereupon the Company shall reflect such
redemption or sale on the records of the Company. If such notice
and payment is not delivered within 210 days of the distribution
by the Trust, and if the Trust has complied with its notice
obligations hereunder, then the Company shall record the Transfer
to the Trust Transferee, notwithstanding the failure to deliver
the documents required by subsection (a). The Company's rights
under this paragraph (b) shall terminate on the date all rights
under Sections 4 and 5 hereof in favor of the FS Stockholder or
its Permitted Transferees have terminated.
(d) Transfer Restrictions Binding Ripplewood Stockholder. The
----------------------------------------------------
Ripplewood Stockholder shall not, without the prior written
approval of FS Stockholder, Transfer any shares of Common Stock
or any right, title or interest therein except in a manner in
compliance with this Agreement, including (without limitation)
Subsection 5.2; or: (i) pledge, hypothecate or encumber any
shares of Common Stock, except that the Ripplewood Employee Fund
may pledge shares of Common Stock subject to Section (e) of this
Section 5.1; (ii) Transfer any shares of Common Stock, or any
right, title or interest therein, except in compliance with the
Securities Act and all applicable state securities laws; or (iii)
Transfer any shares of Common Stock, or any right, title or
interest therein (other than to its Permitted Transferee or as
expressly permitted by and in compliance with this Agreement)
until April 1, 2000, or if earlier, upon consummation of an
Initial Public Offering by the Company.
(e) The Ripplewood Employee Fund may pledge shares of Common
Stock to a lender in connection with the financing of its initial
investment in the Company, provided, that in connection with such
pledge:
(i) No foreclosure sale of the pledge Common Stock shall be
consummated unless the FS Stockholder or a person designated by the FS
Stockholder shall be given the right to acquire such pledged shares of Common
Stock pursuant to this clause (i). Upon the pledgee agreeing to sell the shares
of Common Stock, the pledgee shall give written
19
notice to the FS Stockholder of the agreement to sell, which notice shall
include a term sheet stating, among other material terms, the agreed upon sale
price that the purchaser is willing to pay the pledgee for such shares of Common
Stock. FS Stockholder or its designee shall thereafter have the right for a
period of 30 days following receipt of such notice to elect to purchase such
shares of Common Stock at the price and on the terms stated in the written
notice. The FS Stockholder or its designee shall exercise such rights by
delivering its irrevocable written election to purchase such shares prior to
2:00 p.m. Los Angeles time on the final day of said 30-day period. If the FS
Stockholder (or its designee) elects to purchase such shares of Common Stock, it
shall consummate such purchase within 60 days of the final day of the 30-day
period. If the FS Stockholder (or its designee) does not elect to purchase such
shares of Common Stock, the foreclosure sale may be completed if and only if the
transferee agrees in writing to be bound by the obligations of Ripplewood
Stockholder set forth in Section 3, 4, 5 and 7 of this Agreement.
(ii) A transferee of pledged securities in a
foreclosure sale shall not succeed to any rights hereunder of Ripplewood
Stockholders, including without limitation rights set forth in Sections 2, 3, 6
and 7 hereof.
(iii) Any pledgee of shares of Common Stock shall be
bound by Section 4 of this Agreement during such time it may hold shares of
Common Stock.
(f) Transfer Restrictions Binding Sears Stockholder. The
-----------------------------------------------
Sears Stockholder shall not, without the prior written approval
of FS Stockholder: (i) pledge, hypothecate or encumber any shares
of Common Stock; (ii) Transfer any shares of Common Stock, or any
right, title or interest therein, unless such Transfer is in
compliance with the Securities Act and all applicable State
Securities laws and in a manner in compliance with this
Agreement, including (without limitation) subsection 5.2; or
(iii) Transfer any shares of Common Stock, or any right, title or
interest therein (other than to its Permitted Transferee as is
expressly permitted by and in compliance with this Agreement)
until April 1, 2000, or if earlier, upon consummation of an
Initial Public Offering by the Company.
(g) Transfer Restrictions Binding FS Stockholder. The FS
--------------------------------------------
not, without the prior written approval of Sears Stockholder: (i)
pledge, hypothecate or encumber any shares of Common Stock; (ii)
Transfer any shares of Common Stock, or any right, title or
interest therein, unless such Transfer is in compliance with the
Securities Act and all applicable State Securities laws and in a
manner in compliance with this Agreement including (without
limitation) subsection 5.2; or (iii) Transfer any shares of
Common Stock, or any right, title or interest therein (other than
to its Permitted Transferees as expressly permitted by and in
compliance with this Agreement) until April 1, 2000, or, if
earlier,
20
upon consummation of an Initial Public Offering by the Company.
5.2 Right of First Offer.
--------------------
(a) First Offer by Existing Stockholder. Except in the case of
-----------------------------------
a transaction governed by Section 7.3(g) each of the Existing
Stockholders hereby agrees not to Transfer, prior to April 15,
2001, or until an Initial Public Offering, if earlier, any of the
shares of Common Stock or the Taubman Option held by it to any
Person (other than its Permitted Transferees) unless FS
Stockholder and Sears Stockholder, pro rata based on such
stockholder's then-current ownership of Common Stock (or any
third person(s) designated by FS Stockholder or Sears
Stockholder, as the case may be, which may include their
Affiliates or the Company), is given the right to acquire such
shares of Common Stock pursuant to the provisions of this
Subsection 5.2. In addition, until a Liquidity Event, the
Existing Stockholders shall not Transfer any shares of Common
Stock to any Person who directly or indirectly carries on or
participates in any business in competition with the Business
(whether conducted by the Company or any Subsidiary or controlled
Affiliate of the Company) without complying with this Section
5.2.
(b) First Offer by Ripplewood Stockholder. Except in the case
-------------------------------------
of a transaction governed by Section 5.1(d) and (e) or 7.3(g) the
Ripplewood Stockholder agrees not to Transfer, until an Initial
Public Offering, any of the shares of Common Stock held by it to
any Person (other than its Permitted Transferees) unless FS
Stockholder and Sears Stockholder, pro rata based on such
Stockholder's then-current ownership of Common Stock (or any
third person(s) designated by FS Stockholder or Sears
Stockholder, as the case may be, which may include their
Affiliates or the Company) is given the right to acquire such
shares of Common Stock pursuant to the provisions of this
Subsection 5.2.
(c) First Offer by FS Stockholder. Except in the case of a
-----------------------------
transaction governed by Section 5.1(f) or 7.3(g), the FS
Stockholder agrees not to Transfer, until consummation of an
Initial Public Offering by the Company, any of the shares of
Common Stock held by it to any Person (other than its Permitted
Transferees) unless the Sears Stockholder (or any third person(s)
designated by Sears Stockholder, which may include Affiliates of
Sears Stockholder or the Company) is given the right to acquire
such shares of Common Stock pursuant to the provisions of
Subsection 5.2(e).
(d) First Offer by Sears Stockholder. Except in the case of a
--------------------------------
21
transaction governed by Section 5.1(g) or 7.3(g), the Sears
Stockholder agrees not to Transfer, until consummation of an
Initial Public Offering by the Company, any of the shares of
Common Stock held by it to any person (other than a Permitted
Transferee) unless the FS Shareholder (or any third person(s)
designated by FS Stockholder, which may include Affiliates of FS
Stockholder or the Company) is given the right to acquire such
shares of Common Stock pursuant to the provisions of Subsection
5.2(e).
(e) First Offer Provisions. If a Stockholder while subject to
----------------------
the provisions of this Section 5.2 receives an offer from any
Person (other than its Permitted Transferees) to acquire any
shares of Common Stock, or decides to solicit or cause to be
solicited a proposal or proposals to acquire shares of Common
Stock, such Offering Stockholder shall first give each other
Stockholder having rights with respect to the shares of Common
Stock held by such Offering Stockholder under this Subsection 5.2
(the "Offeree") written notice (the "Stockholder Notice") of such
intention, which notice shall include a term sheet stating, among
other material terms, the minimum cash sales price (the "Target
Price") that such Stockholder would entertain for the shares of
Common Stock to be sold (the "Offered Securities"). The Offeree
(or its designee) shall have the right for a period of 20 days
following the delivery of the Stockholder Notice (the "Acceptance
Period") (provided, that if more than one Stockholder is an
--------
Offeree, the Acceptance Period shall be shortened to 15 days, and
if any Offeree declines to exercise its rights with respect to
the Stockholder Notice, those Offerees exercising their rights
may, by giving a written notice by the 20th day after the
Stockholder's Notice, purchase all, but not less than all, of the
portion of the shares of Common Stock not accepted by the
declining Offeree (the "Take-Up Right"), pro rata based on such
electing Offerees ownership of Common Stock) to accept the offer
to purchase all but not less than all of the Offered Securities
at the Target Price and upon the other terms provided with the
Stockholder Notice. The Offeree (or its designee) shall exercise
its rights under this Section 5.2 by delivering to such Offering
Stockholder an irrevocable written notice of its election prior
to 2:00 p.m. Los Angeles time on the final day of the Acceptance
Period. If the Offeree (or its designee) exercises its rights
under this Section 5.2, the sale of the Offered Securities shall
be consummated within 60 days of the final day of the Acceptance
Period (the "Purchase Period"). If the Offeree (or its designee)
does not elect to purchase the Offered Securities on such terms
(and the failure to deliver an irrevocable notice of acceptance
shall be conclusively deemed to be rejection of such opportunity)
or fails to consummate a purchase of the Offered Securities
within the Purchase Period, such Offering Stockholder shall have
the right (without limitation to other rights it may have) to
22
consummate the sale of the Offered Securities on terms not
materially more favorable to the purchaser than specified in the
Stockholder Notice for a period of 135 days (the "Consummation
Period") after the expiration of the Acceptance Period or, if
applicable, the Purchase Period, provided, that if necessary in
order to receive approval of such sale under antitrust laws, the
Purchase Period Consummation Period may be extended for a
reasonable period by written notice to the Stockholders. If such
Offering Stockholder does not complete such sale, transfer or
conveyance within the Consummation Period, such Offering
Stockholder shall not have the right to sell, transfer or convey
any of the Offered Securities without again complying with this
Subsection 5.2. In the event such Offering Stockholder intends to
sell the Offered Securities for consideration other than cash,
such Offering Stockholder shall notify the Offeree (or its
designee) of the terms and value of such non-cash consideration.
The Offeree (or its designee) may elect within 30 days of such
notice to have the fair market value of such non-cash
consideration determined, with the parties jointly selecting an
investment banking firm to resolve any dispute regarding the fair
market value of such non-cash consideration; in the absence of
agreement on such firm, a third investment banking firm
(designated by the firms proposed by the Offeree and Offering
Stockholder) shall determine such fair market value. The
investment banking firm so selected is referred to as the
"Appraising Firm." If the sum of the fair market value of the
non-cash consideration and the cash consideration (in the case of
a sale that is partially for cash) is less than the cash price
offered to Offeree (or its designee) pursuant to this Subsection
5.2, the Offeree (or its designee) may, within 20 days of the
determination of the fair market value of the non-cash
consideration, elect to purchase the Offered Securities proposed
to be sold for an amount in cash equal to the sum of (i) the fair
market value of the non-cash consideration and (ii) the cash
consideration, if any. Such purchase must be consummated within
60 days of the determination of fair market value. If such
Offering Stockholder receives a written offer for the Offered
Securities at any time during the Consummation Period which is
acceptable to such Offering Stockholder but is less than the
Target Price or is upon terms materially less favorable to such
Offering Stockholder than the terms provided to the Offeree (or
its designee) in the Stockholder Notice (the "Below Target Price
Offer"), such Stockholder shall promptly deliver a copy of such
written offer to the Offeree (or its designee). During the 20-day
period following delivery of such written offer (which period
shall be 15 days in the event there is more than one Offeree, and
such Offerees shall have a Take-Up Right), the Offeree (or its
designee) shall have the right to accept the offer to purchase
the Offered Securities on the terms reflected in such written
offer. The Offeree (or its designee)
23
shall, if it so desires, exercise such right by delivery to such
Offering Stockholder written notice of its election to purchase
all but not less than all of the Offered Securities prior to 2:00
p.m. Los Angeles time on the final day of such additional 20 day
period (or 15 day period, as the case may be) and the sale of the
Offered Securities shall be consummated within 60 days of the
delivery of such written notice, provided, that if necessary in
order to obtain approval of such sale under antitrust laws, such
60-day period may be extended for a reasonable period by written
notice to the Stockholders. If the Offeree (or its designee) does
not elect to accept the offer to purchase the Offered Securities
on such terms within such 20-day period or fails to consummate
the purchase of the Offered Securities within 60 days of the date
of the Offeree's (or its designee's) acceptance of the Below
Target Price Offer, such Stockholder shall have (without
limitation to any other rights it may have) 135 days to
consummate the sale of the Offered Securities at a price and upon
terms are not materially less favorable to such Stockholder than
the price and terms specified in the written offer delivered to
the Offeree (or its designee), provided, that if necessary in
order to receive approval of such sale under antitrust laws, the
135-day period may be extended for a reasonable period by written
notice to the Stockholders. In the event a Below Target Price
Offer involves any non-cash consideration, the procedures for
valuing such non-cash consideration set forth in Subsection 5.2
above shall be utilized to determine the fair market value of
such non-cash consideration and all time periods specified
herein, extended accordingly. Any sale consummated will be
subject to Section 3.1 hereof to the extent applicable.
5.3 Termination and Assignment. The rights granted to
--------------------------
Sears Stockholder and FS Stockholder under Subsection 5.2
shall be assignable to their Permitted Transferees (other
than an Unaffiliated Permitted Transferee) and any designee,
as provided in this Section 5, or to a purchaser acquiring
more than 50% of the outstanding Common Stock then held by
the FS Stockholder or Sears Stockholder. Any transferee of
shares of Common Stock from a Stockholder, other than a
purchaser of shares in a Public Market Sale or any
subsequent transferee thereof, shall be bound by the
provisions of this Section 5 and each Stockholder completing
a Transfer shall obtain and deliver to each other
Stockholder a written commitment by such transferee to be
bound by such provisions prior to any Transfer. Neither the
Ripplewood Stockholder nor the Existing Stockholder need
make a first offer if the Stockholders to whom such an offer
would be made own in the aggregate less than the lesser of
(i) 40% of the shares of Common Stock or (ii) 1.5 times the
number of shares owned by such
24
offering Stockholder.
5.4 Taubman Option and Option Shares. Any reference in
--------------------------------
this Agreement (including any reference in Section 4) to
shares of Common Stock shall include the Option Shares as
defined in the Option Agreement. After the Permitted
Transfer Date, the Taubman Option is transferable, but shall
be subject to the provisions of Sections 4, 5.1 and 5.2
hereof to the same extent as shares of Common Stock (subject
to appropriate adjustment to take account of the exercise
price thereof).
