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Exhibit 10.8
______________________________________________________
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
of
DOMINICK'S SUPERMARKETS, INC.
Dated as of
November 1, 1996
______________________________________________________
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II RESTRICTIONS ON TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.1 Transfers in Accordance with this Agreement . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.2 Agreement to be Bound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.3 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.4 [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.5 Transfer of Pecuniary Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.6 Tag-Along Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.7 Rights to Compel Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.8 Offering Memorandum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.9 Deliveries at Closing; Method of Payment of Purchase Price . . . . . . . . . . . . . . . 16
ARTICLE III SCOPE OF BUSINESS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.1 Scope of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.2 Business Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV ADDITIONAL RIGHTS AND OBLIGATIONS OF
INVESTORS AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.1 Management Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.2 Investment Banking Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.3 Access to Information; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.4 Furnishing of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.5 Regulatory Problems, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE V CORPORATE GOVERNANCE AND VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.1 Boards of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.2 Action by the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.3 Charter Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.4 Appointment of Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.5 Board Visitation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VI TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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ARTICLE VII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.1 No Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.2 No Other Affiliate Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.3 Recapitalization, Exchanges, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.5 No Waivers; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.7 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.9 Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.13 Required Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.14 Consistency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.15 Public Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Agreement")
dated as of November 1, 1996, by and among (i) each of the purchasers listed on
the signature pages attached hereto (together with their Permitted Transferees
(defined below), the "Purchasers"), (ii) each of the investors listed on the
signature pages attached hereto, (iii) The Yucaipa Companies, a California
general partnership, Yucaipa Blackhawk Partners, L.P., a California limited
partnership, Yucaipa Chicago Partners, L.P., a California limited partnership,
Yucaipa Dominick's Partners, L.P., a California limited partnership and Xxxxxx
X. Xxxxxx (collectively, the "Yucaipa Affiliates"), (iv) Dominick's
Supermarkets, Inc., a Delaware corporation (the "Company"), (v) Dominick's
Finer Foods, Inc., a Delaware corporation and wholly owned subsidiary of the
Company ("Dominick's"), and (vi) each other Person (defined below) who becomes
a party to this Agreement in accordance with the terms hereof.
W I T N E S S E T H:
WHEREAS, the parties hereto have entered into that certain
Stockholders Agreement dated as of March 22, 1995 (the "Stockholders
Agreement"), and desire to amend and restate such Stockholders Agreement in
conjunction with the Qualified IPO (as defined in the Stockholders Agreement)
of the Company being consummated on the date hereof;
WHEREAS, this Agreement shall become effective (the "Effective
Date") on the date of, and simultaneously with, the closing under the
Underwriting Agreement, dated as of October [29], 1996, among the Company, the
stockholders of the Company named therein, Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation, Xxxxxx Xxxxxxx & Co. Incorporated, BT Securities
Corporation and Chase Securities, Inc., as the representatives of the several
underwriters named therein (the "Underwriting Agreement");
WHEREAS, on the Effective Date after giving effect to the
transactions contemplated by the Underwriting Agreement (i) the authorized
capital stock of the Company will consist of 50,000,000 shares of voting common
stock, $.01 par value (the "Common Stock"), 10,000,000 shares of non-voting
common stock, $.01 par value, of which 8,500,000 shares will be designated as
Class B Common Stock (the "Class B Common Stock"), and 4,000,000 shares of
preferred stock, $.01 par value (the "Preferred Stock") of which 40,000 shares
have been designated as 15% Redeemable Exchangeable Cumulative Preferred Stock,
Series A, $.01 par value (the "Redeemable Preferred Stock"), and (ii) the
issued and outstanding capital stock of the Company will consist of __________
shares of Common Stock, ______________ shares of Class B Common Stock and
40,000 shares of Redeemable Preferred Stock, with 996,835 shares of Common
Stock reserved for issuance upon the exercise of certain outstanding stock
options, 1,000,000 shares reserved for issuance pursuant to the Company's 1996
Equity Participation Plan and 3,874,492 shares of Common Stock reserved for
issuance upon the exercise of the Yucaipa Warrant (defined below);
WHEREAS, on the Effective Date after giving effect to the
transactions contemplated by the Underwriting Agreement (i) each Yucaipa
Affiliate shall beneficially own the number of shares of Common Stock set forth
under its name on the signature pages attached hereto, and the Yucaipa
Affiliates shall collectively beneficially own 2,934,909 shares of Common
Stock, (ii) each Purchaser shall beneficially own the number and kind of Shares
(defined below)
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set forth under its name on the signature pages attached hereto, and the
Purchasers shall collectively beneficially own _____________ shares of Common
Stock and _____________ shares of Class B Common Stock; and (iii) Xxxx L.L.C.
shall beneficially own 40,000 shares of Redeemable Preferred Stock (which the
Company has agreed to repurchase on January 2, 1997); and
WHEREAS, the parties hereto desire to restrict the sale,
assignment, transfer, encumbrance or other disposition of the Shares, including
both issued and outstanding Shares as well as Shares that may be issued or
otherwise acquired hereafter, to provide for certain rights and obligations in
respect of the Shares and the Company as hereinafter provided.
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the
following terms have the following meanings:
"Acquisition Date" shall mean March 22, 1995 (after giving
effect to the Company's acquisition of Dominick's on such date).
"Additional Shares" shall have the meaning set forth in
Section 2.6(c).
"Affiliate," as applied to any specified Person, shall mean
any other Person directly or indirect controlling or controlled by or under
direct or indirect common control with such specified Person and, in the case
of a Person who is an individual, shall include (i) members of such specified
Person's immediate family (as defined in Instruction 2 of Item 404(a) of
Regulation S-K under the Securities Act) and (ii) trusts, the trustee and all
beneficiaries of which are such specified Person or members of such Person's
immediate family as determined in accordance with the foregoing clause (i).
Notwithstanding, the foregoing, the Purchasers and their respective Affiliates
shall not be deemed Affiliates of the Company.
"Affiliate Transaction" shall mean (i) any sale, lease,
transfer or other disposition by the Company or its Subsidiaries of any of
their respective properties or assets to, (ii) any purchase of property or
assets by the Company or its Subsidiaries from, (iii) any investment by the
Company or its Subsidiaries in, (iv) any agreement by the Company or its
Subsidiaries with or for the benefit of, or (v) any other transaction between
the Company or its Subsidiaries and, an Affiliate of the Company or of any
Subsidiary of the Company.
"Apollo" shall mean Apollo Investment Fund, L.P. and any of
its Permitted Transferees to which Apollo has Transferred Shares.
"Apollo Nominees" shall have the meaning set forth in Section
5.1(a).
"Appraisal Notice" shall have the meaning set forth in Section
2.7(c)(i).
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"Appraisal Request" shall mean a written request for an
appraisal pursuant to Section 2.7(i) sent by Other Purchasers holding a least
65% of the Shares then held by the Other Purchasers to Yucaipa and Apollo on or
prior to the fifth business day following delivery of the Compelled Sale
Notice, which request shall identify five proposed Appraisers that are
independent from the Company, the stockholders of the Company or any of their
respective Affiliates; provided, that the right to deliver an Appraisal Request
shall terminate on the first date on which the Other Purchasers beneficially
own fewer than 50% of the Shares held by the Other Purchasers on the
Acquisition Date.
"Appraised Value" shall mean, with respect to any Compelled
Sale, the per Share value of the Company immediately prior to such Compelled
Sale (without giving effect thereto or to the rights of Apollo contained in
Section 2.7(c)(ii) hereof), as determined in good faith by the Appraiser.
"Appraiser" shall mean a nationally recognized investment
bank, appraisal firm or other Person with experience in valuing businesses
chosen pursuant to Section 2.7(i).
"beneficial owner" of a security shall mean any person who,
directly or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has (i) the power to vote, or to direct the voting
of, such security and (ii) the power to dispose, or to direct the disposition
of, such security. "Beneficially own" shall have a correlative meaning.
Ownership of the Yucaipa Warrant shall not constitute beneficial ownership of
the Shares issuable upon the exercise thereof.
"Board of Directors" shall mean the Board of Directors of the
Company.
"Business Day" shall mean each day other than Saturdays,
Sundays and days when commercial banks are authorized to be closed for business
in New York, New York.
"Business Opportunity" shall have the meaning set forth in
Section 3.2.
"Capitalized Lease Obligation," as applied to any Person,
means obligations under any lease of any property (whether real, personal or
mixed) by that Person as lessee, that, in conformity with GAAP, is accounted
for as a capital lease on the balance sheet of that Person, and the amount of
Indebtedness represented by such obligations shall be the capitalized amount of
such obligations, determined in accordance with GAAP.
"Charter Documents" shall mean the Certificate of
Incorporation and Bylaws of the Company, each as amended or restated, attached
hereto as Exhibits A and B, respectively.
"Class B Common Stock" shall have the meaning set forth in the
recitals.
"Commission" shall mean the United States Securities and
Exchange Commission.
"Common Stock" shall have the meaning set forth in the
recitals.
"Compelled Sale" shall have the meaning set forth in Section
2.7(a).
"Company" shall have the meaning set forth in the preamble.
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"Compelled Sale Acceptance" shall have the meaning set forth
in Section 2.7(c).
"Compelled Sale Agreement" shall have the meaning set forth in
Section 2.7(c).
"Compelled Sale Closing" shall have the meaning set forth in
Section 2.7(a).
"Compelled Sale Date" shall have the meaning set forth in
Section 2.7(b).
"Compelled Sale Notice" shall have the meaning set forth in
Section 2.7(b).
"Compelled Sale Transaction Date" shall have the meaning set
forth in Section 2.7(c).
"Control," when used with respect to any Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Controlling Stockholders" shall mean the Yucaipa Affiliates
and any of their Permitted Transferees to which any Yucaipa Affiliate or any
other Controlling Stockholder has Transferred Shares.
"Credit Agreement" shall mean the Credit Agreement, dated as
of the date hereof, among Dominick's, the Company, the guarantors named
therein, and the lenders, arrangers, administrative agent and syndication agent
named therein.
"Disqualified Indebtedness" shall have the meaning set forth
in Section 2.7(h).
"Dominick's" shall have the meaning set forth in the preamble.
"Dominick's Board" shall mean the board of directors of
Dominick's.
"Dominick's Stock Purchase Agreement" means the Stock Purchase
Agreement, dated January 17, 1995, by and among the Company, DFF Acquisition
Sub, Inc., Xxxx, L.L.C., Xxxx Family L.L.C. and Xxxx Developments, L.L.C.
