Exhibit 5
STOCKHOLDERS' AGREEMENT
DATED AS OF FEBRUARY 25, 1997
BY AND AMONG
CONCORDE CAREER COLLEGES, INC.
AND
THE STOCKHOLDERS IDENTIFIED HEREIN
TABLE OF CONTENTS
ARTICLE 1.DEFINITIONS ........................................ 1
1.1. Defined Terms ...................................... 1
ARTICLE 2. BOARD; COMMITTEE .................................. 4
2.1. Number and Election of Directors. .................. 4
2.2. Removal of Directors ............................... 4
2.3. Vacancies .......................................... 4
2.4. Proxies ............................................ 5
2.5. Compensation. ...................................... 5
2.6. Information ........................................ 5
2.7. Insurance. ......................................... 5
ARTICLE 3. CERTAIN CORPORATE ACTION ......................... 5
3.1. Approval of Preferred Stock Directors. ............. 5
3.2. Approval of Preferred Stock Holders. ............... 5
ARTICLE 4. TRANSFER OF SHARES ............................... 6
4.1. Restrictions on Transfer. .......................... 6
4.2. Certain Permitted Transfers ........................ 6
4.3. Rights of First Refusal ............................ 7
4.4. Restrictions in Connection with Registrations ...... 9
ARTICLE 5. REGISTRATION RIGHTS .............................. 9
5.1. Sale or Transfer of Shares ......................... 9
5.2. Public Offering Shares. ............................ 9
ARTICLE 6. PREEMPTIVE RIGHTS ................................ 18
6.1. Preemptive Rights. ................................ 19
ARTICLE 7. TERMINATION ...................................... 20
ARTICLE 8. REPRESENTATIONS .................................. 20
8.1. Representation of Company. ........................ 20
8.2. Representation of Xxxxxx, Xxxxxxx Purchasers. ..... 20
8.3. Representation of the Brozman Estate. ............. 21
8.4. Representation of the Brozman Trust. .............. 21
ARTICLE 9. MISCELLANEOUS .................................... 21
9.1. Certificate Legend. ............................... 21
9.2. Negotiable Form. .................................. 22
9.3. Enforcement ....................................... 22
9.4. Specific Performance .............................. 22
9.5. Transferees. ...................................... 22
9.6. Notices ........................................... 22
9.7. Binding Effect; Assignment. ....................... 24
9.8. Governing Law. .................................... 24
9.9. Severability ...................................... 24
9.10.Entire Agreement. ................................. 24
9.11.Counterparts. ..................................... 24
9.12.Amendment; Waiver. ................................ 24
9.13.Captions .......................................... 24
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT dated as of February 25, 1997 (this
"Agreement") by and among CONCORDE CAREER COLLEGES, INC., a Delaware corporation
(the "Company"); the parties identified on the signature pages under the heading
"Xxxxxx, Xxxxxxx Parties" (the "Xxxxxx, Xxxxxxx Parties"); and the parties
identified on the signature pages under the heading "Other Holders"
(collectively, the "Other Holders"). The Xxxxxx, Xxxxxxx Parties and the Other
Holders are referred to herein collectively as the "Securityholders."
WHEREAS, the Company has entered into a Convertible Preferred Stock
Purchase Agreement, of even date herewith (the "Stock Purchase Agreement"), with
the Xxxxxx, Xxxxxxx Parties, pursuant to which the Xxxxxx, Xxxxxxx Parties have
acquired shares of the Company's Convertible Preferred Stock on the terms and
conditions set forth therein;
WHEREAS, the Company proposes to issue and sell, and the Xxxxxx Xxxxxxx
Parties wish to purchase, Debentures and Warrants pursuant to Debenture and
Warrant Purchase Agreements, between the Company and the Xxxxxx, Xxxxxxx
Parties, of even date herewith;
WHEREAS, the Estate of Xxxxxx X. Xxxxxxx proposes to sell, and the
Xxxxxx, Xxxxxxx Parties wish to purchase, 500,000 shares of common stock of the
Company, pursuant to a Stock Purchase Agreement, of even date herewith, between
the Company and the Xxxxxx, Xxxxxxx Parties;
WHEREAS, on the date hereof, each Securityholder owns the shares of
capital stock of the Company or options exercisable for shares of capital stock
of the Company set forth opposite its name on Exhibit A hereto;
WHEREAS, the Securityholders desire to enter in this Agreement with the
Company;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS
1.1. Defined Terms. The following terms are defined as follows:
"Affiliate" means, with respect to any Person, (i) any Person in which
such Person holds direct or indirect beneficial ownership (as defined in Rule
13d-3 under the Securities Exchange Act of 1934) of voting securities or other
voting interests representing at least 5% of the outstanding voting power of a
Person or equity securities or other equity interests representing at least 5%
of the outstanding equity securities or equity interests in a Person and (ii)
any brother, sister, parent, child or spouse of such Person or any Person
described in clause (i).
"Board" shall mean the Board of Directors of the Company.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Company's common stock, par value $.10
per share.
"Common Stock Equivalent" shall mean, with respect to any
Securityholder, the number of shares of Common Stock owned by such
Securityholder and the number of shares of Common Stock into which any shares of
Convertible Preferred Stock owned by such Securityholder shall be convertible
and the number of shares of Common Stock into which any options owned by any
Securityholder shall be exercisable as of the date of determination thereof.
"Conversion Stock" shall mean Common Stock into which shares of
Convertible Preferred Stock shall have been converted.
"Convertible Preferred Stock" shall mean the Company's Convertible
Preferred Stock, par value $.10 per share, having such rights, preferences and
privileges as may be in effect from time to time.
"Encumbrances" shall mean any and all liens, claims, charges, security
interests, options or other legal or equitable encumbrances.
"Exchange Act" shall mean the Securities Exchange Act of 1934 or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Preferred Stock Directors" shall mean the directors nominated by the
Preferred Stock Holders pursuant to Section 2.1(a).
"Preferred Stock Holders" shall mean all holders of the Convertible
Preferred Stock issued and outstanding at any time.
"Prime Rate" shall mean the prime rate publicly announced by The Chase
Manhattan Bank, N.A. from time to time.
"Pro Rata Share" shall mean the percentage of Transfer Shares (as
defined in Section 4.3) being offered by a Transferring Securityholder (as
defined in Section 4.3) that each other Securityholder shall be entitled to
purchase, if any. Such percentage shall be determined by dividing the number of
Shares of such other Securityholder by the aggregate number of all Shares of
Securityholders entitled to participate in the purchase of such Transfer Shares
(as defined in Section 4.3).
"Qualified Offering" shall mean the consummation of a firm-commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act covering the offer and sale of Common Stock for the
account of the Company in which (i) the net proceeds of the public
offering price equals or exceeds $20 million and (ii) the public offering price
per share of Common Stock equals or exceeds $4.00.