6. Registration Rights; Acquisitions of Common Stock.
-------------------------------------------------
6.1 Registration Rights. FS Stockholder, the Sears
-------------------
Stockholder, the Ripplewood Stockholder and the Existing
Stockholders shall be entitled to certain registration
rights with respect to their shares of Common Stock (the
"Registration Rights"). The terms of the Registration Rights
are set forth in Exhibit A attached hereto. The rights
granted to Stockholders under this Section 6.1 shall not be
assignable, except that a Stockholder may assign such rights
to a Permitted Transferee (provided, that any Permitted
Transferee of the Existing Stockholders shall deliver to the
Company a power-of-attorney appointing Xx. Xxxxxxx (or an
individual he designates if he is unable to act due to death
or disability), as such Permitted Transferee's attorney-in-
fact for purposes of exercising such Transferee's rights and
fulfilling such Transferee's obligations under this Section
6) or to any purchaser of more than 50% of the shares of
Common Stock then held by such Stockholder (with (i) the
Ripplewood Stockholder, and (ii) the Existing Stockholders,
each considered collectively for this purpose).
6.2 Acquisition of Common Stock. After consummation of
---------------------------
an Initial Public Offering, no Stockholder shall purchase or
permit its Affiliates to purchase or otherwise acquire, or
agree or offer to purchase or otherwise acquire (subject, in
the case of the Trust, to Section 5.1(a)), beneficial
ownership of additional shares of Common Stock or
Securities.
7. Representation on the Board of Directors.
----------------------------------------
7.1 The Board. At each annual or special meeting of
---------
stockholders of the Company, or in any written consent
executed in lieu of a stockholder meeting, at or pursuant to
which persons are
25
being elected to fill positions on the Board, the FS
Stockholder, the Sears Stockholder, the Ripplewood
Stockholder and the Existing Stockholders agree to exercise,
or cause to be exercised, voting rights with respect to the
shares of Voting Securities then held of record or
beneficially owned by them, in such a manner that (i) three
(3) candidates nominated by FS Stockholder, (ii) Xx. Xxxxxxx
or, in the event of his death or disability, his
representative designated in writing, (iii) one (1)
candidate nominated by the Ripplewood Stockholder, (iv) the
Chief Executive Officer of the Company and (v) three (3)
candidates nominated by the Sears Stockholder shall be
elected to fill and continue to hold positions on the Board.
Prior to an Initial Public Offering by the Company, the FS Stockholder
may require the Board to nominate, and the Stockholders to vote their shares in
favor of electing, up to two (2) independent members of the Board of Directors
(such persons being mutually acceptable to FS Stockholder and Sears
Stockholder), and each Stockholder shall take all actions necessary in
connection therewith. Upon consummation of an Initial Public Offering by the
Company, or as soon as practicable thereafter, the Company shall have at least
two (2) independent members of the Board of Directors (such persons being
mutually acceptable to FS Stockholder and Sears Stockholder), as may be required
by applicable law or stock exchange requirements or by the National Association
of Securities Dealers or underwriters in connection with the Initial Public
Offering, and each Stockholder shall take all actions necessary in connection
therewith. Xx. Xxxxxxx (or his representative) may not be removed from the Board
without cause. In addition, Xx. Xxxxxxx shall not be disqualified from being a
director by virtue of his age. The Board of Directors shall have no fewer than
nine (9) and no more than eleven (11) directors and the Stockholders shall vote
to have the Bylaws provide that the Company shall have no fewer than nine (9)
nor more than eleven (11) directors. Notwithstanding the preceding sentence, in
the event of an acquisition by the Company where more than 10% of the Voting
Securities are issued to the seller, and as an important element of the
transaction additional Board seats are required (an "Acquisition Event"), the
Stockholders will use reasonable best efforts to make such Board seats available
including, without limitation, taking all necessary actions to amend this
Agreement and the Bylaws and cause their respective nominees to the Board to
approve an increase in the size of the Board, necessary amendments to this
Agreement, and the election of new members of the Board.
Notwithstanding any other provisions of this Section 7.1: (i) at such
time as either of the FS Stockholder or the Sears Stockholder (including, in
each case, their Permitted Transferees) have sold more than one-third but less
than two-thirds of their Initial Shares, the FS Stockholder or the Sears
Stockholder, as the case may be, shall be entitled to designate no more than two
(2) members of the Board; (ii) at such time as either of the FS Stockholder or
the Sears Stockholder (including, in each case, their Permitted Transferees)
have sold two-thirds or more of their Initial Shares, the FS Stockholder or the
Sears Stockholder, as the case may be, shall be entitled to designate no more
than one (1) member of the Board; and (iii) at such time as
26
FS Stockholder or Sears Stockholder shall own less than 5% of the Common Stock,
such Stockholder's right to designate members of the Board shall terminate.
Sales to Permitted Transferees will not cause a reduction in rights under this
Section 7.1.
If, at any time from and after the date hereof until a Board Rights
Termination Event, a Stockholder shall give notice of its desire to remove any
director previously nominated by that party to serve on the Board, the
Stockholders agree to exercise or cause to be exercised voting rights with
respect to all Voting Securities held of record or beneficially owned by it or
them so as to remove such director of the Company. If at any time from and
after the date hereof, until a Board Rights Termination Event any director
previously nominated by FS Stockholder, Sears Stockholder, Xx. Xxxxxxx or the
Ripplewood Stockholder to serve on the Board ceases to be a director (whether by
reason of death, resignation, removal or otherwise), Sears Stockholder, FS
Stockholder, Xx. Xxxxxxx or the Ripplewood Stockholder, as the case may be,
shall be entitled to nominate a successor director to fill the vacancy created
thereby, and the Stockholders agree to exercise voting rights with respect to
the shares of Voting Securities held of record or beneficially owned by them so
as to elect such nominee as a director of the Company.
In furtherance of its obligations under this Section 7.1, and its
-----------
other obligations hereunder, effective on the date hereof the Ripplewood
Stockholder shall and hereby does grant to FSEP IV an irrevocable proxy to vote
the shares of the Ripplewood Stockholder in any manner that FSEP IV shall choose
consistent with the terms of this Agreement, in the form previously granted.
The irrevocable proxy shall be transferable to any Permitted Transferee (other
than Unaffiliated Permitted Transferees) of the FS Stockholder, and the
Ripplewood Stockholder shall execute and deliver a new irrevocable proxy if
necessary to effect such transfer. No Transfer by the Ripplewood Stockholder to
any Permitted Transferee or other transferee (or any subsequent transferee)
shall be effective unless such transferee first delivers a substantially
identical irrevocable proxy in favor of FSEP IV or its Permitted Transferee.
Any such irrevocable proxy shall expire upon consummation of an Initial Public
Offering.
7.2 Approval Right. Notwithstanding any other
--------------
provision of this Agreement to the contrary, until
April 15, 2001, the Company (including any successor to
the Company's business) may not Transfer any
significant portion of its assets to, or merge with or
into, AutoZone, Inc. or any Affiliate thereof and FS
Stockholder, including any Permitted Transferee,
assignee or designee of FS Stockholder and Sears
Stockholder, may not directly or indirectly transfer
any interest in or control over any Voting Securities
to AutoZone, Inc., or any Affiliate thereof, without
the prior written approval of Xx. Xxxxxxx.
27
7.3 Certain Actions of the Board.
----------------------------
(a) Without the approval of Xx. Xxxxxxx or his representative,
the Company shall not (i) issue any capital stock for
consideration having a value less than the fair market value of
such capital stock (as determined in reasonable good faith by the
Board), unless such capital stock is issued in connection with a
financing transaction the overall terms of which are fair and in
the best interests of the Company, as determined in reasonable
good faith by the Board and provided, in the event that a
Stockholder or any of its Affiliates is participating in or
providing such financing the Existing Stockholders have the
opportunity to participate in such financing and, if they so
participate, to purchase or otherwise receive on the same terms
their Pro Rata Share (as defined in Section 2.4) of such
Securities, or in connection with a debt exchange, the overall
terms of which the Board determines in reasonable good faith are
fair and in the best interests of the Company, (ii) enter into
any transaction or series of related transactions with any
Affiliates of the FS Stockholder or of the Ripplewood
Stockholder, or the Sears Stockholder except on terms (as
determined in reasonable good faith based on full and fair
disclosure by the Board) no less favorable to the Company than
are available from an unaffiliated third party, or (iii) execute
any amendment to the Articles of Incorporation or the Bylaws of
the Company, which would adversely affect the rights and
obligations of Xx. Xxxxxxx or his representative thereunder, as
the case may be, except for amendments which are applicable to
holders of Voting Securities generally and do not
disproportionately disadvantage the Existing Stockholders, or
execute any amendment to this Agreement which adversely affects
the rights and obligations of the Existing Stockholders and their
Permitted Transferees and representatives, provided that this
Agreement may be amended to add new parties hereto who are
purchasers of Securities (including an amendment granting
additional registration rights to such purchasers on terms
permitted hereunder), and this Agreement and the Bylaws may be
amended pursuant to Section 7.1 with respect to an Acquisition
Event.
(b) Without a meeting of the Board of Directors of the Company
(as opposed to a committee thereof) having been called and
convened for the purpose of discussing any such action, the
Company shall not (i) commence a voluntary case or consent to the
entry of an order for relief against it in an involuntary case
under Chapter 7 or Chapter 11 of the United States Bankruptcy
Code, (ii) acquire (including by merger) stock or assets of
another business (other than assets acquired in the ordinary
course of business), from any seller or group of related sellers
in one transaction or in a series of related transactions, for
consideration having a fair market value in excess of $25
million, (iii) effect an Initial Public
28
Offering, (iv) engage in any debt financing whereby the Company
and any of its subsidiaries, taken together, incur in excess of
$100 million of debt, determined as of the time of such
financing, other than pursuant to the terms of any credit
facility then outstanding for purposes of working capital, or
acquisitions or expenditures considered pursuant to clause (ii)
of this Section 7.3(b), (v) hire or terminate the employment of
an executive officer of the Company, (vi) other than pursuant to
employee plans approved by the Board of Directors, issue any
additional equity securities, (vii) sell assets not in the
ordinary course of business (including by merger or sale of stock
of a subsidiary), to any buyer or group of related buyers in one
transaction or in a series of related transactions, for
consideration having a fair market value in excess of $25
million, (viii) participate in a merger, share exchange, or other
business combination transaction having a fair market value in
excess of $25 million or (ix) exercise its postponement rights
pursuant to Section 2.1(d) of Exhibit A.
(c) Without the approval of the director nominated by the
Ripplewood Stockholder, the Company shall not (i) enter into any
transaction or series of related transactions with any Affiliates
of the FS Stockholder, except on terms (as determined in
reasonable good faith based on full and fair disclosure by the
Board) no less favorable to the Company than are available from
an unaffiliated third party or (ii) execute any amendment to the
Articles of Incorporation or the Bylaws of the Company, which
would adversely affect the rights and obligations of the
Ripplewood Stockholder thereunder, except for amendments which
are applicable to holders of Voting Securities generally and do
not disproportionately disadvantage the Ripplewood Stockholder,
or execute any amendment to this Agreement which adversely
affects the rights and obligations of the Ripplewood Stockholder
and their Permitted Transferees and representatives, provided
that this Agreement may be amended to add new parties hereto who
are purchasers of Securities (including an amendment granting
additional registration rights to such purchasers on terms
permitted hereunder), and this Agreement and the Bylaws may be
amended pursuant to Section 7.1 with respect to an Acquisition
Event.
(d) Except with respect to the matters set forth in Section
7.3(c), the director nominated by the Ripplewood Stockholder (the
"Ripplewood Director") shall, until the consummation of an
Initial Public Offering, cast any vote at a meeting of the Board
of Directors together with a majority of the directors nominated
by and affiliated with the FS Stockholder (the "FS Directors")
and shall execute and deliver to the Secretary of the Company any
written consent of the Board executed by all of the FS Directors.
Except as set forth in the preceding sentence, the Ripplewood
Stockholder
29
shall not take any action as a Director except as required by law
or as directed by a majority of the FS Directors. Notwithstanding
the foregoing, but subject to the next paragraph, the Ripplewood
Director shall not be required to vote or act in a manner that he
or she believes in good faith based on the advice of counsel
would violate applicable law, provided that in such circumstance
the Ripplewood Director shall abstain from voting or acting
altogether.
In the event (i) the Ripplewood Director shall fail to comply with the
agreement in Section 7.3(d), (ii) the Ripplewood Director shall exercise his or
her right to abstain pursuant to the last sentence of Section 7.3(d), or (iii)
Section 7.3(d) shall be determined (other than at the instance of the FS
Stockholder or its affiliates) to be invalid, illegal or unenforceable in whole
or in part in any respect, or the Ripplewood Director, Ripplewood Stockholder or
their affiliates shall assert such invalidity, illegality or unenforceability,
then, in any such case, the FS Stockholder shall be entitled to remove the
Ripplewood Director from the Board, and the Board shall be entitled to appoint
another director in its sole discretion, and the Ripplewood Director shall
immediately resign from the Board without casting any further votes or taking
any further actions as a Director. In addition, if clause (i) or (iii) of the
preceding sentence is applicable, then, without, further action by any party to
this Agreement, the Stockholders' Obligation to elect a nominee of the
Ripplewood Stockholder to the Board shall be of no further force and effect; if
clause (ii) of the preceding sentence is applicable, then at any time after the
FS Stockholder shall have replaced the Ripplewood Director on the Board and the
Board has had a reasonable opportunity to reconsider the vote or action with
respect to which the Ripplewood Director abstained, promptly upon the Ripplewood
Stockholder's or Ripplewood Director's request, the Ripplewood Stockholder shall
be entitled to be reappointed a Director under Section 7.1.
(e) Without the affirmative approval of a majority of the
directors nominated by the FS Stockholder, the Company shall not
(i) enter into any transaction or series of related transactions
with any Affiliates of the Sears Stockholder, except on terms (as
determined in reasonable good faith based on full and fair
disclosure by the Board) no less favorable to the Company than
are available from an unaffiliated third party; (ii) execute any
amendment to the Articles of Incorporation or the Bylaws of the
Company, which would adversely affect the rights and obligations
of the FS Stockholder thereunder, except for amendments which are
applicable to holders of Voting Securities generally and do not
disproportionately disadvantage the FS Stockholder; (iii) execute
any amendment to the Articles of Incorporation or Bylaws having
the effect of creating super majority voting requirements for
meetings or consents of stockholders or directors; or (iv)
execute any amendment to this Agreement which adversely affects
the rights and obligations of the FS Stockholder and its
Permitted Transferees and representatives, provided that this
Agreement may be amended to add new parties hereto who are
purchasers of
30
Securities (including an amendment granting additional
registration rights to such purchasers on terms permitted
hereunder), and this Agreement and the Bylaws may be amended
pursuant to Section 7.1 with respect to an Acquisition Event.