"EBITDA" shall mean with respect to any Person for any period,
the net income (or loss) of such Person and its subsidiaries on a consolidated
basis for such period, determined in accordance with GAAP, excluding (to the
extent included therein), without duplication, (i) all net extraordinary gains
(or losses), (ii) total interest expense of such Person and its subsidiaries on
a consolidated basis with respect to outstanding indebtedness of such Person
and its subsidiaries, including without limitation, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under interest rate swap, cap, collar or
similar agreements, (iii) provisions for taxes based on income, (iv) total
depreciation expense, (v) total amortization expense, (vi) LIFO provision, and
(vii) other non-cash items reducing net income and other non-cash items
increasing net income, all of the foregoing as determined on a consolidated
basis for such Person and its subsidiaries in accordance with GAAP; provided,
that EBITDA of the Company for any period shall be calculated to give pro forma
effect to all acquisitions and divestitures during such period as if such
acquisitions and divestitures had
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occurred on the first day of such period, such calculations to be made in
accordance with GAAP and Rule 11-02 of Regulation S-X of the Commission.
"Effective Date" shall have the meaning set forth in the
recitals.
"Employee Plans" shall mean the Company's 1995 Stock Option
Plan, under which 966,835 shares of Common Stock are reserved for issuance upon
exercise of options granted thereunder, the Company's 1996 Equity Participation
Plan, under which 1,000,000 shares of Common Stock are reserved for issuance,
and any employee or similar plans set forth in Schedule 3.23 to the Dominick's
Stock Purchase Agreement or approved by a majority of the Board of Directors
then in office.
"Enterprise Value" with respect to any proposed Compelled
Sale, shall mean (without duplication) the sum of (a) the aggregate value of
the fully diluted common equity of the Company, based on the price per Share
proposed to be paid in such Compelled Sale, net of the exercise, exchange or
conversion price, if any, with respect to any security exercisable or
exchangeable for or convertible into Common Stock of the Company, plus (b) the
aggregate principal amount of all Indebtedness of the Company and its
consolidated Subsidiaries and the aggregate liquidation preference of all
preferred stock of the Company (other than preferred stock included in clause
(a) above), in each case as reflected on the most recent balance sheet of the
Company and its consolidated subsidiaries that was (or was required to be)
provided pursuant to Section 4.4 hereof on or prior to the date of the
Compelled Sale Notice, less (c) all cash and cash equivalents of the Company
and its consolidated Subsidiaries as reflected on such balance sheet.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder.
"Exchange Agreement" means the Stock Exchange Agreement, dated
as of March 22, 1995, by and between the Company and Apollo.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"Indebtedness" shall mean with respect to any Person, without
duplication, all liabilities of such Person (a) for borrowed money (whether or
not the recourse of the lender is to the whole of the assets of such Person or
only to a portion thereof), (b) evidenced by bonds, notes, debentures or
similar instruments or representing the balance deferred and unpaid of the
purchase price of any property (other than any such balance that represents an
account payable or any other monetary obligation to a trade creditor (whether
or not an Affiliate)), or (c) for the payment of money relating to a
Capitalized Lease Obligation.
"Independent Nominator" shall mean (a) Apollo until Apollo
ceases to beneficially own at least 1,463,795 Shares (25% of the Shares
beneficially owned by Apollo on the Acquisition Date) and (b) thereafter,
Yucaipa.
"Investor Nominees" shall have the meaning set forth in
Section 5.1 (a).
"Investors" shall mean each of the parties to the Agreement
(other than the Company and Controlling Stockholders), together with such
party's Permitted Transferees, including (without limitation) any Person who
shall become a party to or agree to be bound by the
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terms of this Agreement after the date hereof. For purposes of determining the
number of Shares held by any Investor, such Investor shall be deemed to hold
all Shares held by such Investor's Permitted Transferees.
"MD&A" shall mean a management's discussion and analysis of
the Company's financial condition and results of operation comparable to the
discussion that is required to be included in periodic reports filed under the
Exchange Act.
"Management Agreement" shall mean that certain Management
Agreement, dated as of the date hereof, by and among the Company, Dominick's
and Yucaipa, attached hereto as Exhibit D.
"Notices" shall have the meaning set forth in Section 7.6.
"Other Investors" shall mean the Investors other than the
Purchasers.
"Other Purchasers" shall mean the Purchasers other than
Apollo.
"Other Nominees" shall have the meaning set forth in Section
5.1(a).
"pecuniary interest" in any security shall mean the
opportunity, directly or indirectly, to profit or share in any profit derived
from a transaction in such security, and shall include securities owned by an
individual's spouse or issue or any trust solely for the benefit of such
individual, spouse or issue.
"Permitted Transferee" shall mean:
(a) in the case of any Purchaser (i) any officer,
director or partner of, or Person controlling, such Purchaser or any other
Purchaser, or (ii) any other Person that is (x) an Affiliate of the general
partner(s), investment manager(s) or investment advisor(s) of such Purchaser on
the date hereof, (y) an Affiliate of such Purchaser or a Permitted Transferee
of such Purchaser or (z) an investment fund, investment account or investment
entity whose investment manager, investment advisor or general partner thereof
is such Purchaser or a Permitted Transferee of such Purchaser, in each case in
a bona fide distribution or other transaction not intended to avoid the
provisions of this Agreement;
(b) in the case of any Controlling Stockholder, (i) any
Person that is controlled by Xxxxxx X. Xxxxxx, (ii) upon a bona fide
liquidation of, or a bona fide withdrawal from, such Controlling Stockholder,
in each case, not intended to avoid the provisions of this Agreement, the
shareholders, partners or principals, as the case may be, of such Controlling
Stockholder, (iii) upon a bona fide reduction (not intended to avoid the
provisions of this Agreement) in such Controlling Stockholder's interest in
another Controlling Stockholder (a "Specified Person"), and a corresponding
increase in a Yucaipa Individual's interest in such Specified Person, such
Yucaipa Individual; provided, that immediately after such Transfer, Xxxxxx X.
Xxxxxx continues to control such Specified Person, or (iv) if such Controlling
Stockholder is an individual, (x) any spouse or issue of such individual, or
any trust solely for the benefit of such individual, spouse or issue, and (y)
upon such individual's death, any Person to whom Shares are transferred in
accordance with the laws of the descent and/or testamentary distribution; and
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(c) in the case of any Other Investor, (i) any Subsidiary
of such Other Investor, (ii) any Person of which such Other Investor is a
Subsidiary, (iii) any Subsidiary of a Person described in the foregoing clause
(ii), or (iv) if such Other Investor is an individual, (x) any spouse or issue
of such Other Investor or any trust for the benefit of such individual, spouse
or issue, and (y) upon such Other Investor's death, any Person to whom Shares
are transferred in accordance with the laws of descent and/or testamentary
distribution.
"Person" shall mean an individual or a corporation,
partnership, limited liability company, trust, or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Preferred Stock" shall have the meaning set forth in the
recitals.
"Proposed Purchaser" shall mean a Person or group of Persons
to which any Controlling Stockholder proposes to Transfer Shares in accordance
with Section 2.6.
"Public Offering" shall mean any bona fide underwritten public
distribution of equity securities of the Company pursuant to an effective
registration statement under the Securities Act.
"Purchasers" shall have the meaning set forth in the preamble.
"Redeemable Preferred Stock" shall have the meaning set forth
in the recitals.
"Registration Rights Agreements" shall mean (i) that certain
Registration Rights Agreement, dated as of March 22, 1995, by and among the
Company, the Purchasers and the other parties thereto and (ii) that certain
Registration Rights Agreement, dated as of the date hereof, by and among the
Company, certain Yucaipa Affiliates and the other parties thereto.
"Regulatory Problem" shall have the meaning set forth in
Section 4.5.
"Remaining Holders" shall have the meaning set forth in
Section 2.7(a).
"Requisite Holders" on any date shall mean the Other
Purchasers that own at least 65% of the Shares beneficially owned by the Other
Purchasers on such date.
"ROFO Acceptance" shall have the meaning set forth in Section
5.1(g).
"ROFO Closing Date" shall have the meaning set forth in
Section 5.1(g).
"ROFO Notice" shall have the meaning set forth in Section
5.1(g).
"ROFO Shares" shall have the meaning set forth in Section
5.1(g).
"RPHC" shall mean any Person, if an interest in such Person is
treated as a "United States real property interest" within the meaning of
section 897 of the Internal Revenue Code of 1986, as amended.
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"Rule 144 Open Market Transaction" shall mean any bona fide
public sale of Shares in an open market transaction under Rule 144 of the
Securities Act (or any successor rule) if such sale is in compliance with the
requirements of paragraphs (c), (d), (e), (f) and (g) of such Rule
(notwithstanding the provisions of paragraph (k) of such Rule).
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
"Shares" shall mean, collectively, the Common Stock and the
Class B Common Stock. Whenever this Agreement refers to a number or percentage
of Shares, such number or percentage shall be calculated as if each of the
Shares had been exchanged or converted into shares of Common Stock immediately
prior to such calculation regardless of the existence of any restrictions on
such exchange or conversion.
"Stock Purchase Agreement" shall mean the stock purchase
agreement, dated as of March 22, 1995, among the Company, Yucaipa and the
Purchasers.
"Subsidiary" shall mean, with respect to any Person, (a) a
corporation a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by a Subsidiary of such Person, or by such Person and one or
more Subsidiaries of such Person, (b) a partnership in which such Person or a
Subsidiary, of such Person is, at the date of determination, a general partner
of such partnership, or (c) any other Person (other than a corporation) in
which such Person, a Subsidiary of such Person or such Person and one or more
Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has (i) at least a majority ownership interest or (ii)
the power to elect or direct the election of the directors or other governing
body of such Person.
"Tag-Along Notice" shall have the meaning set forth in Section
2.6(c).
"Tag-Along Sale" shall mean a bona fide Transfer of a
Controlling Stockholder's pecuniary interest in any Shares (except in
accordance with Section 2.7), including, without limitation, (a) by means of
such Controlling Stockholder's Transfer of an interest in any Person owning
such Shares or (b) a Transfer of a pecuniary interest in any Shares by such
Controlling Stockholder's spouse or issue, or by any trust solely for the
benefit of such Controlling Stockholder's spouse or issue.
"Tag-Along Stockholder" shall have the meaning set forth in
Section 2.6(a).
"Third Party" shall mean any prospective purchaser of Shares
(that is not an Affiliate or Permitted Transferee of the transferor or of any
Yucaipa Affiliate) in an arm's length purchase from such transferor.
"Transfer" shall mean (i) when used as a noun: any direct or
indirect transfer, sale, assignment, pledge, hypothecation, encumbrance or
other disposition and (ii) when used as a verb: to directly or indirectly
transfer, sell, assign, pledge, hypothecate, encumber, or otherwise dispose of.