"Registered Securities" shall mean securities that have been registered
under the Securities Act.
"Sale of the Company" shall mean (i) consummation of a merger or
consolidation of the Company with or into another person that is not a parent or
subsidiary of the Company as a result of which those persons who were
stockholders of the Company immediately prior to such transaction own, in the
aggregate, less than a majority of the outstanding voting capital stock of the
surviving or resulting corporation, (ii) the consummation of the sale or other
disposition of a majority of the outstanding shares of voting capital stock of
the Company to a person that is not a parent or subsidiary of the Company or
(iii) the consummation of the sale or other disposition of all or substantially
all of the Company's assets to a person that is not a parent or subsidiary of
the Company.
"Securities Act" shall mean the Securities Act of 1933, or any similar
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
"Senior Management" shall mean the Company's Chairman, Chief Executive
Officer and Chief Financial Officer, and any other manager of the Company who
receives from the Company an annual base compensation equal to or in excess of
$100,000.
"Shares" shall mean any shares of capital stock of the Company,
including, without limitation, Common Stock and Convertible Preferred Stock, now
or hereafter issued.
"Subsidiary" shall mean any corporation of which a majority of the
outstanding voting securities or other voting equity interests are owned,
directly or indirectly, by the Company.
ARTICLE 2.
BOARD; COMMITTEE
2.1. Number and Election of Directors.
(a) Number of Directors. Subject to the next succeeding sentence, the
Board shall consist of six directors, (i) four directors nominated by the Board
of Directors (excluding the Preferred Stock Directors) or by the holders of a
majority of the shares of Common Stock in accordance with the Company's Bylaws
(excluding the Preferred Stock) (which nominees shall initially be the incumbent
directors and the new Chief Executive Officer) (collectively, the "Company
Directors"), and (ii) two directors (the "Preferred Stock Directors") nominated
by the Preferred Stock Holders. All such action shall have been taken as may be
necessary to elect such a Board of Directors of the Company effective upon the
Closing of this Agreement and the Stock Purchase Agreement. The Preferred Stock
Holders shall have the right to nominate the Preferred Stock Directors so long
as the Preferred Stock Holders maintain ownership in the aggregate of at least
50% of the Conversion Stock and Common Stock Equivalents acquired by them
pursuant to this Agreement.
(b) Election of Nominees. On the date hereof, and at each annual
meeting of stockholders of the Company or any special meeting called for the
purpose of electing directors of the Company (or by consent of stockholders in
lieu of any such meeting) or at such other time or times as the Securityholders
may agree, the Securityholders shall vote all of their respective Shares
entitled to vote in favor of the election of all of the persons nominated in
accordance with Section 2.1(a) and no other person.
(c) Term. The Preferred Stock Directors and the Company Directors shall
each hold office as a director of the Company until their successors are duly
elected and qualified.
2.2. Removal of Directors. No Securityholder shall vote any Shares in
favor of the removal of a director nominated by one or more of the other
Securityholders hereunder unless the right of any such Securityholder to so
designate such director shall no longer exist; provided, however, that upon the
request of Preferred Stock Holders holding a majority of the Common Stock
Equivalents to remove a director previously nominated by such persons, the
Securityholders shall vote all of their Shares in favor of (i) the removal of
such director and (ii) the election of any replacement director as may be
designated by such Securityholder(s).
2.3. Vacancies. If any vacancy occurs in the Board because of death,
disability, resignation, retirement or removal of a director in accordance with
this Agreement, the Securityholder that nominated the person creating such
vacancy shall nominate a successor, and all Securityholders shall vote their
Shares in favor of the election of such successor to the Board. Any vacancy that
occurs shall be filled as promptly as possible upon the request of the group
having the right to nominate a person to fill such vacancy.
2.4. Proxies. Neither the Company nor any Securityholder shall give any
proxy or power of attorney to any person or entity that permits the holder
thereof to vote in his discretion on any matter that may be submitted to the
Company's stockholders for their consideration and approval, unless such proxy
or power of attorney is made subject to and is exercised in conformity with the
provisions of this Agreement.
2.5. Compensation. Each Preferred Stock Director and Company Director
(collectively the "Directors") shall be reimbursed by the Company for all direct
out-of-pocket expenses reasonably incurred in connection with their services as
directors and each Director shall receive from the Company an annual director's
fee.
2.6. Information. The Company agrees to deliver to each of the
Directors the information specified in Section 9.1 of the Stock Purchase
Agreement.
2.7. Insurance. The Company agrees to obtain and maintain insurance, in
an amount acceptable to the Purchasers, to indemnify each Director against any
liability incurred by him or her arising as a result of his or her acting as a
director of the Company.
ARTICLE 3.
CERTAIN CORPORATE ACTION
3.1. Approval of Preferred Stock Directors. The Company agrees that it
shall not, without the prior approval of a majority of the Company Directors and
a majority of the Preferred Stock Directors:
(a) redeem or otherwise purchase any outstanding Shares;
(b) enter into any material transaction with any Affiliate (other than
a transaction between the Company and any of its Subsidiaries);
(c) change the number of Directors on the Board;
(d) amend, modify or waive any provision of this Agreement.
3.2. Approval of Preferred Stock Holders. The Company agrees it shall
not, without the approval of Preferred Stock Holders holding a majority of the
Preferred Stock:
(a) issue any class or series of equity security senior to or on a
parity with the Convertible Preferred Stock as to payment of dividends or senior
to or on a parity with the Convertible Preferred Stock as to payments on a
dissolution, liquidation or winding-up of the Company;
(b) enter into any agreement or arrangement of any kind that would
restrict the Company's ability to perform its obligations under this Agreement
or the Stock Purchase Agreement;
(c) amend the Certificate of Designation, the certificate of
incorporation or the by-laws of the Company in any manner that would impair,
reduce or affect the rights of the Convertible Preferred Stock;
(d) merge or consolidate with any other entity or sell all or
substantially all of its assets; or
(e) liquidate or dissolve.
ARTICLE 4.
TRANSFER OF SHARES
4.1. Restrictions on Transfer.
(a) So long as this Agreement is in effect, no Securityholder shall
sell, assign, transfer, give, encumber, pledge, hypothecate or in any other way
dispose of any Shares or options exercisable for Shares (any of which being a
"Transfer") except as provided in this Agreement.
(b) Each Securityholder agrees that it will not Transfer any of its
Shares or options exercisable for Shares except as permitted under the
Securities Act or applicable state securities laws or any rule or regulation
promulgated thereunder. No Transfer in violation of this Agreement shall be made
or recorded on the books of the Company and any such Transfer shall be void and
of no force or effect. Subject to the terms of this Agreement, the
Securityholders shall be entitled to exercise all rights of ownership of their
Shares and any such options, and the transferability of any such options shall,
in addition to the terms hereof, be subject to the terms and conditions
contained therein.