(f) Without the approval of a majority of the directors
nominated by the Sears Stockholder, the Company shall not (i)
enter into any transaction or series of related transactions with
any Affiliates of the FS Stockholder, except on terms (as
determined in reasonable good faith based on full and fair
disclosure by the Board) no less favorable to the Company than
are available from an unaffiliated third party; (ii) execute any
amendment to the Articles of Incorporation or the Bylaws of the
Company, which would adversely affect the rights and obligations
of the Sears Stockholder thereunder, except for amendments which
are applicable to holders of Voting Securities generally and do
not disproportionately disadvantage the Sears Stockholder; (iii)
execute any amendment to the Articles of Incorporation or Bylaws
having the effect of creating super majority voting requirements
for meetings or consents of stockholders or directors; or (iv)
execute any amendment to this Agreement which adversely affects
the rights and obligations of the Sears Stockholder and its
Permitted Transferees and representatives, provided that this
Agreement may be amended to add new parties hereto who are
purchasers of Securities (including an amendment granting
additional registration rights to such purchasers on terms
permitted hereunder), and this Agreement and the Bylaws may be
amended pursuant to Section 7.1 with respect to an Acquisition
Event.
(g) Subject to Sections 7.2 and 7.3(a) if, after a meeting of
the Board of Directors duly called and noticed (or for which
notice was waived), the Board of Directors approves in good faith
either (i) a sale of substantially all of the assets of the
Company or its operating subsidiaries or (ii) a sale of
substantially all of the capital stock of the Company or (iii) a
merger or other business combination transaction in which
substantially all of the shares of capital stock of the Company
will be converted into the right to receive cash or other
securities, then subject to receipt by the Company of an opinion
from a nationally-recognized investment banking firm that the
transaction is fair, from a financial point of view, to the
Company's stockholders, each Stockholder shall vote all of its
shares in favor of such transaction, waive any dissenting rights
it may have in connection with such transaction, execute such
agreements, powers of attorney, voting proxies or other documents
and instruments as may be necessary to consummate such
transaction, and timely take such other actions as the Board of
Directors may reasonably request as necessary in connection with
the approval of or consummation of such transaction. The Company
31
shall use reasonable best efforts to amend existing agreements under
its stock plans for management, and to adopt new forms of agreements,
so that this Section 7.3(g) will be binding on management stockholders
and option holders. Each Stockholder agrees that no Transfer of its
Securities shall be effective unless the Transferee (other than a
Transferee in a Public Market Sale) agrees to be bound by this Section
7.3(g). The provisions of this Section 7.3(g) shall terminate at such
time as the Stockholders (including any additional parties hereto) no
longer are designating or have the right to designate a majority of
the members of the Board of Directors.
7.4 Termination and Assignment. The rights contained in Section
--------------------------
7.1 shall not be assignable other than by FS Stockholder or Sears
Stockholders to a Permitted Transferee or by the Ripplewood
Stockholder to a Permitted Transferee or by Xx. Xxxxxxx to a
Permitted Transferee (of the type described in clause (w) of the
definition thereof). Xx. Xxxxxxx'x or his representative's rights
under Sections 7.1 and 7.3 shall terminate if Xx. Xxxxxxx and his
Permitted Transferees own less than 2.5% of the issued and
outstanding shares of Common Stock.
8. Certain Covenants of the Company.
--------------------------------
8.1 Audited Financial Statements. So long as any Stockholder
----------------------------
owns 5% or more of the Company's Voting Securities, the Board of
Directors shall engage a nationally recognized firm reasonably
acceptable to the FS Stockholder and the Sears Stockholder to
audit the annual financial statements of the Company, and copies
of such audited annual financial statements shall be delivered to
the Stockholders as promptly as possible after completion, and no
more than 90 days after the fiscal year end.
8.2 Other Financial Information. Within 45 days after the last
---------------------------
day of each fiscal quarter (other than the fourth quarter), the
financial statements of the Company, prepared in accordance with
past practice, for such quarter and for the elapsed portion of
the fiscal year then ended shall be delivered to the
Stockholders. In addition, each Stockholder holding 5% or more
(and, in the case of Xx. Xxxxxxx, 2.5% or more) of the Company's
Voting Securities shall be entitled to receive monthly financial
statements and other financial or business information it may
reasonably request regarding the operation of the business.
9. Copy of Agreement. A copy of this Agreement and all amendments hereto
-----------------
shall be filed with the Secretary of Company and shall be kept at the
32
principal executive offices of Company.
10. Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the Commonwealth of
Virginia without regard to the conflicts of laws rules thereof.
11. Representations and Warranties. Each Stockholder represents and
------------------------------
warrants (a) that such Stockholder has full power, capacity, right and
authority, and any requisite approvals or consents to enter into and
perform this Agreement; (b) that this Agreement and the performance of
its obligations hereunder have been duly authorized, and that this
Agreement has been duly executed and delivered by such Stockholder and
is a valid and binding agreement, enforceable against such Stockholder
in accordance with its terms; (c) that such Stockholder owns
beneficially and of record the shares of Common Stock and the rights,
options or warrants to purchase any capital stock of the Company set
forth opposite its name on Schedule 1 hereto, free and clear of any
lien, claim, charge, option, security interest, restriction or
encumbrance and (d) that such Stockholder does not own beneficially or
of record any other securities or rights, options or warrants to
purchase any securities of the Company. The Trust further represents
and warrants that it is a trust duly organized, validly existing and
in good standing under the laws of the Commonwealth of Virginia. The
sole living Trust beneficiaries are: Xxxxxxxx X. Xxxxxxx (during his
lifetime) and, upon the death of Xxxxxxxx X. Xxxxxxx, his children
then living (presently his children are Xxxx X. Xxxxxxx and Xxxx X.
Xxxxxxx). The execution, delivery and performance of this Agreement
will not violate any trust document establishing or governing the
Trust.
12. Amendment and Waiver; Successors; After Acquired Shares. Except
-------------------------------------------------------
in order to add additional parties who are purchasers of Securities
(including the granting of Registration Rights to such parties on
terms permitted hereunder) or in connection with an Acquisition Event,
this Agreement may be amended, modified or supplemented, and
compliance with any provision hereof may be waived, only with the
written consent of each of the FS Stockholder and the Sears
Stockholder, the written consent of the Existing Stockholders holding
a majority of the shares of Common Stock then held by the Existing
Stockholders, and to the extent the terms of the specific rights
(including, without limitation, their Registration Rights, board
rights or Tag-Along Rights) of the Ripplewood Stockholder would be
prejudiced thereby, the written consent of the Ripplewood Stockholder,
and any amendment, modification, supplement or waiver so consented to
in writing shall be binding upon the parties hereto and their
successors and Permitted Transferees and assigns (if any), provided,
that to the extent either the FS Stockholder or Sears Stockholder or
their respective Permitted Transferees hold less than 10% of Common
Stock, any such amendment shall only require such Stockholder's
written consent if and to the extent the terms of their
33
respective specific rights (including, without limitation, their
Registration Rights, board rights or Tag-Along Rights) would be
prejudiced thereby. This Agreement shall be binding on the parties
hereto and, their successors, transferees, assigns, heirs and personal
representatives; provided however, that unless expressly permitted
herein to an assignee or Permitted Transferee, this Agreement and the
rights granted hereunder shall not be assignable without the written
consent of all of the parties hereto, which consent may be withheld in
each such party's sole discretion. If any right hereunder is not
assignable, it shall not be transferred to any subsequent holder of
shares of Common Stock by reason of the transfer of shares to such
holder. The Agreement shall apply to all shares of Common Stock now
owned or hereafter acquired by any Stockholder, and the term "Common
Stock" includes any securities into which Common Stock may hereafter
be changed or which may hereafter be issued to holders of shares of
Common Stock. No party hereto nor their Affiliates will take any
action indirectly (such as the sale of a subsidiary) that would
otherwise be prohibited if taken directly by a party. Without the
consent of the other Stockholders holding a majority of the Common
Stock not held by Sears Stockholder, Sears, Xxxxxxx and Co. shall not
transfer any voting equity interest in Sears Stockholder to a non-
Affiliate unless the Securities owned by Sears Stockholder are first
transferred to Sears, Xxxxxxx and Co. or a controlled Affiliate
thereof.
13. Interpretation. The headings of the Sections contained in this
--------------
Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not affect the meaning or
interpretation of this Agreement.
14. Notices. All notices and other communications provided for or
-------
permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally or delivered by telecopier
(with receipt confirmed), on the date of such delivery or
transmission, (i) if to Company, at its principal business address,
attention Chief Executive Officer, (ii) if to the FS Stockholder, at
Xxxxxxx Xxxxxx & Co. Incorporated, 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx
0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxx,
telecopier: (000) 000-0000, (iii) if to Xx. Xxxxxxx at 0000 Xxxxxxx
Xxx., XX, Xxxxxxx, XX 00000, with a copy to Xxxxxxx X. Xxxxxxxx, Esq.,
Flippin, Densmore, Xxxxx, Xxxxxxxxxx & Xxxxxx, 000 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxxx 0000, Xxxxxxx, Xxxxxxxx 00000; (iv) if to the Trust at
c/o Xxxxxxxx X. Xxxxxxx at 0000 Xxxxxxx Xxx., XX, Xxxxxxx, XX 00000,
with a copy to Xxxxxxx X. Xxxxxxxx, Esq., Flippin, Densmore, Xxxxx,
Xxxxxxxxxx & Xxxxxx, 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000; (v) if to the Ripplewood Stockholder at Ripplewood
Holdings L.L.C., 0 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000,
Attention: Xxxx Xxxxxx, facsimile: (000) 000-0000, with a copy to
Debevoise & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX, Attention:
Xxxxxx X. Xxxxxxxxxx, Xx., facsimile (000) 000-0000; and (vi) if to
the Sears Stockholders at Sears, Xxxxxxx and Co., 0000 Xxxxxxx Xxxx,
Xxxxxxx Xxxxxxx, Xxxxxxxx 00000,
34
Attention: Assistant General Counsel Corporate and Securities,
facsimile: (000) 000-0000, with a copy to Xxxxx, Xxxxx & Xxxxx, 000
Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000, Attention Xxxxx X.
Xxxxx, facsimile: (000) 000-0000 (or at such other address or
facsimile number for any party as shall be specified by like notice
provided that notices of a change of address or telecopier number
shall be effective only upon receipt thereof).
15. Legends. All certificates evidencing shares of Common Stock which
-------
are issued to any of FSEP IV, the Ripplewood Stockholder, the Sears
Stockholder and the Existing Stockholders shall bear the following
legend (in addition to any other legend required to be placed
thereon):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS AND OBLIGATIONS WITH RESPECT TO THE
TRANSFER, PLEDGE, HYPOTHECATION, DISTRIBUTION AND VOTING THEREOF
AS SET FORTH IN THAT CERTAIN AMENDED AND RESTATED STOCKHOLDERS
AGREEMENT DATED AS OF _______________, 1998, WHICH MAY BE
REVIEWED AT THE PRINCIPAL PLACE OF BUSINESS OF THE CORPORATION
AND A COPY OF WHICH MAY BE OBTAINED FROM THE CORPORATION WITHOUT
CHARGE UPON WRITTEN REQUEST THEREFOR."
All certificates evidencing shares of Common Stock which are issued to the
Trust shall be legended as follows (in addition to the above legend and any
other legend required by law to be placed thereon):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN ADDITIONAL RESTRICTIONS AND OBLIGATIONS WITH RESPECT TO
THE TRANSFER THEREOF RELATING TO THE XXXXXX XXXXXXX TRUST DATED
JULY 13, 1964 AS SET FORTH IN SECTIONS 5.1(A) AND (B) OF THAT
CERTAIN AMENDED AND RESTATED STOCKHOLDERS AGREEMENT DATED AS OF
__________, 1998, WHICH MAY BE REVIEWED AT THE PRINCIPAL PLACE OF
BUSINESS OF THE CORPORATION AND A COPY OF WHICH MAY BE OBTAINED
FROM THE CORPORATION WITHOUT CHARGE UPON WRITTEN REQUEST
THEREFOR."
16. Further Assurances. The Stockholders shall exercise, or cause to
------------------
be exercised, voting rights with respect to Voting Securities held of
record or beneficially owned by them in a manner so that, and shall
otherwise take any necessary actions in order that, the covenants and
understandings of the parties set forth in this Agreement shall be
implemented. Each party hereto agrees to perform any further acts and
execute and deliver any documents which may be reasonably necessary to
carry out the intent of this Agreement and to make
35
appropriate changes to the procedures set forth herein to implement
such rights to the extent necessary to conform to the Virginia Stock
Corporation Act or other applicable law. Each Stockholder further
agrees that it will not take any action (such as amending the articles
of incorporation or bylaws of the Company) that would materially
interfere with or prevent the exercise of any rights of the other
Stockholders under this Agreement. The Company covenants and agrees
that it will act in good faith to preserve for each of the
Stockholders the benefits of this Agreement and that it will take no
voluntary action to impair the benefit hereof or to avoid or seek to
avoid the observance or performance of any of the terms to be observed
or performed hereunder or to deny to any of the Stockholders any of
the benefits or protections contemplated hereby.
17. Injunctive Relief; Disputes. It is acknowledged that it will be
---------------------------
impossible to measure in money the damages that would be suffered if
the parties hereto fail to comply with any of the obligations herein
imposed on them and that, in the event of any such failure, an
aggrieved party hereto will be irreparably damaged and will not have
an adequate remedy at law. Any such party shall, therefore, be
entitled to injunctive relief, including specific performance, to
enforce such obligations, and if any action should be brought in
equity to enforce any of the provisions of this Agreement, none of the
parties hereto shall raise the defense that there is an adequate
remedy at law.
18. Severability. If any term or other provision of this Agreement is
------------
invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect to the maximum
extent permitted by applicable law. Upon such determination that any
term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that this
Agreement be enforced as originally contemplated to the greatest
extent possible.
19. Entire Agreement. This Agreement (and Exhibits hereto), together
----------------
with the Company's Articles of Incorporation and Bylaws as in effect
on the date hereof constitute the entire agreement and understanding
among the parties pertaining to the subject matter hereof and
supersede any and all prior agreements, whether written or oral,
relating hereto.
20. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same instrument.
21. Term. This Agreement shall terminate and be of no further force
----
and effect on the date that is ten years from the date hereof,
provided that subject to Section 7.4,
36
Xx. Xxxxxxx'x rights under Section 7.1 shall survive termination of this
Agreement so long as he shall live.