"Transferee" shall mean any Person to whom Shares have been
Transferred in compliance with the terms of this Agreement.
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"Transfer Allotment" of any Tag-Along Stockholder with respect
to any Tag-Along Sale shall mean the product of (i) the total number of Shares
proposed to be Transferred in such Tag-Along Sale multiplied by (ii) a
fraction, the numerator of which is the total number of Shares owned by such
Tag-Along Stockholder as of the close of business on the second day immediately
preceding the mailing date of the Transfer Notice and the denominator of which
is the total number of Shares then owned by the Controlling Stockholders, the
Investors, and all other stockholders of the Company having tag-along or other
contractual rights to participate in the proposed Transfer.
"Transfer Date" shall have the meaning set forth in Section
2.6(b).
"Transfer Notice" shall have the meaning set forth in Section
2.6(b).
"Yucaipa" shall mean The Yucaipa Companies, a California
general partnership, until a successor controlled by Xxxxxx X. Xxxxxx replaces
such Person, and thereafter means such successor; provided that the rights set
forth in Section 5.1 of this Agreement as belonging to Yucaipa initially shall
be exercisable personally by Yucaipa Management L.L.C., a California limited
liability company, or Xxxxxx X. Xxxxxx and neither The Yucaipa Companies nor
any other Yucaipa Affiliate shall have any right or interest in the exercise of
such rights; provided further that Xxxxxx X. Xxxxxx may assign such rights to
any successor controlled by him, and for purposes of Section 5.1, "Yucaipa"
thereafter shall mean such successor so long as it remains controlled by Xxxxxx
X. Xxxxxx.
"Yucaipa Affiliate" shall have the meaning set forth in the
preamble.
"Yucaipa Individual" shall mean (a) a full-time employee of a
Yucaipa Affiliate or the Company or (b) a partner of a Yucaipa Affiliate who
devotes substantially all of his business efforts to such Yucaipa Affiliate.
"Yucaipa Nominees" shall have the meaning set forth in Section
5.1(a).
"Yucaipa Warrant" shall mean the warrant to purchase up to
3,874,492 shares of Common Stock issued by the Company to Yucaipa on March 22,
1995, as amended.
ARTICLE II
RESTRICTIONS ON TRANSFERS
Section 2.1 Transfers in Accordance with this Agreement.
Any attempt to Transfer, or purported Transfer of, any Shares in violation of
the terms of this Agreement shall be null and void and neither the Company nor
any transfer agent shall register upon its books any such Transfer. A copy of
this Agreement shall be filed with the Secretary of the Company and kept with
the records of the Company.
Section 2.2 Agreement to be Bound. No party hereto shall
Transfer any Shares (other than Transfers to the Company, Transfers
constituting a bona fide public distribution pursuant to (i) the registration
rights included in the Registration Rights Agreements, (ii) any shelf
registration pursuant to Rule 415 under the Securities Act or any Public
Offering or (iii) Rule 144 Open Market Transactions, or Transfers constituting
a bona fide pledge to a broker-dealer or other institutional lender), unless
(x) the certificates representing such Shares issued to the Transferee
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bear the legend provided in Section 2.3, if required by such Section, and (y)
the Transferee (if not already a party hereto) has executed and delivered to
each other party hereto, as a condition precedent to such Transfer, an
instrument or instruments, reasonably satisfactory to such parties, confirming
that the Transferee agrees to be bound by the terms of this Agreement in the
same manner as such Transferee's transferor, except as otherwise specifically
provided in this Agreement.
Section 2.3 Legend. Each Investor and Controlling
Stockholder hereby agrees that each outstanding certificate representing Shares
issued to any of them, or any certificate issued in exchange for or upon
conversion of any similarly legended certificate, shall, unless sold in a
transaction exempted from the operation of Section 2.2 above, bear a legend
reading substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS, AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE. THE HOLDER OF THESE SHARES MAY BE
REQUIRED TO DELIVER TO THE COMPANY, IF THE COMPANY SO REQUESTS, AN OPINION OF
COUNSEL (REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY) TO THE
EFFECT THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (OR
QUALIFICATION UNDER STATE SECURITIES LAWS) IS AVAILABLE WITH RESPECT TO ANY
TRANSFER OF THESE SHARES THAT HAS NOT BEEN SO REGISTERED (OR QUALIFIED).
THE SHARES REPRESENTED BY THIS CERTIFICATE ALSO ARE SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AND OBLIGATIONS, TO WHICH ANY TRANSFEREE
AGREES BY HIS ACCEPTANCE HEREOF, AS SET FORTH IN THE AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT, DATED AS OF NOVEMBER 1, 1996, COPIES OF WHICH MAY BE
OBTAINED FROM THE COMPANY. NO TRANSFER OF SUCH SHARES WILL BE MADE ON THE
BOOKS OF THE COMPANY UNLESS ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE
TERMS OF SUCH AGREEMENT AND BY AN AGREEMENT OF THE TRANSFEREE TO BE BOUND BY
THE RESTRICTIONS SET FORTH IN THE STOCKHOLDERS AGREEMENT.
Section 2.4 [Intentionally Left Blank].
Section 2.5 Transfer of Pecuniary Interests. Prior to a
Transfer of a pecuniary interest in any Shares by Xxxxxx X. Xxxxxx or any
Controlling Stockholder controlled by Xxxxxx X. Xxxxxx to a Permitted
Transferee (including, without limitation, by means of a Transfer of an
interest in any Person owning Shares) Xxxxxx X. Xxxxxx shall provide each of
the Purchasers with a written notice specifying the number of Shares in which a
pecuniary interest is being Transferred.
Without the prior written consent of (a) the holders of a
majority of the Shares held by the Purchasers and (b) at least two unrelated
Purchasers, neither Xxxxxx X. Xxxxxx nor any Controlling Stockholder controlled
by Xxxxxx X. Xxxxxx shall Transfer a pecuniary interest in any Shares to a
Permitted Transferee (including, without limitation, by means of a Transfer of
an interest in any Person owning Shares), if immediately after giving effect to
such Transfer Xxxxxx X. Xxxxxx would have a pecuniary interest in a number of
Shares less than (i) 85% of the number
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of Shares in which Xxxxxx X. Xxxxxx had a pecuniary interest on the Acquisition
Date minus (ii) any Shares as to which Xxxxxx X. Xxxxxx had a pecuniary
interest on the Acquisition Date that are Transferred in a Tag-Along Sale
exempt from the provisions of Section 6.2 pursuant to Section 2.6(e)(v).
The provisions of this Section 2.5 shall not apply to any
Transfer to (x) any spouse or issue of Xxxxxx X. Xxxxxx, or any trust solely
for the benefit of Xxxxxx X. Xxxxxx or any such spouse or issue, and (y) upon
Xxxxxx X. Xxxxxx'x death, any Person to whom Shares are transferred in
accordance with the laws of descent and/or testamentary distribution.
Section 2.6 Tag-Along Rights. (a) Each Controlling
Stockholder who proposes to effect a Tag-Along Sale shall afford each of the
Investors (each, a "Tag-Along Stockholder") the opportunity to participate
therein in accordance with this Section 2.6.
Each Controlling Stockholder represents to the Investors that
it has not entered into any agreement providing for any rights inconsistent
with the rights provided to the Investors in this Section 2.6 and that it has
not otherwise directly or indirectly granted any such rights. No Controlling
Stockholder shall enter into any agreement providing for, or otherwise directly
or indirectly grant, any tag-along or other contractual rights (other than
customary registration rights) to participate, directly or indirectly, in any
Tag-Along Sale without the prior unanimous written approval of the Investor
Nominees and, so long as the Other Purchasers, in the aggregate, beneficially
own at least 33% of the Shares beneficially owned by the Other Purchasers on
the Acquisition Date, the Requisite Holders.
(b) With respect to each Tag-Along Sale, each Tag-Along
Stockholder shall have the right to Transfer, at the same price and upon
identical terms and conditions as such proposed Transfer (except as set forth
below), the number of Shares owned by such Tag-Along Stockholder equal to such
Tag-Along Stockholder's Transfer Allotment; provided, however, that (i) a
Tag-Along Stockholder may Transfer Shares of a different kind than those
transferred by a Controlling Stockholder pursuant to a Tag-Along Sale; and (ii)
in the event of a Tag-Along Sale pursuant to a Transfer by a Controlling
Stockholder of an interest in a Person that directly or indirectly owns Shares,
the price and other terms and conditions of such Tag-Along Sale applicable to
each Tag-Along Stockholder and the Shares to be sold by such Tag-Along
Stockholder, shall as closely approximate those of the proposed Transfer as is
reasonably practicable.
At the time any Tag-Along Sale is proposed, the Controlling
Stockholders shall give written notice to each Tag-Along Stockholder of its
right to sell Shares hereunder (the "Transfer Notice"), which notice shall
identify the Proposed Purchaser and state the number of Shares proposed to be
Transferred, the proposed offering price (including the form and terms of any
non-cash consideration to be received in connection therewith), the proposed
date of any such Transfer (the "Transfer Date") and any other material terms
and conditions of the proposed Transfer. The Transfer Notice shall also
contain a complete and correct copy of any offer to, or agreement with, the
Controlling Stockholders by the Proposed Purchaser to purchase such Shares.
The Controlling Stockholders shall use their best efforts to deliver the
Transfer Notice at least 30 days prior to the Transfer Date and in no event
shall the Controlling Stockholders provide such Transfer Notice later than 21
days prior to the Transfer Date.
(c) Each Tag-Along Stockholder that wishes to participate
in the Tag-Along Sale shall provide written notice (or oral notice confirmed in
writing) (the "Tag-Along Notice")
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to the Controlling Stockholders no less than 7 days prior to the Transfer Date.
The Tag-Along Notice shall set forth the number and kind of Shares that such
Tag-Along Stockholder elects to include in the Transfer, which shall not exceed
such Tag-Along Stockholder's Transfer Allotment; provided that the failure of a
Tag-Along Stockholder to correctly specify a number or kind of Shares not
exceeding its Transfer Allotment shall not affect the rights such Tag-Along
Stockholder may otherwise have under this Section 2.6 (and any specified Shares
in excess of such Tag-Along Stockholder's Transfer Allotment shall be treated
as Additional Shares). The Tag-Along Notice shall also specify the aggregate
number and kind of additional Shares owned of record by such Tag-Along
Stockholder as of the close of business on the second day immediately preceding
the date on which the Tag-Along Notice is given by such Tag-Along Stockholder,
if any, which such Tag-Along Stockholder desires also to include in the
Transfer ("Additional Shares") in the event there is any under-subscription for
the entire amount of all Tag-Along Stockholders' Transfer Allotments. In the
event there is an under-subscription by the Tag-Along Stockholders for any
portion of the aggregate Tag-Along Stockholders' Transfer Allotments, the
Controlling Stockholders shall apportion the unsubscribed Tag-Along
Stockholders' Transfer Allotments to Tag-Along Stockholders whose Tag-Along
Notices specified an amount of Additional Shares, which apportionment shall be
on a pro rata basis among such Tag-Along Stockholders in accordance with the
number of Additional Shares specified by all such Tag-Along Stockholders in
their Tag-Along Notices. The Tag-Along Notices given by the Tag-Along
Stockholders shall constitute their binding agreements to sell such Shares on
the terms and conditions applicable to the Transfer.