4.2. Certain Permitted Transfers. The Company and the Securityholders
acknowledge and agree that any of the following Transfers shall be deemed to be
in compliance with this Agreement:
(a) a Transfer in accordance with the provisions of Section 4.3 hereof
or through a sale in a registered offering in accordance with Article 5 hereof;
(b) a Transfer from the Xxxxxx, Xxxxxxx Parties to any of their
partners, limited partners or employees;
(c) subject to Section 9.5 hereof, a Transfer upon the death of a
Securityholder to his executors, administrators and testamentary trustees; and
(d) subject to Section 9.5 hereof, a Transfer of Shares made for
nominal consideration or as a gift in compliance with applicable federal and
state securities laws to the Securityholder's spouse, parents or issue or to a
trust, the beneficiaries of which, or to a corporation or partnership the
stockholders or partners of which, include only the Securityholder and such
Securityholder's spouse or issue (any such transferee, together with any
transferee pursuant to Section 4.2(c), being a "Permitted Transferee");
(e) a Transfer from the Estate to the Trust; and
(f) a Transfer from the Trust to the beneficiaries thereof provided
such beneficiaries are bound by a voting trust agreement or similar arrangement
reasonably satisfactory to the Xxxxxx Xxxxxxx Parties.
4.3. Rights of First Refusal.
(a) Each Securityholder agrees that, subject to the restrictions on
Transfers contained in Sections 4.4, 4.5 and 4.6, if any Securityholder (for
purposes of this Section 4.3, a "Transferring Securityholder") wishes to
Transfer any or all of the Shares then owned by such Transferring
Securityholder, other than as provided in Section 4.2 or 4.5 hereof, then such
Transferring Securityholder shall first give a written notice (the "Transfer
Notice") to the Company and each Securityholder specifying the number of Shares
such Transferring Securityholder wishes to Transfer (the "Transfer Shares"),
containing an irrevocable offer (open to acceptance for a period of 30 days
after the date such Transfer Notice is received) to sell the Transfer Shares to
each Securityholder other than the Transferring Securityholder (collectively the
"Transfer Offerees") at the price per share stated in the Transfer Notice, which
price shall be equal to the price per Share offered to such Securityholder by a
bona fide third-party offeror (the "Transfer Price"), and stating whether such
offer is conditioned upon purchase of all the Transfer Shares by the Transfer
Offerees.
(b) Each Securityholder shall have the right to purchase all or a
portion of the Transfer Shares in proportion to their respective Pro Rata Share.
A Transfer Offeree who wishes to purchase Transfer Shares shall provide the
Company and the other Transfer Offerees with written notice specifying the
number of Transfer Shares (up to such Transfer Offeree's Pro Rata Share) as to
which such Transfer Offeree desires to accept the offer within 10 business days
of the giving of such notice by the Transfer Offerees, and may, at the Transfer
Offeree's option, indicate the maximum number of Transfer Shares such Transfer
Offeree would purchase in excess of such Transfer Offeree's Pro Rata Share (the
"Excess Amount"). If one or more Transfer Offerees declines to participate in
such purchase or elects to purchase less than such Transfer Offeree's Pro Rata
Share, then the Remaining Transfer Shares shall automatically be deemed to be
accepted by Transfer Offerees who specified an Excess Amount in their respective
notice of acceptance, allocated among such Transfer Offerees (with rounding to
avoid fractional shares) in proportion to their respective Pro Rata Share but in
no event shall an amount greater than a Transfer Offeree's Excess Amount be
allocated to such Transfer Offeree. Any excess Transfer Shares shall be
allocated among the remaining Transfer Offerees whose specified Excess Amount
has not been satisfied (with rounding to avoid fractional shares) in proportion
to their respective Pro Rata Shares, and such procedure shall be employed until
the entire Excess Amount of each Transfer Offeree has been satisfied or all
Transfer Shares have been allocated. The Company and the Preferred Stock Holders
shall have the right but not the obligation to purchase any Transfer Shares
remaining thereafter.
(c) If the offer is accepted by any Transfer Offerees and, if the offer
is conditioned on the purchase of all Transferee Shares, all Transfer Shares
have been accepted for purchase, the Company, on behalf of all purchasing
Transfer Offerees, shall provide the Transferring Securityholder with written
notice of such acceptance specifying the number of the Transfer Shares as to
which each Transfer Offeree is accepting the offer (a "Notice of Acceptance")
within 30 days after the Transfer Notice is received.
(d) The closing of the purchase by the Transfer Offerees of the
Transfer Shares pursuant to this Section 4.3 shall take place at the principal
offices of the Company on the fifteenth business day after the Notice of
Acceptance is given. At such closing, each of the Transfer Offerees who has
elected to purchase Transfer Shares shall deliver a certified check or checks in
the appropriate amount
to the Transferring Securityholder against delivery of duly endorsed
certificates representing the Transfer Shares to be purchased. The Transfer
Shares shall be delivered free and clear of all Encumbrances other than those
imposed by this Agreement.
(e) If any Transfer Shares allocated to a Transfer Offeree are not
purchased by such Transfer Offeree (the "Transfer Default Shares"), such
Transfer Default Shares may be purchased by the Company promptly following any
such default. Nothing contained herein shall prejudice any Person's right to
maintain any cause of action or pursue any other remedies available to it as a
result of such default.
(f) If, at the end of the thirtieth (30th) day after the Transfer
Notice is received, the Company has not delivered an effective Notice of
Acceptance of the offer contained in such Transfer Notice, or if it has
delivered a Notice of Acceptance covering less than all of the Transfer Shares,
then the Transferring Securityholder shall have 90 days in which to Transfer any
or all of the Transfer Shares not accepted for purchase by the Transfer
Offerees, at a price not lower than the Transfer Price and on terms no more
favorable to the transferee than those contained in the Transfer Notice, to any
third party; provided, however, that no Transfer may be made to any third party
unless and until such third party delivers to the Company an executed consent to
be bound by the provision of this Agreement in form and substance reasonably
satisfactory to the Company. Promptly after any Transfer pursuant to this
Section 4.3, the Transferring Securityholder shall notify the Company of the
consummation thereof and shall furnish such evidence of the completion and time
of completion of such Transfer and of the terms thereof as the Company may
request. If, at the end of such 90-day period, the Transferring Securityholder
has not completed the Transfer of all of the Transfer Shares, the Transferring
Securityholder shall no longer be permitted to Transfer such Shares pursuant to
this Section 4.3(f) without again complying with this Section 4.3 in its
entirety. If the Transferring Securityholder determines at any time within such
90-day period that the Transfer of all or any part of such Transfer Shares at a
price not lower than the Transfer Price and on terms no more favorable to the
transferee than those contained in the Transfer Notice is impractical, such
Securityholder may terminate all attempts to Transfer such Transfer Shares and
recommence the procedures of this Section 4.3 in their entirety without waiting
for the expiration of such 90-day period by delivering written notice of such
decision to the Company.