37
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
ADVANCE HOLDING CORPORATION
By: /s/ J. O'Xxxx Xxxxxxxx
-------------------------------------------------------
Its: Senior Vice President and Chief Financial Officer
----------------------------------------------------
XXXXXXXX X. XXXXXXX
/s/ Xxxxxxxx X. Xxxxxxx
----------------------------------------------------------
THE XXXXXX XXXXXXX TRUST DATED JULY 13, 1964
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------------------
Trustee
RIPPLEWOOD PARTNERS, L.P.
a Delaware limited partnership
By: /s/ Xxxx Xxxxxx
--------------------------------------------------------
Its:______________________________________________________
RIPPLEWOOD ADVANCE AUTO PARTS
EMPLOYEE FUND I L.L.C.,
a Delaware limited liability company
By: /s/ Xxxx Xxxxxx
-------------------------------------------------------
Its:______________________________________________________
38
FS EQUITY PARTNERS IV, L.P.
a Delaware limited partnership
By: FS Capital Partners, LLC
Its: General Partner
By: /s/ Xxxx X. Xxxxx
-------------------------------------
Its_____________________________________
WA HOLDING CO., formerly
WESTERN AUTO HOLDING CO.,
a Delaware corporation
By: /s/ Xxx Xxxxx
-------------------------------------
Its_____________________________________
For purposes of the last sentence of Section 12 only:
SEARS, XXXXXXX AND CO.,
a New York corporation
By: /s/ Xxx Xxxxx
-------------------------------------
Its _____________________________________
39
SCHEDULE 1
Ownership of Capital Stock
by Stockholders Upon Consummation of
Transactions Contemplated by Merger Agreement
Dated August 16, 1998
Options to Purchase
Stockholder Common Stock Common Stock
---------------------------------------------------------------- ------------ -------------------
FS Equity Partners IV, L.P. .................................... 11,022,652 --
Ripplewood Partners, L.P. ...................................... 2,763,110 --
Ripplewood Advance Auto Parts Employee Fund I L.L.C. ........... 128,685 --
Xxxxxxxx X. Xxxxxxx ............................................ 1,148,632 250,000
The Xxxxxx Xxxxxxx Trust dated July 13, 1964 ................... 898,633 250,000
WA Holding Co. ................................................. 11,474,606 --
EXHIBIT A
---------
EXHIBIT A
---------
TERMS OF THE REGISTRATION RIGHTS OF THE COMMON STOCK
Capitalized terms used herein and not otherwise defined shall have the
respective meanings given such terms in the Stockholders' Agreement (the
"Agreement") to which this Exhibit A is attached.
SECTION 1
SECTION 1.1 Definitions. For purposes of this Exhibit A, the following
------------ ---------
terms shall have the following meanings:
"Demand Registration" means a Demand Registration as defined in Section
2.1.
"Excess Amount" means, with respect to an underwritten offering, the number
of Registrable Securities requested by a Holder or Holders to be sold pursuant
to Section 2.1 or 2.2 which the managing Underwriter or Underwriters determines
exceeds the largest number of Registrable Securities which can successfully be
sold in an orderly manner in such offering within a price range acceptable to
sellers holding a majority of the Registrable Securities proposed to be sold in
such underwritten offering.
"Holder" means the FS Stockholder, the Sears Stockholder, the Ripplewood
Stockholder and/or any Existing Stockholder (or any Permitted Transferee or
permitted assignee thereof).
"Other Holder Notice" means an Other Holder Notice as defined in Section
2.1.
"Piggy-Back Registration" means a Piggy-Back Registration as defined in
Section 2.2.
"Registrable Security" means any share of Common Stock outstanding until
(i) a registration statement covering such Common Stock has been declared
effective by the SEC and it has been disposed of pursuant to such effective
registration statement, (ii) it is sold under circumstances in which all of the
applicable conditions of Rule 144 (or any similar provisions then in force)
under the Securities Act are met or it may be sold pursuant to Rule 144(k) under
such Act or (iii) it has been otherwise Transferred, the Company has delivered a
new certificate or other evidence of ownership for it not bearing the legend
required pursuant to the Stockholders Agreement and it may be resold without
subsequent registration under the Securities Act.
"Requisite Share Number" means the lesser of (i) a number of Registrable
Securities representing not less than 5% of the total number of shares of Common
Stock then outstanding or (ii) the number of shares of Common Stock representing
not less than $20,000,000 in fair market value as determined by the Board.
A-1
"Selling Holder" means a Holder who is selling Registrable Securities
pursuant to a registration statement under the Securities Act.
"Transfer" means any direct or indirect transfer, sale, assignment or other
disposition of Common Stock.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal in an underwritten offering and not as part of such
dealer's market-making activities.
SECTION 2
SECTION 2.1 Demand Registration.
-------------------
(a) Request for Registration. At any time on or after the date which
------------------------
is 180 days following the closing of the Initial Public Offering any Holder or
Holders owning, individually or in the aggregate, at least the Requisite Share
Number may make a written request for registration under the Securities Act of
all or part of its or their Registrable Securities (a "Demand Registration");
provided that the Holder or Holders making the request are together requesting
that the Requisite Share Number be registered; provided further that the Company
shall not be obligated to effect (i) more than three (3) Demand Registrations
for the FS Stockholder and its Permitted Transferees and permitted assignees, as
a group; (ii) more than three (3) Demand Registrations for the Sears Stockholder
and its Permitted Transferees and permitted assignees, as a group; (iii) more
than two (2) Demand Registrations for the Existing Stockholders and their
Permitted Transferees as a group or (iv) more than one (1) Demand Registration
for the Ripplewood Stockholder and its Permitted Transferees as a group. Such
request will specify the number of shares of Registrable Securities proposed to
be sold and will also specify the intended method of disposition thereof. The
Company shall give written notice of such registration request within ten (10)
days after the receipt thereof to all other Holders. The first time an Existing
Stockholder or the Ripplewood Stockholder requests a Demand Registration, the FS
Stockholder and the Sears Stockholder (or their Permitted Transferees or
permitted assignees) shall each be entitled to submit to the Company, within ten
(10) days after receipt of notice of such Existing Stockholder's or Ripplewood
Stockholder's request for a Demand Registration, a written request for a Demand
Registration (the "Simultaneous Registration") and shall thereby join in the
request of such Existing Stockholder or the Ripplewood Stockholder, and
thereupon each of the Existing Stockholders, Ripplewood Stockholder, Sears
Stockholder and FS Stockholder shall be entitled to include Registrable
Securities in such Demand Registration on a pro rata basis, determined based on
the number of Registrable Securities then sought to be included by the FS
Stockholder, the Sears Stockholder, all Existing Stockholders, the Ripplewood
Stockholder (in each case including any Permitted Transferees or permitted
assignees) and other Persons entitled to include shares therein pursuant to
Demand Registration rights, respectively, up to the number of Registrable
Securities proposed to be sold in such Demand Registration and, for purposes of
Section 2.3, prior to any person including Registrable Securities under Section
2.2 or other Piggy-Back Registration Rights.
A-2
Each time the Sears Stockholder or the FS Stockholder requests a Demand
Registration, the other of the FS Stockholder or the Sears Stockholder (or their
Permitted Transferees or permitted assignees), shall be entitled to submit to
the Company, within ten (10) days after receipt of notice of the Sears
Stockholder or FS Stockholder's request for a Demand Registration, a request for
a Simultaneous Registration, and shall thereby join in the request of the FS
Stockholder or Sears Stockholder, as the case may be, and thereupon each of the
FS Stockholder and the Sears Stockholder shall be entitled to include
Registrable Securities on pro rata basis, determined based on the number of
Registrable Securities then sought to be included by the FS Stockholder and the
Sears Stockholder and other persons entitled to include shares therein pursuant
to Demand Registration rights, respectively, up to the number of Registrable
Securities proposed to be sold in such Demand Registration and, for purposes of
Section 2.3, prior to any person including Registrable Securities under Section
2.2 or other Piggy-Back Registration Rights (except as specifically set forth in
Section 2.3). Each Simultaneous Registration in which the FS Stockholder seeks
to include shares shall be treated as one of the FS Stockholder's three (3)
Demand Registrations and each Simultaneous Registration in which the Sears
Stockholder seeks to include shares shall be treated as one of the Sears
Stockholder's three (3) Demand Registrations. The first time the Ripplewood
Stockholder requests a Demand Registration, if (i) within the 10-day period set
forth in the preceding sentence, neither the FS Stockholder nor the Sears
Stockholder requests a Simultaneous Registration, and (ii) the Existing
Stockholders has not previously requested a Demand Registration counted under
Section 2.1(b), then, by giving notice within three (3) business days of the end
of said 10-day period, the Existing Stockholders may request a Simultaneous
Registration with the Ripplewood Stockholder, and if such a request is made,
thereupon the Existing Stockholders and the Ripplewood Stockholder shall be
entitled to include Registrable Securities in such Demand Registration on a pro
rata basis, determined based on the number of Registrable Securities then sought
to be included by the Ripplewood Stockholder, all Existing Stockholders (in each
case including Permitted Transferees) and other Persons entitled to include
shares therein pursuant to Demand Registration rights (it being understood that
each of the FS Stockholder and the Sears Stockholder shall have waived its right
to participate therein except pursuant to Section 2.2), respectively, up to the
number of Registrable Securities proposed to be sold in such Demand Registration
and, for purposes of Section 2.3, prior to any Person including Registrable
Securities under Section 2.2 or other Piggy-Back Registration Rights. Such
Simultaneous Registration shall count as one of the Existing Shareholders two
(2) Demand Registrations. Within 10 days after receipt by a Holder of notice of
the request for a Demand Registration by another Holder, a Holder may request in
writing that Registrable Securities be included in such Demand Registration
pursuant to Section 2.2. Each such request by such other Holders (each, an
"Other Holder Notice") shall specify the number of shares of Registrable
Securities proposed to be sold and the intended method of disposition thereof.
(b) Effective Registration. A registration will not count as a Demand
----------------------
Registration (or request therefor) (x) until it has become effective or (y) if
the amount of Registrable Securities requested by the initiating Holder is
reduced pursuant to Section 2.3 by
A-3
more than 50%, provided that, in the case of any Simultaneous Registration, the
Existing Stockholder's request shall not count as one of the Existing
Stockholders' two Demand Registrations (unless a Simultaneous Registration is
requested by the Existing Shareholders) and the Ripplewood Stockholder's request
(whether for a Demand Registration or for a Simultaneous Registration) shall not
count as its Demand Registration.
(c) Underwritten Offering. If the Company or the initiating Holder of
---------------------
a Demand Registration so elects, the offering of such Registrable Securities
pursuant to such Demand Registration shall be in the form of an underwritten
offering. The Company and the initiating Holder of the Demand Registration shall
jointly select one or more nationally recognized firms of investment bankers to
act as the managing Underwriter or Underwriters in connection with such offering
and shall select any additional managers to be used in connection with the
offering.
(d) Required Delays. Notwithstanding anything contained in this
---------------
Section 2.1 to the contrary, if any request for Demand Registration is delivered
at a time when the Company has determined or is currently planning (and has
discussed with its Board of Directors its plan) to file a Registration Statement
with respect to an underwritten primary registration of Common Stock on behalf
of the Company (so long as a Registration Statement is filed with respect
thereto within one month of the Holder's or Holders' request for Demand
Registration), the Company may require the Holder or Holders to postpone such
request until the sooner of the expiration of the 90-day period following the
effective date of such registration or six months from the day of the Holder's
or Holders' request for such Demand Registration; and, provided further,
-------- -------
however, that if such request is delivered at a time when such registration
-------
would adversely affect a material acquisition or merger to which the Company is
a party, or otherwise materially and adversely affect the Company or the market
for the Company's Common Stock (it being understood that the ordinary effect of
a Registration on the market for securities does not meet the foregoing
standard) (a "Material Event Postponement"), the Company may require the Holder
to postpone such request for an appropriate period (not to exceed 90 consecutive
days (with a 30-day break between any two consecutive periods) or 180 days in
any 12-month period). In the event of a Material Event Postponement, the Company
shall deliver a certificate signed by the President or the Chairman confirming
the Company's reasons for postponing the registration and will effect such
registration as promptly as possible after removal of such reasons, and if
requested by the demanding Holder, shall prepare a registration statement during
the pendency of such postponement so that the registration statement may be
filed as soon as practicable following a resolution of the circumstance giving
rise to such Material Event Postponement.
SECTION 2.2 Piggy-Back Registration. If at any time on or after the date
-----------------------
which is 180 days following the closing of the Company's Initial Public
Offering, the Company proposes to file a registration statement under the
Securities Act with respect to an offering by the Company for its own account or
for the account of any of its respective security holders of any class of
security of the same class as the Registrable Securities (other than a
registration statement on Form S-4 or S-8 (or any substitute form that may be
adopted by the SEC), a registration
A-4
statement filed in connection with an exchange offer or offering of securities
solely to the Company's existing security holders), then the Company shall give
written notice of such proposed filing to the Holders as soon as practicable,
and such notice shall offer such Holders the opportunity to register such number
of shares of Registrable Securities as each such Holder may request in writing
within ten (10) days of receipt of such notice (which request shall specify the
Registrable Securities intended to be disposed of by such Holder and the
intended method of distribution thereof) (a "Piggy-Back Registration"). The
Company shall use its best efforts to cause the managing Underwriter or
Underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggy-Back Registration to be included
on the same terms and conditions as any similar securities of the Company
included therein to permit the sale or other disposition of such Registrable
Securities in accordance with the intended method of distribution thereof.
Subject to Section 2.3(b), any Holder shall have the right to withdraw its
request for inclusion of its Registrable Securities in any Piggy-Back
Registration by giving written notice to the Company of its request to withdraw
within 20 days of its request for inclusion, provided that the Registration
Statement including such shares (a "Piggy-Back Registration Statement") is not
yet effective. The Company may withdraw a Piggy-Back Registration Statement at
any time prior to the time it becomes effective.
SECTION 2.3 Reduction of Offering.
---------------------
(a) Notwithstanding anything contained herein, if the managing
Underwriter or Underwriters of an offering described in Section 2.1 or 2.2
determine that the size of the offering that the Holders, the Company or any
other Persons intend to make is such that the success of the offering would be
adversely affected by inclusion of the Registrable Securities requested to be
included, then (i) with respect to a Demand Registration, if the size of the
offering is the basis of such Underwriter's or Underwriters' determination, the
Company shall not include in such registration an amount of Registrable
Securities requested to be included in such offering equal to the Excess Amount,
such reduction first to be allocated pro rata among the Holders or other Persons
who did not initiate the request for a Demand Registration according to the
number of Registrable Securities requested for inclusion, with the Holder or
Holders or other Persons who initiated the request for a Demand Registration
entitled to include shares therein to the maximum extent possible provided that
if such Holders cannot include all their shares in such offering, the amount of
Registrable Securities to be registered shall be reduced pro rata among the
initiating Holders (provided further that if the Sears Stockholder or the FS
Stockholder initiates a Demand Registration pursuant to Section 2.1(a) and an
Existing Stockholder or the Ripplewood Stockholder requests to participate in
such Demand Registration, the FS Stockholder or Sears Stockholder (or both in
the case of a Simultaneous Registration by them), and such Existing Stockholder,
the Ripplewood Stockholder and each of them participating shall be treated pari
passu with respect to a reduction under this Section 2.3) and (ii) in the case
of a Piggy-Back Registration, if securities are being offered for the account of
other Persons as well as the Company, the securities the Company seeks to
include shall have priority over securities sought to be included by any other
Person (including the Holders) and, with respect to the Registrable Securities
intended to be offered by Holders, the proportion by which the amount of
A-5
such class of securities intended to be offered by Holders is reduced shall not
exceed the proportion by which the amount of such class of securities intended
to be offered by such other Persons is reduced (it being understood that with
respect to the Holders and third parties such reduction may be all of such class
of securities).