If a Tag-Along Notice is not received by the Controlling
Stockholders from a Tag-Along Stockholder prior to the 7-day period specified
above, the Controlling Stockholders shall have the right to sell or otherwise
Transfer the number of Shares specified in the Transfer Notice to the Proposed
Purchaser specified in the Transfer Notice without any participation by such
Tag-Along Stockholder (subject to the right of other Tag-Along Stockholders to
sell Additional Shares in the event of an under-subscription by Tag-Along
Stockholders, as described above), but only on terms and conditions with
respect to the consideration paid by the Proposed Purchaser no more favorable
(and other material terms and conditions which a reasonable investor would
consider significant to the decision to include Shares in the Transfer no more
favorable in any material respect) to the Controlling Stockholders than as
stated in the Transfer Notice to the Tag-Along Stockholders, and only if such
Transfer occurs on a date within 45 Business Days of the Transfer Date.
(d) No Tag-Along Stockholder shall be required to make
any representations and warranties to any Person in connection with such
Tag-Along Sale except as to (i) good title and the absence of liens with
respect to such Tag-Along Stockholder's Shares, (ii) the corporate or other
existence of such Tag-Along Stockholder and (iii) the authority for and the
validity and binding effect of, and the absence of any conflicts under the
charter documents and material agreements of such Tag-Along Stockholder as to,
any agreements entered into by such Tag-Along Stockholder in connection with
such Transfer. No Tag-Along Stockholder shall be required to provide any
indemnities in connection with such Tag-Along Sale except for a breach of such
representations and warranties.
(e) The provisions of this Section 2.6 shall not apply to
any Transfers (i) by a Controlling Stockholder to a Permitted Transferee of
such Controlling Stockholder (provided that such Permitted Transferee has
agreed to be bound by this Agreement as contemplated by Section 2.9 hereof),
(ii) pursuant to a Public Offering, (iii) pursuant to a Rule 144 Open Market
Transaction of which each of the Investor Nominees and each Purchaser who
beneficially owns at
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least 731,897 Shares, has been provided at least two Business Days prior
written notice, (iv) on or after March 22, 1996, by Xxxxxx X. Xxxxxx or
Controlling Stockholders controlled by Xxxxxx X. Xxxxxx; provided, that the
aggregate number of Shares transferred pursuant to this clause (iv) by all such
Persons does not exceed 73,365 (2.5% of the number of Shares beneficially owned
by the Yucaipa Affiliates on the Acquisition Date), (v) of limited partnership
interests in Yucaipa Dominick's Partners, L.P. by Xxxxxx X. Xxxxxx as of the
Acquisition Date and representing an indirect pecuniary interest in not more
than 178,583 Shares, (vi) of limited partnership interests in Crescent Shared
Opportunity Fund II, L.P., or (vii) constituting a bona fide pledge to a
broker-dealer or other institutional lender.
Section 2.7 Rights to Compel Sale. (a) If at any time
the Controlling Stockholders shall enter into a written agreement with a Third
Party to acquire solely for cash all, but not less than all, of the issued and
outstanding Shares in a bona fide transaction (a "Compelled Sale Agreement"),
the Controlling Stockholders shall have the right, subject to the terms and
conditions set forth below, to require each of the Investors (the "Remaining
Holders") to sell all, but not less then all, of the Shares held by each such
Remaining Holder (a "Compelled Sale"). Subject to the terms and conditions set
forth below, the Remaining Holders shall (and hereby agree to) sell such Shares
on the same terms and conditions and for the same per Share consideration as
the Controlling Stockholders sell their Shares.
As soon as is reasonably practicable after the commencement of
material discussions regarding a proposed sale of the Company (whether through
a merger, sale of stock or assets or otherwise), business combination, or
similar transaction, the Controlling Stockholders shall provide each of the
Investor Nominees with notice thereof, which shall include reasonable details
with respect thereto. The Controlling Stockholders shall provide each of the
Investor Nominees with prompt notice of all material developments in such
discussions.
(b) Within two Business Days following execution of any
Compelled Sale Agreement, the Controlling Stockholders shall provide each
Remaining Holder with written notice thereof (the "Compelled Sale Notice").
The Compelled Sale Notice shall attach a copy of the Compelled Sale Agreement
and shall set forth: (i) the name and address of the Third Party; (ii) the
amount of consideration to be paid per Share and the terms and conditions of
payment offered by the Third Party; and (iii) all other material terms of such
Compelled Sale, including the proposed date of the Compelled Sale (the
"Compelled Sale Date"), which shall be not less than 20 days following the
delivery of the Compelled Sale Notice, and the outside termination date of the
Compelled Sale Agreement (the "Compelled Sale Termination Date"), which shall
be not more than 150 days following the delivery of the Compelled Sale Notice.
(c) The provisions of this Section 2.7(c) shall only
apply if the aggregate consideration to be paid for all outstanding Shares in
such Compelled Sale implies an Enterprise Value on the date of delivery of the
Compelled Sale Notice of less than the product of (x) 6.5 times (y) EBITDA of
the Company for the latest four fiscal quarters of the Company for which
information was (or was required to be) provided to Investors pursuant to
Section 4.4 hereof.
(i) If the Other Purchasers holding at least 65%
of the Shares then held by the Other Purchasers deliver an Appraisal
Request, Apollo and Yucaipa shall choose an Appraiser from the list of
proposed Appraisers contained in the Appraisal Request, and notify
such Other Purchasers of such choice on or prior to the fifth Business
Day following delivery of the Appraisal Request. Such Other
Purchasers shall retain such
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Appraiser and cause the Appraiser to calculate an Appraised Value as
promptly as practicable (but in any event prior to the 20th Business
Day following selection of the Appraiser) and to provide written
notice thereof to the Controlling Stockholders and the Purchasers (the
"Appraisal Notice").
If the per Share consideration to be paid in such
Compelled Sale is less than the Appraised Value, then (A) the
Controlling Stockholders shall pay all fees and expenses of the
Appraiser arising in connection with the calculation of the Appraised
Value and (B) no Purchaser shall be required to sell its Shares in the
Compelled Sale. Otherwise, the Other Purchasers shall pay all fees
and expenses of the Appraiser arising in connection with the
calculation of the Appraised Value and shall be required to sell their
Shares in the Compelled Sale subject to the terms and conditions of
this Section 2.7.
(ii) If (A) an Appraisal Request is not delivered
on or prior to the fifth Business Day following delivery of the
Compelled Sale Notice or the per Share consideration to be paid in
such Compelled Sale is not less than the Appraised Value and (B)
Apollo delivers to Yucaipa a written notice (a "Compelled Sale
Acceptance") within 15 days following the delivery of the Compelled
Sale Notice (or, if an Appraisal Request was delivered, within 15 days
following delivery of the Appraisal Notice), which Compelled Sale
Acceptance sets forth the binding commitment of Apollo (or its
designee) to purchase all of the issued and outstanding Shares at the
price per Share and on all of the other terms and subject to all of
the conditions set forth in the Compelled Sale Agreement and the other
terms and conditions set forth herein (including, without limitation,
the condition that Apollo (or its designee) obtains financing, within
the time periods set forth below, on terms and conditions satisfactory
to Apollo (or such designee)), then the Controlling Stockholders and
such Remaining Holders shall, and the Controlling Stockholders shall
cause the other participating stockholders to, sell, and Apollo (or
its designee) shall purchase, such Shares on the terms and subject to
the conditions set forth therein as if Apollo (or its designee) is
(and for purposes of this Section 2.7 will be deemed to be) the Third
Party, and the Compelled Sale Date is (and for purposes of this
Section 2.7 will be deemed to be) the later of (1) 60 days following
the delivery of the Compelled Sale Notice or the Appraisal Notice, as
the case may be, (2) if on the date of the Compelled Sale Notice, the
Company and its Subsidiaries have, in the aggregate, greater than $100
million of outstanding Disqualified Indebtedness, 90 days following
the delivery of the Compelled Sale Notice or the Appraisal Notice, as
the case may be, and (3) the Compelled Sale Date specified in the
Compelled Sale Notice; provided, that (A) the right of Apollo (or its
designee) to purchase Shares pursuant to this Section 2.7(c) shall
terminate if (x) it has not satisfied or waived its financing
contingencies on or prior to the date all financing contingencies
contained in the Compelled Sale Agreement were required to be so
satisfied or waived (or, if later, on or prior to the date set forth
in clause (1) or (2) above, as applicable) or (y) such purchase has
not been consummated on or prior to the Compelled Sale Termination
Date (or, if later, the date set forth in clause (1) or (2) above, as
applicable) and (B) subject to its ability to obtain financing on
satisfactory terms and conditions within the time periods set forth
above, the obligation of Apollo (or its designee) to purchase Shares
shall terminate only in accordance with the terms of the Compelled
Sale Agreement (or similar agreement by which Apollo (or such
designee) has become bound).
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(d) Notwithstanding anything contained in this Agreement
to the contrary in connection with a Transfer (which otherwise complies with
the terms of this Agreement) of at least 66 2/3% of the Shares held by Apollo
on the Acquisition Date to a single Transferee (whether by a single transaction
or a series of transactions) Apollo may, by written notice to the Company,
assign all of its rights under this Section 2.7 to such Transferee including,
without limitation, the right to purchase all of the issued and outstanding
Shares under Section 2.7(c).
(e) Subject to the satisfaction or waiver of the terms
and conditions of the Compelled Sale Agreement (other than any condition
relating to the delivery of Shares by the Remaining Holders), the Compelled
Sale shall occur at a closing (the "Compelled Sale Closing") on the Compelled
Sale Date during normal business hours at a time and place reasonable
designated by the Controlling Stockholders and the Third Party; provided, that
if the Compelled Sale Closing has not occurred on or prior to the Compelled
Sale Termination Date, the Remaining Holders will be released from their
obligations under this Section 2.7, unless and until the Controlling
Stockholders deliver a new Compelled Sale Notice in compliance with this
Section 2.7.