4.4. Restrictions in Connection with Registrations. Each Securityholder
agrees not to effect any public sale or distribution of Shares, including any
sale pursuant to Rule 144, during the seven (7) days prior to the effective date
of a registration statement effected pursuant to the terms hereof and during
such period of time beginning on such effective date as may be required by the
underwriters of such offering and agreed to by the Company, but in no event
exceeding nine (9) months (in each case except as part of such registration).
Each Securityholder hereby acknowledges that such Securityholder shall have no
right to include its Shares in any registration of Shares, except as expressly
provided in Article 6.
ARTICLE 5.
REGISTRATION RIGHTS
5.1. Sale or Transfer of Shares.
(a) In addition to the other transfer restrictions set forth in this
Agreement, the shares of Common Stock and any shares of Common Stock issued or
issuable upon conversion of the Convertible Preferred Stock shall not be sold or
transferred unless either (i) they first shall have been registered under the
Securities Act, or (ii) the Company first shall have been furnished with an
opinion of legal counsel, reasonably satisfactory to the Company, to the effect
that such sale or transfer is exempt from the registration requirements of the
Securities Act.
(b) Notwithstanding the foregoing, no registration or opinion of
counsel shall be required for a transfer by a Purchaser that is a partnership to
a partner of such partnership.
5.2. Public Offering Shares.
(a) Demand Registration. At any time and from time to time but
excluding the period beginning December 1 and ending March 1 in any year, if the
Company receives written notice from Preferred Stock Holders holding a majority
of the Convertible Preferred Stock, which notice demands the registration of all
or at least 500,000 shares of the Conversion Stock issued or issuable upon
conversion of Convertible Preferred Stock, and specifies the intended methods of
disposition thereof, then the Company shall promptly (and in any event within 10
days after its receipt of such demand) provide notice thereof to the other
Securityholders in accordance with this Section 5.2 (which other Securityholders
shall have the right to include any shares of Common Stock and any shares of
Common Stock issued or issuable upon conversion of Convertible Preferred Stock
or exercise of options to purchase Common Stock held by them in such
registration) and cause to be prepared a registration statement, file the
registration statement within 60 days after the date of such request (45 days in
the case of a Form S-3) (using Form S-3 or other "short form," if available and
advised by counsel), to the end that such Conversion Stock issued or issuable
upon conversion of Convertible Preferred Stock, may be sold thereunder as soon
as it becomes effective, and the Company will use its reasonable best efforts to
ensure that a distribution of the Conversion Stock pursuant to the registration
statement may continue for up to nine months from the date of the effective date
of the registration statement. Each such registration shall hereinafter be
called a "Demand Registration." The Preferred Stock Holders shall be entitled to
request one Demand Registration. A Demand Registration shall not count as such
until a registration statement becomes effective; provided, that if, after it
has become effective, the offering pursuant to the registration statement is
interfered with by any stop order, injunction or other order or requirement of
the Commission or any other governmental authority, such registration be deemed
not to have been effected unless such stop order, injunction or other order
shall subsequently have been vacated or otherwise removed. The Preferred Stock
Holders shall select the underwriters of any offering pursuant to a registration
statement filed pursuant to this Section 5.2(a), subject to the approval of the
Company, which approval shall not be unreasonably withheld. Any selected
underwriter shall be a well-recognized firm in good standing.
(b) "Piggyback" Registration Rights. Subject to applicable stock
exchange rules and securities regulations, at least 30 days prior to any public
offering of any of its Common Stock for the account of the Company or any other
person (other than a registration statement on Form S-4 or S- 8 (or any
successor forms under the Securities Act) or other registrations relating solely
to employee benefit plans or any transaction governed by Rule 145 of the
Securities Act), other than pursuant to the exercise of any Demand Registration
pursuant to Section 5.2(a), the Company shall give written notice of such
proposed filing and of the proposed date thereof to each Securityholder and if,
on or before the twentieth (20th) day following the date on which such notice is
given, the Company shall receive a written request from any such holder
requesting that the Company include among the securities covered by such
registration statement any Shares of Common Stock, Shares of Common Stock issued
or issuable upon conversion of Convertible Preferred Stock or the exercise of
options to purchase Common Stock owned by such Securityholder for offering for
sale in a manner and on terms set forth in such request, the Company shall
include such Shares in such registration statement, if filed, so as to permit
such Shares to be sold or disposed of in the manner and on the terms of the
offering thereof set forth in such request. Each such registration shall
hereinafter be called a "Piggyback Registration." The Company shall select the
underwriters of any offering pursuant to a registration statement filed pursuant
to this Section 5.2(b), subject to the approval of the Purchasers, which
approval shall not be unreasonably withheld.
(c) Terms and Conditions of Registration or Qualification. In
connection with any registration statement filed pursuant to Sections 5.2(a) or
5.2(b) hereof, the following provisions shall apply.
(i) The obligations of the Company to use its reasonable best
efforts to cause the registration of Shares under the Securities Act
are subject to the limitation, condition and qualification that the
Company shall be entitled to postpone for a
reasonable period of time (but not exceeding 90 days in any one year
period) the filing of any registration statement otherwise required to
be filed by it if the Company in good faith determines that such
registration and offering would (A) interfere with any financing,
acquisition, corporate reorganization or other material transaction or
event involving the Company or any of its subsidiaries or (B) require
premature disclosure thereof or of conditions, circumstances or events
affecting the Company or the Company's industry which are not yet
fully developed or ripe for disclosure, in which event the Company
shall promptly give the Securityholders requesting registration
thereof written notice of such determination and an approximation of
the anticipated delay. If the Company shall so postpone the filing of
a registration statement, the Securityholders requesting registration
shall have the right to withdraw the request for registration by
giving written notice to the Company within 15 days after receipt of
the notice of postponement and, in the event of such withdrawal, such
request shall not be counted for purposes of the requests for
registration to which Holders are entitled under this Agreement.