(b) If, as a result of the proration provisions of Section 2.3(a), any
Holder shall not be entitled to include all Registrable Securities in a Demand
Registration or Piggy-Back Registration that such Holder has requested to be
included, such Holder may elect by written notice to the Company to withdraw his
request to include Registrable Securities in such registration (a "Withdrawal
Election"); provided however, that a Withdrawal Election shall be irrevocable
-------- -------
and, after making a Withdrawal Election, a Holder shall no longer have any right
to include Registrable Securities in the registration as to which such
Withdrawal Election was made. If a Withdrawal Election is made, a request shall
not be counted as a Demand Registration.
SECTION 2.4 Additional Rights. The Company shall not grant to any Person
-----------------
registration rights on terms which are more favorable to such Person than or
which otherwise interferes with (it being understood that the granting of
registration rights to other stockholders shall not by itself be deemed to so
interfere) those accorded to the Ripplewood Stockholder or the Existing
Stockholders.
SECTION 2.5 Initial Public Offering. To the extent that the Sears
-----------------------
Stockholder or the FS Stockholder elects to include shares in the Initial Public
Offering, then all Holders shall be entitled to include shares therein on a pro
rata basis, determined based on the number of Registrable Securities then held
by such Holders and other Persons entitled to include shares therein.
SECTION 2.6 Distribution to Sears Stockholders. At any time after the date
----------------------------------
that is 180 days after an Initial Public Offering, the Sears Stockholder may
cause its Registrable Securities to be distributed to the stockholders of
Sagittarius. The Sears Stockholder shall give to the Company notice of its
intention to make such a distribution and the Company shall take any action that
may reasonably be required under Sections 3 and 4 of this Agreement to effect
such distribution, provided, that the Company may delay such distribution under
--------
the circumstances described in, and for the time periods permitted by, Section
2.1(d), and provided, further, that Sears Stockholder will bear all costs
-------- -------
related to the printing and mailing of materials (including, without limitation,
prospectuses) relating to the distribution to its stockholders.
SECTION 3
SECTION 3.1 Filings; Information. Whenever any Holder requests that any
--------------------
Registrable Securities be registered pursuant to Sections 2.1, the Company will
use its best efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof as
quickly as practicable, and in connection with any such request:
A-6
(a) The Company will, subject to Section 2.1(d), as expeditiously as
possible prepare and file with the SEC a registration statement on any form for
which the Company then qualifies and which form shall be available for the sale
of the Registrable Securities to be registered thereunder in accordance with the
intended method of distribution thereof, and use its best efforts to cause such
filed registration statement to become and remain effective until the earlier of
(i) 90 days from the date such registration statement became effective or (ii)
the date on which the sale of Registrable Securities has been completed. If the
Company receives multiple demands for registration in accordance with this
Agreement, then, except as provided in Section 2.1(a), such demands shall be
handled in the order received.
(b) The Company will, prior to filing a registration statement or
prospectus or any amendment or supplement thereto, furnish to each Selling
Holder, one counsel representing all such Selling Holders, and each Underwriter,
if any, of the Registrable Securities covered by such registration statement
copies of such registration statement as proposed to be filed, together with
exhibits thereto, which documents will be subject to prompt review and approval
by the foregoing, and thereafter furnish to such Selling Holder, counsel and
Underwriter, if any, such number of copies of such registration statement, each
amendment and supplement thereto (in each case including all exhibits thereto
and documents incorporated by reference therein), the prospectus included in
such registration statement (including each preliminary prospectus) and such
other documents as such Selling Holder or Underwriter may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by such
Selling Holder.
(c) After the filing of the registration statement, the Company will
promptly notify each Selling Holder of Registrable Securities covered by such
registration statement of any stop order issued or threatened by the SEC and
take all reasonable actions required to prevent the entry of such stop order or
to remove it if entered.
(d) The Company will use its best efforts to (i) register or qualify
the Registrable Securities under such other securities or blue sky laws of such
jurisdictions in the United States as any Selling Holder reasonably (in light of
such Selling Holder's intended plan of distribution) requests and (ii) cause
such Registrable Securities to be registered with or approved by such other
governmental agencies or authorities in the United States as may be necessary by
virtue of the business and operations of the Company and do any and all other
acts and things that may be reasonably necessary or advisable to enable such
Selling Holder to consummate the disposition of the Registrable Securities owned
by such Selling Holder; provided that the Company will not be required to (A)
--------
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (d), (B) subject itself
to taxation in any such jurisdiction or (C) consent to general service of
process in any such jurisdiction.
(e) The Company will immediately notify each Selling Holder of such
Registrable Securities, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such
A-7
Registrable Securities, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and promptly make
available to each Selling Holder any such supplement or amendment.
(f) The Company will enter into customary agreements (including, if
applicable, an underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities.
(g) The Company will deliver promptly to each Selling Holder of such
Registrable Securities and each Underwriter, if any, subject to restrictions
imposed by the United States federal government or any agency or instrumentality
thereof, copies of all correspondence between the SEC and the Company, its
counsel or auditors and all memoranda relating to discussions with the SEC or
its staff with respect to the registration statement and make available for
inspection by any Selling Holder of such Registrable Securities, any Underwriter
participating in any disposition pursuant to such registration statement and any
attorney, accountant or other professional retained by any such Selling Holder
or Underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the "Records"), subject to restrictions imposed by any
governmental authority governing access to classified information, as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any Inspectors in connection with
such registration statement. Records which the Company determines, in good
faith, to be confidential and which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
registration statement or (ii) the disclosure or release of such Records is
requested or required pursuant to oral questions, interrogatories, requests for
information or documents or a subpoena or other order from a court of competent
jurisdiction or other process; provided that prior to any disclosure or release
--------
pursuant to clause (ii), the Inspectors shall provide the Company with prompt
notice of any such request or requirement so that the Company may seek an
appropriate protective order or waive such Inspectors' obligation not to
disclose such Records; and provided further, that if failing the entry of a
----------------
protective order or the waiver by the Company permitting the disclosure or
release of such Records, the Inspectors, upon advice of counsel, are compelled
to disclose such Records, the Inspectors may disclose that portion of the
Records which counsel has advised the Inspectors that the Inspectors are
compelled to disclose. Each Selling Holder of such Registrable Securities agrees
that information obtained by it solely as a result of such inspections (not
including any information obtained from a third party who, insofar as is known
to the Selling Holder after reasonable inquiry, is not prohibited from providing
such information by a contractual, legal or fiduciary obligation to the Company)
shall be deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Company or its Affiliates unless
and until such is made generally available to the public. Each Selling Holder of
such Registrable Securities
A-8
further agrees that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at its expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential.
(h) The Company will otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering a period of 12 months, beginning within three months after
the effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act.
(i) The Company will use its best efforts (a) to cause all such
Registrable Securities to be listed on each national securities exchange on
which similar securities issued by the Company are then listed (if any), if the
listing of such Registrable Securities is then permitted under the rules of such
exchange or (b) to secure designation of all such Registrable Securities as a
National Association of Securities Dealers Automatic Quotation ("NASDAQ")
"national market system security" within the meaning of Rule 11Aa2.1 of the SEC
or, to secure NASDAQ authorization for such Registrable Securities, if similar
securities issued by the Company are so designated.
(j) The Company may require each Selling Holder of Registrable
Securities to promptly furnish in writing to the Company such information
regarding the distribution of the Registrable Securities as the Company may from
time to time reasonably request and such other information as may be legally
required in connection with such registration.
(k) The Company will use its reasonable best efforts to facilitate the
distribution of the Registrable Securities in accordance with the intended
method of distribution thereof, including making management of the Company
available for "road show" presentations and similar selling efforts.
Each Selling Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3.1(e)
hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3.1(e) hereof (such
period during which a Selling Holder is required to refrain from disposition of
Registrable Securities, a "Suspension Period"), and, if so directed by the
Company, such Selling Holder will deliver to the Company all copies, other than
permanent file copies then in such Selling Holder's possession, of the most
recent prospectus covering such Registrable Securities at the time of receipt of
such notice. In the event the Company shall give such notice, the Company shall
extend the period during which such registration statement shall be maintained
effective (including the period referred to in Section 3.1(a) hereof) by the
number of days during the period from and including the date of the giving of
notice pursuant to Section 3.1(e) hereof to the date when the Company shall make
available to the Selling Holders of Registrable Securities covered by such
registration
A-9
statement a prospectus supplemented or amended to conform with the requirements
of Section 3.1(e) hereof.
SECTION 3.2 Registration Expenses. In connection with any Demand
---------------------
Registration pursuant to Section 2.1 hereof and any registration statement filed
pursuant to Sections 2.2, the Company shall pay the following registration
expenses incurred in connection with the registration hereunder (the
"Registration Expenses"): (i) all registration and filing fees, (ii) fees and
expenses of compliance with securities or blue sky laws (including fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), (iii) printing expenses, (iv) the Company's internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), (v) the fees and
expenses, if any, incurred in connection with the listing of the Registrable
Securities, (vi) fees and disbursements of counsel for the Company and fees and
expenses for independent certified public accountants retained by the Company,
(vii) the fees and expenses of any special experts retained by the Company in
connection with such registration, and (viii) with respect to a Demand
Registration only, reasonable fees and expenses of one counsel (who shall be
reasonably acceptable to the Company) for all of the Selling Holders, with such
counsel selected by Holders of a majority of the Registrable Securities. The
Company shall have no obligation to pay any underwriting fees, discounts or
commissions attributable to the sale of Registrable Securities, or any
out-of-pocket expenses of the Holders.
SECTION 4
SECTION 4.1 Indemnification by the Company.
------------------------------
(a) The Company agrees to indemnify and hold harmless each Selling
Holder of Registrable Securities, its officers, directors and agents, and each
Person, if any, who controls such Selling Holder within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act from and against any
loss, claim, damage or liability and any action in respect thereof to which such
Selling Holder, its officers, directors and agents, and any such controlling
Person may become subject under the Securities Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Registrable Securities (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or arises out of or is based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and shall reimburse each Selling Holder, its officers, directors and agents, and
each such controlling Person for any legal and other expenses reasonably
incurred by that Selling Holder, its officers, directors and agents, or any such
controlling Person in investigating or defending or preparing to defend against
any such loss, claim, damage, liability or action. The Company also agrees to
indemnify any Underwriters of the Registrable Securities, their officers and
directors and each Person who
A-10
controls such Underwriters on substantially the same basis as that of the
indemnification of the Selling Holders provided in this Section 4.1.
(b) The indemnity agreement contained in Section 4.1(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage or liability
and any action in respect thereof if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any loss, claim, damage,
liability and any action in respect thereof to the extent that it arises from or
is based upon written information relating to the Indemnified Person furnished
expressly for use in connection with such registration by such Person, nor shall
the Company be liable to any Person for any such loss, claim, damage or
liability and any action in respect thereof to the extent it arises from or is
based upon (a) any untrue statement or alleged untrue statement of a material
fact contained in any registration statement or prospectus relating to the
Registrable Securities delivered by such Person after such Person had received
written notice from the Company pursuant to Section 3.1(a) that such
registration statement or prospectus contained such untrue statement or alleged
untrue statement of a material fact and stating specifically that a Suspension
Period is then in effect, (b) any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading after such Person has received written notice
from the Company pursuant to Section 3.1(a) that such registration statement or
prospectus contained such omission or alleged omission and stating specifically
that a Suspension Period is then in effect, or (c) the failure of such Person to
deliver any preliminary or final prospectus, or any amendments or supplements
thereto, required under applicable securities laws, including the Securities
Act, to be so delivered, provided that a sufficient number of copies thereof had
been provided by the Company to such Person.
SECTION 4.2 Indemnification by Holders of Registrable Securities. Each
----------------------------------------------------
Selling Holder agrees, severally but not jointly, to indemnify and hold harmless
the Company, its officers, directors and agents and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to such Selling Holder, but only with reference to (i)
information related to such Selling Holder furnished in writing by such Selling
Holder or on such Selling Holder's behalf expressly for use in any registration
statement or prospectus relating to the Registrable Securities, or any amendment
or supplement thereto, or any preliminary prospectus or (ii) the matters set
forth in Section 4.l(b). Each Selling Holder also agrees to indemnify and hold
harmless Underwriters of the Registrable Securities, their officers and
directors and each Person who controls such Underwriters on substantially the
same basis as that of the indemnification of the Company provided in this
Section 4.2. In no event, however, shall any indemnity obligation under this
Section 4.2 exceed the gross proceeds from the offering received by such Selling
Holder.
SECTION 4.3 Conduct of Indemnification Proceedings. Promptly after receipt
--------------------------------------
by any person in respect of which indemnity may be sought pursuant to Section
4.1 or 4.2 (an "Indemnified Party") of notice of any claim or the commencement
of any action, the Indemnified
A-11
Party shall, if a claim in respect thereof is to be made against the person
against whom such indemnity may be sought (an "Indemnifying Party") notify the
Indemnifying Party in writing of the claim or the commencement of such action
provided that the failure to notify the Indemnifying Party shall not relieve it
from any liability which it may have to an Indemnified Party except to the
extent of any actual prejudice resulting therefrom. If any such claim or action
shall be brought against an Indemnified Party, and it shall notify the
Indemnifying Party thereof, the Indemnifying Party shall be entitled to
participate therein, and, to the extent that it wishes, jointly with any other
similarly notified Indemnifying Party, to assume the defense thereof with
counsel satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim or action, the Indemnifying Party shall not be liable to
the Indemnified Party for any legal or other expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation; provided that the Indemnified Party shall
--------
have the right to employ separate counsel to represent the Indemnified Party and
its controlling Persons who may be subject to liability arising out of any claim
in respect of which indemnity may be sought by the Indemnified Party against the
Indemnifying Party, but the fees and expenses of such counsel shall be for the
account of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel or
(ii) based upon the advice of counsel of such Indemnified Party representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
claim or pending or threatened proceeding in respect of which the Indemnified
Party is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such claim or proceeding.
SECTION 4.4 Contribution. If the indemnification provided for in this is
------------
unavailable to, or is insufficient to hold harmless, the Indemnified Parties in
respect of any losses, claims, damages or liabilities referred to herein, then
each such Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such losses, claims, damages or liabilities (i) as between the Company
and the Selling Holders on the one hand and the Underwriters on the other, in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Selling Holders on the one hand and the Underwriters on the
other from the offering of the Registrable Securities, or if such allocation is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits but also the relative fault of the Company and
the Selling Holders on the one hand and of the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations and (ii) as between the Company on the one hand and each Selling
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of each Selling Holder in connection with such
statements or omissions, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Holders on the one
hand and the Underwriters on the other shall
A-12
be deemed to be in the same proportion as the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Company and the Selling Holders bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the prospectus. The relative fault of
the Company and the Selling Holders on the one hand and of the Underwriters on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
and the Selling Holders or by the Underwriters. The relative fault of the
Company on the one hand and of each Selling Holder on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Selling Holders agree that it would not be just and
equitable if contribution pursuant to this Section 4.4 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 4.4, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities of such Selling Holder were
offered to the public (less underwriting discounts and commissions) exceeds the
amount of any damages which such Selling Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Each Selling
Holder's obligations to contribute pursuant to this Section 4.4 are several in
proportion to the proceeds of the offering received by such Selling Holder bears
to the total proceeds of the offering received by all the Selling Holders and
not joint.