(f) If any Person fails to deliver certificates
representing its Shares as required by this Section 2.7 and the Compelled Sale
in question is consummated, then such Person (i) shall not be entitled to the
consideration it is to receive under this Section 2.7 until it cures such
failure (provided, that after curing such failure it shall be so entitled to
such consideration without interest), (ii) shall for all purposes be deemed no
longer to be a stockholder of the Company and have no voting rights with
respect to such Shares, (iii) shall not be entitled to any dividends or other
distributions with respect to the Shares held by it, (iv) shall have no other
rights or privileges granted to stockholders under this or any other agreement
and (v) in the event of liquidation of the Company, shall have rights
subordinate to the rights of any equity holder with respect to any
consideration it would have received if it had complied with this Section 2.7,
if any, until it cures such failure (provided, that after curing such failure
it shall be so entitled to such consideration without interest). If any party
so fails to deliver such certificates as so required it shall execute,
acknowledge and deliver all such further agreements and take all such further
actions as may be necessary or desirable to give effect to the provisions of
this Section 2.7(f).
(g) No Remaining Holder shall be required to make any
representations and warranties to any Person in connection with such Transfer
except as to (i) good title and the absence of liens with respect to such
Remaining Holder's Shares, (ii) the corporate or other existence of such
Remaining Holder and (iii) the authority for and the validity and binding
effect of, and the absence of any conflicts under the charter documents and
material agreements of such Remaining Holder as to, any agreements entered into
by such Remaining Holder in connection with such Transfer. The Remaining
Holders shall not be required to provide any indemnities in connection with
such Transfer except for a breach of a such representations and warranties.
(h) The Company shall, and shall cause its Subsidiaries
to, use their respective best efforts to ensure that the terms of all
Indebtedness and preferred stock created, incurred, assumed or guaranteed by
the Company or any of its Subsidiaries after the Effective Date (and all
agreements and instruments relating thereto) do not (directly or indirectly)
prohibit, or provide for a default, right to accelerate, acceleration, put,
mandatory redemption, repurchase or repayment, or similar event, directly or
indirectly, due to, upon, in anticipation of, or following, Apollo's exercise
of its rights pursuant to this Section 2.7 or any other transaction pursuant to
which Apollo obtains or may obtain control of the Company. Any Indebtedness or
preferred stock (including,
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without limitation, the Redeemable Preferred Stock) containing any of such
terms is referred to herein as "Disqualified Indebtedness."
Section 2.8 Offering Memorandum. The Company shall
cooperate with the Investors and make available on a timely basis such
information as the Investors may reasonably request (to the extent that such
information can be provided without unreasonable expense or disruption of the
Company's affairs) to facilitate (i) Transfer of 5% or more of the issued and
outstanding Shares to a Third Party or (ii) in the case of Apollo, the
financing of a Compelled Sale, including, in the case of (A) any Transfer of 5%
or more of the issued and outstanding Shares not registered pursuant to the
Securities Act or (B) in the case of Apollo, the financing of a Compelled Sale,
(x) at any time the Company is not filing periodic reports under the Exchange
Act, prompt preparation of an offering memorandum relating to the Shares, the
financing (if applicable) and the Company and its Subsidiaries that contains
such information as is required by the Securities Act and other applicable laws
to be provided to "accredited investors" and such other information reasonably
requested by the Investors, and (y) making available to any proposed purchaser
of such Shares or proposed source of financing reasonable access to management
of the Company and its Subsidiaries.
The Company shall provide customary representations and
warranties to the selling Investors and any purchaser of such Shares or source
of financing, as the case may be, to the effect that the information contained
in any such offering memorandum that has been provided by the Company does not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and shall indemnify
each of the Investors, the purchaser or source of financing, as the case may
be, and their respective representatives and agents from and against any loss,
claim, damage, liability or expense incurred by any of them as a result of any
breach of such representation and warranty.
Section 2.9 Deliveries at Closing; Method of Payment of
Purchase Price. Each Tag-Along Stockholder, Controlling Stockholder and
Remaining Holder, as applicable, shall deliver to the Proposed Purchaser,
Apollo or the Third Party, as applicable, against delivery of the purchase
price for the Shares being sold by it, (i) certificates appropriately endorsed
and representing the Shares being sold, free and clear of any lien, claim or
encumbrance, and (ii) such other documents, including, without limitation,
executed stock powers and evidence of ownership and authority, as the
purchasers may reasonably request. The purchase price shall be paid by wire
transfer of immediately available funds to the bank account designated by each
Tag-Along Stockholder, Controlling Stockholder and Remaining Holder, or by
certified check if the amount payable to the recipient thereof is less than
$1,000,000.
ARTICLE III
SCOPE OF BUSINESS OF THE COMPANY
Section 3.1 Scope of Business. As of the Effective Date,
the Company legally and beneficially will own 100% of the outstanding shares of
capital stock of Dominick's. Dominick's and its Subsidiaries are engaged
primarily in the operation of conventional retail supermarkets, warehouse
format supermarkets and grocery warehouse facilities located principally in
Illinois and Indiana.
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Section 3.2 Business Opportunities. None of Yucaipa, its
partners nor any Person controlled by any of them (other than the Company or
its Subsidiaries) shall, directly or indirectly, enter into, or agree or commit
to enter into, any material investment in or otherwise exploit any business
opportunity primarily related to the operation of conventional retail
supermarkets, warehouse format supermarkets and grocery warehouse facilities
within the States of Illinois, Indiana, Iowa or Wisconsin or in any other
market in which the Company or any of its Subsidiaries does business (other
than an investment in the shares of any public company representing less than
5% of such company's fully diluted common equity) (a "Business Opportunity")
except with the approval of Apollo and the holders of a majority of the Shares
held by the Other Purchasers, so long as the Other Purchasers beneficially own
at least 50% of the Shares owned by the Other Purchasers as of the Acquisition
Date.
ARTICLE IV
ADDITIONAL RIGHTS AND OBLIGATIONS OF
INVESTORS AND THE COMPANY
Section 4.1 Management Fees. Neither the Company nor any
of its Subsidiaries shall pay to Yucaipa or any of its Affiliates compensation
for providing services to the Company and its Subsidiaries (or reimbursement of
expenses in connection therewith) other than pursuant to (a) the Management
Agreement, (b) customary compensation and expense reimbursement arrangements
between the Company and Xxxxxx X. Xxxxx in his capacity as an officer or
employee of the Company, or (c) any similar agreement or arrangement approved
by a majority of the disinterested members of the Board of Directors with
respect to such agreement or arrangement.
Section 4.2 Consulting Services. Neither the Company nor
any of its Subsidiaries may retain or employ Yucaipa or any of its Affiliates
as a financial advisor or consultant other than solely in accordance with the
terms of the Management Agreement or any similar agreement or arrangement
approved by the Board of Directors and a majority of the Investor Nominees.
Section 4.3 Access to Information; Confidentiality. Upon
the request of any single Investor owning more than 10% of the outstanding
Shares or of any Purchaser, the Company shall afford such Person and its
accountants, counsel and other representatives reasonable access to all of the
properties, books, contracts, commitments and records (including, but not
limited to, tax returns) of the Company and its Subsidiaries that are
reasonably requested. Such Person will, and will cause its agents to, conduct
any such investigations on reasonable advance notice, during normal business
hours, with reasonable numbers of persons and in such a manner as not to
interfere unreasonably with the normal operations of the Company and its
Subsidiaries.
Except as otherwise required by applicable law, neither the
Company nor any of its Subsidiaries shall be required to provide access to or
to disclose information where such access or disclosure would violate or
prejudice the rights of any customer or other Person, would jeopardize the
attorney-client privilege of the Person in possession or control of such
information, or would contravene any law, rule, regulation, order, judgment,
decree, fiduciary duty or binding agreement entered into prior to the date
hereof. The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.
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The Investors shall, and shall use their best efforts to cause
their representatives to, keep confidential all such information to the same
extent such information is treated as confidential by the Company, and shall
not directly or indirectly use such information for any competitive or other
commercial purpose. The obligation to keep such information confidential shall
not apply to (i) any information that (x) was already in the investors'
possession prior to the disclosure thereof by the Company (other than through
disclosure by any other Person subject to a duty of confidentiality), (y) was
then generally known to the public, or (z) was disclosed to the investors by a
third party not bound by an obligation of confidentiality or (ii) disclosures
made as required by law or legal or regulatory process. If in the absence of a
protective order or the receipt of a waiver hereunder the investors are
nonetheless, in the opinion of their counsel, compelled to disclose information
concerning the Company to any tribunal or governmental body or agency or else
stand liable for contempt or suffer other censure or penalty, the Investors may
disclose such information to such tribunal or governmental body or agency
without liability hereunder.
Section 4.4 Furnishing of Information. (a) The Company
shall deliver to each Investor, as long as such Investor shall own any Shares:
(i) as promptly as practical, but in no event
later than 60 days after the close of each of its first three
quarterly accounting periods during any fiscal year of the Company,
the consolidated balance sheet of the Company as at the end of such
quarterly period, and the related consolidated statements of
operations, stockholders' equity and cash flows for such quarterly
period, and for the elapsed portion of the fiscal year ended with the
last day of such quarterly period, and in each case setting forth
comparative figures for the related periods in the prior fiscal year
(if such comparative figures are available without unreasonable
expense), all of which shall be certified by the chief financial
officer of the Company, to have been prepared in accordance with
generally accepted accounting principles, subject to year-end audit
adjustments, together with an MD&A;
(ii) as promptly as practical, but in no event
later than 105 days after the close of each fiscal year of the
Company, the consolidated balance sheet of the Company as of the end
of such fiscal year and the related consolidated statements of
operations, stockholders' equity and cash flows for such fiscal year,
in each case setting forth comparative figures for the preceding
fiscal year, and certified by independent certified public accountants
of recognized national standing, together with an MD&A; and
(iii) all reports, if any, filed by the Company or
any Subsidiary of the Company with the Commission under the Exchange
Act, as promptly as practical, but in no event later than 15 days
after filing any such reports with the Commission.
(b) The provisions of Sections 4.4(a)(i) and (ii) above
shall be deemed to have been satisfied if the Company delivers the reports
timely filed by the Company with the Commission on Form 10-Q or 10-K, as
applicable, for such periods promptly, but in no event later than 15 days after
filing any such Form with the Commission.
(c) The Company shall deliver to Apollo and each Other
Purchaser holding not less than 1,397,925 Shares a copy of all notices,
statements and information sent to the Agent or the Lenders pursuant to Section
6.1 of the Credit Agreement, but in no event later than 15 days after each such
delivery to the Agent or Lenders, as the case may be.