(ii) If the managing underwriter advises that the inclusion in
such registration or qualification of some or all of the Shares sought
to be registered exceeds the number (the "Saleable Number") that can
be sold in an orderly fashion or without adversely affecting the
offering, then the number of Shares offered shall be limited to the
Saleable Number and shall be allocated as follows:
(A) If such registration is being effected
pursuant to a Piggyback Registration, (1) first, all the
Shares the Company (or in the exercise of demand
registration rights by other stockholders of the Company,
the selling stockholder(s) exercising such rights) proposes
to register and (2) second, the difference between the
Saleable Number and the number to be included pursuant to
clause (1) above, allocated to the Preferred Stock Holders
pro rata on the basis of the relative number of Shares
offered for sale by each Preferred Stock Holder; and
(B) if such registration is being effected
pursuant to a Demand Registration other than in connection
with the first public offering of Common Stock of the
Company after the date of this Agreement, (1) first, the
entire Saleable Number allocated first to the Preferred
Stock Holders pro rata on the basis of the relative number
of Shares offered for sale by each such Securityholder, and
then among all other selling Securityholders pro rata on the
basis of the relative number of Shares offered for sale by
each such Securityholder and (2) second, the difference (if
positive) between the Saleable Number and the number to be
included pursuant to clause (1) above, allocated to the
Company; and
(C) if such registration is being effected
pursuant to a Demand Registration and would be the first
public offering of Common Stock after the date of this
Agreement and the Company wishes to sell, for its own
account, shares of Common Stock in such offering, then the
Saleable Number shall be allocated evenly to the Purchasers,
on one hand, and the Company, on the other hand, to the
extent of the number of Shares offered by the Purchasers.
(iii) The selling Securityholders will promptly provide the
Company with such information as the Company shall reasonably request
in order to prepare such registration statement and, upon the
Company's request, each selling Securityholder shall
provide such information in writing and signed by such holder and
stated to be specifically for inclusion in the registration statement.
In the event that the distribution of the Shares covered by the
registration statement shall be effected by means of an underwriting,
the right of any selling Securityholder to include its Shares in such
registration shall be conditioned on such holder's execution and
delivery of a customary underwriting agreement with respect thereto;
provided, however, that except with respect to information concerning
such holder and such holder's intended manner of distribution of the
Shares, no selling Securityholder shall be required (as a selling
Securityholder exercising registration rights) to make any
representations or warranties in such agreement as a condition to the
inclusion of its Shares in such registration.
(iv) The Company shall bear all expenses in connection with the
preparation of any registration statement filed pursuant to Section
5.2(a), including the fees and disbursements of one counsel for the
selling Securityholders.
(v) The Company shall bear all expenses in connection with the
preparation of any registration statement filed pursuant to Section
5.2(b), excluding (A) the fees and disbursements of counsel for the
selling Securityholders, and (B) the underwriting fees, discounts or
commissions with respect to Shares of the selling Securityholders,
which shall be borne by the selling Securityholders.
(vi) Following the effective date of such registration statement,
the Company shall, upon the request of the selling Securityholders,
forthwith supply such number of prospectuses (including preliminary
prospectuses and amendments and supplements thereto) meeting the
requirements of the Securities Act or such other securities laws where
the registration statement or prospectus has been filed and such other
documents as are referred to in the registration statement as shall be
requested by the selling Securityholders to permit such holders to
make a public distribution of their Shares, provided that the selling
Securityholders furnish the Company with such appropriate information
relating to such holders' intentions in connection therewith as the
Company shall reasonably request in writing.
(vii) The Company shall prepare and file such amendments and
supplements to such registration statement as may be necessary to keep
such registration statement effective and to comply with the
provisions of the Securities Act or such other securities laws where
the registration statement has been filed with respect to the offer
and sale or other disposition of the shares covered by such
registration statement during the period required for distribution of
the Shares, which period shall not be in excess of six (6) months from
the effective date of such registration statement.
(viii) The Company shall use its reasonable best efforts to
register or qualify the Shares of the selling Securityholders covered
by any such registration statement under such securities or Blue Sky
laws in such jurisdictions as the Securityholders may reasonably
request; provided, however, that the Company shall not be required to
execute a general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction where it is not
so qualified in order to comply with such request.
(ix) In connection with any registration pursuant to Article 5,
the Company will as expeditiously as possible:
(A) cause the Shares covered by such
registration statement to be registered with or approved by
such other governmental agencies or authorities as may be
necessary by virtue of
the business and operations of the Company to enable the
selling Securityholders to consummate the disposition of
such Shares;
(B) notify each selling Securityholder at any
time of the happening of any event as a result of which the
prospectus included in such registration statement contains
an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Company
will prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such
Shares, 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;
(C) cause all Shares covered by the
registration statement to be listed on each securities
exchange on which similar securities issued by the Company
are then listed and, unless the same already exists, provide
a transfer agent, registrar and CUSIP number for all such
Shares not later than the effective date of the registration
statement;
(D) enter into such customary agreements
(including an underwriting agreement in customary form) and
take all such other actions as the holders of a majority of
the voting power of the Shares being sold or the
underwriters retained by such holders, if any, reasonably
request in order to expedite or facilitate the disposition
of such Shares;
(E) make available for inspection by any
selling Securityholder, any underwriter participating in any
disposition pursuant to such registration statement, and any
attorney, accountant or other agent retained by any such
seller or underwriter (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents
and properties of the Company as shall be 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 such
Inspector in connection with such registration statement,
provided that such Inspectors shall have first executed and
delivered to the Company a confidentiality agreement in
customary form protecting the confidentiality of such
information;
(F) obtain "cold comfort" letters and updates
thereof from the Company's independent public accountants
and an opinion from the Company's counsel in customary form
and covering such matters of the type customarily covered by
"cold comfort" letters and opinion of counsel, respectively,
as the holders of a majority of the voting power of the
Shares of the selling Securityholders shall reasonably
request; and
(G) otherwise comply with all applicable
rules and regulations of the Commission, and make available
to its Securityholders, 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 and Rule 158 thereunder.
(x) Each selling Securityholder agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind
described in Section 5.2(c)(ix)(B), such holder will forthwith
discontinue disposition of its Shares pursuant to the registration
statement covering such Shares until such holder's receipt of the
copies of the supplemented or amended prospectus contemplated by such
Section 5.2(c)(ix)(B) and, if so directed by the Company, such holder
will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such holder's possession, of
the prospectus covering such Shares current at the time of receipt of
such notice.
(xi) Each selling Securityholder agrees not to effect any public
sale or distribution, including any sale pursuant to Rule 144 under
the Securities Act, of any Shares of Common Stock, and not to effect
any such public sale or distribution of any other equity security of
the Company or of any security convertible into or exchangeable or
exercisable for any equity security of the Company in each case, other
than as part of an offering made pursuant to a registration statement
filed and affected by this Agreement during the 15 days prior to, and
during the 90-day period (or such longer period as each selling
Securityholder agrees with the underwriter of such offering) beginning
on the effective date of such registration statement (except as part
of such registration) provided that each selling Securityholder has
received written notice of such registration at least 15 days prior to
such effective date.