SECTION 5
SECTION 5.1 Participation in Underwritten Registrations. No Person may
-------------------------------------------
participate in any underwritten registration hereunder unless such Person (a)
agrees to sell such Person's
A-13
securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements and these Registration Rights; provided that (i) such
--------
Person will not be required to make any representations or warranties except
those which relate solely to themselves and (ii) the liability of such Person to
any Underwriter under such underwriting agreement will be limited to liability
arising from misstatements in, or omissions from, written information regarding
such Person provided by or on behalf of such Person in writing specifically for
inclusion in the prospectus.
SECTION 5.2 Rule 144. The Company covenants that it will use its reasonable
--------
best efforts to file any reports required to be filed by it under the Securities
Act and the Exchange Act and that it will take such further action as any Holder
may reasonably request, all to the extent reasonably required from time to time
to enable Holders to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule 144
or Rule 144A under the Securities Act, as such Rules may be amended from time to
time, or (b) any similar Rule or regulation hereafter adopted by the SEC. Upon
the request of any Holder, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
SECTION 5.3 Holdback Agreement. Each Holder of Registrable Securities
------------------
agrees not to effect any sale or distribution of the issue being registered or
of a similar security of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, including a sale pursuant to
Rule 144 or Rule 144A under the Securities Act, during the 14 days prior to, and
during the 90-day period (180 days in the case of the Company's Initial Public
Offering) beginning on, the effective date of the registration statement filed
by the Company (except as part of such registration) if, and to the extent,
requested by the managing Underwriter or Underwriters in the case of an
underwritten public offering.
A-14
EXHIBIT B
EXHIBIT B
IRREVOCABLE PROXY
The undersigned agrees to, and hereby grants to any of Xxxx X. Xxxxx,
Xxxxxxxx X. Xxxxxxx, Xxxx X. Xxxxxxxx, Xxx X. Xxxxx, Xxxx X. Xxxx, Xxxxxxx X.
Xxxxxxx, Xx., J. Xxxxxxxxx Xxxxxxx, Xxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxxx,
each in his capacity as a manager of Xxxxxxx Xxxxxx & Co. LLC (collectively,
"FS"), an irrevocable proxy to vote, or to execute and deliver written consents
or otherwise act with respect to, all shares of capital stock (the "Stock") of
Advance Holding Corporation, a Virginia corporation (the "Company") now owned or
hereafter acquired by the undersigned as fully, to the same extent and with the
same effect as the undersigned might or could do under any applicable laws or
regulations governing the rights and powers of stockholders of a Virginia
corporation, as provided in that certain Stockholders Agreement by and among the
undersigned, certain other stockholders of the Company and the Company. The
undersigned hereby affirms that this proxy is given as a condition of said
Stockholders Agreement and the undersigned's investment in the Company and as
such is coupled with an interest and is irrevocable. It is further understood by
the undersigned that this proxy may be exercised by FS for the period beginning
the date hereof and ending upon an initial public offering of the Company's
common stock. This proxy shall remain in full force and effect and be
enforceable against any donee, transferee or assignee of the Stock.
Dated this __ day of ________, 1998.
Ripplewood Partners, L.P.,
a Delaware limited partnership
By: /s/ Xxxx X. Xxxxxx
Name: ______________________________
Title: _____________________________
AMENDMENT NO. 1
TO
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this
"Agreement") is made and entered into as of November 28, 2001, by and among
Advance Holding Corporation, a Virginia corporation ("Holding"), Advance Auto
Parts, Inc., a Delaware corporation (the "Company"), FS Equity Partners IV,
L.P., a Delaware limited partnership ("FSEP IV" or the "FS Stockholder"),
Ripplewood Partners, L.P. ("Ripplewood Partners"), Ripplewood Advance Auto Parts
Employee Fund I L.L.C. ("Ripplewood Employee Fund" and, together with Ripplewood
Partners, the "Ripplewood Stockholder"), Xxxxxxxx X. Xxxxxxx and the Xxxxxx
Xxxxxxx Trust dated July 13, 1964 (the "Trust") (Xx. Xxxxxxx and the Trust
collectively, the "Existing Stockholders" and each individually, an "Existing
Stockholder"), WA Holding Co., a Delaware corporation (the "Sears Stockholder")
and Xxxxx X. Xxxxxxxx ("Xxxxxxxx"), Xxxxxxxx Industries Limited Partnership (the
"Xxxxxxxx Partnership") and the Xxxxx X. Xxxxxxxx Revocable Trust (the "Xxxxxxxx
Trust").
RECITALS
A. On November 2, 1998, Holding, the Existing Stockholders, the FS
Stockholder, the Ripplewood Stockholder and the Sears Stockholder entered into
an Amended and Restated Stockholders Agreement (the "Restated Agreement").
B. Pursuant to an Agreement and Plan of Merger dated as of August 7, 2001
by and between Holding and the Company, the parties agreed that Holding will
merge with and into the Company, with the Company continuing as the surviving
corporation (the "Reincorporation Merger").
C. On August 1, 2001, the boards of directors of Holding and the Company
approved a resolution stating that following the Reincorporation Merger the
rights and obligations of the stockholders of Holding to each other and to
Holding shall be preserved and become the rights and obligations of the
stockholders of the Company, including without limitation the rights and
obligations under the Restated Agreement.
D. Pursuant to an Agreement and Plan of Merger dated as of August 7, 2001
(the "Merger Agreement") by and among Holding, Advance Stores Company,
Incorporated, the Company, AAP Acquisition Corporation ("Merger Sub") and
Discount Auto Parts, Inc. ("Discount"), the parties agreed that Merger Sub, a
wholly-owned subsidiary of the Company, will merge with and into Discount, with
Discount continuing as the surviving corporation in such merger (the "Discount
Merger").
E. Pursuant to the Merger Agreement, the parties thereto agreed to amend
the Restated Agreement to, among other things, provide Xxxxxxxx with certain
registration rights and to provide for Xxxxxxxx'x election as a member of the
Board of Directors of the Company upon the terms and conditions as more fully
set forth in this Agreement.
F. Under Sections 7.1 and 12 of the Restated Agreement, the Restated
------------ --
Agreement may be amended to add the terms and conditions set forth in this
Agreement in connection with the Discount Merger.
G. The parties hereto intend that this Agreement shall become effective
upon and only upon the consummation of the Reincorporation Merger and the
contemporaneous Discount Merger.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
1. Definitions. The definitions of Common Stock, Company, and Initial
-----------
Shares as set forth in Section 1.1 of the Restated Agreement are hereby amended
-----------
in their entirety as follows, and seven new definitions, the Agreement, Discount
Merger, Xxxxxxxx Partnership, Xxxxxxxx Stockholder, Xxxxxxxx Trust, Xx.
Xxxxxxxx, and Reincorporation Merger, are hereby added to Section 1.1 as
-----------
follows:
"Agreement: That certain Amended and Restated Stockholders Agreement
---------
dated as of November 2, 1998 by and among Advance Holding Corporation, the
FS Stockholder, the Ripplewood Stockholder, the Existing Stockholders, and
the Sears Stockholder, as amended to date and as it may be amended from
time to time."
"Common Stock: The Common Stock, par value $0.0001 per share, of the
------------
Company."
"Company: Advance Auto Parts, Inc., a Delaware corporation."
-------
"Discount Merger: The merger of AAP Acquisition Corporation, a wholly
---------------
owned subsidiary of the Company, with and into Discount Auto Parts, Inc.,
with Discount Auto Parts, Inc. continuing as the surviving corporation in
such merger, all pursuant to an Agreement and Plan of Merger dated as of
August 7, 2001 by and among the Company, Advance Stores Company,
Incorporated, Advance Holding Corporation, Discount Auto Parts, Inc., and
AAP Acquisition Corporation."
2
"Xxxxxxxx Partnership: Xxxxxxxx Industries Limited Partnership, a
--------------------
Nevada limited partnership."
"Xxxxxxxx Stockholder: The Xxxxxxxx Partnership and its Permitted
--------------------
Transferees."
"Xxxxxxxx Trust: The Xxxxx X. Xxxxxxxx Revocable Trust."
--------------
"Initial Shares: The 28,472,660 shares of Common Stock of the Company
issued and outstanding upon consummation of the Reincorporation Merger and
the Discount Merger and held beneficially and of record by the Stockholders
and the Xxxxxxxx Partnership and any Option Shares as follows:
Options to
Purchase
Common Common
Stockholder Stock Stock
------------------------------------------------- ---------- -----------
FS Equity Partners IV, L.P. ..................... 11,022,652 --
Ripplewood Partners, L.P. ....................... 2,763,110 --
Ripplewood Advance Auto Parts Employee
Fund I L.L.C .................................. 128,685 --
Xxxxxxxx X. Xxxxxxx ............................. 1,148,632 250,000
The Xxxxxx Xxxxxxx Trust dated July 13, 1964 .... 898,633 250,000
WA Holding Co. .................................. 11,474,606 --
Xxxxxxxx Industries Limited Partnership ......... 1,036,342 --"
"Xx. Xxxxxxxx: Xxxxx X. Xxxxxxxx."
"Reincorporation Merger: The merger of Advance Holding Corporation
with and into the Company, with the Company continuing as the surviving
corporation, all pursuant to an Agreement and Plan of Merger dated as of
August 7, 2001 by and between Advance Holding Corporation and the Company."
2. Xxxxxxxx Permitted Transferee. With respect to the Xxxxxxxx
-----------------------------
Partnership, notwithstanding any other provision to the contrary in the Restated
Agreement or this Agreement, the term "Permitted Transferee" shall mean (i) the
Xxxxxxxx Trust, (ii) Xx. Xxxxxxxx or his spouse, children, grandchildren or
other living descendants, or a trust or family partnership of which there are no
principal (i.e., corpus) beneficiaries or partners other than the grantor or one
or more of Xx. Xxxxxxxx, his spouse or described relatives and provided, in the
case of a trust, that the existing beneficiaries and/or trustee(s) and/or
grantor(s) of such trust have the power to act with respect to the trust's
assets without court approval and, in the case of a family partnership, that the
partners thereof have the power to act with respect to the partnership's assets
without court approval and the partnership is not permitted to (a) distribute
assets to Persons who are not among the relatives listed above or (b) have
partners who are not among the relatives
3
listed above or (iii) a legal representative of Xx. Xxxxxxxx in the event Xx.
Xxxxxxxx becomes mentally incompetent or to Xx. Xxxxxxxx'x personal
representative following the death of Xx. Xxxxxxxx. Each Permitted Transferee
shall (x) execute a written undertaking to be and become bound by the Agreement
in the same manner and to the same extent as the Xxxxxxxx Partnership, (y)
execute an irrevocable power of attorney appointing Xx. Xxxxxxxx (or an
individual designated by Xx. Xxxxxxxx if he is unable to act due to death or
disability) as such transferee's attorney-in-fact with sole irrevocable power
and authority to make all decisions on behalf of and take all actions required
to be taken by such transferee in connection with this Agreement.
3. Registration Rights; Acquisitions of Common Stock.
-------------------------------------------------
(a) The first sentence of Section 6.1 of the Restated Agreement is
hereby amended in its entirety as follows:
"6.1 Registration Rights. FS Stockholder, the Sears Stockholder, the
-------------------
Ripplewood Stockholder, the Existing Stockholders and the Xxxxxxxx
Partnership shall be entitled to certain registration rights with respect
to their shares of Common Stock (the "Registration Rights").
(b) A new sentence shall be added at the end of Section 6.1 as
-----------
follows:
"The Xxxxxxxx Partnership may not assign its Registration Rights
except to a Permitted Transferee (provided that any Permitted Transferee of
the Xxxxxxxx Partnership who is not Xx. Xxxxxxxx or the Xxxxxxxx Trust
shall deliver to the Company a power-of-attorney appointing Xx. Xxxxxxxx
(or an individual he designates if he is unable to act due to death or
disability) as such Permitted Transferee's attorney-in-fact for purposes of
exercising such Permitted Transferee's Registration Rights and fulfilling
such Permitted Transferee's obligations under this Section 6)."
---------
4. Section 6.2 of the Restated Agreement is hereby amended in its entirety
-----------
as follows:
"6.2 Acquisition of Common Stock. After consummation of an Initial
---------------------------
Public Offering, neither the Stockholders nor the Xxxxxxxx Stockholder
shall purchase or permit its Affiliates to purchase or otherwise acquire,
or agree or offer to purchase or otherwise acquire (subject, in the case of
the Trust, to Section 5.1(a)), beneficial ownership of additional shares of
Common Stock or Securities."
5. Election to Board of Xxxxx Xxxxxxxx. The first two paragraphs of
-----------------------------------
Sections 7.1 of the Restated Agreement are hereby amended in their entirety as
------------
follows:
"7.1 The Board.
---------
4
At each annual or special meeting of stockholders of the Company, or
in any written consent executed in lieu of a stockholder meeting, at or
pursuant to which persons are being elected to fill positions on the Board,
the FS Stockholder, the Sears Stockholder, the Ripplewood Stockholder, the
Existing Stockholders and the Xxxxxxxx Stockholder agree to exercise, or
cause to be exercised, voting rights with respect to the shares of Voting
Securities then held of record or beneficially owned by them, in such a
manner that (i) three (3) candidates nominated by FS Stockholder, (ii) Xx.
Xxxxxxx or, in the event of his death or disability, his representative
designated in writing, (iii) one (1) candidate nominated by the Ripplewood
Stockholder, (iv) the Chief Executive Officer of the Company, (v) three (3)
candidates nominated by the Sears Stockholder, and (vi) Xx. Xxxxxxxx, shall
be elected to fill and continue to hold positions on the Board.