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Section 4.5 Regulatory Problems, Etc. (a) Each Investor
that has a potential Regulatory Problem shall notify the Company of the
existence thereof and of the percentage amount of the Company's equity
securities that would cause it to have such Regulatory Problem. A Person shall
be deemed to have a "Regulatory Problem" when such Person and its Affiliates
would own, control or have the power over a greater number or percentage of
securities of any kind issued by the Company or any other Person than are
permitted under any requirement of any governmental authority.
(b) Before the Company or any of its Subsidiaries
redeems, purchases or otherwise acquires, directly or indirectly, or converts
or takes any action with respect to the voting rights of, any shares of any of
its capital stock or any securities convertible into or exchangeable for any
shares of any class of its capital stock, the Company shall give prompt written
notice of such pending action to any Investor that would, according to the
terms of any such prior notice, have a Regulatory Problem as a result of such
action.
(c) Before the Company or any of its Subsidiaries
directly or indirectly takes any action that would result in the Company being
treated as a RPHC, the Company shall give prompt written notice to each
Purchaser that has advised the Company it desires to receive such notice.
(d) Upon the written request of any Investor so notified
pursuant to clauses (b) or (c), above, made within 10 days after its receipt
thereof, the Company shall (or shall cause its Subsidiaries to) defer taking
such action for such period (not to extend beyond 45 days after such investor's
receipt of the Company's original notice) as such Investor requests.
ARTICLE V
CORPORATE GOVERNANCE AND VOTING
Section 5.1 Boards of Directors. (a) The Board of
Directors and the Dominick's Board shall each be composed of 11 members (or
such lesser number of members as actually shall have been designated by the
parties hereto in accordance with the provisions of this Section 5.1). Yucaipa
shall be entitled, but not required, to designate 6 members to each such board
of directors (collectively, the "Yucaipa Nominees"). Apollo (or any
representative thereof designated by Apollo) shall be entitled to designate two
members to each such board of directors (collectively, the "Apollo Nominees")
and the Independent Nominator shall be entitled to designate one member to each
such board of directors (the "Other Nominees" and, together with the Apollo
Nominees, the "Investor Nominees"). The remaining two members of each such
board of directors shall be selected by the Board of Directors and shall be
"independent directors" as required by the rules and regulations of the New
York Stock Exchange, Inc. (each, an "Independent Director").
On the Effective Date, the Board of Directors shall be divided
into three classes designated as "Class I", "Class II" and "Class III."
Subject to the provisions of this Section 5.1, Class I shall be comprised of
two Yucaipa Nominees and one Apollo Nominee; Class II shall be comprised of two
Yucaipa Nominees, one Apollo Nominee and one Independent Director; and Class
III shall be comprised of two Yucaipa Nominees, one Other Nominee and one
Independent Director. The terms of office of the respective classes of
directors will be as follows: Class I will expire at the annual meeting of
stockholders to be held in 1997; Class II will expire at the annual meeting of
stockholders to be held in 1998; and Class III will expire at the annual
meeting of
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stockholders to be held in 1999. At each annual meeting of stockholders
beginning in 1997, the successors to directors whose terms will then expire
will be elected to serve for a three-year term (i.e., from the time of election
until the third annual meeting following such election).
If Yucaipa is the Independent Nominator, each Other Nominee
shall be an individual who has no other relationship with the Company, any
stockholder of the Company or any of their respective Affiliates and who is
qualified by reason of such individual's expertise in financial and investment
matters (as distinct from the operation of business concerns) to serve as a
member of such Board; provided, that any Other Purchaser that holds not less
than 35% of the Shares then held by the Other Purchasers may assert to Yucaipa
that any individual so appointed as an Other Nominee does not meet the
qualifications set forth in this sentence, and any dispute as to such matter
shall be resolved by arbitration upon terms reasonably acceptable to Yucaipa
and the Requisite Holders, and such individual shall continue to serve as an
Other Nominee during the pendency of such dispute.
(b) The Investors and the Controlling Stockholders shall
vote all of the Shares (other than shares of Class B Common Stock) owned or
held of record by them at all regular and special meetings of the stockholders
of the Company called or held for the purpose of filling positions on the Board
of Directors, and in each written consent executed in lieu of such a meeting of
stockholders, and each party hereto shall take all actions otherwise necessary,
to ensure (to the extent within the parties' collective control) the election
to the Board of Directors and the Dominick's Board of the Yucaipa Nominees and
the Investor Nominees.
(c) The Company, Dominick's, the Controlling Stockholders
and the Investors shall use their respective best efforts to call, or cause the
appropriate officers and directors of the Company or Dominick's, as applicable,
to call, a special meeting of stockholders of the Company or Dominick's, as
applicable, and to vote all of the Shares (other than shares of Class B Common
Stock) or shares of capital stock of Dominick's, as applicable, owned or held
of record by them for, or to take all actions by written consent in lieu of any
such meeting necessary to cause, the removal (with or without cause) of (A) any
Yucaipa Nominee if Yucaipa requests such director's removal in writing for any
reason, (B) any Apollo Nominee if Apollo requests such director's removal in
writing for any reason and (C) any Other Nominee if the Independent Nominator
requests such director's removal in writing for any reason. Yucaipa, Apollo
and the Independent Nominator, respectively, shall have the right to designate
a new nominee in the event any Yucaipa Nominee, Apollo Nominee or Other
Nominee, respectively, shall be so removed under this Section 5.1(c) or shall
vacate his directorship for any reason.
Except as provided in this Section 5.l(c), each party hereto
agrees that at any time that it is then entitled to vote for the election or
removal of directors, it will not vote in favor of the removal of any Yucaipa
Nominee or Investor Nominee unless (i) such removal shall be at the request of
the party who nominated such director pursuant to the provisions of Section
5.1(a) or (ii) the right of the party who nominated such director to do so has
terminated in accordance with Section 5.1(f).
(d) The Company shall not, and shall not permit any of
its Subsidiaries to, without the consent of holders of a majority of the Shares
(other than shares of Class B Common Stock) held by Yucaipa, Apollo or the
Independent Nominator, as the case may be, take any action that under the
Charter Documents or this Agreement requires the approval of one or more
Yucaipa Nominees, Apollo Nominees or Other Nominee, as the case may be, if any
of the Yucaipa
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Nominees, Apollo Nominees or Other Nominee, as the case may be, approving such
action are Persons whose removal from the Board of Directors has been requested
at or prior to the time of such action by the party who nominated such director
pursuant to Section 5.1(a). Each party hereto shall use reasonable efforts to
prevent any action from being taken by the Board of Directors or the Dominick's
Board, as the case may be, during the pendency of any vacancy due to death,
resignation or removal of a director, unless the Person entitled to have a
person nominated by it elected to fill such vacancy shall have failed, for a
period of 10 days after notice of such vacancy, to nominate a replacement;
provided that the provisions of this Section 5.1(d) shall not apply in
circumstances in which action must be taken by the Board of Directors or the
Dominick's Board, as the case may be, to protect the best interests of the
Company or Dominick's, as the case may be. If such vacancy relates to an Other
Nominee, the Independent Nominator shall use its best efforts to nominate a
replacement Other Nominee during such 10- day period.
(e) As of the Effective Date, the Yucaipa Nominees shall
be Xxxxxx X. Xxxxxx, Xxxxx XxXxxxxxxx Xxxxx, Xxxxxxx X. Xxxxxx, Xxxxxx X.
Xxxxx, Xxxxxx X. Xxxxxxx and Xxxx X. Xxxxxx; the Apollo Nominees shall be Xxxxx
X. Xxxxxx and Xxxxx X. Xxxxxx; and the Other Nominee shall be Xxxxxx X.
Xxxxxxx.
(f) (i) The right of Yucaipa to designate members to
the Board of Directors and the Dominick's Board under this Section 5.1 shall
(A) be decreased by three with respect to each Board (which, in the case of the
Board of Directors, shall mean one director in each of the three classes) if
Xxxxxx X. Xxxxxx ceases to beneficially own at least 978,298 Shares (33 1/3% of
the Shares beneficially owned by the Yucaipa Affiliates on the Acquisition
Date) and (B) shall terminate if Xxxxxx X. Xxxxxx ceases to beneficially own at
least 733,727 Shares (25% of the Shares beneficially owned by the Yucaipa
Affiliates on the Acquisition Date); provided, that if the termination of
Yucaipa's rights pursuant to this Section 5.1(f) is due to the death of Xxxxxx
X. Xxxxxx, such termination will not become effective until 60 days after the
date thereof.
(ii) The right of Apollo to designate members to
the Board of Directors and the Dominick's Board under this Section 5.1
shall (A) be decreased by one with respect to each Board if Apollo
ceases to beneficially own at least 1,951,722 Shares (33 1/3% of the
Shares beneficially owned by Apollo on the Acquisition Date) and (B)
shall terminate if Apollo ceases to beneficially own at least
1,463,795 Shares (25% of the Shares beneficially owned by Apollo on
the Acquisition Date).
(iii) The right of the Independent Nominator to
designate a member to the Board of Directors and the Dominick's Board
under this Section 5.1 shall terminate if the Other Purchasers cease
to beneficially own at least 1,949,278 Shares (33 1/3% of the Shares
beneficially owned by the Other Purchasers on the Acquisition Date).
(g) (i) Notwithstanding anything in this Agreement to
the contrary, in connection with a Transfer of at least 66 2/3% of the Shares
held by Apollo on the Acquisition Date to a single Transferee (other than any
of the Yucaipa Affiliates) whether by a single transaction or a series of
transactions, Apollo may, by written notice to the Company, assign all of its
rights under this Section 5.1 (other than any such rights it may have as an
Independent Nominator) to such Transferee and, without limiting the foregoing,
such Transferee's rights to designate directors under this Section 5.1 shall
not be reduced until such Transferee and its Permitted Transferees collectively
cease to beneficially own at least 33 1/3% or 25%, as the case may be, of the
number of Shares beneficially owned by Apollo on the Acquisition Date;
provided, that such directors shall
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not be deemed Investor Nominees unless Apollo has provided Yucaipa the
opportunity to purchase such Shares pursuant to clause (ii) below and such
Shares are transferred to a Transferee other than any of the Yucaipa
Affiliates.