(d) Exceptions to Registration Obligations. The Company shall not be
required to effect any registration of Shares pursuant to Section 5.2(a) or
Section 5.2(b) hereof if either:
(i) it shall deliver to the selling Securityholders requesting
such registration an opinion of counsel in form reasonably
satisfactory to such selling Securityholder to the effect that all
such Shares held by such selling Securityholder may be sold in the
public market without registration under the Securities Act (e.g.,
pursuant to Rule 144) and any applicable state securities laws; or
(ii) it shall offer to purchase all the Shares sought by the
selling Securityholder to be registered, at a purchase price per Share
equal to the average, over the ten (10) trading days immediately after
the selling Securityholder's request for Demand Registration or
Piggyback Registration, of the average on each such trading day of the
bid and ask price (or high and low sales price, if applicable) for a
share of Common Stock of the Company on the exchange or quotation
system upon which the Common Stock is traded or quoted.
(e) Transfer Restrictions. The transfer restrictions contained in
Article 4 of this Agreement shall not apply to any offering of Shares pursuant
to this Section 5.2.
(f) Indemnification.
(i) In the event of the registration or qualification of any
Shares of the Securityholders under the Securities Act or any other
applicable securities laws pursuant to the provisions of this Section
5.2, the Company agrees to indemnify and hold harmless each
Securityholder thereby offering such Shares for sale (a "Seller"),
underwriter, broker or dealer, if any, of such Shares, and each other
person, if any, who controls any such Seller, underwriter, broker or
dealer within the meaning of the Securities Act or any other
applicable securities laws, from and against any and all losses,
claims, damages or
liabilities (or actions in respect thereof), joint or several, to
which such Seller, underwriter, broker or dealer or controlling person
may become subject under the Securities Act or any other applicable
securities laws or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
Shares were registered or qualified under the Securities Act or any
other applicable securities laws, any preliminary prospectus or final
prospectus relating to such Shares, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
any violation by the Company of any rule or regulation under the
Securities Act or any other applicable securities laws applicable to
the Company or relating to any action or inaction required by the
Company in connection with any such registration or qualification and
will reimburse each such Seller, underwriter, broker or dealer and
each such controlling person for any legal or other expenses
reasonably incurred by such Seller, underwriter, broker or dealer or
controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that
the Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon
an untrue statement or omission made in such registration statement,
such preliminary prospectus, such final prospectus or such amendment
or supplement thereto or violation in reliance upon and in conformity
with written information furnished to the Company by such Seller,
underwriter, broker, dealer or controlling person specifically and
expressly for use in the preparation thereof; and provided, further,
that the Company shall not be liable to any person who participates as
an underwriter in the offering or sale of Shares or any other person,
if any, who controls such underwriter within the meaning of the
Securities Act, in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of such person's failure to send or give a copy
of the final prospectus, as the same may be then supplemented or
amended, to the person asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of Shares to such person if such statement or
omission was corrected in such final prospectus so long as such final
prospectus, and any amendments or supplements thereto, have been
furnished to such underwriter.
(ii) In the event of the registration or qualification of any
Shares of the Securityholders under the Securities Act or any other
applicable securities laws for sale pursuant to the provisions of this
Section 5.2, each selling Securityholder, each underwriter, broker and
dealer, if any, of such Shares, and each other person, if any, who
controls any such selling Securityholder, underwriter, broker or
dealer within the meaning of the Securities Act, agrees severally, and
not jointly to indemnify and hold harmless the Company, each person
who controls the Company within the meaning of the Securities Act, and
each officer and director of the Company from and against any and all
losses, claims, damages or liabilities (or actions in respect
thereof), joint or several, to which the Company, such controlling
person or any such officer or director may become subject under the
Securities Act or any other applicable securities laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement
of any material fact contained in any registration statement under
which such Shares were registered or qualified under the Securities
Act or any other applicable securities laws, any preliminary
prospectus or final prospectus relating to such Shares, or any
amendment or supplement thereto, or arise out of or are based upon an
untrue statement or the omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading or any violation by the Company of any rule or
regulation under
the Securities Act or any other applicable securities laws applicable
to the Company or relating to any action or inaction required by the
Company in connection with any such registration or qualification and
will reimburse each such Seller, underwriter, broker or dealer and
each such controlling person for any legal or other expenses
reasonably incurred by such Seller, underwriter, broker or dealer or
controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action, which untrue statement
or omission or violation was made therein in reliance upon and in
conformity with written information furnished to the Company by such
selling Securityholder, underwriter, broker, dealer or controlling
person specifically for use in connection with the preparation
thereof, and will reimburse the Company, such controlling person and
each such officer or director for any legal or any other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that no selling Securityholder will be liable under this
Section 5.2(f)(ii) for any amount in excess of the net proceeds paid
to such selling Securityholder of Shares sold by it unless such
liability arises from such written information furnished to the
Company with knowledge of its misleading nature or an intent to
defraud.
(iii) Promptly after receipt by a person entitled to
indemnification under this Section 5.2(f) (an "indemnified party") of
notice of the commencement of any action or claim relating to any
registration statement filed under Section 5.2(a) or 5.2(b) or as to
which indemnity may be sought hereunder, such indemnified party will,
if a claim for indemnification hereunder in respect thereof is to be
made against any other party hereto (an "indemnifying party"), give
written notice to such indemnifying party of the commencement of such
action or claim, but the omission to so notify the indemnifying party
will not relieve the indemnifying party from any liability that it may
have to any indemnified party otherwise than pursuant to the
provisions of this Section 5.2(f) and shall also not relieve the
indemnifying party of its obligations under this Section 5.2(f) except
to the extent that the indemnifying party is actually prejudiced
thereby. In case any such action is brought against an indemnified
party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled (at its own expense)
to participate in and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the
defense, with counsel reasonably satisfactory to such indemnified
party, of such action and/or to settle such action and, after notice
from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof, other than the reasonable cost of investigation;
provided, however, that no indemnifying party shall enter into any
settlement agreement without the prior written consent of the
indemnified party unless such indemnified party is fully released and
discharged from any such liability. Notwithstanding the foregoing, the
indemnified party shall have the right to employ its own counsel in
any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (A) the employment of
such counsel shall have been authorized in writing by the indemnifying
party in connection with the defense of such suit, action, claim or
proceeding, (B) the indemnifying party shall not have employed counsel
(reasonably satisfactory to the indemnified party) to take charge of
the defense of such action, suit, claim or proceeding, or (C) such
indemnified party shall have reasonably concluded, based upon the
advice of counsel, that there may be defenses available to it that are
different from or additional to those available to the indemnifying
party which, if the indemnifying party and the indemnified party were
to be represented by the same counsel, could result in a conflict of
interest for such counsel or materially prejudice the prosecution of
the defenses available to such indemnified party. If any of the events
specified in clauses (A), (B) or (C) of the preceding sentence shall
have occurred or shall
otherwise be applicable, then the fees and expenses of one counsel or
firm of counsel selected by a majority in interest of the indemnified
parties (and reasonably acceptable to the indemnifying party) shall be
borne by the indemnifying party. If, in any such case, the indemnified
party employs separate counsel, the indemnifying party shall not have
the right to direct the defense of such action, suit, claim or
proceeding on behalf of the indemnified party and the indemnified
party shall assume such defense and/or settle such action; provided,
however, that an indemnifying party shall not be liable for the
settlement of any action, suit, claim or proceeding effected without
its prior written consent, which consent shall not be unreasonably
withheld.