The FS Stockholder may require the Board to nominate, and the
Stockholders to vote their shares in favor of electing, up to three (3)
independent members of the Board of Directors (including three (3)
directors who meet applicable independence and experience requirements for
audit committee members) (such persons being mutually acceptable to FS
Stockholder and Sears Stockholder), and each Stockholder and the Xxxxxxxx
Stockholder shall take all actions necessary in connection therewith. Upon
and after consummation of the Discount Merger as necessary to comply with
New York Stock Exchange rules, including rules pertaining to audit
committees (or with applicable law or rules or the applicable requirements
of the National Association of Securities Dealers or any other exchange)
including, without limitation, in connection with the Discount Merger or an
Initial Public Offering, the Company shall have up to three (3) independent
members of the Board of Directors (including three (3) directors who meet
applicable independence and experience requirements for audit committee
members) (such persons being mutually acceptable to FS Stockholder and
Sears Stockholder), and each Stockholder and the Xxxxxxxx Stockholder shall
take all actions necessary in connection therewith. Neither Xx. Xxxxxxx (or
his representative) nor Xx. Xxxxxxxx may be removed from the Board without
cause. In addition, Xx. Xxxxxxx shall not be disqualified from being a
director by virtue of his age. The Board of Directors shall have no fewer
than ten (10) and no more than fourteen (14) directors and the Stockholders
shall vote to have the Bylaws provide that the Company shall have no fewer
than ten (10) nor more than fourteen (14) directors. Notwithstanding the
preceding sentence, in the event of an acquisition by the Company where
more than 10% of the Voting Securities are issued to the seller, and as an
important element of the transaction additional Board seats are required
(an "Acquisition Event"), the Stockholders and the Xxxxxxxx Stockholder
will use reasonable best efforts to make such Board seats available
including, without limitation, taking all necessary actions to amend this
Agreement and the Bylaws and cause their respective nominees to the Board
to approve an increase in the size of the Board,
5
necessary amendments to this Agreement, and the election of new members of
the Board."
6. Termination of Xxxxxxxx'x Rights. The following two sentences are
--------------------------------
hereby added to the end of Section 7.4 of the Restated Agreement:
-----------
"Xx. Xxxxxxxx'x rights to be elected to fill and continue to hold a
position on the Board pursuant to Section 7.1 and his obligations to vote
-----------
under such Section shall terminate upon the earliest to occur of the
following events (each, a "Termination Event"): (a) January 1, 2004, (b)
his submission of a voluntary resignation from the Board, (c) his removal
from the Board for cause, (d) his ceasing to have beneficial interest in at
least 50% of the Initial Shares, (e) the expiration of the voting rights of
the Stockholders and the Xxxxxxxx Stockholder under the Restated Agreement,
or (f) his death. If the voting rights of the Stockholders and the Xxxxxxxx
Stockholder to the Restated Agreement expire after Xx. Xxxxxxxx has been so
elected, the Company shall thereafter continue to nominate Xx. Xxxxxxxx for
a position on the Board of Directors unless another Termination Event has
occurred or another Termination Event thereafter occurs."
7. Restrictions on Amendments and Waivers. The first sentence of Section
--------------------------------------
12 of the Restated Agreement is hereby amended by inserting the following clause
in line 10 thereof after the words "Ripplewood Stockholder":
"and to the extent the terms of the specific Registration Rights of
the Xxxxxxxx Partnership or board rights of Xx. Xxxxxxxx would be
prejudiced thereby, the written consent of the Xxxxxxxx Partnership or Xx.
Xxxxxxxx, as the case may be, shall be required to amend, modify or waive
compliance with this Agreement,"
8. Notice. Section 14 of the Restated Agreement is hereby amended by
------ ----------
adding the following clause between the end of clause (vi) and the parenthetical
clause that begins, "(or at such other address . . .":
"and (vii) if to Xxxxxxxx, the Xxxxxxxx Partnership or the Xxxxxxxx Trust,
to Xxxxx X. Xxxxxxxx, 00 Xxxxxxx Xxxx, Xxxxxxxxx, XX 00000, facsimile:
(000) 000-0000; with a copy to the Xxxxxxxx Industries Limited Partnership,
0000 Xxxx Xxxxxx Xxxxxxxx Xxxx, #00, Xxx Xxxxx, XX 00000, Attention: Xxxxx
X. Xxxxxxxx."
9. Registration Rights of the Xxxxxxxx Partnership. Exhibit A of the
----------------------------------------------- ---------
Restated Agreement is hereby amended as follows:
(a) The sentence preceding Section 1 of Exhibit A of the Restated
--------- ---------
Agreement is hereby amended in its entirety as follows:
6
"Capitalized terms used herein and not otherwise defined shall have
the respective meanings given such terms in the Amended and Restated
Stockholders Agreement (as amended to date and as it may be further amended
from time to time) (the "Agreement") to which this Exhibit A is attached."
---------
(b) The definition of Holder in Section 1.1 of Exhibit A of the
----------- ---------
Restated Agreement is hereby amended in its entirety as follows:
"Holder" means the FS Stockholder, the Sears Stockholder, the
Ripplewood Stockholder, any Existing Stockholder, and/or the Xxxxxxxx
Partnership (or any Permitted Transferee or permitted assignee thereof);
provided, that the Xxxxxxxx Stockholder shall not be deemed to be a
"Holder" for purposes of the first sentence of Section 2.1(a) of Exhibit A
-------------- ---------
(i.e., the Xxxxxxxx Stockholder shall not be entitled to rights to Demand
Registrations as defined in Section 2.1(a))."
--------------
(c) The fourth sentence of Section 2.1(a) of Exhibit A of the
-------------- ---------
Restated Agreement is hereby amended in its entirety as follows:
"The first time an Existing Stockholder or the Ripplewood Stockholder
requests a Demand Registration, the FS Stockholder and the Sears
Stockholder (or their Permitted Transferees or permitted assignees) shall
each be entitled to submit to the Company, within ten (10) days after
receipt of notice of such Existing Stockholder's or Ripplewood
Stockholder's request for a Demand Registration, a written request for a
Demand Registration (the "Simultaneous Registration") and shall thereby
join in the request of such Existing Stockholder or the Ripplewood
Stockholder, and thereupon each of the Existing Stockholders, Ripplewood
Stockholder, the Xxxxxxxx Partnership, Sears Stockholder and FS Stockholder
shall be entitled to include Registrable Securities in such Demand
Registration on a pro rata basis, determined based on the number of
Registrable Securities then sought to be included by the FS Stockholder,
the Sears Stockholder, all Existing Stockholders, the Ripplewood
Stockholder and the Xxxxxxxx Partnership (in each case including any
Permitted Transferees or permitted assignees) and other Persons entitled to
include shares therein pursuant to Demand Registration rights,
respectively, up to the number of Registrable Securities proposed to be
sold in such Demand Registration and, for purposes of Section 2.3, prior to
-----------
any person including Registrable Securities under Section 2.2 or other
-----------
Piggy-Back Registration Rights."
(d) The seventh sentence of Section 2.1(a) of Exhibit A of the
----------- ---------
Restated Agreement is hereby amended in its entirety as follows:
"The first time the Ripplewood Stockholder requests a Demand
Registration, if (i) within the 10-day period set forth in the fourth
sentence of this
7
Section 2.1(a), neither the FS Stockholder nor the Sears Stockholder
--------------
requests a Simultaneous Registration, and (ii) the Existing Stockholders
has not previously requested a Demand Registration counted under Section
-------
2.1(b), then, by giving notice within three (3) business days of the end of
------
said 10-day period, the Existing Stockholders may request a Simultaneous
Registration with the Ripplewood Stockholder, and if such a request is
made, thereupon the Existing Stockholders, the Ripplewood Stockholder and
the Xxxxxxxx Partnership shall be entitled to include Registrable
Securities in such Demand Registration on a pro rata basis, determined
based on the number of Registrable Securities then sought to be included by
the Ripplewood Stockholder, all Existing Stockholders, the Xxxxxxxx
Partnership (in each case including Permitted Transferees) and other
Persons entitled to include shares therein pursuant to Demand Registration
rights (it being understood that each of the FS Stockholder and the Sears
Stockholder shall have waived its right to participate therein except
pursuant to Section 2.2), respectively, up to the number of Registrable
-----------
Securities proposed to be sold in such Demand Registration and, for
purposes of Section 2.3, prior to any Person including Registrable
-----------
Securities under Section 2.2 or other Piggy-Back Registration Rights."
-----------
(e) Section 2.3(a) of Exhibit A of the Restated Agreement is hereby
----------- ---------
amended in its entirety as follows:
"SECTION 2.3 Reduction of Offering.
---------------------
(a) Notwithstanding anything contained herein, if the managing
Underwriter or Underwriters of an offering described in Section 2.1 or 2.2
----------- ---
determine that the size of the offering that the Holders, the Company or
any other Persons intend to make is such that the success of the offering
would be adversely affected by inclusion of the Registrable Securities
requested to be included, then (i) with respect to a Demand Registration,
if the size of the offering is the basis of such Underwriter's or
Underwriters' determination, the Company shall not include in such
registration an amount of Registrable Securities requested to be included
in such offering equal to the Excess Amount, such reduction first to be
allocated pro rata among the Holders or other Persons who did not initiate
the request for a Demand Registration according to the number of
Registrable Securities requested for inclusion, with the Holder or Holders
or other Persons who initiated the request for a Demand Registration
entitled to include shares therein to the maximum extent possible provided
that if such Holders cannot include all their shares in such offering, the
amount of Registrable Securities to be registered shall be reduced pro rata
among the initiating Holders (provided further that if the Sears
Stockholder or the FS Stockholder initiates a Demand Registration pursuant
to Section 2.1(a) and an Existing Stockholder or the Ripplewood Stockholder
--------------
or the Xxxxxxxx Partnership requests to participate in such Demand
Registration, the FS Stockholder or Sears Stockholder (or both in the case
of a Simultaneous Registration by them), and such Existing Stockholder, the
Ripplewood
8
Stockholder or the Xxxxxxxx Partnership and each of them participating
shall be treated pari passu with respect to a reduction under this Section
---- ----- -------
2.3 and (ii) in the case of a Piggy-Back Registration, if securities are
---
being offered for the account of other Persons as well as the Company, the
securities the Company seeks to include shall have priority over securities
sought to be included by any other Person (including the Holders) and, with
respect to the Registrable Securities intended to be offered by Holders,
the proportion by which the amount of such class of securities intended to
be offered by Holders is reduced shall not exceed the proportion by which
the amount of such class of securities intended to be offered by such other
Persons is reduced (it being understood that with respect to the Holders
and third parties such reduction may be all of such class of securities)."
(f) Section 2.4 of Exhibit A of the Restated Agreement is hereby
----------- ---------
amended in its entirety as follows:
"SECTION 2.4 Additional Rights. The Company shall not grant to any
-----------------
Person registration rights on terms which are more favorable to such Person
than or which otherwise interferes with (it being understood that the
granting of registration rights to other stockholders shall not by itself
be deemed to so interfere) those accorded to the Ripplewood Stockholder,
the Existing Stockholders or the Xxxxxxxx Partnership."
10. Deletion of Schedule 1. Schedule 1 to the Restated Agreement is hereby
---------------------- ----------
deleted in its entirety.
11. Effectiveness. This Agreement shall become effective upon and only
-------------
upon the consummation of the Reincorporation Merger and the contemporaneous
Discount Merger and shall terminate and be of no force and effect upon
termination of the Merger Agreement in accordance with its terms.
12. Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of Delaware without regard to
the conflicts of laws rules thereof.
13. Representations and Warranties.
------------------------------
(a) Each Stockholder and the Xxxxxxxx Partnership represents and
warrants (i) that it has full power, capacity, right and authority, and any
requisite approvals or consents to enter into and perform this Agreement; (ii)
that this Agreement and the performance of its obligations hereunder have been
duly authorized, and that this Agreement has been duly executed and delivered by
it and is a valid and binding agreement, enforceable against it in accordance
with its terms; (iii) that upon the consummation of the Reincorporation Merger
and the Discount Merger, it will own beneficially and of record the shares of
Common Stock and the rights,
9
options or warrants to purchase any capital stock of the Company set forth
opposite its name under the definition of Initial Shares, free and clear of any
lien, claim, charge, option, security interest, restriction or encumbrance other
than applicable restrictions set forth in this Agreement; and (iv) that it does
not own beneficially or of record any other securities or rights, options or
warrants to purchase any securities of the Company.
(b) The Trust further represents and warrants that it is a trust duly
organized, validly existing and in good standing under the laws of the State of
South Dakota. The sole living Trust beneficiaries are: Xxxxxxxx X. Xxxxxxx
(during his lifetime) and, upon the death of Xxxxxxxx X. Xxxxxxx, his children
then living (presently his children are Xxxx X. Xxxxxxx and Xxxx X. Xxxxxxx).
The execution, delivery and performance of this Agreement will not violate any
trust document establishing or governing the Trust.
(c) Xx. Xxxxxxxx, in his individual capacity and as trustee of the
Xxxxxxxx Trust, further represents and warrants that as of the date hereof, (i)
the Xxxxxxxx Trust is the record and beneficial owner of all of the general
partnership interests of the Xxxxxxxx Partnership, (ii) the Xxxxxxxx Trust and
Xxxxxxxx are the record and beneficial owners of all of the limited partnership
interests of the Xxxxxxxx Partnership, and (iii) the Xxxxxxxx Trust and Xxxxxxxx
own such partnership interests (general and limited) free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on voting rights, charges and other encumbrances of any
nature whatsoever (except for any encumbrance arising under the limited
partnership agreement of the Xxxxxxxx Partnership).
14. Severability. If any term or other provision of this Agreement is
------------
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect to the maximum extent permitted by applicable
law. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
this Agreement be enforced as originally contemplated to the greatest extent
possible.
15. Entire Agreement. This Agreement, together with the Company's Articles
----------------
of Incorporation and Bylaws as in effect on the date hereof constitute the
entire agreement and understanding among the parties pertaining to the subject
matter hereof and supersede any and all prior agreements, whether written or
oral, relating hereto.
16. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
10
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
ADVANCE HOLDING CORPORATION,
a Virginia corporation
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------------
Its:
------------------------------------------
ADVANCE AUTO PARTS, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------------
Its:
------------------------------------------
XXXXXXXX X. XXXXXXX
/s/ Xxxxxxxx X. Xxxxxxx
-----------------------------------------------
THE XXXXXX XXXXXXX TRUST DATED JULY 13, 1964
By: /s/ [illegible], SVP
------------------------------------------
Trustee
RIPPLEWOOD PARTNERS, L.P.,
a Delaware limited partnership
By: /s/ [illegible]
------------------------------------------
Its:
------------------------------------------
11
RIPPLEWOOD ADVANCE AUTO PARTS
EMPLOYEE FUND I L.L.C.,
a Delaware limited liability company
By: /s/ [illegible]
------------------------------------------
Its:
------------------------------------------
FS EQUITY PARTNERS IV, L.P.,
a Delaware limited partnership
By: FS Capital Partners, LLC
Its: General Partner
By: /s/ Xxxx X. Xxxx
--------------------------------------
Its:
--------------------------------------
WA HOLDING CO., formerly
WESTERN AUTO HOLDING CO.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Its: President
-----------------------------------------
For purposes of the last sentence of Section 12
of the Agreement only:
SEARS, XXXXXXX AND CO.,
a New York corporation
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Its: V.P. Business Development
-----------------------------------------
12
XXXXX X. XXXXXXXX,
an individual
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------------------
XXXXXXXX INDUSTRIES LIMITED PARTNERSHIP,
a Nevada limited partnership
By: Xxxxx X. Xxxxxxxx Revocable Trust
Its: General Partner
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------------
By: Xxxxx X. Xxxxxxxx
Its: Trustee
XXXXX X. XXXXXXXX REVOCABLE TRUST,
a Florida revocable trust
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------------------
By: Xxxxx X. Xxxxxxxx
Its: Trustee
13
AMENDMENT NO. 2
TO
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
THIS AMENDMENT NO. 2 TO AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this
"Amendment") is made and entered into as of February 6, 2002 by and among
Advance Auto Parts, Inc., a Delaware corporation (the "Company"), Sears, Xxxxxxx
and Co., a New York corporation ("Sears"), FS Equity Partners IV, L.P., a
Delaware limited partnership (the "FS Stockholder"), Ripplewood Partners, L.P.,
a Delaware limited partnership ("Ripplewood Partners"), Ripplewood Advance Auto
Parts Employee Fund I L.L.C., a Delaware limited liability company ("Ripplewood
Employee Fund" and, together with Ripplewood Partners, the "Ripplewood
Stockholder"), Xxxxxxxx X. Xxxxxxx, an individual, the Xxxxxx Xxxxxxx Trust
dated July 13, 1964 (the "Trust") (Xx. Xxxxxxx and the Trust collectively, the
"Existing Stockholders"), WA Holding Company, a Delaware corporation ("WAH"),
Xxxxx X. Xxxxxxxx, an individual, Xxxxxxxx Industries Limited Partnership, a
Nevada limited partnership, and the Xxxxx X. Xxxxxxxx Revocable Trust, a Florida
revocable trust. All capitalized terms used but not defined herein shall have
the meanings given to them in the Share Exchange Agreement (as defined below).
RECITALS
A. On November 2, 1998, Advance Holding Corporation ("Holding"), the
Existing Stockholders, the FS Stockholder, the Ripplewood Stockholder and WAH
entered into an Amended and Restated Stockholders Agreement (the "Original
Stockholders Agreement").
B. In connection with the consummation of the transactions contemplated by
that certain Agreement and Plan of Merger dated as of August 7, 2001 by and
among Holding, Advance Stores Company, Incorporated, the Company, AAP
Acquisition Corporation and Discount Auto Parts, Inc., (i) Holding merged with
and into the Company, with the Company continuing as the surviving corporation,
and (ii) certain parties hereto entered into Amendment No. 1 to Amended and
Restated Stockholders Agreement dated November 28, 2001 ("Amendment No. 1"). The
Original Stockholders Agreement, as amended by Amendment No. 1, shall be
referred to herein as the "Stockholders Agreement."
C. Pursuant to that certain Share Exchange Agreement dated as of the date
hereof (the "Share Exchange Agreement") between the Company and Sears, the
Company shall issue and transfer 11,474,606 shares of Common Stock to Sears in
exchange for the simultaneous conveyance, transfer and delivery by Sears to the
Company of 1,000 shares of common stock of WAH, which shares represent all of
the issued and outstanding capital stock of WAH (the "Share Exchange").
D. As promptly as practicable, but in no event more than one business day
after the Closing, the Company shall cause WAH to merge with and into the
Company, in a statutory merger meeting the requirements of Delaware law, with
the Company being the surviving corporation, whereupon the Company shall cancel
all 11,474,606 shares of Common Stock held by WAH (the "Advance Shares") (such
merger and cancellation, collectively, the "Merger Transaction").
E. In connection with the Share Exchange and to reflect certain changes in
the circumstances of the Company since the execution of the Original
Stockholders Agreement, the parties hereto desire to amend the Stockholders
Agreement to (i) add Sears as a party thereto, (ii) (A) change the equity
ownership thresholds relating to the election of members to the Board of
Directors of the Company, (B) increase from two to three the number of Demand
Registrations that the Existing Stockholders may exercise, (C) change the
termination provisions relating to certain rights under Section 3 of the
Stockholders Agreement and (D) make certain other related amendments and (iii)
waive certain other rights that each party to the Stockholders Agreement may
have with respect to the Share Exchange and Merger Transaction.
F. Under Section 12 of the Stockholders Agreement, the Stockholders
Agreement may be amended to add the terms set forth in this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the agreements and
waivers contained herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
1. Definitions; Agreement to Be Bound.
----------------------------------
(a) The definition of "Sears Stockholder" in the preamble to the
Stockholders Agreement is hereby amended to refer solely to "Sears, Xxxxxxx and
Co., a New York corporation." Accordingly, the term "Sears Stockholder," as used
throughout the Stockholders Agreement, including Exhibit A thereto, and as
amended by this Amendment and, so long as Sears shall be a party thereto, as it
may be amended from time to time, shall in all instances refer solely to Sears,
and all parties hereto agree that Sears shall have all of the benefits and
rights under (including, but not limited to, the registration rights set forth
in Exhibit A thereto), and Sears hereby agrees to be fully bound by, and shall
fully discharge and perform all of its obligations under, the Stockholders
Agreement, as so amended, as if Sears were an original signatory thereto.
(b) Subsection (w)(iv) of the definition of "Permitted Transferee" is
hereby deleted in its entirety and replaced with the following:
2
"with respect to the Sears Stockholder, includes The Xxxxx - Xxxxxxx
Foundation"
(c) The following definition is hereby added to Section 1.1 of the
Stockholders Agreement as follows:
"Board Rights Termination Event: Shall mean, (i) with respect to
------------------------------
FS Stockholder, Sears Stockholder and the Ripplewood Stockholder, an
event which terminates such Stockholder's right to designate a member
or members of the Board under Section 7.1 and (ii) with respect to Xx.
Xxxxxxx or his representative, an event described in Section 7.4 which
terminates the right of Xx. Xxxxxxx or such representative to
designate a member of the Board under Section 7.1."
2. Transfer of Shares by FS Stockholder, Sears Stockholder or Ripplewood
---------------------------------------------------------------------
Stockholder; Rights of Inclusion; Termination and Assignment. The fourth
------------------------------------------------------------
sentence of Section 3.5 of the Stockholders Agreement is hereby deleted in its
entirety and the following is hereby substituted therefor:
"The obligations of FS Stockholder and Sears Stockholder and any
Permitted Transferee or assignee pursuant to the provisions of this
Section 3 shall terminate, as to any such holder only, at such time as
each of FS Stockholder and Sears Stockholder, as applicable, shall own
less than 2% of the issued and outstanding Common Stock or, as to any
such holder only, upon a distribution without consideration of all of
the shares of Common Stock that such holder holds to its stockholders
or the limited or general partners or employees of such holder or
their Affiliates. The obligations of the Ripplewood Stockholder and
any Permitted Transferee or assignee pursuant to the provisions of
this Section 3 shall terminate upon a Liquidity Event or, as to any
such holder only, upon a distribution without consideration of all of
the shares of Common Stock that such holder holds to its stockholders
or the limited or general partners or employees of such holder or
their Affiliates."
3. The Board.
---------
(a) The first sentence of the third paragraph of Section 7.1 of the
Stockholders Agreement is hereby amended as follows:
"(iii) at such time as FS Stockholder or Sears Stockholder shall own
less than 5% of the Common Stock, such Stockholder's right to
designate members of the Board shall terminate."
is hereby deleted in its entirety and the following is hereby
substituted therefor:
3
"(iii) at such time as FS Stockholder or Sears Stockholder shall own
less than 2% of the issued and outstanding shares of Common Stock,
such Stockholder's right to designate members of the Board shall
terminate."
(b) The second sentence of Section 7.4 of the Stockholders Agreement is
hereby deleted in its entirety and the following is hereby substituted therefor:
"Xx. Xxxxxxx'x or his representative's rights under Sections 7.1 and
7.3 shall terminate if Xx. Xxxxxxx and his Permitted Transferees own
less than 2% of the issued and outstanding shares of Common Stock."
4. Governing Law. Section 10 of the Original Stockholders Agreement is
-------------
hereby deleted in its entirety and the following is hereby substituted therefor:
"10. Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the State of Delaware
without regard to the conflicts of laws rules thereof."
5. Notice. Subsection (vi) of Section 14 of the Stockholders Agreement is
------
hereby amended as follows:
"Xxxxx, Xxxxx & Xxxxx, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000-0000, Attention Xxxxx X. Xxxxx, facsimile: (000) 000-0000"
is hereby deleted in its entirety and the following is hereby
substituted therefor:
"Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois), 000 Xxxx Xxxxxx
Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxx X. Xxxxxx,
facsimile: (000) 000-0000"
6. Registration Rights.
-------------------
(a) The first sentence of Section 2.1(a) of Exhibit A of the Stockholders
Agreement is hereby amended as follows:
"(iii) more than two (2) Demand Registrations for the Existing
Stockholders and their Permitted Transferees as a group"
is hereby deleted in its entirety and the following is hereby
substituted therefor:
"(iii) more than three (3) Demand Registrations for the Existing
Stockholders and their Permitted Transferees as a group"
4
(b) The third to last sentence of Section 2.1(a) of Exhibit A of the
Stockholders Agreement, which reads as follows:
"Such Simultaneous Registration shall count as one of the
Existing Shareholders two (2) Demand Registrations."
is hereby deleted in its entirety and the following is hereby
substituted therefor:
"Such Simultaneous Registration shall count as one of the
Existing Stockholders' three (3) Demand Registrations."
(c) Section 2.1(b) of Exhibit A of the Stockholders Agreement is
hereby amended as follows:
"the Existing Stockholder's request shall not count as one of the
Existing Stockholders' two Demand Registrations"
is hereby deleted in its entirety and the following is hereby
substituted therefor:
"the Existing Stockholder's request shall not count as one of the
Existing Stockholders' three Demand Registrations"
(d) Section 2.6 of Exhibit A of the Stockholders Agreement is hereby
corrected so that "Sagittarius" reads "Sears Stockholder".
7. Waiver. In order to facilitate the consummation of the transactions
------
contemplated by the Share Exchange Agreement, each of the undersigned hereby
irrevocably and unconditionally consents to the Share Exchange, the Merger
Transaction and all other transactions contemplated by the Share Exchange
Agreement and, with respect to the Share Exchange, the Merger Transaction and
such transactions, irrevocably and unconditionally waives his or its rights and
related notification rights under Sections 2, 3, 5.1, 5.2, 5.3, 7 and 12 of the
Stockholders Agreement.
8. New Shares. If permitted by applicable law, the New Shares when so
----------
acquired by Sears shall be deemed to have been acquired as of the date the
Advance Shares were acquired by WAH.
9. The Share Exchange. The Share Exchange shall not be deemed a sale,
------------------
distribution, transfer or other similar transaction under the Stockholders
Agreement, including without limitation, Sections 2, 3, 5 or 7 therof.
10. Assumption of WAH Liabilities. With respect to the Stockholders
-----------------------------
Agreement and all transactions contemplated thereunder, Sears hereby absolutely
and irrevocably assumes to be solely liable and responsible for all acts and
omissions of WAH, and Sears hereby agrees to be liable for, and to perform,
discharge and satisfy when due, as applicable, all of WAH's rights,
5
interests, liabilities, warranties, indemnification obligations, duties,
responsibilities and commitments of any kind or nature thereunder.
11. Release of WAH. Each of the parties hereto hereby releases WAH of any
--------------
and all liabilities, obligations, duties, responsibilities and commitments of
any kind or nature that WAH has or will have in, to, under or with respect to
the Stockholders Agreement after giving effect to the assumption contemplated
by Section 10 of this Amendment.
12. Effectiveness. This Amendment shall become effective upon and only upon
-------------
the consummation of the Share Exchange.
13. Representations and Warranties. Each party hereto represents and
------------------------------
warrants that (i) he or it has full power, capacity, right and authority, and
any requisite approvals or consents to enter into and perform this Amendment and
(ii) this Amendment and the performance of his or its obligations hereunder have
been duly authorized, and that this Amendment has been duly executed and
delivered by him and it and is a valid and binding agreement, enforceable
against him or it in accordance with its terms.
14. Severability. If any term or other provision of this Amendment is
------------
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Amendment shall nevertheless
remain in full force and effect to the maximum extent permitted by applicable
law. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Amendment so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
this Amendment be enforced as originally contemplated to the greatest extent
possible.
15. Governing Law. This Amendment shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of Delaware without regard to
the conflicts of laws rules thereof.
16. Full Force and Effect. Except as provided in this Amendment, all of the
---------------------
terms and provisions of the Stockholders Agreement shall remain unmodified and
in full force and effect and are hereby ratified and confirmed.
17. Entire Agreement. The Stockholders Agreement, as amended by this
----------------
Amendment, together with the Company's Certificate of Incorporation and Bylaws
as in effect on the date hereof, constitute the entire agreement and
understanding among the parties pertaining to the subject matter hereof and
supersede any and all prior agreements, whether written or oral, relating
hereto.
18. Counterparts. This Amendment may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
6
IN WITNESS WHEREOF, the parties have executed this Amendment No. 2 to
Amended and Restated Stockholders Agreement as of the date first written above.
ADVANCE AUTO PARTS, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Senior Vice President, General
Counsel and Secretary
SEARS, XXXXXXX AND CO.,
a New York corporation
By: /s/ Xxxx X. Xxxxx
---------------------------------
Name: Xxxx X. Xxxxx
Title: Executive Vice President and
Chief Financial Officer
FS EQUITY PARTNERS IV, L.P.,
a Delaware limited partnership
By: FS Capital Partners, LLC
Its: General Partner
By: /s/ Xxxx X. Xxxxx
------------------------------
Its: Managing Member
RIPPLEWOOD PARTNERS, L.P.,
a Delaware limited partnership
By: /s/ [illegible]
-----------------------------------
Its:
RIPPLEWOOD ADVANCE AUTO PARTS
EMPLOYEE FUND I L.L.C.,
a Delaware limited liability company
By: /s/ [illegible]
-----------------------------------
Its:
XXXXXXXX X. XXXXXXX,
an individual
/s/ Xxxxxxxx X. Xxxxxxx
----------------------------------------
THE XXXXXX XXXXXXX TRUST DATED
JULY 13, 1964
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Trustee
WA HOLDING COMPANY, formerly
WESTERN AUTO HOLDING CO.,
a Delaware corporation
By: /s/ Xxxx Xxxxxxx
----------------------------------
Name: Xxxx Xxxxxxx
Title: President
XXXXX X. XXXXXXXX,
an individual
/s/ Xxxxx X. Xxxxxxxx
---------------------------------------
XXXXXXXX INDUSTRIES LIMITED PARTNERSHIP,
a Nevada limited partnership
By: Xxxxx X. Xxxxxxxx Revocable Trust
Its: General Partner
/s/ Xxxxx X. Xxxxxxxx
----------------------------------
By: Xxxxx X. Xxxxxxxx
Its: Trustee
XXXXX X. XXXXXXXX REVOCABLE TRUST,
a Florida revocable trust
/s/ Xxxxx X. Xxxxxxxx
---------------------------------------
By: Xxxxx X. Xxxxxxxx
Its: Trustee