(ii) Apollo may (but shall not be required to)
provide Yucaipa with written notice of its desire to effect a proposed
Transfer of at least 66 2/3% of the Shares beneficially owned by
Apollo on the Acquisition Date (the "ROFO Notice"), which notice shall
set forth: (1) the proposed price to be paid per Share; (2) the
minimum number of Shares proposed to be Transferred (the "ROFO
Shares"); and (3) the names of up to five proposed Transferees. If
Apollo delivers a ROFO Notice and Yucaipa delivers to Apollo, within
15 days following the delivery thereof, a written acceptance setting
forth the binding commitment (subject to the receipt of all required
governmental approvals and financing on terms and conditions
satisfactory to Yucaipa) of Yucaipa to purchase all (but not less than
all) of the ROFO Shares at the price per Share set forth in the ROFO
Notice (a "ROFO Acceptance"), then Apollo shall sell, and Yucaipa
shall purchase, all the ROFO Shares on a date no later than 90 days
after deliver of the ROFO Notice (the "ROFO Closing Date"). If
Yucaipa timely elects not to purchase the ROFO Shares, fails to
deliver a ROFO Acceptance within 15 days following delivery of the
ROFO Notice, or fails to purchase the ROFO Shares on or prior to the
ROFO Closing Date (which failure shall not relieve Yucaipa of its
binding commitment, subject to the receipt of all required
governmental approvals and financing on terms and conditions
satisfactory to Yucaipa, to purchase such Shares), then in connection
with a Transfer by Apollo of a number of Shares not less than the
number of ROFO Shares to any one of the Transferees specified in the
ROFO Notice for a price per Share not less than that specified in the
ROFO Notice. Apollo may assign its rights to designate directors in
accordance with the terms of clause (i) above, and thereafter
directors designated by such Transferee under Section 5.1 shall be
deemed Investor Nominees; provided that, if Yucaipa has timely elected
not to purchase the ROFO Shares or failed to deliver a ROFO Acceptance
within 15 days following delivery of the ROFO Notice, such Transfer is
consummated on or before the later of (i) the 90th day following
delivery of the ROFO Notice and (ii) if Apollo and such Transferee
have entered into a binding agreement with respect to such Transfer on
or prior to such 90th day, the date on which all regulatory approvals
with respect to such Transfer have been obtained.
(h) (i) The Bylaws of each of the Company and
Dominick's shall authorize the establishment of an Executive Committee of the
Board of Directors and the Dominick's Board, and may authorize the
establishment of other committees of the Board of Directors or the Dominick's
Board, as the case may be, comprised in any case of such persons as a majority
of the Board of Directors or the Dominick's Board, as the case may be, shall
approve, and having authority, subject to applicable law, to take all actions
that (A) are ancillary to or arise in the normal course of the businesses of
the Company or Dominick's, as the case may be, (B) implement and are consistent
with resolutions of the Board of Directors or the Dominick's Board, as the case
may be, or (C) in the case of any Compensation Committee or Audit Committee,
are customary for such committee of a public company to perform. Any other
delegations of authority to the Executive Committee or any other committee of
the Board of Directors or the Dominick's Board, as the case may be, shall
require the prior written approval of a majority of the Investor Nominees. At
least one of the Apollo Nominees shall be entitled to be a member of any Audit
Committee.
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(ii) Each committee of the Board of Directors or
the Dominick's Board, as the case may be, to which authority has been
delegated, shall keep complete and accurate minutes and records of all
actions taken by such committee, prepare such minutes and records in a
timely fashion and promptly distribute such minutes and records to
each member of the Board of Directors or the Dominick's Board, as the
case may be.
Section 5.2 Action by the Board of Directors. All
decisions of the Board of Directors shall require the affirmative vote of a
majority of the directors of the Company then in office, or a majority of the
members of an Executive Committee, or any other committee, of the Board of
Directors, to the extent such decisions may be lawfully delegated to an
Executive Committee, or any other committee, pursuant to Section 5.1(h).
Section 5.3 Charter Documents. (a) Exhibits A and B set
forth copies of the Charter Documents, each in the form in which it is to be in
effect on the Effective Date.
(b) The Company covenants that it will act, and each
Controlling Stockholder and Investor agrees to use its best efforts to cause
the Company to act, in accordance with its Charter Documents in all material
respects. Each Controlling Stockholder and Investor shall vote all the Shares
(other than shares of Class B Common Stock) owned or held of record by it at
any regular or special meeting of stockholders of the Company or in any written
consent executed in lieu of such a meeting of stockholders, and shall take all
action necessary, to ensure (to the extent within the parties' collective
control) that (i) the Charter Documents of the Company do not, at any time,
conflict with the provisions of this Agreement, and (ii) unless an amendment is
approved by the Board of Directors, the Charter Documents of the Company
continue to be in effect in the form attached hereto as Exhibits A and B.
Section 5.4 Appointment of Representative. Until the
termination of this Agreement, each Other Investor shall and shall cause its
Permitted Transferees (jointly with the transferor, if it retains any Shares)
to appoint one proxy to vote all Shares owned by such Other Investor and its
Permitted Transferees. If requested by the Company, each of Apollo, the
Yucaipa Affiliates and the Controlling Stockholders shall designate one Person
(which designated Person may be changed from time to time by notice to the
Company) to make, on their respective behalf, any and all elections and
designations and to give and receive any and all notices required or permitted
hereunder.
Section 5.5 Board Visitation Rights. The Company shall
(a) provide notice of each meeting of the Board of Directors and of the
Dominick's Board concurrently with, and in the same manner as, the notice of
such meeting provided to the members of such board (but not less than one
Business Day prior to such meeting) to (i) each Purchaser, as long as such
Purchaser shall beneficially own at least 698,962 Shares and (ii) each Investor
owning more than 10% of the outstanding Shares, (b) provide each such Person a
copy of all materials and written information provided to members of each such
board and any committee thereof in connection with any such meeting
concurrently with the distribution thereof to such members, and (c) permit a
single representative of each such Person to attend and observe each such board
meeting (in person or telephonically); provided, that (x) the Company may
redact or withhold all or any portion of such materials and/or (y) exclude any
such representative from all or any portion of any such meeting, if the members
of such board or committee reasonably determine in good faith that such
redaction, withholding or exclusion is required in order to preserve the
attorney-client privilege with respect to any matter before the Board of
Directors or the Dominick's Board, as the case may be.
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ARTICLE VI
TERMINATION
Section 6.1 Termination. Except as otherwise provided
herein with respect to certain specific provisions, this Agreement shall
terminate upon the earlier to occur of:
(i) the mutual agreement of the parties hereto,
(ii) with respect to any party hereto other than the
Company, such party (or its Permitted Transferees) ceasing to own any
Shares,
(iii) such time as less than 10% of the Shares continue to
be subject to the provisions of this Agreement, or
(iv) March 22, 2005.
If this Agreement has not otherwise terminated prior to March
22, 2003, the Investors and the Controlling Stockholders shall undertake to
renew provisions of this Agreement relating to the voting of Shares for a
successive 10-year period, or such shorter period as this Agreement is in
effect. Notwithstanding the foregoing, Section 4.3 shall survive to the later
of March 22, 2005 or the termination of this Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1 No Inconsistent Agreements. Each party
hereto hereby consents to the termination of any other prior written or oral
agreement or understanding restricting, conditioning or limiting the ability of
any party to transfer or vote Shares and of any registration rights agreements
entered into pursuant to or in connection therewith, other than the
Registration Rights Agreements.
Each of the Company and the Controlling Stockholders represent
and agree that, as of the Effective Date, there is no (and from and after the
Effective Date they will not, and will cause their respective Subsidiaries and
Affiliates not to, enter into any) agreement with respect to any securities of
the Company or any of its Subsidiaries (and from and after the Effective Date
neither the Company nor any Controlling Stockholder shall take, or permit any
of their Subsidiaries or Affiliates to take, any action) that is inconsistent
in any material respect with the rights granted to the Investors in this
Agreement.
Without limiting the foregoing, the Company represents that,
(a) except for (i) this Agreement, (ii) the Company's 1995 Stock Option Plan,
(iii) the Company's 1995 Management Equity Plan and those certain Management
Stockholders Agreements entered into thereunder, (iv) the Company's 1996 Equity
Participation Plan, and (v) the Registration Rights Agreements dated as of
November 1, 1996 between the Company and certain Yucaipa Affiliates, there are
no other existing agreements relating to the voting or registration of any
equity securities of the Company or any of its Subsidiaries and (b) except for
(i) the agreements specified in clause (a), above, there
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are no other existing agreements between the Company and any other holder of
Shares relating to the transfer of any equity securities of the Company or any
of its Subsidiaries.
Section 7.2 No Other Affiliate Stockholders. Each
Yucaipa Affiliate represents to the Investors that, as of the Acquisition Date,
except for 2,934,909 shares of Common Stock owned collectively by the Yucaipa
Affiliates, the Yucaipa Warrant, limited partnership interests in Crescent
Shared Opportunity Fund II, L.P., and options to purchase 109,784 shares of
Common Stock owned collectively by Xxxxxx X. Xxxxx and Xxxxxx X. Xxxxxxxx, no
Yucaipa Affiliate or Affiliate of any Yucaipa Affiliate is the beneficial or
record owner of (or has any pecuniary interest in) any Shares or any rights,
options or warrants to purchase Shares or securities convertible into Shares.
Section 7.3 Recapitalization, Exchanges, Etc. If any
capital stock or other securities are issued in respect of, in exchange for, or
in substitution of, any Shares by reason of any reorganization,
recapitalization, reclassification, merger, consolidation, spin-off, partial or
complete liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the Shares or any other change in capital
structure of the Company, then appropriate adjustments shall be made with
respect to the relevant provisions of this Agreement so as to fairly and
equitably preserve, as far as practicable, the original rights and obligations
of the parties hereto under this Agreement and the terms "Common Stock, "Class
B Common Stock," and "Shares," each as used herein, shall be deemed to include
shares of such capital stock or other securities, as appropriate. Without
limiting the foregoing, whenever a particular number of Shares is specified
herein, such number shall be adjusted to reflect stock dividends, stock-splits,
combinations or other reclassifications of stock or any similar transactions.
Section 7.4 Successors and Assigns. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto, and their
respective successors and permitted assigns; provided that (i) neither this
Agreement nor any rights or obligations hereunder may be transferred or
assigned by the Company (except by operation of law in any merger); (ii)
neither this Agreement nor any rights or obligations hereunder may be
transferred or assigned by the Controlling Stockholders or any Investor except
to any Person to whom it has Transferred Shares in compliance with this
Agreement and who has become bound by this Agreement pursuant to Section 2.2
hereof; and (iii) the rights of the parties under Article V hereof may not be
assigned to any Person except as explicitly provided therein. If any party
hereto shall acquire additional Shares, such Shares shall, except as otherwise
expressly provided herein, be held subject to (and entitled to all the benefits
of) all of the terms of this Agreement.