ARTICLE 6.
PREEMPTIVE RIGHTS
6.1. Preemptive Rights. If, after the date hereof and prior to the
conversion of the Convertible Preferred Stock by Preferred Stock Holders holding
a majority of the Convertible Preferred Stock, the Company shall propose to
issue or sell New Securities (as hereinafter defined) or enter into any
contracts, commitments, agreements, understandings or arrangements of any kind
relating to the issuance or sale of any New Securities, each Preferred Stock
Holder shall have the right to purchase that number of New Securities at the
same price and on the same terms proposed to be issued or sold by the Company so
that such holder would after the issuance or sale of all of such New Securities,
hold the same proportional interest of the then outstanding Shares (assuming
that any securities or other rights convertible or exchangeable into or
exercisable for Shares have been converted, exchanged or exercised) as was held
by it prior to such issuance and sale (the "Proportionate Percentage"). "New
Securities" shall mean any securities or other rights convertible or
exchangeable into or exercisable for Shares; provided, however, that "New
Securities" does not include: (i) Common Stock issued or issuable on conversion
of the Convertible Preferred Stock or upon the exercise of options outstanding
on the date hereof; (ii) Shares issued pursuant to any rights or agreements
including, without limitation, any security convertible or exchangeable, with or
without consideration, into or for any stock, options and warrants, provided
that the rights established by this Section 6.1 apply with respect to the
initial sale or grant by the Company of such rights or agreements; (iii)
securities issued by the Company as part of any public offering pursuant to an
effective registration statement under the Securities Act; (iv) Shares issued in
connection with any stock split, stock dividend, recapitalization, spin-off, or
split-off of the Company; (v) Shares issued to management, directors or
employees of, or consultants to, the Company pursuant to plans outstanding as of
the date hereof, and options to purchase Shares issued in accordance with such
plans or pursuant to other plans approved by the Board and options to purchase
Shares issued in accordance with such plans; (vi) securities issued in
connection with any merger or acquisition by the Company; and (vii) securities
issued in any single transaction in which (A) the purchase price for such
securities is less than $1,000,000 and (B) such purchase price per share of
Common Stock or per Common Stock Equivalent is not less than the then applicable
Conversion Price per share of the Convertible Preferred Stock.
The Company shall give the Preferred Stock Holders written notice of
its intention to issue and sell New Securities, describing the type of New
Securities, the price and the general terms and conditions upon which the
Company proposes to issue the same. The Preferred Stock Holders shall have 15
days from the giving of such notice to agree to purchase all (or any part) of
its Proportionate Percentage of New Securities for the price and upon the terms
and conditions specified in the notice by giving written notice of the Company
and stating therein the quantity of New Securities to be purchased.
If the Preferred Stock Holders fail to timely exercise in full such
right, the Company shall have 120 days thereafter to sell the New Securities in
respect of which the Preferred Stock Holders' rights were not exercised, at a
price and upon general terms and conditions no more favorable to the purchasers
thereof than specified in the Company's notice to the Preferred Stock Holders
pursuant to this Section 7.1. If the Company has not sold the New Securities
within such 120 days, the Company shall not thereafter
issue or sell any New Securities, without first offering such securities to the
Preferred Stock Holders in the manner provided above.
ARTICLE 7.
TERMINATION
This Agreement shall terminate automatically upon the consummation of
(a) a Qualified Offering, or (b) a Sale of the Company. Notwithstanding the
foregoing, the provisions of Article 5 of this Agreement shall survive and
continue in effect subsequent to the consummation of a Qualified Offering until
the third anniversary of the date of consummation of a Qualified Offering.
ARTICLE 8.
REPRESENTATIONS
8.1. Representation of Company. The execution, delivery, and
performance by the Company of this Agreement and all other agreements in
connection with this Agreement required to be executed by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby,
have been duly authorized by all necessary corporate action. This Agreement and
all other agreements have been duly executed and delivered by the Company and
constitute valid and binding obligations of the Company enforceable in
accordance with their respective terms. The execution of and performance of the
transactions contemplated by this Agreement and all other agreements and
compliance with their provisions by the Company will not violate any provision
of law and will not conflict with or result in any breach of any of the terms,
conditions, or provisions of, or constitute a default under, or require a
consent or waiver under, its Certificate of Incorporation or by-laws or any
indenture, lease, agreement or other instrument to which the company is a party
or by which it or any of its properties is bound, or any decree, judgment,
order, statute, rule or regulation applicable to the Company.
8.2. Representation of Xxxxxx, Xxxxxxx Purchasers. The execution,
delivery, and performance by the Xxxxxx, Xxxxxxx Parties of this Agreement and
all other agreements required to be executed by the Xxxxxx, Xxxxxxx Parties and
the consummation by the Xxxxxx, Xxxxxxx Parties of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary action. This
Agreement and all other agreements have been duly executed and delivered by the
Xxxxxx, Xxxxxxx Parties and constitute valid and binding obligations of the
Xxxxxx, Xxxxxxx Parties enforceable in accordance with their respective terms.
The execution of and performance of the transactions contemplated by this
Agreement and all other agreements and compliance with their provisions by the
Xxxxxx, Xxxxxxx Parties will not violate any provision of law and will not
conflict with or result in any breach of any of the terms, conditions, or
provisions of, or constitute a default under, or require a consent or waiver
under any agreements applicable to the Xxxxxx, Xxxxxxx Parties.
8.3. Representation of the Brozman Estate. The execution, delivery,
and performance by the Executor of the Brozman Estate of this Agreement and all
other agreements required to be executed by the Executor of the Brozman Estate
and the consummation by the Executor of the Brozman Estate of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
action by the Brozman Estate. This Agreement and all other agreements have been
duly executed and delivered by the Executor of the Brozman Estate and constitute
valid and binding obligations of the Brozman Estate enforceable in accordance
with their respective terms. The execution of and performance of the
transactions contemplated by this Agreement and all other agreements and
compliance with their provisions by the Brozman Estate will not violate any
provision of law and will not conflict with or result in any breach of any of
the terms, conditions, or provisions of, or constitute a default under, or
require a consent or waiver under any applicable agreements applicable to the
Brozman Estate.