Section 7.5 No Waivers; Amendments. (a) No failure or
delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
(b) This Agreement may not be amended or modified, nor
may any provision hereof be waived, other than by a written instrument signed
by (x) Yucaipa, (y) the holders of a majority of the Shares held by the
Purchasers and (z) so long as the Other Purchasers beneficially own at least
50% of the Shares beneficially owned by them as of the Acquisition Date, at
least two unrelated Purchasers; provided, however, that
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(i) so long as Apollo beneficially owns at least 25% of
the Shares beneficially owned by Apollo on the Acquisition Date,
without the consent of Apollo, no amendment, modification or waiver
that adversely affects the rights or duties of Apollo hereunder may be
effected,
(ii) so long as Apollo beneficially owns at least 10% of
the Shares beneficially owned by Apollo on the Acquisition Date,
without the consent of Apollo, no amendment, modification or waiver of
Section 2.7, 6.1 or this Section 7.5 that adversely affects the rights
or duties of Apollo thereunder may be effected,
(iii) so long as any Other Purchaser beneficially owns at
least 25% of the Shares beneficially owned by it on the Acquisition
Date and not less than 698,962 Shares without the consent of such
Other Purchaser, no amendment, modification or waiver that adversely
affects the rights or duties of such Other Purchaser hereunder may be
effected.
(iv) so long as the Investors, in the aggregate,
beneficially own at least 25% of the Shares beneficially owned by such
Persons on the Acquisition Date, without the consent of a majority of
the Shares then held by the Investors no amendment, modification or
waiver that adversely affects the rights or duties of the Investors
hereunder may be effected, and
(v) without the consent of each Investor adversely
affected thereby, no amendment, modification or waiver of Sections 4.5
or 7.15 may be effected.
The parties hereto shall use their best efforts not to effect
any amendments to the Charter Documents that would circumvent the provisions of
this Section 7.5(b).
Section 7.6 Notices. All notices, demands, requests,
consents or approvals (collectively, "Notices") required or permitted to be
given hereunder or which are given with respect to this Agreement shall be in
writing and shall be personally delivered or mailed, registered or certified,
return receipt requested, postage prepaid (or by a substantially similar
method), or delivered by a reputable overnight courier service with charges
prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or such other address (and with such other copy)
as such party shall have specified most recently by written notice. Notice
shall be deemed given or delivered on the date of service or transmission if
personally served or transmitted by telegram, telex or facsimile. Notice
otherwise sent as provided herein shall be deemed given or delivered on the
third Business Day following the date mailed or on the next Business Day
following delivery of such notice to a reputable overnight courier service.
To the Company, Dominick's or the Controlling Stockholders:
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
c/o The Yucaipa Companies
26
30
10000 Santa Xxxxxx Xxxxxxxxx
Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
and
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
To the Purchasers:
To the address specified on the signature page
executed by each such Purchaser.
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
To the Other Investors:
To the address specified on the signature page
executed by each such Other Investor.
Section 7.7 Inspection. So long as this Agreement shall
be in effect, this Agreement and, amendments hereto and waivers hereof shall be
distributed to all parties hereto after becoming effective and shall be
available upon the request of any Investor.
SECTION 7.8 GOVERNING LAW. THIS AGREEMENT SHALL GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS, EXCEPT AS TO MATTERS OF CORPORATE
GOVERNANCE, WHICH SHALL BE INTERPRETED IN ACCORDANCE WITH THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE.
Section 7.9 Section Headings. The section headings
contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
27
31
Section 7.10 Entire Agreement. This Agreement, together
with the Stock Purchase Agreement and the Registration Rights Agreements
attached as Exhibit C hereto, constitutes the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof and thereof and supersedes any and all prior agreements and
understandings, written or oral, relating, to the subject matter hereof.
Section 7.11 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdictions, it
being intended that all rights and obligations of the panics hereunder shall be
enforceable to the fullest extent permitted by law.
Section 7.12 Counterparts. This Agreement may be signed
in counterparts, each of which shall constitute an original and which together
shall constitute one and the same agreement.
Section 7.13 Required Approvals. If approval of this
Agreement or any of the transactions contemplated hereby shall be required by
any governmental or supra-governmental agency or instrumentality or is
considered to be necessary or advisable to all the parties hereto, all parties
hereto shall use their best efforts to obtain such approval. If any required
approval is not obtained or it becomes clear that such approval will not be
granted, any party shall immediately give the other parties hereto notice and
the parties hereto shall promptly meet and negotiate in good faith to modify
their respective obligations as necessary.
Section 7.14 Consistency. In the event of a conflict
between this Agreement on the one hand and the Charter Documents or any
agreement relating to the securities of the Company, or its Subsidiaries on the
other hand, the terms and provisions of this Agreement shall be deemed to set
forth the true intentions of the parties (to the extent permitted by applicable
law) and shall supersede the terms of any other agreement.
Section 7.15 Public Disclosure. The Company shall not,
and shall not permit any of its Subsidiaries to, make any public announcements
or disclosures relating or referring to any Investor, any of its affiliates, or
any of their respective directors, officers, partners, employees or agents
(including, without limitation, any Person designated as a director of the
Company or Dominick's pursuant to the terms hereof) unless such Investor has
consented to the form and substance thereof, which consent shall not be
unreasonably withheld except to the extent such disclosure is, in the opinion
of counsel, required by law or by stock exchange regulation, provided that (i)
any such required disclosure shall only be made, to the extent consistent with
law, after consultation with such Investor and (ii) no such announcement or
disclosure (except as required by law or by stock exchange regulation) shall
identify any such Person without such Investor's prior consent.
(signature pages follow)
28
32
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
DOMINICK'S SUPERMARKETS, INC.
By:
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and
Chief Executive Officer
DOMINICK'S FINER FOODS, INC.
By:
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and
Chief Executive Officer
S-1
33
THE YUCAIPA AFFILIATES
YUCAIPA BLACKHAWK PARTNERS, L.P.
By: Yucaipa Management L.L.C., its
General Partner
By:
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
Number of Shares of
Common Stock: 2,018,106
YUCAIPA CHICAGO PARTNERS, L.P.
By: Yucaipa Management L.L.C., its
General Partner
By:
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
Number of Shares of
Common Stock: 253,470
YUCAIPA DOMINICK'S PARTNERS, L.P.
By: Yucaipa Management L.L.C., its
General Partner
By:
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
Number of Shares of
Common Stock: 663,333
-----------------------------------
Xxxxxx X. Xxxxxx
S-2
34
THE PURCHASERS
APOLLO INVESTMENT FUND, L.P.
By: Apollo Advisors II, L.P.
Its General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By:
--------------------------------
Name:
Title:
Address for notice:
c/o Apollo Advisors II, L.P.
0 Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn:
Fax:
Number of Shares of
Common Stock:
Number of Shares of
Class B Common Stock:
X-0
00
XXXXXX XXXXXXXXXX XXXX XXX, L.P.
By: Apollo Advisors II, L.P.
Its General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By:
--------------------------------
Name:
Title:
Address for notice:
c/o Apollo Advisors II, L.P.
0 Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn:
Fax:
Number of Shares of
Common Stock:
Number of Shares of
Class B Common Stock:
S-4
36
APOLLO OVERSEAS PARTNERS III, L.P.
By: Apollo Advisors II, L.P.
Its Managing General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By:
--------------------------------
Name:
Title:
Address for notice:
c/o Apollo Advisors II, L.P.
0 Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn:
Fax:
Number of Shares of
Common Stock:
Number of Shares of
Class B Common Stock:
S-5
37
APOLLO (UK) PARTNERS III, L.P.
By: Apollo Advisors II, L.P.
Its Managing General Partner
By: Apollo Capital Management II, Inc.
Its General Partner
By:
--------------------------------
Name:
Title:
Address for notice:
c/o Apollo Advisors II, L.P.
0 Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn:
Fax:
Number of Shares of
Common Stock:
Number of Shares of
Class B Common Stock:
S-6
38
BT INVESTMENT PARTNERS, INC.
By:
--------------------------------
Name:
Title:
Address for Notice:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-7
39
CHASE EQUITY ASSOCIATES, L.P.
By:
--------------------------------
Name:
Title:
Address for Notice:
Xxx Xxxxx Xxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. XxXxxxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
X-0
00
XXXXXXXX/XXXX X PARTNERS, L.P.
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
Address for Notice:
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxx
Fax: (000) 000-0000
Number of Shares of Common Stock:
Number of Shares of Class B Common Stock:
CRESCENT SHARED OPPORTUNITY
FUND II, L.P.
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
Address for Notice:
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxx
Fax: (000) 000-0000
Number of Shares of Common Stock:
Number of Shares of Class B Common Stock:
S-9
41
INVESTORS
BAHRAIN INTERNATIONAL BANK, E.C.
By:
--------------------------------
Name:
Title:
Address for Notice:
c/o Dilmun Investments, Inc.
Metro Center
Xxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-10
42
BANKERS TRUST NEW YORK CORPORATION
By:
--------------------------------
Name:
Title:
Address for Notice:
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-11
43
BHF-BANK AKTIENGESELLSCHAFT
By:
--------------------------------
Name:
Title:
Address for Notice:
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-12
44
CONTINENTAL CASUALTY COMPANY
By:
--------------------------------
Name:
Title:
Address for Notice:
c/o Loews Holding Corp.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-13
45
FLEET NATIONAL BANK
By:
--------------------------------
Name:
Title:
Address for Notice:
Fleet National Bank
0 Xxxxxxx Xxxxxx
Xxxx Xxxx XXXXX00X
Xxxxxx, XX 000000
Attention: Xxx X. Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-14
46
FSC CORP.
By:
--------------------------------
Name:
Title:
Address for Notice:
x/x Xxxx xx Xxxxxx
000 Xxxxxxx Xxxxxx, XX 00-00-00
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxx Xxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-15
47
INDOSUEZ DOMINICK'S PARTNERS, L.P.
By:
--------------------------------
Name:
Title:
Address for Notice:
x/x Xxxxxxxx Xxxxxxx
0000 Xxxxxx of the Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxx, Esq.
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
X-00
00
XXXXXXXXXXXXX XXXXXXXXXXX
(U.S.) CAPITAL CORPORATION
By:
--------------------------------
Name:
Title:
Address for Notice:
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-17
49
MIDLAND MONTAGU PRIVATE EQUITY INC.
By:
--------------------------------
Name:
Title:
Address for Notice:
000 Xxxxxxxx - 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-18
50
OKGBD & CO.
By:
--------------------------------
Name:
Title:
Address for Notice:
Xxx Xxx Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxx
Fax: (000) 000-0000
Number of Shares of
Class B Common Stock:
S-19