8.4. Representation of the Brozman Trust. The execution, delivery, and
performance by the Trustee of the Xxxxxx X. Xxxxxxx Trust Under Agreement dated
December 28, 1989 (the "Brozman Trust") of this Agreement and all other
agreements required to be executed by the Trustee of the Brozman Trust and the
consummation by the Trustee of the Brozman Trust of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
action by the Brozman Trust. This Agreement and all other agreements have been
duly executed and delivered by the Trustee of the Brozman Trust and constitute
valid and binding obligations of the Brozman Trust enforceable in accordance
with their respective terms. The execution of and performance of the
transactions contemplated by this Agreement and all other agreements and
compliance with their provisions by the Brozman Trust will not violate any
provision of law and will not conflict with or result in any breach of any of
the terms, conditions, or provisions of, or constitute a default under, or
require a consent or waiver under any applicable agreements applicable to the
Brozman Trust.
ARTICLE 9.
MISCELLANEOUS
9.1. Certificate Legend. Upon execution of this Agreement, the stock
certificates representing Shares held by the Stockholders shall contain
substantially the following legend, in addition to any other legends deemed
reasonably appropriate or necessary by the Company:
"This certificate is transferable only upon compliance with and
subject to the provisions of a Stockholders' Agreement among the
Company and certain Securityholders, a copy of which Agreement is on
file in the office of the Secretary of the Company at its principal
place of business. The Company will furnish a copy of such Agreement
to the record holder of this Certificate, without charge, upon written
request to the Company at its principal place of business or
registered office."
9.2. Negotiable Form. Whenever any Shares are to be delivered or sold
pursuant to this Agreement, the person selling such Shares shall deliver such
certificates or other instruments duly endorsed or accompanied by appropriate
stock powers or assignments separate from the certificate or instrument.
9.3. Enforcement. No Shares shall be Transferred on the books of the
Company and no Transfer thereof shall be effective unless and until the terms
and provisions of this Agreement are complied with, and in cases of violation of
this agreement by the attempted Transfer of the Shares without compliance with
the terms and provisions thereof, such Transfer shall be invalid and of no
effect, and the Company and/or any of the Securityholders who are not attempting
to Transfer the Shares shall have the right to compel the Securityholder who is
attempting to Transfer the Shares, and/or the purported transferee, to Transfer
and deliver the same in accordance with the applicable provisions of this
Agreement.
9.4. Specific Performance. The parties hereto recognize that it is to
the benefit of the Company and the Securityholders that this Agreement be
carried out; and for those and other reasons, the parties hereto would be
irreparably damaged if this Agreement is not specifically enforced in the event
of a breach hereof. If any controversy concerning the rights or obligations to
purchase or sell any Shares arises, or if this Agreement is breached, the
parties hereto hereby agree that remedies at law might be inadequate and that,
therefore, such rights and obligations, and this Agreement, shall be enforceable
by specific performance. The remedy of specific performance shall not be an
exclusive remedy, but shall be cumulative of all other rights and remedies of
the parties hereto at law, in equity or under this Agreement.
9.5. Transferees. The Company and the Securityholders shall cause any
transferee of any Shares or options exercisable for shares held by any
Securityholder to execute a consent, in form and substance reasonably acceptable
to the Company, to be bound by the terms and conditions of this Agreement and
upon execution thereof such future Securityholder shall be entitled to the
rights of an owner of the Shares held by such transferee hereunder, provided
that the foregoing shall not apply to Shares that have been sold pursuant to an
effective registration statement under the Securities Act or Rule 144
thereunder.
9.6. Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if in writing and delivered in
person, transmitted by telecopier or sent by registered or certified mail
(return receipt requested) or recognized overnight delivery service, postage
pre-paid, addressed as follows, or to such other address as any such party may
notify to the other parties in writing:
(a) if to the Company:
Concorde Career Colleges, Inc.
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
with a copy to:
Xxxxx Xxxx, L.L.P.
0000 Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxxx Xxxx, XX 00000-0000
Attn: Xxxxxx X. Xxx Xxxx
(b) if to the Xxxxxx, Xxxxxxx Parties:
c/x Xxxxxx, Xxxxxxx & Company, LLC
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx, Esquire
Facsimile No.: (000) 000-0000
(c) if to any of the Other Holders, to the respective Other Holder as
set forth below:
Xxxx X. Xxxxxxx
0000 Xxxxx
Xxxxxxx Xxxxxxx, XX 00000
The Brozman Estate
c/o Xxxx X. Xxxxxxx
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxx, XX 00000
The Brozman Trust
c/o Xxxx X. Xxxxxxx
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
A notice or communication will be effective (i) if delivered in person or by
overnight courier, on the business day it is delivered, (ii) if transmitted by
telecopier, on the business day of actual confirmed receipt by the addressee
thereof, and (iii) if sent by registered or certified mail, 3 business days
after dispatch.
9.7. Binding Effect; Assignment. This Agreement, including the rights
and conditions contained herein in connection with disposition of Shares, shall
be binding upon the parties hereto, together with their respective executors,
administrators, successors, personal representatives, heirs and assigns
permitted under this Agreement.
9.8. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware.
9.9. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provisions shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
9.10. Entire Agreement. This Agreement together with the Certificate
of Designation embodies the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings relating to the subject matter hereof.
9.11. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one instrument.
9.12. Amendment; Waiver. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the Company and the
Securityholders.
9.13. Captions. The captions of this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
[Balance of Page Left Blank Intentionally -- Signature Page Follows]
STOCKHOLDERS' AGREEMENT SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
CONCORDE CAREER COLLEGES, INC.
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
XXXXXX, XXXXXXX PARTIES:
XXXXXX, XXXXXXX STRATEGIC PARTNERS FUND,
L.P.
By: XXXXXX XXXXXXX STRATEGIC PARTNERS,
L.P.,
its General Partner
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: a General Partner
STRATEGIC ASSOCIATES, L.P.
By: XXXXXX, XXXXXXX & COMPANY, LLC, its
General Partner
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Member
OTHER HOLDERS:
XXXX X. XXXXXXX, in his individual
capacity
By: /s/ Xxxx X. Xxxxxxx
---------------------------------------
THE ESTATE OF XXXXXX X. XXXXXXX
By: /s/ Xxxx X. Xxxxxxx
---------------------------------------
Xxxx X. Xxxxxxx, Executor
XXXXXX X. XXXXXXX TRUST UNDER AGREEMENT
DATED DECEMBER 28, 1989
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Xxxx X. Xxxxxxx, Trustee
